Richard B. Goodman – General Counsel Richard Horowitz – Chairman, President, Assistant Treasurer and Chief Executive Officer Joseph Molino – Vice President, Treasurer, Secretary, Chief Financial Officer and Chief Operating Officer

Andrew E. Shapiro – Lawndale Capital Management LLC

Good day everyone. Welcome to the P&F Industries Third Quarter Earnings Conference. Today’s conference is being recorded. At this time, I would like to turn things over to Mr. Richard Goodman. Please go ahead, sir. Richard B. Goodman: Thank you, Operator. Good morning and welcome to P&F Industries third quarter 2013 earnings conference call. With us today from management as usual are Richard Horowitz, Chairman, President and CEO; and Joseph Molino, Chief Operating Officer and CFO. Before we get started, I’d like to remind you that any forward-looking statements discussed on today’s call by our management, including those related for the Company’s future performance and outlook are based upon the Company’s historical performance and current plans, estimates and expectations, which are subject to various risks and uncertainties, including but not limited to the strength of the retail, industrial, housing and other markets in which we operate, the impact of competition, product demand, supply chain pricing, our debt and debt service requirements and those other risks and uncertainties described in the reports and statements filed by the company with the SEC including among others as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and our subsequent filings. These risks could cause the company’s actual results for future periods to differ materially from those expressed in any forwarding-looking statements made by or on behalf of the company. Forward- looking statements speak only as of the date on which they are made. And the company undertakes no obligation to update publicly or revise any forward-looking statements whether as a result of new information, future developments or otherwise. With that, I’d now like to turn the call over to Richard. Good morning Richard.

Thank you, Rich. And good morning Rich and everybody on the call. Thank you all for joining us again this morning. I will begin today's call as I usually do with a brief summary of the company's results of operations and earnings per share for the three and nine-month periods ended September 30, 2013 and how that is compared to the same period last year. I will then ask Joe Molino to briefly review key cash flow information, after which we will move to the Q&A session. However, before I begin, I wish to remind all of you once again that the purpose of this call is to discuss and review the Company's third quarter 2013 results only. As such, I request if you confine all questions and comments to those relating to the Company's results for this past quarter. Thank you for your cooperation. The Company's consolidated revenue for the three and nine-month periods ended September 30, 2013 were $20,483,000 and $60,668,000 respectively, compared to $17,622,000 and $47,180,000 for the same periods in 2012. Specifically, revenue for our Tools segment during the three and nine-month periods ended September 30, 2013 was $14,776,000 and $43,625,000 respectively, compared to $13,327,000 and $32,672,000 in the same periods in 2012. The three and nine-month increases in our tool revenue were due largely in part to The Home Depot, which we began shipping in late December of last year. Revenue for the three and nine month periods ended September 30, 2013 for our Hardware segment which only consist of Nationwide industries as of now, was $5,707,000 and $17,043,000 respectively compared to $4,295,000 and $14,508,000 for the same periods last year. An expanded customer base, new product offerings along with organic growth continued to be the drivers to Nationwide's revenue growth. The Company's consolidated gross margins for the three and nine-month periods this year were 34.4% and 36.1% respectively, compared to 34.3% and 36.7% for the same periods last year. Specifically for the Tools segment, third quarter 2013 gross margin was 33.4% compared to 32.7% for the same period last year with year-to-date 2013 gross margins of 35.5% compared to 36% during the same nine-month period in 2012. Gross profits generated by our tool segment improved by $575,000 and $3,739,000 respectively when comparing the third quarter and first nine-months of 2013 to the same periods in 2012. The hardware segment, three and nine-month’s 2013 gross margins were 37.5% compared to 39.2% and 38.4% for the same periods in 2012. Third quarter of 2013 gross profit at the Hardware segment improved by $443,000 to $2,125,000, while the segment’s nine-month gross profit increased by $827,000 to $6,399,000. Our selling, and general and administrative expenses for the three and nine-month periods ended September 30, 2013 were $5,680,000 and $17,892,000 respectively, compared to $4,646,000 and $14,107,000 for the same periods in the prior year. Stated as a percentage of revenue, SG&A for the three and nine-month periods ended September 30 of this year were 27.7% and 29.5% respectively compared to 26.4% and 29.9% during the same periods in the prior year. Our interest expense during the third quarter of 2013 declined to $94,000 from $126,000 incurred during the third quarter of last year, and for the nine-month periods this year our interest expense was $321,000, down from $401,000 from the same period last year. Taking all of the above data into consideration, our income before income taxes for the three and nine-month periods ended September 30 of this year was $1,281,000 and $3,678,000 respectively compared to $1,000,265 and $2,817,000 for the same periods in 2012. Our tax expense for the third quarter of 2013 was $471,000 compared to a tax benefit of $2,302,000 in the third quarter of 2012. While tax expense for the nine-month periods ended September 30, 2013 was $1,372,000, with the tax benefit of $2,252,000 for the nine-month period ended September 30 of last year. I wish to remind you that in the third quarter of last year we eliminated the valuation allowance on our federal deferred tax assets. Prior to this elimination, in lieu of recording our tax expense, we adjusted the then in place valuation allowance, thus creating minimal effective tax rates that would have applied to our pretax income. With the valuation allowance removed this year, current and future tax provisions will more significantly impact our aftertax earnings as well as our earnings per share. Our basic earnings per share for the three and nine-month period ended September 30, 2013 were $0.22 and $0.63 compared to $0.98 and $1.48 for the same periods of 2012. And lastly, diluted earnings per share for the three and nine-month periods ended September 30, 2013 were $0.20 and $0.59 compared to $0.95 and $1.36 for the same period in 2012. Again, I wish to remind you that as a result of the reduction in the estimated valuation allowance on deferred tax asset previously mentioned, our effective tax rates for the three and nine-month periods ended September 30, 2012 were not directly correlated to the amount of our pretax income and are therefore not comparable to the effective tax rate for the same periods this year. At this time I'd like to ask Joe Molino to provide insight into our cash flow. Joe?

