OVERVIEW
Preformed Line Products Company (the "Company", "PLPC", "we", "us", or "our") is an international designer and manufacturer of products and systems employed in the construction and maintenance of overhead and underground networks for the energy, telecommunication, cable operators, information (data communication), and other similar industries. Our primary products support, protect, connect, terminate, and secure cables and wires. We also provide solar hardware systems and mounting hardware for a variety of solar power applications. Our goal is to continue to achieve profitable growth as a leader in the innovation, development, manufacture, and marketing of technically advanced products and services related to energy, communications, and cable systems and to take advantage of this leadership position to sell additional quality products in familiar markets.
The reportable segments are PLP-USA, Australia, Brazil, South Africa, Canada, Poland, and All Other. Our PLP-USA segment is comprised of our U.S. operations primarily supporting our domestic energy and telecommunications products. The Australia segment is comprised of all of our operations in Australia supporting energy, telecommunications, data communications and solar products. Our Canada and Brazil segments are comprised of the manufacturing and sales operations from those locations which meet at least one of the criteria of a reportable segment. Our final two segments are Poland and South Africa, which are comprised of a manufacturing and sales operation, and have been included as segments to comply with reporting segments for 75% of consolidated sales. Our remaining operations are included in the All Other segment as none of these operations meet, or the future estimated results are not expected to meet the criteria for a reportable segment.
DISCONTINUED OPERATION
Our consolidated financial statements were impacted by the divestiture of Superior Modular Products (SMP) on May 30, 2008. We sold our SMP subsidiary for $11.8 million, which included a $.8 million gain, net of tax, and a holdback of $1.5 million. During the six month period ended June 30, 2009, we received the remaining balance of $.8 million of the holdback. We have not had any significant continuing involvement in the operations of SMP after the closing of the sale. For tax purposes, the sale of SMP generated a capital loss, which was not deductible except for amounts used to offset capital gains in the current year and from a preceding year. A full valuation allowance was provided against the deferred tax asset on the remaining portion of the capital loss carryover. The operating results of SMP are presented in our consolidated statements of operations as income from discontinued operations, net of tax, and all periods presented have been reclassified. For the three month period ended June 30, 2008, income from discontinued operations, net of tax was $.6 million, or $.12 per diluted share. Income from discontinued operations, net of tax for the six month period ended June 30, 2008 was $.8 million, or $.14 per diluted share. Preface
Our net sales for the three month period ended June 30, 2009 decreased $15.8 million, or 21%, and gross profit decreased $3.8 million, or 16%, compared to the three month period ended June 30, 2008. Our net sales decrease was impacted by a 27% decrease in total foreign net sales and a 14% decrease in U.S net sales due to the weaker end market. Of the 21% decrease in net sales, 9% was from an unfavorable effect on the change in the translation rate of local currencies as a result of a stronger U.S. dollar to certain foreign currencies compared to 2008. Therefore, excluding the effect of currency translation, net sales decreased 12% compared to 2008. Excluding the effect of currency translation, gross profit decreased 8% compared to the 2008, primarily due to the decrease in net sales partially offset by an improvement in production costs. Costs and expenses decreased $1.7 million, or 10%. Excluding the effect of currency translation, costs and expenses decreased 2% compared to 2008. As a result, income from continuing operations, net of tax, of $3.5 million, decreased $1.4 million, or 28%, and excluding the unfavorable effect on the change in the translation rates to local currencies, income from continuing operations, net of tax, decreased 22% compared to 2008.
Our net sales for the six month period ended June 30, 2009 decreased $17 million, or 13%, and gross profit decreased $4.3 million, or 10%, compared to the six month period ended June 30, 2008. Excluding an unfavorable effect on the change in the translation rate of local currencies as a result of a stronger U.S. dollar to certain foreign currencies, net sales decreased 2%. During the first six months, especially during the three month period ended June 30, 2009, certain of the end markets that we serve continued to see further sales declines. Gross profit decreased $4.3 million, or 6%, primarily due to the decrease in net sales. Excluding the effect of currency translation, gross profit decreased 1% compared to 2008. Costs and expenses decreased $1.8 million, or 6%, as foreign costs and expenses decreased $2 million partially offset by an increase in U.S. costs and expenses of $.2 million. As a result, income from continuing operations, net of tax, of $6.3 million, decreased $1.5 million, or 20%, compared to 2008. Excluding the effect of currency translation, income from continuing operations, net of tax, decreased 8% compared to 2008.

