UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-K

 

(Mark One)

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-34495

Ladish Co., Inc.

( Exact name of registrant as specified in its charter )

Wisconsin (State of Incorporation)		31-1145953 (I.R.S. Employer Identification No.)
5481 S. Packard Avenue
Cudahy, Wisconsin		53110
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (414) 747-2611

Securities Registered Pursuant to Section 12(b) of the Act: None

Securities Registered Pursuant to Section 12(g) of the Act:

Title of each class		Name of each exchange on which registered
Common stock, $0.01 par value		Nasdaq

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Registration S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The aggregate market value of voting stock held by non-affiliates of the Registrant was $356,004,315 as of June 30, 2010.

15,707,552
(Number of Shares of common stock outstanding as of March 8, 2011)

None.

 

 

PART 1

Item 1. Business

General

Ladish Co., Inc. (“Ladish” or the “Company”) engineers, produces and markets high-strength, high-technology forged and cast metal components for a wide variety of load-bearing and fatigue-resisting applications in the jet engine, aerospace and industrial markets. Approximately 85% of the Company’s 2010 revenues were derived from the sale of jet engine parts, missile components, landing gear, helicopter rotors and other aerospace products. Approximately 33% of the Company’s 2010 revenues were derived from sales, directly or through prime contractors, under United States government contracts or under contracts with allies of the United States government, primarily covering defense equipment. Although no comprehensive trade statistics are available, based on its experience and knowledge of the industry, management believes that the Company is the second largest supplier of forged and cast metal components to the domestic aerospace industry, with an estimated 25% market share in the jet engine component field.

Products and Markets

The Company markets its products primarily to manufacturers of jet engines, commercial business and defense aircraft, helicopters, satellites, heavy-duty off-road vehicles and industrial and marine turbines. The principal markets served by the Company are jet engine, commercial aerospace (defined by Ladish as satellite, rocket and aircraft components other than jet engines) and general industrial products. The amount of revenue and the revenue as a percentage of total revenue by market were as follows for the periods indicated:

		Years Ended December 31,
		2008								2009								2010
		(Dollars in millions)
Jet Engine Components		$	238				51	%		$	193				55	%		$	199				49	%
Aerospace Components			124				26	%			114				33	%			143				36	%
General Industrial Components			107				23	%			43				12	%			61				15	%
Total		$	469				100	%		$	350				100	%		$	403				100	%

Manufacturing

Ladish offers one of the most complete range of forging, investment casting and precision machining services in the world. The Company employs all major forging processes, including open and closed-die hammer and press forgings, as well as ring-rolling, and also produces near-net shape aerospace components through isothermal forging and hot-die forging techniques. Closed-die forging involves hammering or pressing heated metal into the required shape and size by utilizing machined impressions in specially prepared dies which exert three-dimensional control on the heated metal. Open-die forging involves the hammering or pressing of metal into the required shape without such three-dimensional control, and ring-rolling involves rotating heated metal rings through presses to produce the desired shape. Investment casting involves the creation of precise wax molds which are dipped, autoclaved and cast to create near-net components for the aerospace industry. The Company’s precision machining services focus on the milling and turning of components for the aerospace industry.

Much of the Company’s business is capital intensive, requiring large and sophisticated forging, casting, machining and heating equipment and extensive facilities for inspection and testing of components after formation. Ladish believes that it has the largest forging hammer, isothermal press and ring-roll in the world at its plant in Cudahy, Wisconsin. Its largest counterblow forging hammer has a capacity of 125,000 mkg (meter-kilograms), and its ring-rolling equipment can produce single-piece seamless products that weigh up to 350,000 pounds with outside diameters as large as 28 feet and face heights up to 10 feet. Ladish’s 4,500-ton, 10,000-ton and 12,500-ton isothermal presses can produce forgings, in superalloys as well as titanium, that weigh up to 2,000 pounds. Ladish qualified a new 12,500-ton isothermal press in 2010. Much of the domestic forging equipment has been designed and built by Ladish. The Company also maintains such auxiliary facilities as die-sinking, heat-treating and machining equipment and produces most of the precision dies necessary for its forging operations. The Company considers such equipment to be in good operating condition and adequate for the purposes for which it is being used.

Marketing and Sales

The product sales force, consisting primarily of sales engineers, is supported by the Company’s metallurgical staff of engineers and technicians. These technically trained sales engineers, organized along product line and customer groupings, work with customers on an ongoing basis to monitor competitive trends and technological innovations. Additionally, sales engineers consult with customers regarding potential projects and product development opportunities. During the past few years, the Company has refocused its marketing efforts on the jet engine components market and the commercial aerospace industry.

The Company is actively involved with key customers in joint cooperative research and development, engineering, quality control, just-in-time inventory control and computerized process modeling programs. The Company has entered into strategic contracts for a number of sole-sourced products with each of Rolls-Royce, Sikorsky and Snecma for major programs. The Company believes that these contracts are a reflection of the aerospace and industrial markets’ recognition of the Company’s manufacturing and technical expertise.

The research and development of jet engine components is actively supported by the Company’s Advanced Materials and Process Technology Group. The Company’s long-standing commitment to research and development is evidenced by its industry-recognized materials and process advancements. The experienced staff and fully equipped research facilities support Ladish sales through customer-funded projects. Management believes that these research efforts position the Company to participate in future growth in demand for critical advanced jet engine components.

Customers

The Company’s top three customers, Rolls-Royce, United Technologies and General Electric, accounted for approximately 47%, 56% and 56% of the Company’s revenues in 2008, 2009 and 2010, respectively. Net sales to Rolls-Royce were 23%, 26% and 26%, United Technologies 15%, 19% and 17% and General Electric 9%, 11% and 13% of total Company net sales for the respective years. No other customer accounted for ten percent or more of the Company’s net sales.