Thanks Richard. Capital expenditures during the nine-month period ended September 30, 2013 were $428,000 compared to $1,736,000 in the same period of 2012. Significant non-cash items affecting our cash flows from operations during the first nine months of 2013 were depreciation and amortization of $1,176,000. The change in our net deferred tax assets of $1,098,000. Amortization of other intangibles of $192,000 and stock-based compensation of $245,000. During the nine-month period ended September 30, 2013, we had an increase in our accounts receivable of $5,426,000, increases in accounts payable and accrued liabilities payable, $594,000, a decrease in inventory of $927,000 and an increase in prepaid and other current assets of $313,000. With that I’d like to turn the call back over to Richard, Richard?

Thank you Joe, and thank you all for being on the call today and we’re happy to take some – answer questions and answers – we’ll give you answers now. But I’d like to acknowledge all of our employees and management for the outstanding job they continuing to do and helping to grow our company in these very settling times in our country. The core value has been establishing. We’ll continue to be – to improve our shareholder value. That’s the end of our report today and we’re happy to answer any questions you may have, operator.

Thank you. (Operator Instructions) Move here first from Andrew Shapiro with Lawndale Capital Management. Andrew E. Shapiro – Lawndale Capital Management LLC: Hi, guys. I have a bunch of questions today, I’ll ask a few and then back out into the question queue for others, but please come back to us. There is a lot of meat in this quarters report. On the revenue side, if I could get a handle on first on Florida Pneumatic, you’ve talked about the negative impact of – you are going to place greater emphasis on the retail and in the industrial/catalog lines, and that’s likely to cause a negative impact in your other product lines. Does this negative impact, you expect have the potential to lower the volumes such levels where respective direct overhead, might not be covered or you are still staying in those lines because there is some profitable contribution that we ahead?

