OVERVIEW

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the Company's Condensed Consolidated Financial Statements and Notes thereto included in Item 1 of this Report. In addition, this MD&A contains certain statements relating to future results which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. See "Information Concerning Forward-Looking Statements" on pages 24 and 25 of this Report. The Company undertakes no obligation to update these forward-looking statements.

The outline for our MD&A is as follows:

OVERVIEW OF MARKETS AND RELATED INDUSTRY PERFORMANCE / FUTURE OUTLOOK

KEY RECENT EVENT

Credit Agreement Amendment

REVIEW OF CONSOLIDATED OPERATING RESULTS

First Quarter Ended March 29, 2009 Compared to 2008

General

First Quarter Ended March 29, 2009 Compared to 2008

LIQUIDITY AND CAPITAL RESOURCES

Capital Resources

Summary of Liquidity and Capital Resources

CRITICAL ACCOUNTING POLICIES

OTHER

Seasonality

Inflation

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

OVERVIEW OF MARKETS AND RELATED INDUSTRY PERFORMANCE / FUTURE OUTLOOK

The continuation of the deterioration in macroeconomic conditions in all sectors of the economy in the first quarter of 2009, including restricted capacity and availability of capital, high unemployment, low consumer confidence levels, a decline in discretionary spending, and liquidity concerns, had a negative impact on the Company's sales and a major impact on all three of the major markets the Company serves. The Company expects the depressed conditions in the RV, MH and residential housing markets to continue through 2009 and possibly into 2010 as certain customers of the Company are closing and consolidating facilities, reducing workforce, reducing inventory levels, and reducing costs. In addition, the Company's sales will continue to be negatively impacted as RV dealers are expected to continue to lower their inventory levels as a result of weak consumer demand and restricted floor plan and consumer financing availability which in turn may negatively impact the sales of our products.

According to industry sources, the RV industry, which represents approximately 34% of the Company's first quarter 2009 sales, experienced unit shipment declines of approximately 63% versus the comparable prior year period. Long-term demographic trends favor RV market growth and the anticipated positive impact that aging baby boomers will have on the industry once the industry recovers from the current economic crisis. In addition, Federal economic credit and stimulus packages, which include provisions to stimulate RV lending and provide favorable tax treatment for new RV purchases, may help promote sales and aid in the RV industry's economic recovery. While demographic trends point to positive conditions for this particular market sector in the long-term, the Recreational Vehicle Industry Association's chief economist currently forecasts a 45% decline for full year 2009 unit shipments compared to the full year 2008 level.

According to industry sources, the MH industry, which represents approximately 40% of the Company's first quarter 2009 sales, experienced unit shipment declines of approximately 45% versus the comparable prior year period. Factors that may favorably impact production levels in this industry include favorable changes in financing laws, rising interest rates, quality credit standards in the residential housing market, mild inflation and improved job growth.

Both the RV and MH industries as a whole continue to run at rates that reflect significant contraction on an annualized basis. Pricing on gypsum related commodity products that the Company sells into the MH industry rose approximately 14% in the first quarter of 2009 on both manufactured and distribution products. Annual RV and MH unit shipments are expected to be lower in 2009 as high credit standards, increasing food and volatile fuel prices, employment downturns, and continued declines in household wealth and home prices continue to negatively impact the global economy.

The industrial and other markets represent approximately 26% of the Company's first quarter 2009 sales. Approximately 70% of the Company's industrial revenue base is linked to the residential housing market which continued to be impacted by depressed conditions as new housing starts for the first three months of 2009 were down approximately 48% from the March 2008 seasonally adjusted rate (as reported by the U.S. Department of Commerce). There is a direct correlation between the demand for our products in this market and new residential

The weak conditions in the MH industry dramatically impacted the Company's Distribution Segment, which saw first quarter 2009 sales decline from the prior year by approximately $8.1 million or 44% and operating profits decline approximately $0.8 million to a loss of $0.5 million, as approximately 71% of the Company's sales in this segment are associated with the MH Industry.

