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 Shapiro – Lawndale Capital Management

Good day and welcome to the Second Quarter 2014 Earnings Conference. Today’s conference is being recorded. At this time, I would like to turn the conference over to Richard Goodman, The Company’s General Counsel. Please go ahead, sir.

Thank you, Operator. Good morning and welcome to P&F Industries Second Quarter 2013 Earnings Conference Call. With us today from management 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, 2013 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 Horowitz. Good morning, Richard.

Good morning, Rich. Thank you so much and good morning to everybody on the call. Thank you all for joining us this morning. I will begin today's call with a brief summary of the Company's results of operations and earnings per share up to the three and six-month periods ended June 30, 2014 and how that is compared to the same period in the last year. I will then ask Joe Molino to briefly review key cash flow information and provide an update on the events affecting the company, after which we will move to the our usual 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 second quarter 2014 results only. As such, I request that you confine all questions and comments to those relating to the Company's results but in this case due to the events of the last 45 days with our acquisitions we will certainly answer questions we are permitted to relating to our acquisitions as well. Thank you for your cooperation. Our consolidated revenue for the three and six-month periods ended June 30, 2014 were $80,268,000 and $34,200,000 compared to $90,476,000 and $40,185,000 respectively for the same periods in 2013. Revenue for our tool segment for the same periods in 2014 were $12,693,000 and $23,884,000 compared to $30,221,000 and $28,850,000 respectively for the three month and six month periods in 2013. Much of our decrease in our tools revenue was due to the ongoing decline of revenue from Sears as well as a Q1 2013 one-time THD opening order which was obviously a little inflated to fill the channels. I wish to point out that our current shipping to the Home Depot is up slightly for the second quarter of 2014 compared to 2013 as we continue to encompass but we do continue to encounter sluggishness during the second quarter at our industrial and catalogue sectors. Revenue for the three and six month periods ended June 30, 2014 for our hardware segment which today consist of only Nationwide industry which is 5,575,000 and 10,316,000 compared to 6,255,000 and 11,335,000 for the same three and six month periods in 2013. I would note that the decline in revenue for both periods is due to our decision to sale the Kitchen and Bath product line in November of last year. On a year-to-date basis, all three remaining product lines in Nationwide have reported increases in revenue when compared to 2013, nationwide continues to expand its core product line of fencing, hardware tool of growing, national customer base as well as to provide new innovative products. The company’s consolidated gross margin for the three month period ended June 30th this year declined 40 basis points to 36.1% from 36.5% during the same period last year. Specifically for the tool segment, second quarter of 2014 gross margin was 35% compared to 35.9% for the same period last year. For the hardware segment, gross margin improved 100 basis points at 38.7% from 37.7% in the second quarter of last year. Our gross margin on year-to-date basis is up 10 basis points compared to the same six month period ended June 30th 2013. The tools gross margins during the six month period ended June 30, 2014 was 36% down from 36.6% due primarily to customer and product mix. While hardware’s six month gross margin increased by 150 basis points to 39.2% from 37.7%. The increase is due primarily to elimination of the kitchen and bath provision which of course again we saw last year. Our selling in G&A expenses for the three and six-month periods ended June 30, 2014 was $5,556,000 and $10,783,000 compared to $5,559,000 and $12,169,000 for the same period the prior year. Stated as the percentage of revenue, SG&A for the three and six month period ended June 30, this year was 30.4% and 31.5% compared to 28.5% and 30.3% during the same period last year. The most significant items impacting our second quarter of 2014 SG&A were approximately $290,000 of professional and legal fees incurred in the connection with our two acquisitions that took place in July and August of this year resulting in an increase over the prior year of $219,000. This increase in expenses was partially offset by lower compensation cost, non-cash stock-based compensation in an adjustment to our allowance for doubtful accounts calculation. Line items are contributed to the decline in SG&A in the six month basis include such things as lower variable course included as a result of lower retail revenue. If you recall during the first quarter of last year, we have got to ship the initial rollout to the Home Depot. In addition, during the first quarter of last year, we incurred a one-time fee of $700,000 also in connection with this rollout. Legal and professional fees during the six month period ended June 30 this year increased over the prior year by $271,000 and these were partially offset by reduction in bare debt expense. Our interest expense during three and six month periods ended June 30 this year declined to 88,000 and 117,000 from 139,000 and 270,000 incurred during the same period to prior year due to primarily lower average borrowing. Taking the above into consideration, our income before income taxes for the three and six month periods in the June 30, 2014 were $959,000 and $1,678,000 compared to $1,404,000 and $2,397,000 for the same period in the prior year. Of course highlighting the differences in the second quarter a big chunk of that being the legal expenses. Our tax expense for the three and six month periods ended June 30, 2014 were $387,000 and $644,000 compared to $529,000 and $901,000 for the same periods a year ago. Our basic and diluted earnings per share for the three month period ended June 30th was $0.15 compared to basic earnings per share of $0.24 for the three month period last year with diluted earnings per share of $0.23 for the same period in 2013. For the six-month period ended June 30, 2014, basic and diluted earnings per share were $0.28 and $0.27 respectively compared to $0.41 and $0.39 for the same periods in 2013. At this time I would like to hand the call back to Joe. Go ahead Joe.