No Andrew, that is not going to be the issue, what we’re trying to say to you is that we’re spending more of our emphasize and time on our higher end – higher margin lines. It doesn’t mean that we are neglecting the other side, it’s just that is more emphasis and our strategic plan is to emphasize those things going forward. But you’re not going to – other than if economic conditions change, you’re not going to see a fluctuation in negative sense in that regard. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay, well your language implied that there might be instead of reduced growth that there might be a negative impact and that’s…

I don’t think that’s I’m going to miss ready, I guess you read it that way but we didn’t intend it that way? Andrew E. Shapiro – Lawndale Capital Management LLC: Okay fine good. With respect to Florida Pneumatic's auto product side, you talked about a loss due to a large flow margin air filter customer, was the loss due to a move to another supplier or was the loss due to the customers business shrinking or going away?

That is a old news, I don’t know – I’d imagine we put in our old press release that is two year old news already. We lost that customer year and a half or two years ago for the most part and it’s been like well [indiscernible]. Andrew E. Shapiro – Lawndale Capital Management LLC: It can be that old you referred to and say other revenues during the quarter declined due to the loss.

Because you got to let me finish please, because we are comparing it to last years third quarter, so it was at least a year ago that this happened and we are just trying to bring it your attention, bringing to all the stockholders attention. But the answer to your question is, we do not believe that there was any other competitive – we really loss to the competitor. We believe that they took this in-house. I believe that’s Amtrak [ph]. Andrew E. Shapiro – Lawndale Capital Management LLC: And then when does this anniversary because this loss didn’t anniversary in the quarter ended September yet, that’s why it was down year-over-year.

Go ahead.

I’m pretty sure it anniversaries at the end of the year. I think we had them through the end of 2012, and just to put a little bit more comment on the answer. It was a pricing issue. We were not making the kind of margins that we needed to make and it was not in line with the rest of our business. So even though it was a sizable customer, I frankly the decision was very mutual on parting ways. We were not generating the return we needed on that account. So I’m not sure if it was any great loss to the bottom line frankly. Andrew E. Shapiro – Lawndale Capital Management LLC: Last, Florida Pneumatic revenue question then I’ll back out. You talked about coming out of the recession your economy had headwinds et cetera, but the economy is still growing somewhat here. Your catalog in industry segment versus prior year was weaker last quarter and it was again weaker versus prior year this quarter and almost by the same $400,000 year-over-year amount. Can you elaborate a little bit more about this and if there’s anything you can do to and are doing to address this and how long might you expect this year-over-year weakness to continue?

Andrew, I’ll let Joe answer the question for that, but I’ll give you the 40,000 foot answer. 40,000 foot answer is that the economy in this industry is absolutely not recovering and as a matter of fact we’ve mentioned this on calls at least the last two quarters and it continues unfortunately. Our competitors in these industries are down double-digits compared to last year. We are not, thankfully. But in our economy and they publicly traded type of information therein they’re down anywhere from 15% to 25%. So though the economy in a global sense may appear to the world to be improving in some areas certainly not in this area of the country. Joe, you continue.

In our industrial/catalog business is going across a number of applications; oil and gas, aerospace, general manufacturing, metal working and where in all of those, they’re not all down the same amount, which is why we are not down as much as some of our competitors that are little more focused. But we are very active in product development and we’re attempting to take market share. So we are doing that continuously. How long the market will be this way, I don’t know, but we’re certainly doing everything we can to pull ourselves out of it and again it’s only part of our market, which is why we are not nearly as much as some of our competitors. I don’t know if that answers your question or not.

One other tidbit, Andrew, for more or less stocks [ph] on accrual. Of late, I would say the last two or three months we have seen a slight and I’ll say slight, but a slight trend change and the volumes have become a little more active. So we feel like maybe it’s starting to pull out a little bit, but it’s a little early to tell, but we think we are starting to see the light at the end of the tunnel, but something we are not there yet, but I think it’s a little more encouraging. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay. I’ll back out into the queue. Before I do, Joe could you just repeat I think the D&A, the non-cash depreciation amortization aggregate for the quarter. In the CapEx I think I was talking internally and I didn’t catch that number.

