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        9.    SALE OF AKAPP OPERATIONS

On September 29, 2002 we adopted SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 states that the results of operations of a component of an entity that has either been disposed of or is classified as held for sale shall be reported in discontinued operations if both the following conditions are met: (a) the operations and cash flows of the component have been (or will be) eliminated from the ongoing operations of the entity as a result of the disposal transaction and (b) the entity will not have any significant continuing involvement in the operations of the component after the disposal transaction.

In November 2002 we sold our Dutch subsidiary, AKAPP, to a third party. We sold the AKAPP operation for $4.9 million in cash, which included the payment of a $2.6 million inter-company loan and the receipt of $2.3 million in cash. As a result of this transaction we recorded a $0.7 million gain on disposal, which in accordance with SFAS No. 144 has been reported as Income from Discontinued Operations. The results of operations related to AKAPP for fiscal 2003 have also been recorded as Income from Discontinued Operations.

        10.    RESTRUCTURING CHARGES

In January 2003 we adopted FASB Statement No. 146 Accounting for Costs Associated with Exit or Disposal Activities, which generally requires that a liability for costs associated with an exit or disposal activity be expensed as incurred. Exit costs primarily consist of future minimum lease payments on vacated facilities, facility closure costs and facility consolidation costs. Employee separation costs consist primarily of severance costs. At each reporting date, we will evaluate our anticipated restructuring and other charges and accruals for employee separation costs to ensure that the amounts are still appropriate.

In the quarter ending June 28, 2003 we announced the closing of our Aero-Motive facility in Kalamazoo, Michigan. During the first quarter of fiscal 2004 we completed the sale of the Aero-Motive government hose reel product line and recorded a gain of $1.2 million. In addition to having sold two small product lines (including the hose reel product line sold in the fourth quarter of 2003) that did not align strategically with our current operations we will consolidate and integrate the remaining manufacturing operations into our facility in Juarez, Mexico, which will improve our overall operating efficiencies. The office operations will be integrated with our Northbrook, Illinois facility. The closing of this facility will terminate the employment of 111 total employees, which includes sixty-four plant employees and forty-seven office employees. As of the quarter ended June 26, 2004 seventy-four employees have left the company and it is estimated that the Kalamazoo, Michigan facility will remain open during a portion of the fourth quarter of fiscal year 2004.

For the nine months ending June 26, 2004 we recorded restructuring and other related charges of $1.2 million, which related to the closing of our Aero-Motive facility. For the quarter ending June 26, 2004 we recorded $0.1 million of restructuring charges. The Aero-Motive restructuring program is now almost complete and we have recorded $3.3 million of total restructuring charges. In addition, related to the Aero-Motive restructuring, we anticipate in the fourth quarter an additional pension settlement charge, estimated to be approximately $0.3 million. The pension settlement charge was triggered by the reduction in employment levels that require us to recognize past gains and losses to our pension plan accounts. This restructuring charge, including the anticipated pension settlement charge, is composed of the following:

The costs included as a one-time termination benefit are the estimates of severance benefits that will be incurred as the Kalamazoo facility is closed. Included in Other associated costs are the estimated pension settlement charges of $0.6 million. In accordance with SFAS No. 144 we have accelerated the depreciation on those assets

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that are expected to be excess when the facility is closed. We have included $0.2 million of accelerated depreciation in other associated costs for the nine months ending June 26, 2004. During the quarter just ended accelerated depreciation expense was reduced by $0.4 million to reflect changes in the estimated net realizable value of the remaining assets. Legal fees, system conversion costs, incidental salaries and travel expense represent the balance of other associated costs. There are no anticipated contract termination costs related to this project.

