GENERAL:

The following analysis of the results of operations and financial condition of the Company should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this quarterly report on Form 10-Q.

CRITICAL ACCOUNTING POLICIES:

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", included in our 2008 annual report on Form 10-K.

Overview

The following table has been prepared as an aid in understanding the Company's results of operations on a comparative basis for the three and nine months ended March 31, 2009 and 2008. Amounts presented are percentages of the Company's net sales.

                                           Three Months Ended          Nine Months Ended
                                               March 31,                   March 31,
                                           2009          2008          2009         2008
Net sales                                    100.0 %      100.0 %        100.0 %     100.0 %
Cost of goods sold                           (83.5 )      (81.6 )        (81.8 )     (80.4 )
Gross margin                                  16.5         18.4           18.2        19.6
Selling, general and administrative          (19.6 )      (16.8 )        (18.7 )     (17.3 )
Facility consolidation and other costs        (0.7 )          -           (0.9 )         -
Operating (loss) income                       (3.8 )        1.6           (1.4 )       2.3
Other (expense) income, net                   (0.2 )       (0.2 )         (0.0 )      (0.3 )
(Loss) income before income taxes             (4.0 )        1.4           (1.4 )       2.0
Income tax benefit (expense)                   1.5         (0.5 )          0.5        (0.7 )
Net (loss) income                             (2.5 )%       0.9 %         (0.9 )%      1.3 %

Results of Operations for the Quarter Ended March 31, 2009 vs. 2008



The following table compares net sales in total and by area of application for
the quarter ended March 31, 2009 to the prior year quarter (in millions).



                                      Net Sales
                               Quarter Ended March 31,
  Area of Application          2009              2008           $ Change       % Change
  Residential              $        53.6     $        60.9     $     (7.3 )        (11.9 )%
  Recreational Vehicle               2.5              14.0          (11.5 )        (82.0 )
  Commercial                        17.5              23.2           (5.7 )        (24.9 )
  Total                    $        73.6     $        98.1     $    (24.5 )        (25.0 )%

Gross margin for the quarter ended March 31, 2009 was 16.5% compared to 18.4% in the prior year quarter. The decrease in gross margin percentage is primarily due to adjustments to realizable value on inventory of $1.7 million (2.2% of net sales) due to business conditions primarily related to vehicle seating.

Selling, general and administrative expenses for the quarter ended March 31, 2009 were 19.6% of net sales compared to 16.8% of net sales in the prior year quarter. This percentage increase is due to under-absorption of fixed costs on the lower sales volume and an increase in bad debt expense of approximately $0.3 million.

During the current quarter the Company recorded pre-tax charges of approximately $0.5 million of employee separation costs due to business conditions.

Operating loss for the current quarter was $2.8 million compared to operating income of $1.5 million in the prior year quarter reflecting the aforementioned factors.

The effective income tax rate was 36.8% and 34.6% in the current and prior year fiscal quarters, respectively. The primary difference between the federal statutory rate and the expected effective rate is the result of state taxes.

The above factors resulted in current quarter net loss of $1.9 million or $0.28 per share, compared to the prior year quarter net income of $0.8 million or $0.13 per share.

All earnings per share amounts are on a diluted basis.

Results of Operations for the Nine Months Ended March 31, 2009 vs. 2008



The following table compares net sales in total and by area of application for
the nine months ended March 31, 2009 to the prior year nine-month period (in
millions).



                                      Net Sales
                             Nine Months Ended March 31,
Area of Application           2009                2008            $ Change       % Change
Residential              $         173.7     $         191.2     $    (17.5 )         (9.1 )%
Recreational Vehicle                13.4                44.5          (31.1 )        (70.0 )
Commercial                          62.5                69.3           (6.8 )         (9.9 )
Total                    $         249.6     $         305.0     $    (55.4 )        (18.2 )%

Gross margin for the nine-month period ended March 31, 2009 was 18.2% compared to 19.6% in the prior year nine-month period. The decrease in gross margin percentage is primarily due to under-utilization of capacity on significantly lower sales volume and the aforementioned $1.7 million adjustment to realizable value on inventory.

Selling, general and administrative expenses were 18.7% compared to 17.3% in the prior year nine-month period. This percentage increase is due to under-absorption of fixed costs on the lower sales volume and an increase in bad debt expense of approximately $0.7 million.

Results for the nine-month period ended March 31, 2009 included a pre-tax gain on the sale of securities held for investment of $0.5 million or $0.04 per share after tax. During the current nine-month period the Company recorded pre-tax charges of approximately $2.4 million, or $0.23 per share after tax related to facility consolidation.

Operating loss for the nine months ended March 31, 2009 was $3.6 million compared to operating income of $7.0 million in the prior year nine-month period reflecting the aforementioned factors.