Yeah, I don’t think every number I gave was for the first nine months, but the depreciation and amortization for the nine months was $1,176,000. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay. I will now back out, but please come back to me. I have more revenue as well as margin questions.

Okay.

(Operator Instructions) We will go back to Andrew Shapiro. Please go ahead. Andrew E. Shapiro – Lawndale Capital Management LLC: All right, I will ask a few more and let me know if someone’s in the queue. On Hy-Tech, you had this major customer I guess declined year-over-year for the third quarter in a row, presumably is this something that you expect that’s going to anniversary, this is global inventory destocking and usually when someone reduces their inventory, they do so until they get it inline and then once that inventory is inline, they would presumably increase their purchase velocity back to some kind of normal throughput level. When do you think that occurs with this customer?

I would say Andrew that this customer is having, it’s a double whammy. They had an over inventory situation, because the bottom fill out of the market, which is what we were just referring to in the industrial space. So it’s a double whammy. They reduced their inventory which reduced our purchases and they are still suffering very hard, very emphatically with the bad business, their bad numbers themselves. So it’s a double whammy and we don’t see with them, we have seen momentary lifts of a couple of weeks in a positive way, but for the most part, we don’t envision anything changing for that company in the next, certainly by the end of the year and I would imagine into early next year as well. I mean we maybe wrong, but we see no reasons to change our opinion as of now. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay. And on ATP, revenue set is positively impacted by a significant order shift to an existing customer. Was this merely a timing issue or is this customer seeing sustained increase in their business and if its sustained increase, do you think this translate into further increases to [indiscernible] continued levels for P&F?

It was not a timing issue. While it was a customer, it was relatively small customer until recently and our relationship with them going forward is going to be bigger than it was historically.

But again Andrew, keep it in perspective, it’s a smaller part of our business and a small customer in that business, so there is not game changing, but it’s certainly something positive Andrew E. Shapiro – Lawndale Capital Management LLC: Okay, great. I will back out and before I ask the Nationwide revenue question…

Yes, there is nobody else on the queue.

There is nobody else. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay, great. Talk about Nationwide. You are giving out this bath and hardware and I think you have explained in your press release pretty adequately about basically, this is a low return on asset business and we’re moving out of it. It sounds as if you have a buyer, but it hasn’t closed for the sale of the remaining inventory in the business line, is that what I can take from this?

Yeah. We believe that the Kitchen and Bath transaction Andrew are little close this week, but there can be no assurances of course because anything can happen, but there are no assurances that it will occur, but we do believe that it will be this week. We checked this morning before we came on the call if it had anything or change beforehand, but hopefully we’ll have some news this week – again no assurance because things could change, but as of now we are very confident.

Yes, I also wanted to interject that even if that doesn’t close, the plan B if you will on the shutdown doesn’t leave this in a materially different place at the end of the year. I mean, it’s a little better to close the deal with the company we’ve talked to, but we really have a plan B to get out of the inventory without too much of a – but frankly I don’t think any adjustment to the asset base.

Yes, and I think there’s going to be a beneficial tax impact of the lead if we close the transaction when we sell it.

Yes, let me go into that and I think we may have gone into this in prior quarters. I can’t recall exactly, but just to remind everyone going all the way back to the Woodmark transaction, we were amortizing every year about $1.4 million in what I’ll call excess purchase price in tax parlance, and then really call it goodwill. I guess the new call is goodwill. So that was the tax shield – is the tax shield and this Kitchen and Bath is the last remnant of the original Woodmark acquisition. And per tax code, should we exit Kitchen and Bath either through sale or liquidation, all the remaining tax shields, which were scheduled to go all the way out through the middle of 2019, are brought forward immediately. And are available to us to the full extent to shield taxes to the extent they can be used and I’m going to say that number is around $7.9 million beginning with the fourth quarter. And so if it closes, the next $7.9 million in taxable income will not result in a tax cash payment if you will. And then even if it doesn’t close by year-end, whatever is left of that we’ll call it $7.5 million would be available to us beginning in 2014 to shield them, taxable income. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay. So regarding that, is there – when you have this unamortized goodwill that then gets accelerated and written off, this is only on a tax basis, the GAAP goodwill is already written off or do you have any of this GAAP already?