The following table details the activity in the Aero-Motive restructuring accrual accounts for the nine months ending June 26, 2004:

        11.    INCOME TAX EXPENSE

Our effective rate for the quarter ending June 26, 2004 was 34.5% compared to 28.4% for the quarter ending June 28, 2003. The relatively low effective tax rate for the third quarter of 2003 was due mainly to the favorable tax treatment of a capital gain in Canada. Our effective tax rate for continuing operations was 26.5% and 30.2% for the first nine months of 2004 and 2003, respectively. The decrease in our effective tax rate for the first nine months of 2004 was due mainly to the utilization in the first quarter of 2004 of capital loss carryforwards (which previously had a valuation allowance reported against them) to offset $0.4 million in tax on capital gains from the Aero-Motive product line sale and the change in the effective Canadian tax rate (due to a change in tax legislation) on deferred tax assets, which resulted in a tax benefit of $0.1 million.

        12.    BENEFIT PLANS

Beginning in April 2003, our post retirement benefit plan was modified to require participants to fund the total cost of the retiree medical program. At September 28, 2002 we had accrued postretirement benefit cost, which was included in our consolidated balance sheet in the amount of $2.2 million. At December 27, 2003 we had no liability for any of these post retirement benefit costs and the reduction of this $2.2 million liability was amortized over the period from April 1, 2003 to December 27, 2003. During the quarter ended December 27, 2003 we lowered our benefits liability account $0.8 million, which represents the last of the amortization of the $2.2 million liability.

The following table provides the components of net periodic benefit cost for our non-union plans for the three and nine months ended June 26, 2004 and June 28, 2003:

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It has been our policy to fund our pension costs by making annual contributions based upon minimum funding provisions of the Employee Retirement security Act of 1974. During 2003 we contributed an additional $2.0 million to increase the funded status of our plan. We made a $0.2 million contribution to our pension plan in the quarter ended June 26, 2004. Related to the Aero-Motive restructuring we anticipate the balance of the pension settlement charge, estimated to be approximately $0.3 million to be recognized in the fourth quarter of 2004. This is in addition to the pension settlement charge that was part of the restructuring charge for the quarter ended June 26, 2004 in the amount of $0.3 million. The charge was triggered by the reduction in employment levels that require us to recognize past gains and losses to our pension plan accounts.

        13.       CONTINGENT LIABILITIES

We are subject to federal and state hazardous substance cleanup laws that impose liability for the costs of cleaning up contamination resulting from past spills, disposal or other releases of hazardous substances. In this regard, we have incurred, and expect to incur, assessment, remediation and related costs at one of our facilities. In 1991, we reported to state regulators a release at that site from an underground storage tank (“UST”). The UST and certain contaminated soil subsequently were removed and disposed of at an off-site disposal facility.

We have been conducting an investigation of soil and groundwater at the site with oversight by the state Department of Environmental Quality (“DEQ”). The investigation indicates that, unrelated to the UST release, additional soil and groundwater at the site have been impaired by chlorinated solvents, including tetrachloroethane and trichloroethylene, and other compounds. Also, our investigation revealed that the previous owners of the site had used a portion of the site as a disposal area. We have remediated the soils in this area but we believe that it is a source of contamination of groundwater, both on-site and off-site. Our investigation indicates that there were releases by the previous owners in areas over which additions were subsequently built. These releases have impacted groundwater that has migrated off-site. We have implemented a groundwater remediation system for the on-site contamination. We continue to monitor and analyze conditions to determine the continued efficacy of the system. We also have implemented a groundwater remediation system for the off-site contamination. We continue to analyze other remedial alternatives for the off-site groundwater contamination and are reviewing these alternatives with the DEQ.

We previously filed a complaint in federal district court seeking contribution from the previous owners of the site for the cost of the investigation and remediation of the site. We settled that litigation through a consent judgment against the former owners. Also, we asserted claims against insurers of the former owners for the amounts specified in the consent judgment. The insurers denied coverage and three of them filed a declaratory judgment action to that effect against us in federal district court. In July 2004 the federal district court entered an Order and Judgment on cross motions for summary disposition resolving the claims in favor of the insurers. We anticipate filing an appeal to the U.S. Court of Appeals for the Sixth Circuit.