In addition, higher energy costs continue to affect the costs of raw materials. The Company continues to explore alternative sources of raw materials and components, both domestically and from overseas, and evaluate and implement sales price increases to customers where needed to offset the effect of cost increases. In first quarter 2009, we have seen cost increases softening somewhat and expect that to continue until the general economy improves. While the Company has historically been able to obtain sales price increases to offset raw material cost increases, there can be no assurance that future cost increases can be passed on to customers.

Fiscal Year 2009 Outlook

We anticipate further closures/consolidations of customers and suppliers during 2009, which may result in continued pricing erosion in certain of our major commodity product categories and potential closings/consolidations of our own facilities in situations where additional cost savings may be achieved. We anticipate that the recession and low consumer confidence will continue for the rest of 2009 and potentially into 2010 as consumers remain cautious when deciding whether or not to purchase discretionary items such as RVs.

We believe we are well positioned to increase revenues in all of the markets that we serve upon improvement in the overall economic environment. The management team remains focused on matching costs with revenues and will continue to size the operating structure and platform according to the revenue base. Key focus areas for the remainder of 2009 include earnings before interest, taxes, depreciation and amortization ("EBITDA"), cash flow, and debt reduction. While market conditions are expected to remain depressed for the remainder of 2009, additional key focus areas include:

• fixed and variable overhead cost reduction;

• additional market share gain;

• further improvement of operating efficiencies in all manufacturing operations and corporate functions;

• aggressive management of inventory and costs, and the addition of select key commodity suppliers; and

• maximization of sales in weaker markets by reviewing and adjusting product offerings where needed to ensure they are appropriately positioned in both price and features.

In conjunction with our strategic plan, we will continue to make targeted capital investments to support new business and leverage our operating platform, and work to more fully integrate sales efforts to broaden customer relationships and meet customer demands, especially in times like these where access to capital is restricted. In the first quarter of 2009, capital expenditures were approximately $54,000. For full year 2009, our capital expenditures are estimated to be approximately $1.8 million, and are limited to $2.25 million for any fiscal year per our Amended Credit Agreement.

At March 1, 2009 (February month end), we were in violation of the Consolidated EBITDA financial covenant under the terms of the credit agreement. On April 14, 2009, the Company entered into a Third Amendment to the Company's Credit Agreement, pursuant to which, among other things, the lenders waived any actual or potential Event of Default (as defined in the Credit Agreement) resulting from our failure to comply with the Consolidated EBITDA covenants for the fiscal months ended March 1, 2009 and March 29, 2009. In addition, the Third Amendment amended and/or added certain definitions, terms and reporting requirements including a modification of the one-month and two-month Consolidated EBITDA covenants. Borrowings under the revolving line of credit are subject to a borrowing base, up to a borrowing limit. The maximum borrowing limit amount was reduced from $33.0 million (as defined in the second amendment to the Credit Agreement) to $29.0 million. The principal amount outstanding under the term loan, the interest rates for borrowings under the revolving line of credit and the term loan, and the expiration date of the Credit Agreement remained unchanged under the amended terms. For

REVIEW OF CONSOLIDATED OPERATING RESULTS

General

The following consolidated and business segment discussions of operating results pertain to continuing operations.

First Quarter Ended March 29, 2009 Compared to 2008

The following table sets forth the percentage relationship to net sales of
certain items on the Company's condensed consolidated statements of operations:




                                                First Quarter Ended
                                               March 29,    March 30,
                                                  2009        2008
Net sales                                          100.0%       100.0%
Cost of goods sold                                  92.0         88.7
Restructuring charges                                 -          0.4
Gross profit                                         8.0         10.9
Warehouse and delivery expenses                      6.0         4.6
Selling, general, and administrative expenses        8.1         7.5
Restructuring charges                                 -          0.1
Amortization of intangible assets                    0.2         0.4
Gain on sale of fixed assets                          -         (0.4)
Operating loss                                (6.3)             (1.3)
Interest expense, net                         4.1                1.9
Other income                                  (0.1)               -
Income tax credit                             -                 (1.2)
Loss from continuing operations               (10.3)            (2.0)