This is all tax basis. The GAAP present is already taking place for GAAP purposes and it’s all been – those adjustments have all been made. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay. And then is this amount allowed to be carried back to the last year’s worth of gains or because or you had still an NOL and then aren’t any gains in the last…?

Yes, we had an NOL and we haven’t paid cash taxes in any material amount in a number of – frankly since 2009 I think. So there is no place to send it back to. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay. So nothing ascended back to and this in a sense gets added to your remaining NOL?

It’s not real. I don’t know that I technically call it an NOL. I guess it effectively is the same in terms of function. It’s just an acceleration of the amortization. Andrew E. Shapiro – Lawndale Capital Management LLC: Right. I know it’s not an operating loss, but you are adding it back to the bucket of not paying tax.

: Yes. And where you’ll see it on the balance sheet, is you’ll start to see the deferred tax asset shrink with each quarter as we have profit and roughly that change we’ll equate to the aftertax change or the aftertax cash benefit. Andrew E. Shapiro – Lawndale Capital Management LLC: But all of this will be added to the deferred tax asset I guess in Q4?

No, no there is no addition to the deferred tax asset. Deferred tax asset actually already referenced this and would have been there through 2019. So now that tax asset most of it will go away in the next year and a half. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay, so it would have come down at a slower pace?

Yes, that’s exactly correct. Andrew E. Shapiro – Lawndale Capital Management LLC: And now – the tax code allowing you to write this thing aftertax purposes, now when you have profit it will chew it up a lot quicker.

Exactly, and there is certainly on a discounted cash flow basis you can see the benefit of that. Andrew E. Shapiro – Lawndale Capital Management LLC: Yes, no, no this is – that’s great, especially and if you continue to generate profits and grow this profits. So when you give a third party to buy this and it’s not clear to me was there a price announced. Is there much cash proceeds that we’re going to receive in return to this inventory coming off our books?

No, as I said earlier the delta between actually selling it to single buyer and liquidating it is frankly marginally different. Andrew E. Shapiro – Lawndale Capital Management LLC: So you’re getting a liquidation price for it?

I would say a little better than that. We do not expect in either situation to have a write-off. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay.

There will not be an expense. Andrew E. Shapiro – Lawndale Capital Management LLC: Can you give a range or a level of how much inventory we’re talking about that will leave books in a sense be converted to cash?

About $0.25 million. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay.

And then we’re going to collect the AR ourselves. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay. And this AR is of similar quality to your other AR.

Yes, we have no reason to believe that it’s not fully collectible. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay. Now when you talked about in the past your acquisition programs and the things that you were looking to acquire, this quarter you have referenced now to, I guess an expense hit on a potential acquisition that you now do not expect to recur. How is this expense broken down if it is broken down or is it just like a buyer representative fee or what is it that’s legal et cetera and what was the factors that caused the deal to fall by the way side of EBITDA [ph] pricing issue?

The answer to your first question, it’s legal and accounting expense. Legal and consulting expenses, exclusively. It really is a much else there. There were no fee to do a broker or anything like that and we really can’t get into the details of why it didn’t happen other than it’s not going to happen or we don’t’ anticipate that it’s going to happen. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay, can you give us some insight, since it is the closest you’ve gotten to a new deal in a while, and your acquisition strategy is one that’s a great concern to us. Can you give a little bit of insight as to the product line or the – and the kind of a divisional area you were seeking presumably that’s synergistic purchase because I think you mentioned you’re only looking for synergistic purchases?

We are and it would have been just that and but we have a confidentiality that’s going to effect, so we can’t really – our lawyers tell us we can’t really discuss it, but it would have been in our areas, in our business areas. Andrew E. Shapiro – Lawndale Capital Management LLC: But you can’t – you are prohibited from saying that it’s in towards your Hardware segment or towards your Tools segment.