Thanks Richard. Capital expenditures during the six-month period ended June 30, 2014 were $446,000 compared to $303,000 in the same period in 2013. Significant non-cash items affecting our cash flows from operations during the first six months of 2014 were depreciation and amortization of $740,000. Differed income tax of $612,000 and amortization of other intangible assets were $116,000. Stock-based compensation expenses were $144,000 and amortization of debt issue cost of $43,000. Significant components of our cash used in our operating activity of $1,359,000 was include an increase in the accounts receivable of $1,132,000 decrease in accounts payable and accrued expenses payable of $650,000 and $506,000 respectively, and a decrease in our net inventories of $2,017,000. With that I’d like to turn the call back over to Richard, Richard?

Thank you, Joe. And again I would if we miss if I didn’t acknowledge all of our employees in the management from all of our companies for their outstanding jobs and helping to grow our company during these continuing unsettling times. A core value has been established at P&F and we will continue to be devoted to improving shareholder value. That’s the end of our report today and now we’re happy to answer any questions any of you may have, operator?

Thank you. (Operator Instructions) and we will take our first question from William Keaston (ph) who is a private investor. William Keaston – Private Investor: Morning gentlemen. Can you quickly comment on your capital allocation plan, dividends, stock repurchases et cetera to stock is trading at a significant discount to book value and just wondering if you guys are planning on returning capital to shareholders, thanks.

We have discussed that on another call, William. And we continue to discuss that at all of our Board meetings when the board come and amongst ourselves as well and when the time comes, we would look at it and consider for each quarter but there is no decision in that regard for a divided at this point. We have said on I believe last call that if we continue to have a very excess cash position towards the end of this year, at the end of this year, then we would have to give serious considerations to that. But our priority was to grow the business which is what we are doing. So I can’t comment about anything but I can only say that you have heard something that we consider at all time and we will continue to consider. William Keaston – Private Investor: Sure. And can you guys just comment a little bit about available liquidity at this time, you have a $20 million revolver and what was the current balance as we speak?

We have about $10 million available to us underlying after the borrowings related to the two acquisitions. William Keaston – Private Investor: And can you guys disclose the acquisition prices for those two acquisitions?

Yes they were in the press releases. They were roughly...

$10.85 million.

I am sorry $10.3 say that again?

We call $10.4 million for exhaust technologies and approximately $2 million for universal tool. William Keaston – Private Investor: Perfect. Thanks guys.

You are welcome.

(Operator Instructions). We will take our next question from Andrew Shapiro with Lawndale Capital Management. Andrew Shapiro - Lawndale Capital Management: Good morning. A few questions if I could start with regarding the acquisitions and then I will back out but I have several others on quarter’s results. Actually, one quick question so we can calculate this and come back to with, Joe can you go over again the second quarter’s depreciation and amortization total numbers to those non-cash expense numbers.

Sure. Andrew Shapiro - Lawndale Capital Management: You don’t have the detail, just the summary would be fine for the second quarter or is that for the first half?