Caterpillar, Boeing, Techspace Aero, Goodrich and Volvo are also important customers of the Company. Because of the relatively small number of customers for some of the Company’s principal products, the Company’s largest customers exercise significant influence over the Company’s prices and other terms of trade.

U.S. exports accounted for approximately 46%, 46% and 43% of total Company net sales in 2008, 2009 and 2010, respectively. U.S. exports to England constituted approximately 25%, 26% and 26%, respectively in the above years, of total Company net sales.

A substantial portion of the Company’s revenues is derived from long-term, fixed price contracts with major engine and aircraft manufacturers. These contracts are typically “requirements” contracts under which the purchaser commits to purchase a given portion of its requirements of a particular component from the Company, and provide the Company with the ability to adjust prices based on raw material price fluctuation. Actual purchase quantities are typically not determined until shortly before the year in which products are to be delivered. The Company attempts to minimize its risk by entering into fixed-price contracts with its raw material suppliers. Additionally, a portion of the Company’s revenue is directly or indirectly related to government spending, particularly military and space program spending.

Research and Development

The Company maintains a research and development department which is engaged in applied research and development work primarily relating to the Company’s forging operations. The Company works closely with customers, universities and government technical agencies in developing advanced forgings, materials and processes. The Company spent approximately $3.1 million, $2.7 million and $3.3 million on applied research and development work during 2008, 2009 and 2010, respectively. Customers reimbursed the Company for $1.3 million, $1.2 million and $1.7 million of the foregoing research and development expenses in 2008, 2009 and 2010, respectively.

Patents and Trademarks

Although the Company owns patents covering certain of its processes, the Company does not consider these patents to be of material importance to the Company’s business as a whole. The Company considers certain other information that it owns to be trade secrets and the Company takes measures to protect the confidentiality and control the disclosure and use of such information. The Company believes that these safeguards adequately protect its proprietary rights and the Company vigorously defends these rights.

The Company owns or has obtained licenses for various trademarks, trademark registrations, service marks, service mark registrations, trade names, copyrights, copyright registrations, patent applications, inventions, know-how, trade secrets, confidential information and any other intellectual property that is necessary for the conduct of its business (collectively, “Intellectual Property”). The Company is not aware of any existing or threatened patent infringement claim (or of any facts that would reasonably be expected to result in any such claim) or any other existing or threatened challenge by any third party that would significantly limit the rights of the Company with respect to any such Intellectual Property or to the validity or scope of any such Intellectual Property. The Company has no pending claim against a third party with respect to the infringement by such third party of any such Intellectual Property that, if determined adversely to the Company, would individually or in the aggregate have a material adverse effect on the Company’s financial condition or results of operations. While the Company considers all of its proprietary rights as a whole to be important, the Company does not consider any single right to be essential to its operations as a whole.

Raw Materials

Raw materials used by the Company in its metal components include alloys of titanium, nickel, steel, aluminum, tungsten and other high temperature alloys. The major portion of metal requirements for forged products are purchased from major metal suppliers producing forging quality material as needed to fill customer orders. The Company has two or more sources of supply for all significant raw materials, with the exception of certain nickel-based powder alloys where the Company is currently dependent upon a single source of supply.

The titanium and nickel-based superalloys used by the Company have a relatively high dollar value. Accordingly, the Company recovers and recycles scrap materials such as machine turnings, forging flash, solids and test pieces (“by-products’). The proceeds from the disposition of by-products are taken as a reduction to the Company’s cost of goods and are not treated as a part of net sales.

The Company’s most significant raw materials consist of nickel and titanium alloys. Its principal suppliers of nickel alloys include Carpenter Technology, Special Metals Corporation and Allegheny Technologies, Inc. (“ATI”). Its principal suppliers of titanium alloys are Titanium Metals Corporation of America (“Timet”), ATI and RTI International. The Company typically has fixed-price contracts with its suppliers.

In addition, the Company, its customers and suppliers have undertaken active programs for supply chain management to reduce overall lead times and the total cost of raw materials. In 2009, the Company experienced a decline in raw material prices and saw lead times shorten as demand for material eased due to the global economic downturn. In 2010, raw material prices stabilized and began to increase as aerospace markets firmed. The Company attempts to protect against raw material price escalation by passing those price increases directly to the Company’s customers.

Energy

The Company uses a considerable amount of energy in the processing of its forged and cast metal components. The fluctuating prices for energy, both natural gas and electricity, impacted the Company’s 2009 and 2010 results. Other than increased volume usage in 2010, there was not a material variance between the two years. The Company expects natural gas to remain stable in 2011, with expected increases in electrical costs. The Company attempts to ameliorate the impact of these price swings by purchasing directly from producers and pre-ordering supplies for the future, however, the level of price fluctuation and lack of availability are not within the control of the Company.

Backlog

The average amount of time necessary to manufacture the Company’s products is five to six weeks from the receipt of raw material. The timing of the placement and filling of specific orders may significantly affect the Company’s backlog figures, which are subject to cancellation for a variety of reasons. In addition, the Company typically only includes those contracts which will result in shipments within the next 18 months when compiling backlog and does not include the out years of long-term agreements. As a result, the Company’s backlog may not be indicative of actual results or provide meaningful data for period-to-period comparisons. The Company’s backlog was approximately $629 million, $504 million and $556 million as of December 31, 2008, 2009 and 2010, respectively. The Company received $408 million, $229 million and $456 million of new orders in 2008, 2009 and 2010, respectively.