For strategic reasons we don’t want to say which one, you can just – we generally want to make it clear that it was highly synergistic and much in line with our strategy it’s just unfortunate where it kind of we ended up.

And Andrew as a shareholder I can assure you that we’re not going anywhere outside of our businesses, any acquisitions that we look at. Andrew E. Shapiro – Lawndale Capital Management LLC: Just to get a feel for how far the prospect of the acquisition had matured or gone down the pipe, have it gone to the point where it’d been in the front of the Board and the Board had approved your pursuit of this particular company and business?

Sure, absolutely. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay.

Just to be 100% clear, yes, the Board was fully involved, they were on board. We were into the point where the transaction was kind of got what I’ll call final approval just ahead of the closing, we went to that point. But the Board was fully on board and we didn’t expect any issue from them in terms of final approval. Andrew E. Shapiro – Lawndale Capital Management LLC: Yes, no, no I understand. Now Nationwide, it was harder that you guys had incremental air freight costs to meet higher costumer demand and is this I think historically you didn’t always do things in air freight but I have been here long enough that I have seen air freight expenses incurred when you’re bringing some stuff in, rather than I guess by the boat. Does that mean this was last minute or unexpected surge in demand.

Yes, it was a good problem. It was an unexpected surge in demand from customers. Yes.

And it was on fairly high margin products, so it was absolutely worse doing. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay. all right and then I think my associates might be kicking in here in a second regarding this question about some variable costs and the change in your SG&A. But before that occurs I wanted to understand I guess this issue of the legal and there is a legal deal regarding the busted real estate transaction of past that’s all behind us now. There is no more appeals, there is no more easier expenses or perspective.

Correct.

Correct. Andrew E. Shapiro – Lawndale Capital Management LLC: …and asset award.

Yes, we are done with that. That’s finished. We got our pound of flesh, we didn’t get our two pounds of flesh and there has been nothing – so there is no more remedies for us. Andrew E. Shapiro – Lawndale Capital Management LLC: Yes, okay, all right. Let me back out in the queue real briefly in case there is someone and we’ll come back to us to finish up.

Okay.

(Operator Instructions) And Mr. Shapiro you’re open. Please go ahead. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay, so looks like we estimate G&A costs here that they increased by – well they look little over $1 million – $1.034 million. You mentioned that about $750,000 of that was variable cost. So is this mostly due to promotional spend these variable costs or is this something else?

No, as we said I believe that it’s primarily related to the Home Depot business which has a lot of expenses below the line warranty, freights, advertising, and there is other variable costs, commissions, those are sizable figures, and as you can see it’s a sizable increase in revenue. So it’s almost all that. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay. And gentlemen you talk about new automotive products that were launched in the marketplace and of the revenues in the automotive. This is in Florida Pneumatic have had a nice jump. Do you feel this is a sustainable level of new revenues or it’s an initial inventory stocking of the new products. And what were some of these new products if there are any notable ones?

I think that market in general is in pretty good shape – I don’t think it’s suffering the way industrial is. I don’t know that I could point any new products, but we continue to make new offerings of products that are in the development pipeline in that market much likely do for retail and industrial in general. So I think it’s sustainable and I don’t think I’d point to any one particular product and/or customer. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay. On the import duties issue, is there any other update on the case of the change in the previous estimates? Can you explain what is going on this quarter with respect to the duty’s issue. And that is not behind us or what?

It’s – we are still waiting for that Andrew. We’ve been told that we will be hearing in a relatively short-term time with their response. So we have done everything we can do. At this point we paid the initial fine in full. We are just waiting if we’re in the penalty stage at this point and we are still waiting in the informant, and our lawyers have advised us to run its course with them.