Despite the current economic conditions, our financial condition remains strong. We continue to generate substantial cash flows from operations, have proactively managed working capital and controlled capital spending. We currently have a debt to equity ratio of 5% and can borrow needed funds at an affordable interest rate from our untapped main credit facility. While current worldwide economic conditions necessitate that we concentrate our efforts on maintaining our financial strengths, we believe there are many available opportunities for growth. We are pursuing these opportunities as appropriate in the current environment in order to strongly position ourselves for when the economic recovery ultimately happens.

THREE MONTH PERIOD ENDED JUNE 30, 2009 COMPARED TO THREE MONTH PERIOD ENDED JUNE
30, 2008
Net Sales. For the three month period ended June 30, 2009, net sales were
$59.6 million, a decrease of $15.8 million, or 21%, from the three month period
ended June 30, 2008. Excluding the effect of currency translation, net sales
decreased 12% as summarized in the following table:

                                                Three month period ended June 30
                                                                  Change           Change
                                                                  due to          excluding
                                                                 currency         currency          %
thousands of dollars     2009         2008        Change        translation      tranlation       change
Net sales
PLP-USA                $ 26,028     $ 30,697     $  (4,669 )   $           -     $    (4,669 )        (15 )%
Australia                 6,260        7,783        (1,523 )          (1,540 )            17            -
Brazil                    5,690        9,884        (4,194 )          (1,424 )        (2,770 )        (28 )
South Africa              2,293        2,536          (243 )            (219 )           (24 )         (1 )
Canada                    3,200        2,706           494              (503 )           997           37
Poland                    2,737        5,439        (2,702 )          (1,376 )        (1,326 )        (24 )
All Other                13,360       16,317        (2,957 )          (1,559 )        (1,398 )         (9 )

Consolidated           $ 59,568     $ 75,362     $ (15,794 )   $      (6,621 )   $    (9,173 )        (12 )%

The decrease in PLP-USA net sales of $4.7 million, or 15%, was primarily due to an overall sales volume/ mix decrease. International net sales were unfavorably affected by $6.6 million when converted to U.S. dollars, as a result of a stronger U.S. dollar to certain foreign currencies. Excluding the effect of currency translation, Australia and South Africa net sales remained flat compared to 2008. Excluding the effect of currency translation, Brazil net sales decreased $2.8 million, or 28%, primarily as a result of lower sales volume in their markets. Excluding the effect of currency translation, Canada net sales increased $1 million, or 37%, due to higher sales volume in their markets. Excluding the effect of currency translation, Poland net sales decreased $1.3 million, or 24%, primarily due to a decrease in sales volume. Excluding the effect of currency translation, All Other net sales decreased $1.4 million, or 9%, due to a decrease in sales volume. We continue to see competitive pricing pressures globally as well as a decline in the global economy which will continue to negatively affect sales and profitability in 2009.

Gross profit. Gross profit of $19.9 million for the three month period ended June 30, 2009 decreased $3.8 million, or 16%, compared to the three month period ended June 30, 2008. Excluding the effect of currency translation, gross profit decreased 8% as summarized in the following table:

                                                Three month period ended June 30
                                                                 Change            Change
                                                                 due to          excluding
                                                                currency          currency          %
thousands of dollars     2009         2008        Change       translation      translation       change

Gross profit
PLP-USA                $  8,808     $  9,584     $   (776 )   $           -     $       (776 )         (8 )%
Australia                 1,694        2,343         (649 )            (402 )           (247 )        (11 )
Brazil                    1,302        2,030         (728 )            (328 )           (400 )        (20 )
South Africa                901        1,258         (357 )             (93 )           (264 )        (21 )
Canada                    1,435        1,271          164              (228 )            392           31
Poland                      800        1,497         (697 )            (399 )           (298 )        (20 )
All Other                 4,910        5,694         (784 )            (546 )           (238 )         (4 )

Consolidated           $ 19,850     $ 23,677     $ (3,827 )   $      (1,996 )   $     (1,831 )         (8 )%