Competition

The sale of metal components is highly competitive. Certain of the Company’s competitors are larger than the Company and have substantially greater capital resources. Although the Company is the sole supplier on several sophisticated components required by prime contractors under a number of governmental programs, many of the Company’s products could be replaced with other similar products of its competitors. However, the significant investment in tooling, the time required and the cost of obtaining the status of a “certified supplier” are barriers to entry. Competition is based on quality (including advanced engineering and manufacturing capability), price and the ability to meet delivery requirements.

Website Access to Company Reports

The Company’s annual report is available free of charge on the Company’s website at www.ladishco.com as soon as reasonably practicable after such material is filed electronically with the SEC. The Company’s other filings with the SEC; Form 10-K, Form 10-Q, Form 8-K and Form 4 are readily available at www.sec.gov/edgar or www.secfiling.com. The Company’s Form 14 Proxy Statement for the 2011 annual stockholders’ meeting is available on the Company’s website. The Company’s Code of Conduct is available on the Company’s website and in printed form upon request. Also, copies of the Company’s annual report will be made available, free of charge, upon written request.

Environmental, Health and Safety Matters

The Company’s operations are subject to many federal, state and local regulations relating to the protection of the environment and to workplace health and safety. In particular, the Company’s operations are subject to extensive federal, state and local laws and regulations governing waste disposal, air and water emissions, the handling of hazardous substances, environmental protection, remediation, workplace exposure and other matters. Management believes that the Company is presently in substantial compliance with all such laws and does not currently anticipate that the Company will be required to expend any substantial amounts in the foreseeable future in order to meet current environmental, workplace health or safety requirements. However, additional costs and liabilities may be incurred to comply with current and future requirements which could have a material adverse effect on the Company’s results of operations or financial condition.

There are no known pending remedial actions or claims relating to environmental matters that are expected to have a material effect on the Company’s financial position or results of operations. All of the properties owned by the Company, however, are located in industrial areas and have a history of heavy industrial use. These properties may potentially incur environmental liabilities in the future that could have a material adverse effect on the Company’s financial condition or results of operations. The Company was previously named a potentially responsible party at several “Superfund” sites. The Company’s liability with respect to these sites has largely been resolved. Although the Company does not believe that the amount for which it may be held liable for any further administrative or wrap-up expense will exceed the amount it has reserved, no assurance can be given that the amount for which the Company will be held responsible will not be significantly greater than expected. In 2006, the Company agreed to participate in the environmental remediation of a site near Houston, Texas. The Company’s allocated share is relatively small, less than 1%, and its projected exposure for the site is estimated to be $0.16 million. The Company has an accrual of $0.3 million for this site and any other environmental claims which may arise.

With respect to any past or future claim for any environmental, health or safety matter, the Company evaluates every such claim from both a technical and legal perspective, using outside consultants where necessary. The Company establishes a good faith estimate of its prospective risk associated with said claim and, where material, establishes an accrual for the estimated value of such claim.

Forward Looking Statements

Any statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Legislation Reform Act of 1995, and involve risks and uncertainties. These forward-looking statements include expectations, beliefs, plans, objectives, future financial performance, estimates, projections, goals and forecasts. Potential factors which could cause the Company’s actual results of operations to differ materially from those in the forward-looking statements include:

•		Market conditions and demand for the Company’s products
•		Interest rates and capital costs
•		Unstable governments and business conditions in emerging economies
•		Health care costs
•		Legal, regulatory and environmental issues
•		Competition
•		Technologies
•		Raw material and energy prices
•		Taxes

Any forward-looking statement speaks only as of the date on which such statement is made. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.

Employees

As of December 31, 2010, domestically, the Company had approximately 1,250 employees, of whom 960 were engaged in manufacturing functions, 65 in executive and administrative functions, 180 in technical functions, and 45 in sales and sales support. At such date, approximately 598 employees, principally those engaged in manufacturing, were represented by labor organizations under collective bargaining agreements. Internationally, the Company had approximately 460 employees in Poland as of December 31, 2010, approximately two-thirds of which are represented by trade unions.

				Number of Employees
				Represented by
				Collective
Union		Expiration Date		Bargaining Agreement
International Association of Machinists & Aerospace Workers, Local 1862		February 26, 2012			226
International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers & Helpers, Subordinate Lodge 1509		October 1, 2012			178
International Federation of Professional & Technical Engineers, Technical Group, Local 92		August 19, 2012			97
International Association of Machinists & Aerospace Workers, Die Sinkers, Local 140		March 26, 2012			53
Office & Professional Employees International Union, Clerical Group, Local 35		July 15, 2013			17
International Brotherhood of Electrical Workers, Local 662		November 11, 2012			22
Service Employees International, Local 1		April 22, 2012			5

Executive Officers of the Company

Name		Age				Position
Gary J. Vroman			51			President & CEO and Director
Wayne E. Larsen			56			Vice President Law/Finance & Secretary and Director
Lawrence C. Hammond			63			Vice President, Human Resources
Randy B. Turner			61			President — Pacific Cast Technologies, Inc. (“PCT”)
John Delaney			61			President — Stowe Machine Co., Inc. (“Stowe”) & Aerex LLC (“Aerex”)
Robert C. Miller			60			President — Valley Machining, Inc. (“Valley”)
Jozef Burdzy			59			President — Zaklad Kuznia Matrycowa Sp. z o.o. (“ZKM”) & Zaklad Obrobki i Procesow Specjalnych Sp. z o.o. (“ZOPS”)
Shannon J. S. Ko			68			President — Chen-Tech Industries, Inc. (“Chen-Tech”)

Item 1A. Risk Factors

Cyclicality of the Aerospace and Jet Engine Industries

Substantially all of our revenues are derived from the aerospace and jet engine industries, which are cyclical in nature and subject to changes based on general economic conditions, airline profitability, passenger ridership and international relations. The duration and severity of upturns and downturns in these industries are influenced by a variety of factors, including those set forth herein. Accordingly, they cannot be predicted with any certainty. Historically, orders for new commercial aircraft and related commercial aerospace components have been driven by the operating profits or losses of commercial airlines. Purchases by customers in the military aerospace sector are dependent upon defense budgets. Events adversely affecting the airline industry, such as cyclical overcapacity and inability to maintain profitable fare structures, would likely have a material adverse effect on our financial condition and results of operations.