We give it for the first half and see how the back out Q1. So the depreciation number for the first six months was $740,000. The differed tax change was $612,000, the intangible amortization was $116,000, stock-based comp was 144 and amortization of the dead issue cost was $43,000. Andrew Shapiro - Lawndale Capital Management: Okay and so on the acquisition questions here. Can you give us some background on the Board and management’s decision and thought process for these two acquisitions? What were the most important factors that lead you to believe that Exhaust Technologies are AIRCAT and Universal Air Tool Company were the best investments for the company to make?

Sure Andrew. This is Richard. I will say a few things and then Joe can add if anything is wrong. We think that both of these companies were direct hits, as the terminology we use, direct hits into the businesses that we presently have. The Exhaust Technologies is in the automotive business which we thought that we need a big presence in that side of the air tool business they have as a much more sizable impact in that business than we do, plus they have in technology with a noise of battling and all that other things that they do. They have a technology for that. So we felt that we would expand our line, we could put that technology into our products and we would be having an entrée, a bigger entrée into the automotive field. We have been working on this acquisition on and off for a couple of years and finally came to fruition for us. As for the UT1-UK, it give us a new market and that was going to give AIRCAT Exhaust Technologies a market, another market as well that they didn’t have. And we felt that it was very good extension of logical and good extension for us to go into that side of the world with these products. Joe, do you want to add anything to this?

I think that’s good. I would add that the automotive market has been a very steady market in air tools over the years, very solid margins, reasonably good growth and as Richard said had a very small presence and after these two certainly in the U.S. we have got a very nice presence now and with the acquisition of Universal Tool in the United Kingdom, they are fairly dominant player over there. And it gives us a (inaudible) hole in Europe. And it gives us an opportunity to possibly sold some other tools over there that we have been trying to sale, going through the backdoor to various other customers but now we have got a direct operation over there and that should a little easier. But we have to walk before we run but certainly we see down the road some real opportunities that there were not available to us prior to it.

And I might add also with the Exhaust Technologies, lot of savings will go down to the bottom to us due to the fact that date that we closed on the business we closed that operation, we moved all the inventory over into Florida Pneumatic and we also took no employees. So it was just a volume adder to our business there. A very-very good fit, we could not have joined them any better frankly. Andrew Shapiro - Lawndale Capital Management: So when should we expect the accretive nature of then of these acquisitions to hit our books? In the first quarter that it has been acquired?

Yes.

Yes. Andrew Shapiro - Lawndale Capital Management: Go ahead Joe.

I was just going to say they will show up on to the automotive line item in our breakdown of revenue in the Qs. Andrew Shapiro - Lawndale Capital Management: Right and because of the synergistic fold you just described, I am assuming it’s going to impact an improve on the margins on that area quite a bit?

In the margin area, Joe can comment a little further on that but the margin area that we have distinctions here. The retailers is nowhere near the margin and industry enjoys and automotive is somewhere in the middle. So I don’t know the margin were increased but certainly dollars were increased.

The average should go up but, Richard is right it’s somewhere between retail margin and industrial margins, probably little closer to the industrial margin. So yes I would anticipate non-accretive. Certainly I would except the margins to improve overall once they blended in. Andrew Shapiro - Lawndale Capital Management: Okay. Now will you guys release any information on the sales revenue and profitability of the two acquired company so that we may better understand the valuation attractiveness and return attractiveness?

In the footnote to the Q disclosure, we have information regarding what the business would have look like beginning in January 2013 with the six month period ended June 30 that (inaudible) so you will be able to see again, going back in time, the revenue improvement would have been in that income. And again those are pro-forma they are not audited, obviously there are estimates in there but I think it’s a reasonable description of what you could expect to see.

Yes, and just in general, just to give you a framework, we can’t really discuss the other stuff at that lowest (inaudible) but just in general you can expect somewhere on an annualized basis somewhere between $9 million and $10 million of increased revenue between the two acquisitions. Andrew Shapiro - Lawndale Capital Management: Okay, can you provide a range as to the purchase model that you felt you paying on an EBITDA basis?

I can’t get into that other than to say that the effect of multiple was substantially less than the multiple that was received by the sellers.

(Operator Instructions) and we have no further questions at this time.