PLP-USA gross profit of $8.8 million decreased $.8 million, or 8%. PLP-USA gross profit decreased primarily as a result of lower sales volume and an unfavorable product mix. Excluding the effect of currency translation, the Australia gross profit decrease of $.2 million was a result of higher material costs of $.5 million partially offset by an improvement in manufacturing efficiencies. Excluding the effect of currency translation, the Brazil gross profit decrease of $.4 million was primarily due to a $.6 million decrease on lower net sales partially offset by improved production margins. Excluding the effect of currency translation, South Africa gross profit decreased $.3 million due primarily to a $.2 million increase in higher material and manufacturing costs. Excluding the effect of currency translation, Canada gross profit increased $.4 million primarily due to an increase in net sales. Excluding the effect of currency translation, Poland's gross profit decreased as a result of lower net sales. Excluding the effect of currency translation, All Other gross profit decreased $.2 million primarily as a result of $.4 million from lower sales volume partially offset by improved production margins.
Cost and expenses. Cost and expenses for the three month period ended June 30, 2009 decreased $1.7 million, or 10%, compared to the three month period ended June 30, 2008. Excluding the effect of currency translation, cost and expenses decreased 2% as summarized in the following table:

                                                Three month period ended June 30
                                                                 Change            Change
                                                                 due to           excluding
                                                                currency          currency           %
thousands of dollars     2009         2008        Change       translation       translation      change
Costs and expenses
PLP-USA                $  7,753     $  8,555     $   (802 )   $           -     $        (802 )        (9 )%
Australia                 1,293        1,755         (462 )            (318 )            (144 )        (8 )
Brazil                    1,217        1,261          (44 )            (242 )             198          16
South Africa                417          359           58               (39 )              97          27
Canada                      388          408          (20 )             (63 )              43          11
Poland                      650          829         (179 )            (330 )             151          18
All Other                 3,027        3,281         (254 )            (408 )             154           5

Consolidated           $ 14,745     $ 16,448     $ (1,703 )   $      (1,400 )   $        (303 )        (2 )%

PLP-USA costs and expenses decreased $.8 million primarily due to an increase in the cash surrender values of life insurance policies of $.2 million, a gain on foreign currency transactions of $.3 million, a $.3 million decrease in professional fees, lower commissions related to lower sales and the mix of commissionable sales of $.1 million, a decrease in advertising, repairs and maintenance, and professional and technical services of $.4 million, partially offset by an increase in personnel related costs of $.4 million and consulting expense of $.1 million. Excluding the effect of currency translation, Australia costs and expenses decreased $.1 million primarily due to lower personnel related costs. Excluding the effect of currency translation, Brazil costs and expenses increased $.2 million primarily due to personnel related costs, consulting, and commissions. Excluding the effect of currency translation, South Africa's costs and expenses increased $.1 million primarily due to personnel related costs, consulting and administrative expenses. Excluding the effect of currency translation, Canada costs and expenses remained relatively unchanged compared to 2008. Excluding the effect of currency translation, Poland's costs and expenses increased $.2 million primarily due to personnel related costs, travel and administrative expenses. Excluding the effect of currency translation, All Other costs and expenses increased $.2 million primarily due to personnel related costs.
Operating income. Operating income of $5.1 million for the three month period ended June 30, 2009 decreased $2.1 million, or 29%, compared to the three month period ended June 30, 2008 primarily due to the $3.8 million decrease in gross profit partially offset by the decrease in costs and expenses of $1.7 million. PLP-USA operating income decreased $.3 million primarily as a result of the $.8 million decrease in gross profit coupled with a $.3 million decrease in intercompany royalty income partially offset by a $.8 million decrease in costs and expenses. International operating income was unfavorably affected by $.4 million when converted to U.S. dollars as a result of a stronger U.S. dollar to certain foreign currencies. Excluding the effect of currency translation, Australia operating income decreased $.1 million as a result of the $.2 million decrease in gross profit partially offset by a $.1 million decrease in costs and expenses. Excluding the effect of currency translation, Brazil operating income decreased $.5 million primarily as a result of the $.4 million decrease in gross profit coupled with a $.2 million increase in costs and expenses offset by a $.1 million decrease in intercompany royalty expense. Excluding the effect of currency translation, South Africa operating income decreased $.4 million as a result of the $.3 million decrease in gross profit coupled with a $.1 million increase in costs and expenses. Excluding the effect of currency translation, Canada operating income increased $.3 million primarily as a result of an increase in gross profit. Excluding the effect of currency translation, Poland operating income decreased $.4 million primarily as a result of a decrease in gross profit of $.3 million coupled with an increase in cost and expenses. Excluding the effect of currency translation, All Other operating income decreased $.3 million primarily as a result of the $.2 million decrease in gross profit coupled with a $.2 million increase in cost and expenses partially offset by lower intercompany royalty expense.
Other income (expense). Other income (expense) for the three month period ended June 30, 2009 of $.2 million increased $.1 million compared to the three month period ended June 30, 2008. Other income (expense) increased primarily related to the generation of natural gas at our corporate headquarters property in Mayfield Village, Ohio. Production of the natural gas well commenced in May 2008. The increase related to the natural gas well was partially offset by a decrease in interest income.
Income taxes. Income taxes from continuing operations for the three month period ended June 30, 2009 of $1.7 million were $.7 million lower than the three month period ended June 30, 2008. The effective tax rate for the three month periods ended June 30, 2009 and 2008 was 33%. The effective tax rate for three month period ended June 30, 2009 is lower than the statutory federal rate of 34% primarily due to increased foreign earnings in jurisdictions with lower tax rates.