Net Sales. Net sales decreased $52.1 million or 53.7%, to $44.9 million in first quarter 2009 from $97.0 million in the comparable prior year period. Net sales were negatively impacted as RV and MH retailers and manufacturers continued to reduce inventory levels in response to restricted credit conditions and increasing credit costs, a decline in consumer discretionary spending, and economic trends that continued to weaken in all three of the primary markets the Company serves (as discussed above). The MH and RV industries, which together comprise approximately 74% of the Company's first quarter 2009 sales, experienced unit shipment declines of approximately 45% and 63%, respectively. Approximately 70% of the Company's industrial revenue base is linked to the residential housing market which continued to be impacted by depressed conditions as new housing starts for the first three months of 2009 were down approximately 48% from the comparable period in 2008 (as reported by the U.S. Department of Commerce). The Company expects the soft conditions in the MH, RV, and residential housing markets to continue throughout the remainder of 2009, thus resulting in further reductions in inventory levels and cost reductions by RV and MH retailers and manufacturers.

Cost of Goods Sold. Cost of goods sold declined $44.7 million or 52.0%, to $41.3 million in first quarter 2009 from $86.0 million in 2008. The decline is principally due to the impact of lower sales volumes. As a percentage of net sales, cost of goods sold increased to 92.0% from 88.7% as a result of certain manufacturing overhead costs such as group insurance, depreciation expense, building charges, utility costs, and property taxes remaining relatively constant despite lower sales. Improved production efficiencies and facility consolidations partially offset the fixed cost levels. Current comparative prices of some of the key raw materials remain above prior year levels and will continue to have an adverse impact on our quarterly results. Cost of goods sold during the quarter ended March 30,

Restructuring Charges. In first quarter 2008, total restructuring charges were $542,000 or 0.5% of net sales, of which $446,000 was included as a separate line item under cost of goods sold. The charges were recorded in conjunction with the closing and consolidation of two Patrick divisions in the Company's Other Component Manufactured Products segment and one division in the Primary Manufactured Products segment.

Restructuring charges included as a separate line item under operating expenses were $96,000 in first quarter 2008 for severance costs related to consolidation activities. In 2009, the Company expects to identify further cost reduction opportunities which may result in additional restructuring charges. There were no restructuring charges in first quarter 2009.

Gross Profit. Gross profit decreased $6.9 million or 65.9%, to $3.6 million in first quarter 2009 from $10.5 million in 2008. As a percentage of net sales, gross profit decreased to 8.0% in first quarter 2009 from 10.9% in the same period in 2008. The decrease in the percentage of net sales is attributable to certain fixed overhead costs, such as group insurance, depreciation expense, building rent and utilities, remaining relatively constant despite lower sales volumes, and a shift to lower margin products that was partially offset by certain direct labor efficiencies of approximately 1.2% of net sales. Gross profit was impacted in first quarter 2008 by a $0.7 million physical inventory adjustment at one of the Company's manufacturing facilities and by restructuring charges of $0.4 million as discussed above.

Warehouse and Delivery Expenses. Warehouse and delivery expenses decreased $1.8 million or 39.9%, to $2.7 million in first quarter 2009 from $4.5 million in 2008 primarily reflecting a reduction in delivery wages, fleet rental, fuel costs and freight charges of approximately $1.7 million. As a percentage of net sales, warehouse and delivery expenses were 6.0% and 4.6% in first quarter 2009 and 2008, respectively.

Selling, General and Administrative (SG&A) Expenses. SG&A expenses decreased $3.6 million or 49.4%, to $3.7 million in first quarter 2009 from $7.3 million in 2008. As a percentage of net sales, SG&A expenses were 8.1% compared to 7.5% in 2008. The decrease in SG&A expenses is primarily attributable to our ongoing efforts to align operating costs with revenue as a result of the soft market conditions, and maximize efficiencies gained through headcount reduction synergies. Administrative, office, and sales wages and related performance based compensation declined $1.9 million during the quarter principally reflecting the reduction in headcount and reductions in base compensation taken by all hourly and salaried employees. In addition, deferred financing costs related to the Company's Credit Agreement dated May 18, 2007 and to subsequent amendments to the Credit Agreement are being amortized over the life of the related credit facility. As a result, amortization expense related to these deferred financing costs increased approximately $0.1 million in first quarter 2009 compared to the prior year. SG&A expenses in first quarter 2008 included the impact of approximately $0.1 million of restructuring charges associated with severance costs related the Company's headcount reduction initiatives in conjunction with the Adorn acquisition.