We are going to assume that Andrew got disconnected and he will be calling back and to see if he have other questions. So we will wait for him to come back and hopefully he will back shortly.

(Operator Instructions)

We apologize for the delay but we do know that Mr. Shapiro has other questions. I mean we don’t want to cut it short for anybody else on the call. So we ask you to have to some patience with us for a few minutes while he get back hopefully. And at some point he is not back on then we will conclude the call and the round of the questions.

(Operator Instructions) Andrew Shapiro - Lawndale Capital Management: Are we on the call with you or not?

Yes, now you are on the call with us. We waited for you Andrew because we know you had other questions. Andrew Shapiro - Lawndale Capital Management: Thank you. So I was asking a question and I don’t know what happened but we get cut off. I was asking about, when you guys evaluated and give these acquisitions, you were looking at EV-EBITDA kind of multiples, can you provide a range for your criteria or the range of your EV-EBITDA multiples you paid for these two businesses.

We can’t really do that but I can tell you two things. The effective multiple that we paid are substantially less than the multiples received by the two selling shareholders which were pull market multiples. You can get out a little bit by taking a look at the footnote that will be in the Q coming up in the couple of days. You can back into a multiple of source but we are not going to disclose it specifically. Because frankly it’s a little bit of an estimate to begin with. Andrew Shapiro - Lawndale Capital Management: Was the multiple less than what your own company staff is trading for on their EV-EBITDA.

These are going to be accretive. Yes, this will add value to P&F is that your question? Andrew Shapiro - Lawndale Capital Management: I am looking at from an EV-EBITDA. I appreciate that will to EPS because of it will...

No, I didn’t say that. I said it will add value to the corporation. This should increase the value of P&F shareholders not just the earnings per share. So I guess the answer is yes. Andrew Shapiro - Lawndale Capital Management: You preferred (inaudible) 19,000 in cost for the two acquisitions in the second quarter, how much more do you expect to charge-off to the acquisition cost to the rest of year?

We would expect roughly a comparable amount for the rest of the year, roughly. Andrew Shapiro - Lawndale Capital Management: What do you guys plan to do to utilize this AIRCAT technology across your other lines?

Well again as I said, we are going to walk before we can run, we want to simulate this and then we are going to allow the various engineers to take a look at it and see if they can incorporate any of this into our current totals and obviously the marketing people will also have to decide at that something that they feel the market would pay up for. So that process is ongoing, it isn’t why we bought it. It’s the number one reason we bought AIRCAT but it is a nice asset to have. Andrew Shapiro - Lawndale Capital Management: Okay. And does Universal, is it solely UK or does it have existing channels and existing legs into the rest of Europe?

Ireland certainly but very little in rest of Europe but that opportunity does exist. Andrew Shapiro - Lawndale Capital Management: Okay and they were some of what a distribution business, were they previously a customer PNF at all?

Yes.

Yes they were, small customers. Andrew Shapiro - Lawndale Capital Management: About how much were you selling into them before you made this acquisition?

Very-very, de minimums.

Any material number.

Probably knew them. We know them for a while.

We known them well but the company is actually have some history going back 30 years the founder of Universal Tool was quite close to the founder of Florida Pneumatic. Andrew Shapiro - Lawndale Capital Management: Right. I mean I have remembered this name in the years past. Was the increase of approximately $10 million of cash this quarter versus prior quarter? At all relate to the timing of the acquisitions or it was just your regular seasonal working capital.

It’s our seasonal working capital primarily. Andrew Shapiro - Lawndale Capital Management: I don’t know what happened when I left – I am offering the back-out into the queue because I do have the other questions but these were mostly ones ahead on the acquisition but I want to ask about the quarter but I will back out in the queue if people got waiting.

I don’t believe there are people are waiting and so you can continue. Andrew Shapiro - Lawndale Capital Management: Alright. So according to your statement, revenues were down in part because the economy is down and all that. To what extent is the serious decline attributable to reduce store count versus lower same-store sales and is there anyone or other products you see that have sub-planted TNF inside of the Sears?