Income from continuing operations, net of tax. As a result of the preceding items, income from continuing operations, net of tax for the three month period ended June 30, 2009 was $3.5 million, compared to income from continuing operations, net of tax of $4.9 million, for the three month period ended June 30, 2008. Excluding the effect of currency translation, income from continuing operations, net of tax decreased, $1.1 million, or 22% as summarized in the following table:

                                                    Three month period ended June 30
                                                                     Change             Change
                                                                     due to           excluding
                                                                    currency           currency           %
thousands of dollars       2009         2008         Change        translation       translation        change
Income from continuing
operations, net of tax
PLP-USA                     1,094      $ 1,471      $   (377 )    $           -      $       (377 )         (26 )%
Australia                      62          139           (77 )               (7 )             (70 )         (50 )
Brazil                         51          456          (405 )              (77 )            (328 )         (72 )
South Africa                  304          591          (287 )              (34 )            (253 )         (43 )
Canada                        616          540            76                (97 )             173            32
Poland                        123          522          (399 )              (56 )            (343 )         (66 )
All Other                   1,292        1,228            64                (48 )             112             9

Consolidated              $ 3,542      $ 4,947      $ (1,405 )    $        (319 )    $     (1,086 )         (22 )%

PLP-USA income from continuing operations, net of tax decreased $.4 million as a result of the $.3 million decrease in operating income coupled with an increase in income taxes of $.3 million partially offset by an increase in other income of $.2 million. Excluding the effect of currency translation, Australia income from continuing operations, net of tax, decreased $.1 million due to a decrease in operating income partially offset by lower income taxes. Excluding the effect of currency translation, Brazil income from continuing operations, net of tax,decreased $.3 million as a result of lower operating income of $.5 million partially offset by a decrease in income taxes of $.2 million. Excluding the effect of currency translation, South Africa income from continuing operations, net of tax, decreased $.3 million as a result of a decrease in operating income of $.4 million partially offset by lower income taxes of $.1 million. Excluding the effect of currency translation, Canada income from continuing operations, net of tax, increased $.2 million primarily as a result of a $.3 million increase in operating income partially offset by an increase in income taxes. Excluding the effect of currency translation, Poland income from continuing operations, net of tax, decreased $.3 million primarily as a result of a $.4 million decrease in operating income partially offset by a decrease in income taxes of $.1 million. Excluding the effect of currency translation, All Other income from continuing operations, net of tax increased $.1 million primarily as a result of the $.5 million decrease in income taxes partially offset by a $.3 million decrease in operating income coupled with lower other income.