And one other thing I’d add our understanding from speaking to the attorney experience in this area is even when there is an initial indication of a penalty. That is usually not where it ends up. There is usually some level of negotiation and I suspect that would take some time as well. So even if we got an indication, I am not sure we’d be comfortable saying what it was because our understanding is the ultimate results can be drastically different and lower than where thing start. But we understand we are suppose to hear soon. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay. And as the company has continued to generate profits. Its’ continuing to be able to shield those profits from tax expense. And you are accumulating more cash in effect and paying down debt. And you are now getting out of a line of business that you have given us at least that adequate information and you represent is lower turn on assets. So our –presumably our return on assets of the company are to improve from getting out of that niche of the hardware business and this low debt to equity ratio that is built up by, I want to ask as I do each quarter in case there may be some movement favorably on this. Your debt to equity ratio now the Company is certainly taking into account. The swings that could happen in the cyclical business I think this is the lowest debt to equity ratio, I have seen in years and maybe ever in my long history of investing in the company. A twofold question was your perspective acquisition that you were looking at. I guess we call it in a price range for which your debt to equity ratio would have been brought back up with the acquisition of the business or the company of the size you were taking with.

I am not sure how to answer your question Andrew other than say we were going to borrow the entire acquisition price. As we would always do and certainly would have raised the debt to equity and would have may be answers your question on why we sort of keep the powder dry because we want to be able for just such an opportunity. Andrew E. Shapiro – Lawndale Capital Management LLC: And is there any way to provide in broad range the size of the acquisition that was contemplated, whether it’s in revenue size, cash flow generation size or a purchase price size, a range that we could get a feel for what was being contemplated?

Again, Andrew, I mean we’ve been prodded by our attorneys to that we had a non-disclosure confidentiality and that’s not something that just we do, so as much as I’d happy to share with you… Andrew E. Shapiro – Lawndale Capital Management LLC: Okay, let me rephrase my question because I want you to remain compliant. You and the Board have approved and you are pursuing an acquisition program that is targeting companies and assets in synergistic lines of business or synergistic ways to the Company’s existing operating. In terms of the scope and size of the acquisitions you feel that your balance sheet and cash flow generation could swallow and accommodate in terms of – you’re not going to be comfortable with 100% debt to equity ratio. We’re currently at a 25% debt to equity ratio, okay. So in terms of the range in which the Board has given you guidance in terms of the size of acquisition you might pursue, can you give us guidance to that general acquisition strategy?

Let me try to answer it, and this is frankly my opinion and I don’t know that the Board would disagree and I’ll let Richard chime in. I know that in the past we’ve done deals or combined deals that have gotten us up to a senior debt to EBITDA level of four to one or higher. That is not where we’re going. Any acquisition or I’ll call them, series of acquisitions, I don’t believe I’m comfortable. I don’t think the Board is comfortable with getting up to that level of debt anymore. So I’m not sure that answers your question, but it’s going to be south of that, senior debt to EBITDA.

We’re not going to – we’re not going to ever again put our company in harms way with an acquisition. Having said that, we’re also going to do things that are going to make totally financial improvement sense for us as a growing concern. So I don’t know if that answers your questions, Andrew, but and just to go one step further since I know where you’re going and frankly, I’d be disappointed if we didn’t hear this question every quarter, but I can assure you with over – help the question, I bring it up at every single meeting that we have at the Board, every last one with one question. It’s a permanent part of our agenda and so I promise you that with or without your prodding we always address it, but this is exactly why at this point the Board has felt not compel to do anything other than to keep our options open because we feel that we’re in a very, very good financial state and a very good place to make acquisitions and that’s where up to the last Board meeting, which was three months ago, we decided that that continues to be our emphasis. But having said that, we will at our next meeting before year-end talk about it yet again as we always do and we will continue to until the background of the scenery changes. Andrew E. Shapiro – Lawndale Capital Management LLC: Right. When you say talk about it, I haven’t raised it yet. So for the…

We know what it is. We’re talking about the dividends or sectors of the company. So… Andrew E. Shapiro – Lawndale Capital Management LLC: A dividend or a buyback if you are not able to have an acquisition and you are bringing your debt equity ratio down so low.

Right, right. Andrew E. Shapiro – Lawndale Capital Management LLC: Okay.