The answer is no. Nobody is sub-planted us inside the Sears. We are still (inaudible) and we enjoy very good relationship with them. We shift to their warehouses so we have no way of really knowing whether to shift that out to an individual stores. But I think we all read the headlines and they are going through some difficult time. I don’t know if we have any color that we can even add if we even knew, anything else about Sears other than their continuing difficulties.

I just too thought Andrew, it has been our experience that Sears is closing the unprofitable and less important stores. So while this is anecdotal, I don’t anticipate that the store closing has really affected our revenue in great deal and second we continue to believe as we see Sear’s decline and now have a little more insight into the Depot revenues that we are seeing Sears customers move to Home Depots, a great deal of them. Andrew Shapiro - Lawndale Capital Management: Okay and you said in the statement as the most significant factor to the decline in Florida Pneumatics’ retail revenue was the initial rollout to all of the Home Depot stores in the prior year, the channel fill initially compared to what you think now as a normal level of replenishment orders?

Yes. Andrew Shapiro - Lawndale Capital Management: So at current level of orders that we are doing, a level that you would expect to see going forward them with Home Depot?

I would say the answer to that question would be yes. This is our second year and so we are still learning a little bit about their trends and they are still learning a little bit about their trends and their ordering patterns. So with the copy out that we have limited knowledge, limited experience with numbers only having been here for year and half thus far, I will say the answer seems to be, we all think the answer is yes. Andrew Shapiro - Lawndale Capital Management: Okay. You talk about the loss of large low-margin air filter customer prior year. I am just wondering why did the margins for the six months ended June then actually decrease, if was a large low margin customer?

It was a large low margin customer and that was a small part of our business. So it was in a relative sense and again it was nothing that would draw any attention if there is something that we have to say for public (inaudible) being as you probably know the rules of the SEC but it is a very small, in the overall PNF well, overall Florida Pneumatic, it’s a very small number at all. Andrew Shapiro - Lawndale Capital Management: Okay and so we have heard about lost customers in the statement and other things, what have you done recently to add customers and how successful has that effort been?

At which subsidiary? Andrew Shapiro - Lawndale Capital Management: I would say Florida Pneumatic, Flash High Tech where reference to loss customers has been highlighted.

Andrew, I think different than you, we have a lost customers. In any fluid business, there are ongoing customers that are coming or customers that go but we haven’t really lost any customer of any consequence. Some of our customers are showing lesser sales but whatever the reason but not losing to other people with the exception of in the catalogue areas, some of our customers have widen their offerings to their customers. So in that way other competitors have gotten in but we haven’t lost customers at all. Andrew Shapiro - Lawndale Capital Management: Okay. So let’s focus on the industrial catalogue where we are having the issue or if the catalogue that was like most sizable, dollar value decline as the segment. You correctly pointing out that there is alternative products are now being offered, in some sense if a loss of market share certainly a loss of catalogue space, relative to it, they are diversifying way, is there any particular reason or feel that you get as to why that's occurring and your opportunities of gaining that share?

Yes, again Joe can comment on this as well but these are catalogue houses and industrial houses, they are trying to increase their volume. So they want to attract more customers so they are spending their offering, it simply that. They want to expand their offerings so they get – they appeal to a wider customer base and so some of those people go and they advise some other products than ours and it will go the other way as well as time goes on. We are not losing our grip at the customer, we are not falling, it’s nothing like that. It’s just that they make their own decision that they want to have a wider product offering. So naturally when you do that, you do – sometimes people that go and try other things for a period of time, may come back, it’s a very an exact sign. I know if you can add anything to that Joe.

I would just say that we are, the area that we are focusing on where we think we can get some traction and are getting some traction is their space manufacturing. We feel really good about our ability to continue to add to the breadth of our line and we are certainly starting to make some in-roads. These are some of the larger trends to competitors so that is what we are focused on because we think that's where the opportunity lies for us and we have got – we had some very success and a lot a few years growing that.

And I might add that another reason for why we made these acquisitions, to spread it out ourselves, that's what we are doing as well. Andrew Shapiro - Lawndale Capital Management: So does that get you some of that catalogue space back by buying AIRCAT?

It may. But certainly we are going to presented to them but it’s a possibility, I don’t know I would think that they would probably want to put new one and we would be offering it to them. Andrew Shapiro - Lawndale Capital Management: So, currently it isn’t those catalogues?