SIX MONTH PERIOD ENDED JUNE 30, 2009 COMPARED TO SIX MONTH PERIOD ENDED JUNE 30,
2008
Net Sales. For the six month period ended June 30, 2009, net sales were
$118.3 million, a decrease of $17 million, or 13%, compared to the six month
period ended June 30, 2008. Excluding the effect of currency translation, net
sales decreased 2% as summarized in the following table:

                                                  Six month period ended June 30
                                                                    Change            Change
                                                                    due to          excluding
                                                                   currency          currency          %
thousands of dollars     2009          2008         Change        translation      translation       change
Net sales
PLP-USA                $  54,699     $  55,704     $  (1,005 )   $           -     $     (1,005 )         (2 )%
Australia                 11,942        14,688        (2,746 )          (3,639 )            893            6
Brazil                    10,882        15,939        (5,057 )          (3,206 )         (1,851 )        (12 )
South Africa               4,147         4,137            10              (724 )            734           18
Canada                     5,555         5,072           483            (1,064 )          1,547           31
Poland                     5,695         9,374        (3,679 )          (2,729 )           (950 )        (10 )
All Other                 25,342        30,313        (4,971 )          (3,320 )         (1,651 )         (5 )

Consolidated           $ 118,262     $ 135,227     $ (16,965 )   $     (14,682 )   $     (2,283 )         (2 )%

The decrease in PLP-USA net sales of $1 million, or 2%, was primarily due to a sales volume/mix decrease. We anticipate a flat to slight decrease in sales compared to the first half of 2009 for the remainder of 2009, as we believe PLP-USA will continue to be negatively affected by a continued difficult economy and depressed housing market for the remainder of the year. International net sales for the six month period ended June 30, 2009 were unfavorably affected by $14.7 million when converted to U.S. dollars, as a result of a stronger U.S. dollar to certain foreign currencies. Excluding the effect of currency translation, Australia net sales increased $.9 million, or 6%, primarily as a result of higher volume/ mix in energy sales and the increase in sales related to BlueSky Energy Pty Ltd, a solar systems integration and installation business entered into on May 21, 2008. Excluding the effect of currency translation, Brazil net sales decreased $1.9 million, or 12%, primarily as a result of lower sales volume in their markets. Excluding the effect of currency translation, South Africa net sales increased $.7 million, or 18%, primarily as a result of increased volume in energy sales. Excluding the effect of currency translation, Canada net sales increased $1.5 million, or 31%, due to higher sales volume in their markets. Excluding the effect of currency translation, Poland net sales decreased $1 million, or 10%, due to a decrease in sales volume. Excluding the effect of currency translation, All Other net sales decreased $1.7 million, or 5%, due to a decrease in volume. We continue to see competitive pricing pressures globally as well as a decline in the global economy, which will continue to negatively affect sales and profitability in 2009. Gross profit. Gross profit of $38.4 million for the six month period ended June 30, 2009 decreased $4.3 million, or 10%, compared to the six month period ended June 30, 2008. Excluding the effect of currency translation, gross profit decreased 1% as summarized in the following table:

                                                 Six month period ended June 30
                                                                 Change            Change
                                                                 due to           excluding
                                                                currency          currency           %
thousands of dollars     2009         2008        Change       translation       translation      change

Gross profit
PLP-USA                $ 18,128     $ 17,684     $    444     $           -     $         444           3 %
Australia                 3,247        4,373       (1,126 )            (970 )            (156 )        (4 )
Brazil                    2,739        3,514         (775 )            (809 )              34           1
South Africa              1,644        1,988         (344 )            (302 )             (42 )        (2 )
Canada                    2,402        2,281          121              (459 )             580          25
Poland                    1,741        2,431         (690 )            (843 )             153           6
All Other                 8,527       10,411       (1,884 )          (1,150 )            (734 )        (7 )

Consolidated           $ 38,428     $ 42,682     $ (4,254 )   $      (4,533 )   $         279           1 %

PLP-USA gross profit of $18.1 million increased $.4 million, or 3%. PLP-USA gross profit increased due to better production margins partially offset by lower sales volume. Excluding the effect of currency translation, the Australia gross profit decrease of $.2 million was a result of $.7 million from higher material costs and $.1 million from increased manufacturing costs partially offset by higher net sales of $.3 million coupled with an improvement in manufacturing efficiencies of $.4 million. Excluding the effect of currency translation, Brazil gross profit remained relatively unchanged primarily due to a decrease in gross profit attributable to lower net sales of $.3 million offset by better production margins. Excluding the effect of currency translation, . . .