Merger Between Ladish and ATI May Not Close

In November 2010, we entered into a merger agreement with Allegheny Technologies Incorporated (“ATI”). Pursuant to the terms of the merger agreement, all of the common stock of Ladish would be acquired by ATI for the per share consideration of $24.00 in cash and .4556 of an ATI share of common stock. The closing of the merger is subject to a number of conditions and approvals. There is no guarantee that the conditions will be met or the approvals obtained. Should the merger not occur, there could be an impact upon the Ladish share price.

Reduction in Government Spending

Since 2002, approximately 25% to 40% of our annual revenues have been derived from the government-sponsored aerospace industry, an industry that is dependent upon government budgets and, in particular, the United States government budget. There can be no assurance that U.S. defense and space budgets and the related demand for defense and space equipment will continue or that sales of defense and space equipment to foreign governments will continue at present levels.

Competition

The sale of metal components for the aerospace, jet engine and industrial markets is highly competitive. Many products we manufacture are readily interchangeable with the products manufactured by our competitors. Many of our products are sold under long-term contracts which are bid upon by several suppliers. Our principal competitor, Precision Castparts Corp. (“PCC”), is a substantially larger business and has greater financial resources. In 2006, PCC purchased one of our larger suppliers of nickel-based alloys, Special Metals Corporation.

Reliance on Major Customers

Our three largest customers accounted for approximately 47%, 56% and 56% of our revenues in 2008, 2009 and 2010, respectively. Because of the small number of customers for some of our principal products, those customers exercise significant influence over our prices and other terms of trade. The loss of any of our largest customers would have a material adverse effect on our financial condition and results of operations.

Dependence on Key Personnel

We have been and continue to be dependent on certain key management personnel. Our ability to maintain our competitive position will depend, in part, upon our ability to retain these key managers and to continue to attract and retain highly qualified managerial, manufacturing and sales and marketing personnel. There can be no assurance that the loss of key personnel would not have a material adverse effect on our results of operations or that we will be able to recruit and retain such personnel.

Product Liability Exposure

We produce many critical engine and structural parts for commercial and military aircraft and for other specialty applications. As a result, we have an inherent risk of exposure to product liability claims. We currently maintain product liability insurance, but there can be no assurance that insurance coverage will continue to be available on terms acceptable to us or that such coverage will be adequate for any liabilities that might be incurred.

Availability and Price of Raw Materials

The largest single component of our cost of goods sold is raw material costs. We manufacture products in a wide variety of specialty metals and alloys, some of which can only be purchased from a limited number of suppliers. We hold limited quantities of raw materials in inventory but, for the principal part of our business, we seek to procure delivery of raw materials in quantities and at times matching customers’ orders. We, along with other entities in the industry, have experienced periods of increased delivery times for nickel-based and titanium alloys and certain stainless steels, which account for a significant portion of our raw materials. Significant scarcity of supply of raw materials used by us could have a material adverse effect on our results of operations by affecting both the timing of delivery and the cost of purchasing such materials. In addition, our largest competitor, PCC, has purchased one of our largest suppliers of nickel-based alloys. Many of our products are sold pursuant to long-term agreements with our customers, which currently provide us the right to pass through material cost increases. Any inability to obtain such rights in future long-term agreements could have a material adverse effect on our results of operations.

Labor Contracts

Approximately 48% of our domestic employees are represented by seven collective bargaining units. Contracts were historically renegotiated every three years with each union. Six of the unions in 2006 and one union in 2007 entered into six-year agreements with the Company. While we do not expect that work stoppages will arise in connection with the renewal of labor agreements expiring in the foreseeable future, no assurance can be given that work stoppages will not occur. An extended or widespread work stoppage could have a material adverse effect on our results of operations.

Pension and Other Postretirement Benefit Obligations

Many of our employees are eligible to participate in various Company-sponsored pension plans. In addition to pension benefits, we provide health care and life insurance benefits to our eligible employees and retirees. The pension benefits have been and will continue to be funded through contributions to pension trusts, while health care and life insurance benefits are paid as incurred.

We have several domestic pension plans, all of which are underfunded. The aggregate actuarially determined liability recorded for these pension plans on the balance sheet at December 31, 2010 was approximately $65.5 million. The decline in the equity market in the United States in 2008 had a negative impact upon the level of assets in the pension trust of the Company; a portion of that decline was recovered in 2009 and 2010.

The actuarially determined liability recorded for postretirement health care and life insurance benefits on the balance sheet at December 31, 2010 was approximately $33.7 million and will be paid as incurred.

Compliance with Environmental and Other Government Regulations

Our operations are subject to extensive environmental, health and safety laws and regulations promulgated by federal, state and local governments. Many of these laws and regulations provide for substantial fines and criminal sanctions for violations. The nature of our business exposes us to risks of liability due to the use and storage of materials that can cause contamination or personal injury if released into the environment. In addition, environmental laws may have a significant effect on the nature, scope and cost of cleanup of contamination at operating facilities. It is difficult to predict the future development of such laws and regulations or their impact on future earnings and operations, but we anticipate that these standards will continue to require continued capital expenditures. There can be no assurance that we will not incur material costs and liabilities in the future relating to environmental matters.