It’s currently what I am sorry? Andrew Shapiro - Lawndale Capital Management: So AIRCAT currently wasn’t already in the catalogues where you acquire basically pages.

Not to my knowledge.

Not in the way we are.

Okay but with the catalogue, I don’t know how familiar you all with this but catalogue reviews once a year, different times of year for each one of them. So when they come up with anniversaries, we are going to obviously present to that as well as other things that we have at that time. Andrew Shapiro - Lawndale Capital Management: And you stated in your release you believe the funds spend on improvements and renovations declined when comparing last year, what metrics are you using to make that determination and what prevents the company from that capturing and offsetting that with some of the benefit of the growing new office starts and sales in that channel?

I am not sure we have said anything about not investing in renovations may be you have stated in different way, I am not sure we are following this. Andrew Shapiro - Lawndale Capital Management: In the press release you talked about how the – the new homes starts are up but you then commented about how improvements and renovations spending was down and that was part of the reason for the weakness in your segment.

Okay so now I think I understand. So Nationwide, there are two drivers for Nationwide, our new homes start and renovations. We don’t know those numbers exactly but for arguments they call it 50:50, 60:40 housing starts versus renovation. So to the extent one is up and the other is down and that will hand the counterbalance each other. I think that's what we are trying to say. Andrew Shapiro - Lawndale Capital Management: Alright and then you have talked in the past about active product development and want an increased market share, this is in Florida Pneumatic line as well as frankly new products at Nationwide being the key driver for your success and growth. What new products have been or being developed in the upcoming period here and for the ones that are recently introduced do you have any indicators of the success of those past investments?

I don’t think we are going to discuss anything that hasn’t been launched but once again all of the things that we introduced into aerospace have done extremely well and the margins are excellent and I don’t have the statistics but I had its reasonable time ago, at Nationwide I believe the substantial portion of today’s revenues or products we didn’t even have five years ago, a substantial portion like half, it’s a big number. I mean, Andy that's the success of our development program.

Andrew if you are looking for us to say we have next iPhone 6 about to come out, I don’t think that's the nature of our business. I think the nature of our business is, customers sometimes they will say GFV could get an impact range with the, that's got a better handle or lighter this or more torque or whatever I will go back and sales people talk to our engineers about it and we will develop it and then of course with our factories where we think are improvements but there is no, I mean there is a list of very long list and actually four/three of our businesses that we gone for a quite a while that they are doing for a new products and as Joe says a great majority, I am going to say 70% of that five years ago that growth in the Nationwide is an example was different. When we made that decision to emphasize the fencing area but I don’t think there is a—if you asking about this is A product that's going to be a game-changer I think it’s, we think basis and we do (inaudible) so they are all mature industry so I don’t think you have that kind of dynamic frankly. Andrew Shapiro - Lawndale Capital Management: What’s your current status or estimate of where you are tax non-operating losses are now down to?

4.6 million. Andrew Shapiro - Lawndale Capital Management: Thanks. You are after the question, you got ready at this time, I appreciate that.

Once in a while even (inaudible). Andrew Shapiro - Lawndale Capital Management: Are you guys done acquiring for now with these, do you feel these are sufficiently large that you need to swallow them and learn to walk before you run or there are more acquisition activity that you have on the plate?

As a large and interested stockholder which we appreciate and we know that you are, you can understand and appreciate that it’s an ongoing thing and we continue to evaluate other opportunities that will fit nicely into our company. Of course we can’t discuss any of these opportunities at this time but if and when the time comes that there is something more to discuss we will make a prompt public announcement at that time. Having said that, what you are saying about simulating these companies, both these companies Florida Pneumatic division so if we find another opportunities. I think they have enough under their belt right now to simulate and do work but if find other things as a working line and we see other things on other division, we will certainly endeavor to do that. Andrew Shapiro - Lawndale Capital Management: Okay and I will back out in the queue in case someone is accumulated because I know I have asked a lot questions but..