The effective income tax rate was 36.4% in the current and prior year nine-month periods. The primary difference between the federal statutory rate and the expected effective rate is the result of state taxes.

The above factors resulted in net loss of $2.3 million or $0.35 per share, compared to the prior year nine-month period net income of $3.9 million or $0.59 per share.

All earnings per share amounts are on a diluted basis.

Liquidity and Capital Resources

Operating Activities:

Working Capital (current assets less current liabilities) at March 31, 2009 was $87.8 million. Net cash provided by operating activities was $12.9 million for the nine months ended March 31, 2009 compared to $11.4 million at March 31, 2008. Cash from operating activities was used primarily to reduce borrowings by $12.0 million and pay dividends of $2.0 million. Significant changes in working capital from June 30, 2008 to March 31, 2009 included decreased accounts receivable of $11.6 million, decreased inventory of $9.1 million and decreased accounts payable of $3.8 million. The decrease in receivables is related to lower shipment volume, as well as the timing of shipments to customers and the related payment terms. Inventory decreased $7.4 million due to lower forecasted customer requirements and $1.7 million due to write-downs related to current business environment primarily in vehicle seating applications. The decrease in accounts payable relates to reduced purchase volume based on current demand. The Company expects that due to the nature of our operations that there will be continuing fluctuations in accounts receivable, inventory, accounts payable, and cash flows from operations due to the following: (i) we purchase inventory from overseas suppliers with long lead times and depending on the timing of the delivery of those orders inventory levels can be greatly impacted, and (ii) we have various customers that purchase large quantities of inventory periodically and the timing of those purchases can significantly impact inventory levels, accounts receivable, accounts payable and short-term borrowings. As discussed below, the Company believes it has adequate financing arrangements and access to capital to absorb these fluctuations in operating cash flow.

Investing Activities:

Net cash provided by investing activities was $0.6 million during the nine-month period ended March 31, 2009. Proceeds from the sale of investments were $0.7 million. Capital expenditures were $0.9 million for the nine months ended March 31, 2009. Depreciation and amortization expense was $2.8 million and $3.4 million for the nine-month periods ended March 31, 2009 and 2008, respectively. The Company expects that capital expenditures will be less than $0.5 million for the remainder of the 2009 fiscal year.

Financing Activities:

Net cash used in financing activities was $14.0 million during the nine-month period ended March 31, 2009. Borrowings were lower by $12.0 million primarily due to the reduction in accounts receivable and inventory. Dividends of $2.0 million were paid during the nine-month period.

During the third quarter of fiscal year 2009, the Company negotiated a refinancing of its working capital line of credit that would have expired June 30, 2009. The Company's short-term credit facility was increased from $12 million to $15 million and expires June 30, 2010. The long-term credit facility was reduced from $20 million to $10 million and expires September 30, 2011.

The Company pledged accounts receivable and inventory as security under the amended credit facility agreements. The amount of credit available to the Company will be based on eligible accounts receivable and inventory as defined in the amended agreements. At March 31, 2009, the Company had available collateral, as defined by the bank, of $52.9 million with borrowing availability of $25.0 million of which $14.0 million was outstanding. The Company believes that the available credit under the amended agreements is sufficient to support its financing needs.

During the third quarter of fiscal year 2009, the Company's Board of Directors voted to decrease the quarterly dividend from $0.13 per share to $0.05 per share. The action was taken to conserve cash and further strengthen the Company's balance sheet by reducing debt levels. If the reduced dividend would remain in effect for one full year the result will be annual cash savings of $2.1 million.

In the opinion of management, the Company's current liquidity and credit resources provide it with the ability to react to opportunities as they arise, to pay quarterly dividends to its shareholders, and to purchase productive capital assets that enhance safety and improve operations. However, should the current economic conditions continue for an extended period of time or deteriorate significantly, we would further evaluate all uses of cash and credit facilities, including the payment of dividends and purchase of capital assets.

Outlook

The consolidation of manufacturing operations that the Company announced on September 10, 2008 was substantially completed as of December 31, 2008. However, workforce reductions have taken place at other facilities as we continue to adjust operations to bring production capacity in line with current and expected demand for our products. Company wide employment has been reduced approximately 30% over the past year.

Demand for our products is dependent on factors such as consumer confidence, affordable housing, reasonably attainable financing and an economy with low levels of unemployment and high levels of disposable income. These factors are all currently in poor positions, and indications are that they will remain that way in the near-term. We are not anticipating significant improvements in market conditions at this time, and are managing our business on that basis.

While we expect that current business conditions will persist for the remainder of calendar year 2009, we remain optimistic that our strategy of a wide range of quality product offerings and price points to the residential, recreational vehicle and commercial markets combined with our conservative approach to business will be rewarded over the longer-term.