We have a reserve for the $1.2 million of investigation and remediation expenses we have estimated to be incurred over the next 14 years to address the environmental issue at our site in Michigan. We based our estimate on the future costs expected to be incurred to investigate, monitor and remediate the site. Our cost estimate continues to be subject to substantial uncertainty because of the extent of the contamination area, the variety and nature of geological conditions throughout the contamination area, changes in remediation technology and the state’s Department of Environmental Quality feedback. Funding this activity will come from operating cash flows and only changes to the reserve estimate will affect the results of operations.

We indemnify certain customers with regard to product liability. We have insurance policies to cover this exposure, which includes a minimal deductible to be paid by us.

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Item 2 – Management’s Discussion and Analysis of Financial Condition
and Results of Operations

Overview

Woodhead Industries develops, manufactures and markets network and electrical infrastructure products engineered for performance in demanding, harsh, or hazardous environments. We are known in the global industrial market by our recognized brands which include Brad Harrison®, SST™, Daniel Woodhead®, mPm®, applicom®, Aero-Motive® and RJ-Lnxx®. Our expertise extends from mechanical, electrical and electronics products to communication software products and technologies.

Woodhead operates from twenty-one locations in ten countries spanning North America, Europe and Asia/Pacific.

Results of Operations

Third quarter fiscal 2004 results compared with third quarter fiscal 2003 results

SALES
Sales in the quarter ended June 26, 2004 were $52.7 million, an increase of 12.8% compared to sales of $46.7 million for the quarter ended June 28, 2003. This increase was due mainly to the increased sales volume in both the Connectivity and Electrical segments and the positive effects resulting from changes in exchange rates of $1.3 million. These results were partially offset by the lost revenue from the divesture of the two Aero-Motive product lines. Recent economic reports indicate the continued expansion in the manufacturing sector and we are continuing to see our customer’s willingness to initiate new projects. This continued economic expansion and growth programs initiated at the beginning of the fiscal year are starting to generate revenue improvements. For the third quarter 2004 Connectivity sales were $37.8 million, an 11.6% increase over the $33.9 million in sales reported for the third quarter 2003. Favorable foreign exchange rates accounted for $1.3 million of this increase but we also experienced solid growth in our Europe and Asia businesses due mainly to continued economic recovery and increased market successes. These gains in the Connectivity segment were partially offset by $2.8 million in lower revenue from a North American OEM account in the data communication industry. Connectivity sales represented 71.8% of our total third quarter sales, which reflects our continued focus on the growth of this segment. Electrical sales were $14.9 million in the quarter ended June 26, 2004 and $12.8 million last year, a 15.9% increase. This increase was due mainly to the strong performance of our U.S. Electrical business, which was partially offset by $0.8 million of lost revenue from the divestiture of two Aero-Motive product lines.

SALES BY REGION
In the United States, sales were $28.8 million in the third quarter of fiscal 2004 compared to $26.6 million in the third quarter of 2003. We recorded 45% and 43% of our revenues in foreign currencies during the third quarters of fiscal 2004 and 2003, respectively. Our international revenue was up 18.7% in the third quarter of fiscal 2004 when compared to last year. This increase was mainly due to the strong operating performance of our businesses in Europe and Asia and the favorable impact from foreign exchange rate changes. In constant dollars, sales in Asia and Europe increased 53.0% and 7.6%, respectively, when compared to the third quarter of 2003. In constant dollars North American sales increased 9.0% in the third quarter of 2004 even with the divestiture of the two Aero-Motive product lines and the lower revenue from the data communication customer.

BACKLOG
The backlog of unfilled orders stood at $18.8 million at the end of this quarter as compared to $15.3 million a year ago, which translates to 23 and 21 average days of sales for the third quarters of 2004 and 2003, respectively. This 22.4% increase in backlog is consistent with our improved business trends.

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GROSS PROFIT
Gross profit as a percent of sales was 38.4% in the third quarter of fiscal 2004 and 35.6% last year. We are starting to show improvements in our gross margins as our efficiencies and sourcing programs gain traction and our product mix improves. The increased sales volume also contributed to the operating efficiencies at our manufacturing facilities. Decreases in our LIFO reserve requirement increased our gross profit by $0.3 million in the third quarter of fiscal 2004 compared to $0.2 million in the third quarter of 2003.