Yes, there is nobody else on the queue. We can see Andrew there is nobody else here. Andrew Shapiro - Lawndale Capital Management: Okay well then I have a—then I just want to get down into the SG&A questions and to also understand either trends of where we are going here. So one of the things I want to understand if I can is if one or more of the performance targets for senior executive compensation is based on revenue growth or if the focus is entirely on from EBITDA down towards the bottom-line?

To my knowledge, it’s my bottom-line generated. Andrew Shapiro - Lawndale Capital Management: So the revenue growth and revenue targets are not part of the performance thresholds for the performance bonuses?

Not up to this point. Andrew Shapiro - Lawndale Capital Management: Okay and with respect to the more bottom-line numbers that are used in the performance targets, is there a revision that is done on those performance thresholds as a result of acquisitions that could not have been known at the time that performance targets were established?

The answer is yes. So in other word, I want to make this up. If we were projected to make $5 million in a year with no acquisitions then we acquire two companies or five companies or whatever it is then we make $10 million, the bonus is based on the all $5 million threshold. Is that answer your question? Andrew Shapiro - Lawndale Capital Management: It’s adjusted for the fact you did consummate the acquisition and the reached target should be—is established.

Yes, the hurdle goes on. Is that answers your questions? Andrew Shapiro - Lawndale Capital Management: That's fine. Now similarly with the focus on controlling and reducing SG&A consistent with weaker gross profit dollars and with the economy as you have still have stated being so unsettling and bad, can you explain why the Board’s comp committee thought it wise and competent to open the current CEO comp agreement before its expiration and increase the guaranteed base compensation portion of the arrangements?

Andrew, I can’t speak for the comp committees’ rationale for what they did other than what we discussed in the past with you or anybody else is interested but I really couldn’t speak to anybody else honestly. Andrew Shapiro - Lawndale Capital Management: I mean because you are large shareholder, to me it doesn’t make sense to have adjusted the base the guaranteed base comp I appreciate making adjustments to performance targets as arm links negotiations. I don’t really like the idea of agreements opened before it’s expiration rather than it’s just a made part of the upcoming contract which is now only five months away, it just need to – have to reopen it and director have actually done that and then adjusted the guarantee based compensation, to me is mind boggling?

Okay, Andrew as we discussed earlier this is a Q2 call but I will answer... Andrew Shapiro - Lawndale Capital Management: Q2 SG&A no less, SG&A concern of mine.

If you let me answer the question Andrew but I would appreciate I will give you the one answer and then please go back to other questions you would like to ask about the numbers. I think the only constant that the Board had feeling about was that since actually before the new contract was established, the company was in a very different place and the company has done immeasurably well and as a whole different look to the company and unless couple of years since before the contract went into place and I think that the feeling was in some small manner they would reward I guess in May as we have been talking about. They would reward me in some small way for the enormous turnaround and improvement in the company at that time. Any more than that I can’t address that I really know but I think that was the genesis of the reasoning for it and I even believe that was stipulated in the filing that we made but I am not sure and I am pretty sure was. Andrew Shapiro - Lawndale Capital Management: And I appreciate that would inappropriate item to put inside of performance targets but given the size of the company and the size of the base compensation already it’s just optically even if you call it small and one might refer to it small, optically I think its ridicules but now it shows the inexperience of your comp committee members, I really disappointed.

I take great exception for that comment but you are entitled to your opinion and I respect it. And we all do and we all hear you and thank you for it but I don’t necessarily we think have to agree with you. Anyhow, please if we could just move on from that, that would be good. Andrew Shapiro - Lawndale Capital Management: Okay, I mean we had opportunity to share our views on it. That's what I want and that's one reason we voted you with hold on your comp committee members as well because of it. Can you give us a feel for your customer concentration in our Florida Pneumatic or continental tool line as series as decline in Home Depot has increased, I am trying to get a better feel to what level and you have also diversified and made some acquisitions to what level Sears is now of the segment and of the overall business? Are they below 10%?

Are they below 10%?

No, they are not below 10%.

But they are dramatically lower than they were in near test. Andrew Shapiro - Lawndale Capital Management: I mean you got Home Depot and you have got another business?

Yes. Andrew Shapiro - Lawndale Capital Management: Then I am assuming more of that then they are declined which has caused their percentage to be lower?