Risks Related to Significant Price Concessions to Our Customers and Increased Pressure to Reduce Our Costs

We are subject to substantial competition in all of the markets we serve, and we expect this competition to continue. As a result, we have made significant price concessions to our customers in the aerospace and industrial markets in recent years and we expect customer pressure for price concessions to continue. Maintenance of our profitability will depend, in part, on our ability to sustain a cost structure that enables us to be cost-competitive. If we are unable to adjust our cost relative to our pricing or if we are unable to continue to compete effectively, our business will suffer.

Our Business is Affected by Federal Rules, Regulations and Orders Applicable to Government Contractors

A number of our products are manufactured and sold under U.S. government contracts or subcontracts. Violation of applicable government rules and regulations could result in civil liability, in cancellation or suspension of existing contracts or in ineligibility for future contracts or subcontracts funded in whole or in part with federal funds.

Risks Associated with International Operations

We purchase products from and supply products to businesses located outside of the United States. In fiscal 2010, approximately 51% of our total sales were attributable to non-U.S. customers. A number of risks inherent in international business could have a material adverse effect on our future results of operations, including:

•

currency fluctuations;

•

general economic and political uncertainties and potential for social unrest in international markets;

•

limitations on our ability to enforce legal rights and remedies;

•

changes in trade policies;

•

tariff regulations;

•

difficulties in obtaining export and import licenses; and

•

the risk of government financed competition.

Our Business Involves Risks Associated with Complex Manufacturing Processes

Our manufacturing processes depend on certain sophisticated and high-value equipment, such as some of our forging presses for which there may be only limited or no production alternative. Unexpected failures of this equipment may result in production delays, revenue loss and significant repair costs. In addition, equipment failures could result in injuries to our employees. Moreover, the competitive nature of our business requires that we continuously implement process changes intended to achieve product improvements and manufacturing efficiencies. These process changes may at times result in production delays, quality concerns and increased costs. Any disruption of operations at our facilities due to equipment failures or process interruptions could have a material adverse effect on our business.

Acquisitions

We expect that we will continue to make acquisitions of, investments in, and strategic alliances with complementary businesses, products and technologies to enable us to add products and services for our core customer base and for related markets, and to expand our business geographically. The success of this acquisition strategy will depend on our ability to: identify suitable businesses to buy; negotiate the purchase of those businesses on terms acceptable to us; complete the acquisitions within our expected time frame; improve the results of operations of the businesses that we buy and successfully integrate their operations into our own; and avoid or overcome any concerns expressed by regulators.

We may fail to properly complete any or all of these steps. We may not be able to find appropriate acquisition candidates, acquire those candidates that we do find, obtain necessary permits or integrate acquired businesses effectively and profitably.

Some of our competitors are also seeking to acquire similar businesses, including competitors that have greater financial resources than we do. Increased competition may reduce the number of acquisition targets available to us and may lead to less favorable terms as part of any acquisition, including higher purchase prices. If acquisition candidates are unavailable or too costly, we may need to change our business strategy.

We also cannot be certain that we will have enough capital or be able to raise enough capital on reasonable terms, if at all, to complete the purchases of the businesses that we want to buy. Our credit facility limits our ability to make acquisitions. Our lender may object to certain purchases or place conditions on them that would limit their benefit to us.

If we are unsuccessful in implementing our acquisition strategy for the reasons discussed above or otherwise, our financial condition and results of operations could be materially adversely affected.

Item 1B. Unresolved Staff Comments

The Company has no unresolved comments from the Commission staff.

Item 2. Properties

The following table sets forth the location and size of the Company’s seven facilities:

		Approximate Acreage				Approximate Square Footage
Forging — Cudahy, Wisconsin			140.0				1,650,000
Stowe — Windsor, Connecticut			8.2				40,000
PCT — Albany, Oregon			14.0				149,000
Valley — Coon Valley, Wisconsin			3.0				40,000
ZKM — Stalowa Wola, Poland			70.0				820,000
Chen-Tech — Irvine, California			2.0				55,000
Aerex — Windsor, Connecticut			1.0				15,000

The above facilities, except for Chen-Tech and Aerex, are owned by the Company.

The Company believes that its facilities are well maintained, are suitable to support the Company’s business and are adequate for the Company’s present and anticipated needs. While the rate of utilization of the Company’s manufacturing equipment is not uniform, the Company estimates that its facilities overall are currently operating at approximately 70% of capacity.

The principal executive offices of the Company are located at 5481 South Packard Avenue, Cudahy, Wisconsin 53110. Its telephone number at such address is (414) 747-2611.

Item 3. Legal Proceedings

The Company is involved in various stages of investigations relative to environmental protection matters relating to various waste disposal sites. The potential costs related to such matters and the possible impact thereof on future operations are uncertain due in part to uncertainty as to the extent of the pollution, the complexity of laws and regulations and their interpretations, the varying costs and effectiveness of alternative cleanup technologies and methods, and the questionable level of the Company’s involvement. The Company has an accrual of $0.3 million at December 31, 2010, included in other noncurrent liabilities on the consolidated balance sheets of the Company, for potential losses related to these matters. The Company does not anticipate such losses will have a material impact on the financial statements beyond the aforementioned provisions.

From time to time the Company is involved in legal proceedings relating to claims arising out of its operations in the normal course of business. Although the Company believes that there are no material legal proceedings pending or threatened against the Company or any of its properties, the Company has been named as a defendant in a number of asbestos cases in Mississippi, Illinois, Wisconsin and California. As of December 31, 2010, the Company has been dismissed from the case in California and has nine individual claims in Mississippi, two individual claims remaining in Illinois and one individual claim in Wisconsin. The Company has never manufactured or processed asbestos. The Company’s only exposure to asbestos involves products the Company purchased from third parties. The Company has notified its insurance carriers of these claims and is vigorously defending these actions. The Company has not made any provision in its financial statements for the asbestos litigation.