OPERATING EXPENSES
Operating expenses were $16.6 million in the third quarter 2004 compared to $14.3 million in the third quarter of 2003. These expenses were 31.5% of sales in the third quarter of 2004 compared to last year’s 30.6%. Operating expenses in the third quarter of 2004 included a restructuring charge of $0.1 million, which included a $0.3 million pension settlement charge compared to restructuring charges of $1.2 million in the third quarter of fiscal 2003. These restructuring charges relate to the migration of operations from our Aero-Motive subsidiary to Juarez, Mexico. The Aero-Motive restructuring program is almost complete with 2004 year to date charges of $1.2 million. Exchange rate changes increased operating expenses by $0.3 million when compared to the second quarter of 2003. Also contributing to this increase was the planned investment in sales and marketing initiatives, which includes the hiring of additional experienced sales professionals in North America. Contributing to the year over year increase was a $0.7 million credit in the third quarter of 2003 resulting from the reduction in our liability for retiree medical benefits.

SEGMENT OPERATING INCOME
Income from operations in the third quarter of 2004 was $1.6 million in the Connectivity segment compared to $1.7 million in 2003. This decline was due to higher operating expenses, which includes the operating expense credit related to retiree medical benefits recorded in 2003, which more than offset the benefit of higher revenue and improved gross margins. The Electrical segment recorded income from operations in the third quarter of 2004 of $2.3 million compared to $25 thousand in 2003. This increase was due mainly to the increased volume and productivity along with the $1.0 million decrease in restructuring charges in the third quarter of 2004 when compared to the same period in 2003. These increases were partially offset by the $0.8 million of lost third quarter revenue that resulted from the divestiture of the two Aero-Motive product lines.

MISCELLANEOUS INCOME / EXPENSE
Other expense in the third quarter of 2004 was $0.5 million compared to other income of $1.5 million in the third quarter of 2003. This year over year change was primarily due to exchange rate changes on a U.S. dollar loan that our Canadian subsidiary used to acquire the assets of SST in early 1998. Partially offsetting the 2003 other income related to the exchange gain was a $0.3 million for a penalty associated with a value added tax ruling in Mexico.

NET INCOME
Net income in the third quarter of 2004 was $1.6 million compared to $2.0 million in 2003. Our effective tax rate was 34.5% and 28.4% for the quarters ending June 26, 2004 and June 28, 2003. The relatively low effective tax rate for the third quarter of 2003 was due mainly to the favorable tax treatment of the capital gain in Canada. Since most of the product costs and operating expenses in our foreign subsidiaries are incurred in local currencies, the impact of exchange rate changes on reported net income was partially mitigtated.

Nine months fiscal 2004 results compared with nine months fiscal 2003 results

SALES
Sales for the nine months ended June 26, 2004 were $148.6 million an increase of 10.3% compared to sales of $134.7 million for the nine months ended June 28, 2003. This increase was due mainly to the strengthening business climate that started to occur in the first quarter and the positive effects from changes in exchange rates. The $3.4 million of lost revenue from the divestiture of the two Aero-Motive product lines and the loss of a portion of a North American OEM account in the data communication industry, which represented a $6.0 million reduction in revenue, partially offset the increases. For the first nine months of 2004 Connectivity sales were $107.3 million, a 13.9% increase over the $94.3 million in sales reported for the first nine months of 2003. Favorable foreign exchange rates accounted for $7.0 million of this increase but we also experienced solid growth in the Germany, Italy and Japan. Connectivity sales represented 72.2% of our total sales for the first nine months of 2004

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compared to 70.0% for the same period last year, which reflects our increased focus on the continued growth of this segment. Electrical sales were $41.3 million for the nine months ended June 26, 2004 and $40.5 million last year, a 2.0% increase. This increase was due mainly to the strong performance of our U.S. Electrical business, which was partially offset by $3.4 million of lost revenue from the divestiture of two Aero-Motive product lines.