I think it’s both. I think they have declined and I think we have grown and we have made a very constant position, several years ago to take away the depends from the Sears and that was the reason why we were so intend and are continue to be so intend to make our position in other areas so that we can decrease our dependence retail period. So it’s not just Sears, it’s also from Home Depot and though they are very important to our business I mean I appreciate that business and are committed to continuing with them as long as they will have us which is probably a long time, we certainly want to go other aspects of our business to take away the percentage of the dependence compared to our total revenue.

So that's another very good reason that we did what we did. Andrew Shapiro - Lawndale Capital Management: I don’t have a problem with what I know of your acquisitions, I don’t have a problem with it and it seem visibly very synergistic but I have seen very synergistic acquisitions in this company in the past and I am obviously most concerned about the valuation multiple put in and the clock ticking. Now I usually look and I learned to look at this company and the success of your acquisitions approximately two years from the date of closing to three years and...

Okay, we should all live in the well Andrew and be here two or three years and then we will talk about that but I have to day that you have made that comment to us in the past and it’s an unfair and not only unfair, it’s an untrue comment. Andrew Shapiro - Lawndale Capital Management: Comps don’t lie, so...

Andrew please let me continue for one moment if you would. So, I asked Joe Molino in anticipation of that comment which is to make just some very broad basic concepts to you, so others on this call can understand where we are coming from and what we think we have accomplish, so Joe I am going to leave it to you to briefly and globally at 40,000 ft just give that answer.

Sure. Since Andrew I am sure you are hanging your head on the Woodmark and PST, I am not going to talk about those because those businesses were bought ahead of the greatest depression and housing start in the history of company but let’s talk about some of the other things we have bought over the years. So Florida Pneumatic was purchased between 1984 and 1986 for a price of around $7 million and it has returned to the shareholders on a pre-tax basis of $150 million since that time. Andrew Shapiro - Lawndale Capital Management: I don’t know Richard’s watch but go on.

That was all on Richard’s watch, I beg your pardon? Andrew Shapiro - Lawndale Capital Management: His fathers. [Multiple Speaker]

No sir, I have been the President since I believe ’86 and before that I was way below that and the answer is no. That was my acquisition, I found the company and we bought the company. Me, me, me. Okay, if you want to dig about me personally, I am more than happy to do that with you on a different form and more than happy to do that but let’s talk about the facts as they are. I bought that company and continue Joe.

Green was a better watch, we made a couple of – we got our money out it and we decided we didn’t want to be in that business anymore. Paid around 12 million, got a little more than that back. Nationwide we purchased for 12.5 million and to date have returned $28.4 million to shareholders on a pre-tax basis and we are still sitting on an extremely valuable asset. High Tech was purchased for $21.6 million in 2007 and in only seven short years this has returned almost $22 million on a pre-tax basis this year. So I'll let you figure out those turns Andrew but we back to different with you now. Andrew Shapiro - Lawndale Capital Management: I appreciate you talked about the EBITDA or whatever they generate but you not counting the CapEx and you certainly have not counting the interest expense on the borrowing used on it. They are accretive perhaps but on a return and on asset of point of view and return on equity of view I don’t think there is glory defined as you represent. So we can agree with this.

Andrew, I think you are just intend on making points that are somewhat questionable, so with your major points we gave our comments back I am sure anybody on this call can understand that what we are doing in this company is good and if you don’t think so I apologize for that but next question? Andrew, I am okay. You are not going to convince to me and I am not going to convince you so I respectfully ask you ask any other questions you would like to ask. Andrew Shapiro - Lawndale Capital Management: Undervalued and in general, pursuing in the direct direction, if you think about the summary of all of my criticism. [Multiple Speakers]

Andrew, I am asking you to please any other questions about the second quarter I really would appreciate that. Andrew Shapiro - Lawndale Capital Management: No more questions, thank you gentlemen.

Thank you so much.

Operator any other questions?

And currently there are no more questions in the queue.

Okay, so thank you all for being on the call today and we look forward to continuing to grow this business and increase value to the company which is what we have been doing for quite some time and we are going to continue to do that and thank you for your time today everybody. Thank you operator.

Ladies and gentlemen, that does conclude today’s presentation. Thank you for your participation.