The Company is participating in an investigation initiated by U.S. Customs & Border Protection (“Customs”) into duty drawback claims filed on behalf of the Company by its former export agent. The Company is cooperating with Customs in this investigation and has voluntarily suspended its duty drawback claims. Based upon its internal investigation, the Company believes any errors or omissions with respect to its filings were solely attributable to its former export agent. The Company and Customs have tentatively agreed to an Offer in Compromise whereby both parties agree to settle the matter for the amount of approximately $0.146 million and the repayment of approximately $0.130 million of prior duty drawback claims. The Company has made adequate provisions in its financial statements for this resolution.

The Company and each of its directors have been named as defendants in a lawsuit in Wisconsin State Circuit Court and in a separate lawsuit in federal court in the eastern district of Wisconsin. Each of these cases is brought by a stockholder of the Company alleging a breach of fiduciary duty in connection with the proposed merger with ATI. Neither case seeks monetary damages. Rather, each case requests equitable relief in enjoining the merger. The Company is defending these actions and has alerted its insurer.

Item 4. Removed and Reserved

PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The common stock of the Company, par value $0.01 per share, trades on the Nasdaq National Market under the symbol “LDSH”.

The following table sets forth, for the fiscal periods indicated, the high and low closing prices for each quarter of the years 2008, 2009 and 2010. At December 31, 2010 there were an estimated 2,500 beneficial holders of the Company’s common stock.

		Year Ended								Year Ended								Year Ended
		December 31, 2008								December 31, 2009								December 31, 2010
		High				Low				High				Low				High				Low
First quarter		$	41.94			$	32.90			$	15.34			$	5.36			$	21.64			$	15.02
Second quarter		$	37.35			$	20.59			$	15.04			$	7.28			$	28.40			$	20.39
Third quarter		$	27.56			$	18.75			$	16.48			$	10.88			$	31.73			$	21.94
Fourth quarter		$	19.74			$	11.47			$	16.03			$	11.79			$	50.39			$	29.33

The Company has not paid cash dividends and currently intends to retain all its earnings to reduce debt and to finance its operations, its stock repurchase program and future growth. The Company does not expect to pay dividends for the foreseeable future.

TOTAL SHAREHOLDER RETURN

The following graph compares the period percentage change in Ladish’s cumulative total shareholder return on its common stock, assuming dividend reinvestment, with the cumulative total return of (i) the Russell 2000 Small Cap Index, and (ii) a peer group from the Company’s industry, for the period of December 31, 2005 to December 31, 2010. The Company’s peer group is comprised of PCC, ATI, Timet and SIFCO Industries, Inc.

		Dec-31-05				Dec-31-06				Dec-31-07				Dec-31-08				Dec-31-09				Dec-31-10
Ladish			22.35				37.08				43.19				13.85				15.05				48.62
Russell 2000			673.22				796.89				765.90				499.45				625.39				783.65
Industry Peers			67.53				73.05				86.93				24.94				45.51				56.97

Item 6. Selected Financial Data

The selected financial data of the Company for each of the last five fiscal years are set forth below.

The data below should be read in conjunction with the Financial Statements and the Notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this filing.

		Year Ended December 31,
		(Dollars in millions, except earnings per share)
INCOME STATEMENT DATA		2006				2007				2008				2009				2010
Net sales		$	369.290			$	424.631			$	469.466			$	349.832			$	403.132
Income from operations			48.960				52.319				39.538				9.248				46.985
Interest expense			3.548				2.528				1.971				5.050				5.613
Net income			28.481				32.288				32.205				6.094				25.375
Basic earnings per share			2.01				2.22				2.15				0.38				1.61
Diluted earnings per share			2.00				2.22				2.15				0.38				1.61
Dividends paid			—				—				—				—				—
Shares used to compute earnings per share:
Basic			14,136,946				14,516,120				14,998,437				15,901,833				15,742,247
Diluted			14,205,641				14,550,258				15,000,844				15,902,246				15,743,201

		December 31,
BALANCE SHEET DATA		2006				2007				2008				2009				2010
Total assets		$	329.060			$	381.833			$	509.466			$	469.514			$	485.568
Net working capital			123.764				130.855				138.910				137.515				149.685
Total debt			54.100				53.500				118.900				90.000				84.285
Stockholders’ equity			152.670				201.554				223.411				225.582				251.921

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview

2010 was a turnaround year for Ladish. After downsizing the business in 2009 to respond to the global economic slowdown, we were able to respond rapidly to the recovery in most of our markets in 2010. The actions taken in 2009 to reduce the cost structure of Ladish in order to remain profitable in 2009 provided added benefits in 2010. The lower cost structure and the increased focus on productivity at all of Ladish’s operating units combined to yield significantly improved results as we were able to produce $25.4 million of net income in 2010, a $19.3 million increase over 2009 results.

The three principal markets, jet engine, aerospace and industrial, served by Ladish all improved in 2010. Ladish’s largest market, jet engine components, experienced the slowest recovery with only a 3% growth level due to continued delays on new aircraft programs such as the 787 and temporary concerns regarding other programs like the A380. The aerospace components market reflected significant growth with a 25% increase over 2009 levels. The demand for titanium helicopter components for new build and for spare parts along with increased orders for airframe components contributed to the $29 million increase. The market for industrial components, Ladish’s smallest, had the largest percentage growth with a 42% improvement. The industrial components market rebounded due to expanded demand from Caterpillar for mining and earthmoving equipment and the beginning of a recovery at ZKM.