SALES BY REGION
In the United States, sales were $82.5 million for the nine months ended June 26, 2004 compared to $81.2 million for the nine months ended June 28, 2003. We recorded 44% and 40% of our revenues in foreign currencies during the first nine months of 2004 and 2003, respectively. Our international revenue was up 23.6% in the first nine months of fiscal 2004 when compared to last year. This increase was mainly due to the strong operating performance of our businesses in Europe and Asia and the favorable impact from foreign exchange rate changes. In constant dollars, sales in Europe and Asia increased 9.7% and 34.8%, respectively, while North American sales increased 1.9% despite the lost revenue from the data communications business and the divestiture of the two Aero-Motive product lines.

GROSS PROFIT
Gross profit as a percent of sales was 37.7% for the first nine months of fiscal 2004 and 36.6% last year. We are starting to show improvements in our gross margins as our efficiencies and sourcing programs gain traction and our product mix improves. Increased sales volume also contributed to the operating efficiencies at our manufacturing facilities. Decreases in our LIFO reserve requirement increased our gross profit by $0.6 million in the first nine months of fiscal 2004 compared to an increased gross margin due to LIFO of $0.4 million last year.

OPERATING EXPENSES
Operating expenses were $49.0 million in the first nine months of 2004 compared to $42.4 million in the first nine months of 2003. These expenses were 33.0% of sales in 2004 compared to last year’s 31.5%. Operating expenses include a restructuring charge of $1.2 million related to the migration of our operations from our Aero-Motive subsidiary to Juarez, Mexico in for the nine months ended June 26, 2004 and June 28, 2003. Exchange rate changes increased operating expenses by $2.2 million when compared to the first nine months of 2003. Also contributing to this increase was the planned investment in sales and marketing initiatives, which includes the hiring of additional experienced sales professionals in North America. This investment also includes a branding study to maximize our brand name, the implementation of a new E-Catalog, the improvement of our marketing tools and programs to increase customer awareness.

SEGMENT OPERATING INCOME
Income from operations for the nine months ended June 26, 2004 was $2.6 million in the Connectivity segment compared to $3.2 million in 2003. This decline was due to the mix shifts and higher operating expenses, which includes the investment in the new marketing initiatives and an increased sales force. The Electrical segment recorded income from operations in the first nine months of 2004 of $5.0 million compared to $3.5 million in 2003. This increase was due mainly to the increased volume in our Electrical business, which was partially offset by the $3.4 million of lost revenue that resulted from the divestiture of the two Aero-Motive product lines.

MISCELLANEOUS INCOME
Other income in the first nine months of 2004 was $1.0 million and consisted mainly of the $1.2 million gain on the sale of the Aero-Motive government hose reel product line. Other income for the first nine months of 2003 was $2.6 million and consisted mainly of a $3.1 million gain realized from exchange rate changes on a U.S. dollar loan that a Canadian subsidiary used to acquire the assets of SST in early 1998. Partially offsetting this gain was a $0.3 million penalty for a value added tax ruling in Mexico and a $0.6 million loss from foreign exchange in our Canadian operations.

DISCONTINUED OPERATIONS
In the first quarter of 2003 we sold our AKAPP operations for $4.9 million in cash. This sale resulted in a gain of $0.7 million and was recorded as Income from Discontinued Operations. The results of operations related to AKAPP for fiscal 2003 have also been recorded as Income from Discontinued Operations.

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NET INCOME
Net income in the first nine months of 2004 was $4.6 million compared to $5.7 million in 2003. Our effective tax rate on continuing operations was 26.5% and 30.2% for the first nine months of 2004 and 2003, respectively. The decrease in our effective tax rate for the first nine months of 2004 was due mainly to the first quarter utilization of capital loss carryforwards (which previously had a valuation allowance reported against them) to offset $0.4 million in tax on capital gains from the Aero-Motive product line sale and the change in the effective Canadian tax rate (due to a change in tax legislation) on deferred tax assets, which resulted in a tax benefit of $0.1 million.