And I know that goes to our thing, but our acquisition posture hasn’t change. We’re still out there. We are looking aggressively and hopefully something will…

And yet again we doubled our efforts because we really – we were very excited about what were going and so we’ve redoubled our efforts and we have more people working on it and we’re going to accomplish our goal. I can assure you that. Andrew E. Shapiro – Lawndale Capital Management LLC: So Joe, you gave guidance or actually [ph] I don’t want to use that word. You gave a little bit of input as to a range of a debt coverage level that the company wouldn’t go to. That only implies on whether it was a debt purchased acquisition, if you did an acquisition with all cash, for example, that wouldn’t impact your debt coverage of what was acquired.

But Andrew, we don’t have any cash. Andrew E. Shapiro – Lawndale Capital Management LLC: Yes, well, I’m trying to get a handle of – are we talking about revenues that would be acquired equal in size to the company’s $80 million or so in trailing 12 month revenues, are we talking about something that would be $40 million, $20 million, what do we…

Well, I mean, Andrew, I’m not quite sure how to answer the question. I mean I suppose it depends on the operating margin at what we’re buying, if it’s a very low operating margin I guess. It could be a very high revenue number. Andrew E. Shapiro – Lawndale Capital Management LLC: Fair enough. You’re right. So let’s go straight down to the cash flow to be acquired and I guess the multiple range you’re willing to pay. Are we talking about an acquisition in the size of $20 million, $30 million, $50 million, what’s the sweet spot of acquisition size that you guys are looking at? Obviously you would go smaller.

I mean I would say the sweet spot is not bumping up against the very limit of our…

Covenants.

No. Well, covenants of course, but the availability under our line between the availability of what we have and the availability of what we would acquire since we were an ABL borrower. I mean I’d say the sweet spot is a good chunk of that availability, but not all of it. I don’t know if that helps you? Andrew E. Shapiro – Lawndale Capital Management LLC: Yes, that does. If you can share as of September 30, what’s the availability under your lines?

I’m going to say $17 million to $18 million. I’d say… Andrew E. Shapiro – Lawndale Capital Management LLC: Some decent fraction of that plus whatever decent fraction of the ABL ability that are being acquired with it.

Yes, that’s right and it could be two acquisitions that… Andrew E. Shapiro – Lawndale Capital Management LLC: I understand because it could always be smaller. I’m just trying to understand with respect to size, in balancing, you could get something that big that might be as acceptable as a dividend or a buyback. So I’m trying to balance issues.

But, Andrew, also say this. I mean, there could be very small ones that are just very strategic and easy to do that don’t you have much availability. There could be something larger where we – that that we choose it to get into the whole availability and maybe get some sort of small fixed note or something with the bank. I mean we could to do. I don’t know the time what we are looking at, but… Andrew E. Shapiro – Lawndale Capital Management LLC: Obviously the small ones aren’t as easy as you think because you have been on the power for well over a year and nothing has come around.

Yes, I mean nothing has happened. Nothing closed. That’s sure. Andrew E. Shapiro – Lawndale Capital Management LLC: Yes. So it’s not easy. The small ones are no easier than the large ones.

You’re right.

We’re trying to answer part of your questions that we really – we’re trying to give you answers, but we don’t have the crystal ball and we really don’t know, but that’s a sense of where we are trying to… Andrew E. Shapiro – Lawndale Capital Management LLC: Yes. So, well, through the ABL the line of credit, scope and size and the other things that does actually giving me a better feel for size and range that we might be able to refer to you. You referred your deal too, so we did in the past and we’ll see if we can find some synergistic for you.

Appreciate. Thank you.

All right. Thank you.

No other questions.

Any other questions?

Okay.

And gentlemen with that, we have no further questions at this time. I’ll turn the conference back to you.

Okay. Thank you, operator and thank you all for being on our call today. We hope we shed some light on everything for you and we will be on our call with the even numbers in early 2014. Thank you all. Have good day.

Ladies and gentlemen, again that does conclude today’s conference. We do thank you all for joining.