The Company has remained focused on managing administrative overhead costs as evidenced by a reduction in both its salaried and hourly headcount of more than 200 employees since the beginning of 2009 and by more than 1,000 employees since the acquisition of Adorn on May 18, 2007.

Amortization of Intangible Assets. Amortization expense declined approximately $0.3 million in the first quarter of 2009 to $0.1 million reflecting the impairment of $22.3 million of amortizable intangible assets in the fourth quarter of 2008.

Gain on Sale of Fixed Assets. First quarter 2008 results include approximately $0.4 million in gains on the sale of excess equipment acquired in the Adorn acquisition and in the normal course of business.

Operating Loss. The operating loss was $2.8 million in first quarter 2009 compared to a loss of $1.3 million in 2008. The decrease in operating income from period to period is attributable to the factors described above.

Discontinued Operations, Net of Tax. Discontinued operations includes the operating results for American Hardwoods (through its sale in January 2009) and for the aluminum extrusion operation. After-tax income from discontinued operations in first quarter 2009 was $459,000 or $0.05 per diluted share which was comprised of $19,000 of income from operations pertaining to the aluminum extrusion operation, and a $40,000 loss on operations and a $480,000 gain on sale related to American Hardwoods. For first quarter 2008, after-tax income from discontinued operations was $69,000 or $0.01 per diluted share. See Note 3 to the Condensed Consolidated Financial Statements for further details.

Net Income (Loss). The net loss was $4.1 million or $0.45 per share for first quarter 2009 compared to a net loss of $1.9 million or $0.30 per diluted share for 2008. The incremental decline in net income reflects the impact of the items previously discussed.

Average Diluted Shares Outstanding. Average diluted shares outstanding increased 43.9% in first quarter 2009 compared to 2008. The increase principally reflects the completion on March 12, 2008 of the private placement of 1,125,000 shares of common stock, and the sale of 1,850,000 shares in connection with the June 26, 2008 rights offering.

REVIEW BY BUSINESS SEGMENT

General

We classify our businesses into three reportable business segments based on the Company's method of internal reporting, which segregates its business by product category and production/distribution process. The Company regularly evaluates the performance of each segment and allocates resources to them based on a variety of indicators including sales, cost of goods sold, and operating income.

The Company's reportable business segments based on continuing operations are as follows:

• Primary Manufactured Products utilizes various materials, including gypsum, particleboard, plywood, and fiberboard, which are bonded by adhesives or a heating process to a number of products, including vinyl, paper, foil, and high pressure laminate. These products are utilized to produce furniture, shelving, wall, counter, and cabinet products with a wide variety of finishes and textures.

• Distribution distributes drywall and ceiling panels, drywall finishing products, hardboard and various sidings, roofing products, various flooring products, passage doors, insulation, and other products. Previously, this segment included our American Hardwoods operation that was sold in January 2009 and was reclassified to discontinued operations for all periods presented.

• Other Component Manufactured Products includes an adhesive division (closed in first quarter 2008), a cabinet door division, and a vinyl printing division.

Results relating to the planned divestiture of the aluminum extrusion operation, which comprised the entire Engineered Solutions segment, have been reclassified to discontinued operations for all periods presented.

First Quarter Ended March 29, 2009 Compared to 2008

Primary Manufactured Products

Sales. Sales decreased $37.7 million or 54.4%, to $31.5 million in first quarter 2009, from $69.2 million in the prior year quarter. This segment accounted for approximately 69% of the Company's consolidated net sales in first quarter 2009. As discussed above, decreased unit shipment levels in the MH and RV industries and declines in the

Gross profit. Gross profit decreased $4.5 million or 74.5%, to $1.5 million in first quarter 2009 from $6.0 million in first quarter 2008. As a percentage of sales, gross profit decreased to 4.9% in first quarter 2009 compared to 8.7% in the prior year. The decrease in gross profit as a percentage of sales is attributable to certain fixed overhead costs remaining relatively constant despite lower sales volumes, and a shift in product mix to lower margin products. Gross profit for first quarter 2008 includes the impact of restructuring charges of approximately $0.2 million related to the closing and consolidation of one of the Company's Patrick divisions in this segment and a $0.7 million adjustment to inventory and cost of goods sold related to the misappropriation of Company assets and underreporting of scrap at one of the Company's manufacturing facilities.