Financial Condition, Liquidity and Capital Resources

At June 26, 2004 we had $22.8 million in cash and short-term investments, up from $22.5 million at year-end September 27, 2003. This slight increase in cash was due mainly to our operating cash flow of $8.9 million, which includes the impact from the sale of our Aero-Motive product line offset by spending for inventory, property, plant and equipment and our quarterly dividend.

Working capital in the first nine months of 2004 increased to $54.8 million compared to $48.2 million at September 27, 2003. This increase in working capital was due mainly to the increase in accounts receivable, which were the result of increased sales levels, increased inventory levels to meet increased sales and the favorable exchange rate effects on our foreign assets.

We continue to invest in property and equipment, including new machinery, computer systems and facilities. For the first nine months of 2004 we invested $6.6 million in property, plant and equipment compared to $3.3 million in the first nine months of 2003.

Our cash and short-term investments are available for strategic investments, acquisitions, and other potential cash needs that may arise. We believe that existing cash and short-term investments, together with funds generated from operations, will be sufficient to meet our operating requirements through the current fiscal year.

At June 26, 2004 we had $36.6 million of long-term debt outstanding ($5.7 million shown as current debt) and we had unused credit facilities that provide for additional borrowings of up to $25.0 million. On April 28, 2004 we entered into a new three-year revolving credit agreement with our existing bank that will continue to provide for borrowings up to $25.0 million at the bank’s prime or offered rate. This agreement will expire on April 28, 2007. This new revolving credit agreement states that the maximum ratio of debt to EBITDA, as defined, shall be no greater than 2.5 to 1.0 and minimum interest coverage ratio, as defined, shall be no less than 2.5 to 1.0. We are in compliance with all provisions of our funding agreement. At June 26, 2004 and September 27, 2003 we had no short-term borrowings.

We do not have any exposures to off-balance sheet arrangements, including special purpose entities, or activities that include non-exchange-traded contracts accounted for at fair value.

Contingent Liabilities and Environmental Matters

Our operations are subject to international, federal, state and local environmental laws and regulations. We are party to an environmental matter, which obligates us to investigate, remediate or mitigate the effects on the environment of the release of certain substances at one of our manufacturing facilities. It is possible that this matter could affect cash flows and results of operations. For additional details on the environmental exposure, see Part II – Other Information: Item 1 – Legal Proceedings.

Critical Accounting Policies

The preparation of this Quarterly Report requires management’s judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates.

Our significant accounting policies are described in the Management’s Discussion and Analysis of Financial Condition and Results of Operation in our Form 10-K for the year ended September 27, 2003. There have been no

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significant changes to those accounting policies subsequent to September 27, 2003.

FORWARD-LOOKING STATEMENTS

The Securities and Exchange Commission encourages companies to disclose forward-looking information, so that investors can better understand a company’s future prospects, and make informed investment decisions. This report, and other written and oral statements that we make from time to time, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements set out anticipated results based on management’s plans and assumptions. We have tried, wherever possible, to identify such statements by using words such as “anticipate”, “estimate”, “expect”, “plan”, “believe”, and words and terms of similar substance, in connection with any discussion of future operating or financial performance.

We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties, and inaccurate assumptions.

In particular, such risks include statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, general economic and business conditions, currency fluctuations, and competition.

International-based revenues and substantial international assets result in our exposure to currency exchange rate fluctuations. We continue to evaluate the economic and operational impact of all foreign currencies, including its impact on competition, pricing, and foreign currency exchange risks. There is no guarantee, however, that all problems have been foreseen and corrected, or that no material disruption will occur in our businesses.

Growth in costs and expenses, changes in product mix, and the impact of acquisitions, restructuring, divestitures and other unusual items that could result from evolving business strategies could affect future results. Changes in the U.S. tax code and the tax laws in other countries can affect our net earnings. Claims have been brought against us and our subsidiaries for various legal, environmental, and tax matters, and additional claims arise from time to time. It is possible that our cash flows and results of operations could be affected by the resolution of these matters.

Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements.