Ladish’s gross profits in 2010 of $65.7 million, or 16.3% of net sales, reflected a significant advance from the $27.1 million, or 7.7% of net sales, of gross profits in 2009. The increase in gross profits in total and as a percent of sales in 2010 was directly attributed to higher margins on incremental sales as fixed costs were absorbed, a better product mix within each of Ladish’s three primary markets and improved by-product credits of $13.1 million in 2010 in comparison to $6.3 million in 2009.

The 15% overall growth in net sales contributed to the improved net income in 2010 as did our ability to manage the cost structure at Ladish. The 15% increase in net sales came as total employment was increased by 4%. The productivity of Ladish employees grew in 2010 and provided a significant boost to net income growing from $6.1 million in 2009 to $25.4 million in 2010. Net income in 2009 was also aided by a $2.9 million tax benefit as opposed to a $16.2 million tax provision in 2010.

As Ladish experienced significant sales growth in 2010, we also managed our costs and working capital which enabled Ladish to generate $25.0 million in operating cash flow after contributing $10.5 million to the pension plans. From the operating cash flow we expended $14.6 million for capital expenditures, used $5.7 million to retire the first tranche of Series B notes and spent $3.3 million to repurchase Ladish common stock. We ended 2010 with Ladish’s cash balances increased by $3.4 million to $23.3 million.

On November 16, 2010, Ladish and ATI entered into an Agreement and Plan of Merger (“Merger Agreement”). Under the terms of the Merger Agreement, ATI will acquire all of the outstanding common stock of Ladish for the consideration of $24.00 in cash and .4556 of a share of ATI common stock for each share of Ladish common. The Merger Agreement contains a number of conditions which must be met along with certain approvals which must be obtained, including the positive vote of a majority of the shareholders of Ladish. As of the date of this filing, Ladish and ATI have received the approval of the U.S. Federal Trade Commission of their filing under the Hart-Scott-Rodino Act.

Results of Operations

Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

Net sales in 2010 were $403.1 million, an increase of $53.3 million, or 15.2%, from the $349.8 million of net sales in 2009. The amount of net sales for each of the three principal markets served by the Company were as follows for the periods indicated:

		Years Ended December 31,
		2009								2010
		(Dollars in millions)
Jet Engine Components		$	193				55	%		$	199				49	%
Aerospace Components			114				33	%			143				36	%
General Industrial Components			43				12	%			61				15	%
Total		$	350				100	%		$	403				100	%

The Company’s $199 million of net sales of jet engine components in 2010 was relatively flat in comparison to 2009 due to the delays associated with several major programs for new planes and their accompanying engines. Net sales of aerospace components in 2010 demonstrated a significant growth of 25% over 2009 due to the strength in the demand for helicopter components. Net sales of industrial components in 2010 reflected a 42% increase over 2009 net sales as demand for large and complex forgings to support the mining sector continued to improve in 2010. The Company’s increase in 2010 net sales was largely attributed to increases in volume of product with relatively stable pricing.

In 2010, the Company’s cost of sales was $337.5 million, or 83.7%, of net sales in comparison to $322.7 million, or 92.3%, of net sales in 2009. Although cost of sales increased in 2010, as a percentage of sales there was a significant decrease which was attributed to a better absorption of fixed costs through higher net sales in 2010, improved productivity at the Company’s operating units and higher by-product credits in 2010.

Gross profits in 2010 were $65.7 million, or 16.3% of net sales. This represented a $38.6 million increase over 2009 when gross profits were $27.1 million, or 7.7% of net sales. The increase in gross profits in total and as a percentage of net sales in 2010 was attributable to the growth in net sales. Raw material and energy prices did not have a material impact upon the variation in gross profits between the two periods. The Company recognized $13.1 million of by-product credits in 2010 in comparison to $6.3 million of by-product credits in 2009. Any proceeds received from by-product disposal are considered an offset to cost of sales.

The Company incurred $18.7 million of SG&A expenses in 2010, or 4.6% of net sales, in comparison to $17.8 million of SG&A expenses in 2009, or 5.1% of net sales. SG&A expenses increased in 2010 in part due to approximately $0.6 million of professional fees and expenses associated with the prospective merger of the Company with ATI. SG&A expenses in 2009 were negatively impacted by a one-time charge of $1.3 million related to employment reductions.

In 2010, the Company recognized $5.6 million of interest expense. This represents a $0.5 million increase from the $5.1 million of interest expense in 2009. Although total debt at the Company declined in 2010 as the Company began to amortize long-term notes, interest expense increased due to the lack of capitalization of interest in 2010 in contrast to 2009. The following table reflects the Company’s treatment of interest in 2009 and 2010:

(Dollars in Millions)		2009				2010
Interest expensed		$	5.050			$	5.613
Interest capitalized			0.953				0.043
Total		$	6.003			$	5.656

Pretax income in 2010 was $41.6 million, a $38.5 million improvement over the $3.1 million of pretax income in 2009. The 2010 growth in pretax income is attributable to improved operating efficiencies, higher sales which produced incremental increases in profits and higher by-product credits.

In 2010, the Company recorded a tax provision of $16.2 million. This reflected an effective tax rate of 39%. In contrast, the Company recorded a tax benefit of $2.9 million in 2009 when the Company recognized a tax asset of $5.3 million.

Net Income in 2010 was $25.4 million, or $1.61 per share, on a fully diluted basis. The increase from 2009 net income of $6.1 million was the result of $53.3 million of higher net sales, improved operating efficiencies, cost controls, better absorption of fixed costs and higher by-product credits.

Contract backlog at the Company was $556 million at December 31, 2010 in comparison to $504 million at the end of 2009. The Company had $456 million of new orders in 2010 versus $229 million of new orders in 2009. The growth in new orders in 2010 was attributable to an improvement in all three of the Company’s major markets.