Operating income. The operating loss in first quarter 2009 was $0.8 million compared to operating income of $2.1 million in the prior year due primarily to lower sales volumes and the decrease in gross profit as discussed above. Reduced administrative costs, primarily resulting from staffing reductions, and lower warehouse and delivery expenses partially offset the gross profit decline.

Distribution

Sales. Sales decreased $8.1 million or 44.2%, to $10.2 million in first quarter 2009 from $18.3 million in the prior year. This segment accounted for approximately 23% of the Company's consolidated net sales in first quarter 2009. The decline in sales is attributable to the approximate 45% decline in unit shipments in the MH industry, which is the primary market sector this segment serves. The decrease in sales was partially offset by pricing increases on gypsum related products of approximately 14%.

Gross profit. Gross profit decreased $1.4 million or 55.8%, to $1.1 million in first quarter 2009 from $2.5 million in 2008. As a percentage of sales, gross profit decreased to 10.6% in first quarter 2009 from 13.4% in 2008. The decrease in gross profit dollars for 2009 is due to the decline in sales primarily resulting from decreased shipment levels in the MH industry. The decrease in gross profit as a percentage of sales is attributable to certain fixed overhead costs remaining relatively constant despite lower sales volumes.

Operating income. The operating loss in first quarter 2009 was $0.5 million, a decrease of $0.8 million from operating income of $0.3 million in 2008. Lower sales volumes and the decrease in gross profit dollars as described above contributed to the decline.

Other Component Manufactured Products

Sales. Sales decreased $10.0 million or 67.3%, to $4.8 million in first quarter 2009 from $14.8 million in 2008 primarily reflecting overall unit shipment declines in the RV and MH industries. This segment accounted for approximately 8% of the Company's consolidated net sales in first quarter 2009. The Company's adhesive operation was closed in first quarter 2008.

Gross profit. Gross profit decreased $1.3 million or 91.9%, to $0.1 million in first quarter 2009 from $1.4 million in 2008. As a percentage of sales, gross profit decreased to 2.4% in first quarter 2009 from 9.9% in 2008. Gross profit includes the impact of approximately $0.2 million in restructuring charges in first quarter 2008 related to the closing and consolidation of two Patrick divisions. The decrease in gross profit dollars is due to the decline in net sales as discussed above. The decrease in gross profit as a percentage of sales is attributable to certain fixed overhead costs remaining relatively constant despite lower sales volumes, and a shift in product mix to lower margin products in the cabinet door division.

Operating income. The operating loss in first quarter 2009 was $0.3 million compared to operating income of $0.6 million in 2008 primarily reflecting lower sales volumes and the decrease in gross profit as discussed above. Reduced administrative costs, primarily resulting from staffing reductions, partially offset the gross profit decline.

Cash Flows

Operating Activities

Cash flows from operations represent the net income we earned or the net loss sustained in the reported periods adjusted for non-cash charges and changes in operating assets and liabilities. Our primary sources of liquidity have been cash flows from operating activities and borrowings under our credit facility. Our principal uses of cash have been to support seasonal working capital demands, meet debt service requirements and support our capital expenditure plans.

Net cash provided by operating activities decreased $2.7 million to $0.3 million in first quarter 2009 compared to $3.0 million in first quarter 2008. The quarter-over-quarter change in operating cash flow is primarily the result of lower net income in 2009 that was largely impacted by the deterioration of macroeconomic conditions that negatively impacted sales volumes in the RV, MH and residential housing markets and industries. Trade receivables increased $3.2 million in first quarter 2009 versus $10.9 million in first quarter 2008 reflecting our efforts to maintain appropriate credit policies as we strive to keep our trade receivables at acceptable levels given the tight retail credit standards and the level of consolidations/closures in the RV and MH industries.

Cash provided by operating activities included a decrease in inventory levels of . . .