This discussion of potential risks and uncertainties is by no means complete but is designed to highlight important factors that may impact our outlook. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise.

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Item 3 – Quantitative and Qualitative Disclosures about Market Risk

In our global operating activities and in the normal course of our business, we are exposed to changes in foreign currency exchange rates, which may adversely affect our results of operations and financial condition. We seek to minimize those risks through our regular operating activities and, when deemed appropriate, through the use of derivative financial instruments. We use financial instruments to selectively hedge our foreign currency risk and do not use financial instruments for speculative purposes.

In 1998 we entered into a foreign currency swap agreement with an AA- rated counter-party to hedge a portion of our cash flows from our Italian subsidiary. We base the fair value for our cross-currency swap on the total cost estimate to terminate the agreement. The fair value of the swap at June 26, 2004 was recorded as a $0.9 million liability.

$36.6 million of our long-term debt is denominated in U.S. Dollars and carries fixed interest. We base the fair value of our long-term debt on market, or dealer quotes. The difference between fair and carrying values of our financial instruments, other than the swap, were not material at the balance sheet dates.

Item 4 – Internal Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. This information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. Our management, including our principal executive officer and our principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures within 90 days of the filing date of this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective in alerting them on a timely basis to material information required to be disclosed in our periodic filings.

There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation referenced in the foregoing paragraph.

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PART II – OTHER INFORMATION
Item 1 – Legal Proceedings

We are subject to federal and state hazardous substance cleanup laws that impose liability for the costs of cleaning up contamination resulting from past spills, disposal or other releases of hazardous substances. In this regard, we have incurred, and expect to incur, assessment, remediation and related costs at one of our facilities. In 1991, we reported to state regulators a release at that site from an underground storage tank (“UST”). The UST and certain contaminated soil subsequently were removed and disposed of at an off-site disposal facility.

We have been conducting an investigation of soil and groundwater at the site with oversight by the state Department of Environmental Quality (“DEQ”). The investigation indicates that, unrelated to the UST release, additional soil and groundwater at the site have been impaired by chlorinated solvents, including tetrachloroethane and trichloroethylene, and other compounds. Also, our investigation revealed that the previous owners of the site had used a portion of the site as a disposal area. We have remediated the soils in this area but we believe that it is a source of contamination of groundwater, both on-site and off-site. Our investigation indicates that there were releases by the previous owners in areas over which additions were subsequently built. These releases have impacted groundwater that has migrated off-site. We have implemented a groundwater remediation system for the on-site contamination. We continue to monitor and analyze conditions to determine the continued efficacy of the system. We also have implemented a groundwater remediation system for the off-site contamination. We continue to analyze other remedial alternatives for the off-site groundwater contamination and are reviewing these alternatives with the DEQ.

We previously filed a complaint in federal district court seeking contribution from the previous owners of the site for the cost of the investigation and remediation of the site. We settled that litigation through a consent judgment against the former owners. Also, we asserted claims against insurers of the former owners for the amounts specified in the consent judgment. The insurers denied coverage and three of them filed a declaratory judgment action to that effect against us in federal district court. In July 2004 the federal district court entered an Order and Judgment on cross motions for summary disposition resolving the claims in favor of the insurers. We anticipate filing an appeal to the U.S. Court of Appeals for the Sixth Circuit.

We have a reserve for the $1.2 million of investigation and remediation expenses we have estimated to be incurred over the next 14 years to address the environmental issue at our site in Michigan. We based our estimate on the future costs expected to be incurred to investigate, monitor and remediate the site. Our cost estimate continues to be subject to substantial uncertainty because of the extent of the contamination area, the variety and nature of geological conditions throughout the contamination area, changes in remediation technology and the state’s Department of Environmental Quality feedback. Funding this activity will come from operating cash flows and only changes to the reserve estimate will affect the results of operations.

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PART II – OTHER INFORMATION
Item 6 – Exhibits and Reports on Form 8-K

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SIGNATURES

Under the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, this report was signed on behalf of the Registrant by the authorized persons below.

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