Year Ended December 31, 2009 Compared to Year Ended December 31, 2008

2009 net sales were $349.8 million, a 25.5% reduction from the $469.5 million of net sales in 2008. The decline in sales was due to reduced demand in all of the Company’s markets. The Company’s sales of components for jet engines, aerospace and general industrial declined 19%, 8% and 60%, respectively, as customers reduced their build schedules and destocked their inventory. In 2009, cost of sales at the Company increased to 92.3% of net sales in comparison to 87.4% in 2008. The percentage increase in 2009 is directly linked to the reduction of sales with fewer sales to cover the fixed costs at the Company.

SG&A expenses at the Company were $17.8 million in 2009, in contrast to $19.8 million of SG&A expenses in 2008. Although the Company experienced a $2 million year-over-year reduction in SG&A, as a percentage of sales SG&A increased to 5.1% in 2009 from 4.2% during the same period in 2008. The increased rate of SG&A expense in 2009 is attributable to a combination of a one-time charge of $1.3 million related to employment reductions and the reduced level of sales.

Interest expense at the Company in 2009 was $5.1 million, a $3.1 million increase from the level in 2008. The growth of interest expense in 2009 was related to a full year of interest on the Series C long-term notes along with the reduction of capitalized interest in 2009. The Company was able to capitalize $2.4 million of interest in 2008 while it only capitalized $1.0 million of interest in 2009. Total interest incurred was $6.0 million and $4.4 million, respectively, in 2009 and 2008. The following table reflects the Company’s treatment of interest in 2008 and 2009:

(Dollars in millions)		2008				2009
Interest expensed		$	1.971			$	5.050
Interest capitalized			2.418				0.953
Total		$	4.389			$	6.003

The Company earned $3.1 million and $38.3 million of pretax income, respectively, in 2009 and 2008. The decline in pretax income was due to decreased sales and increases in pension expense, interest expense, depreciation expense, costs associated with downsizing operations and lower by-product credits in 2009. These expense increases were somewhat offset by reductions in employment costs related to lower employment levels in 2009.

In 2009, the Company reversed a valuation allowance and recognized a tax asset in the amount of $5.3 million which resulted in a tax benefit of $2.9 million. The tax asset related to a credit for state taxes which the Company determined it was more likely than not that the Company would earn sufficient income to fully utilize the credit in Wisconsin. In 2008, the Company had a tax provision of $5.9 million for an effective rate of 15.4%.

Net income for 2009 was $6.1 million or $0.38 per share on a fully diluted basis. The decline from 2008 net income of $32.2 million was a result of reduced sales combined with increases in pension expense of $4.4 million, interest expense of $3.1 million, depreciation expense of $2.0 million, employment reduction expenses of $3.0 million and reduced by-product credits of $7.9 million, offset by the recognition of the state tax credit of $5.3 million.

The Company ended 2009 with a contract backlog of $504 million, down from the 2008 ending backlog of $629 million. In 2009, the Company booked $229 million of new orders in contrast to $408 million of new orders in 2008. The decline in new orders was related to the global slowdown in the aerospace market associated with reduced passenger miles in 2009.

Liquidity and Capital Resources

The Company’s cash position as of December 31, 2010 is $3.4 million more than its position at December 31, 2009. The 2010 increase in cash is due to increased net sales and receipts partially offset by increased pension contributions along with growth in working capital. Cash flow from operations in 2010 was $38.2 million less than cash flow from operations in 2009 primarily due to working capital growth as the Company increased inventories by $8 million and receivables by $23 million which reflects the growth in net sales in 2010, partially offset by a $3.7 million increase in accounts payable.

On May 16, 2006, the Company sold $40 million of Series B Notes in a private placement to certain institutional investors. The Series B Notes are unsecured and bear interest at a rate of 6.14% per annum with interest being paid semiannually. The Series B Notes have a ten-year duration with the principal amortizing equally over the duration after the fourth year. The first amortization payment of $5.7 million was made on May 17, 2010.

On September 2, 2008, the Company sold $50 million of Series C Notes in a private placement to certain institutional investors. The Series C Notes are unsecured and bear interest at a rate of 6.41% per annum with interest being paid semiannually. The Series C Notes have a seven-year duration with the principal amortizing equally over the duration after the third year.

The Company’s Series B and Series C Notes contain financial covenants which (a) limit the incurrence of certain additional debt; (b) require a certain level of consolidated adjusted net worth; (c) require a minimum fixed charges coverage ratio; and (d) require a limited amount of funded debt to consolidated cash flow. The covenant on incurrence of additional debt limits funded debt to 60% of total capitalization. At December 31, 2010, funded debt at Ladish was at 23% of total capitalization. This covenant also limits priority debt to 20% of adjusted net worth. Ladish had no priority debt at December 31, 2010. The covenant on adjusted net worth requires a minimum of $119.2 million. At December 31, 2010, Ladish had $286.2 million of adjusted net worth. The covenant on fixed charges coverage ratio requires that consolidated cash flow to fixed charges be a minimum of 2.00. The Company’s fixed charges coverage ratio at December 31, 2010 was 11.33. The final covenant on funded debt to consolidated cash flow allows for a maximum level of 4.00. At December 31, 2010, the Company’s actual level was 0.96. The Note Agreement for the Series B and Series C Notes also contains customary representations and warranties and events of default.

At December 31, 2010, the Company was in compliance with all covenants in the Series B and Series C Notes and the Facility.

The Company and a syndicate of lenders entered into a revolving credit facility (the “Facility”), which was most recently renewed on April 8, 2010. The Facility consists of a $35 million unsecured revolving line of credit which bears interest at a rate of LIBOR plus 2.00% or at a base rate. At December 31, 2010, there were no borrowings under the Facility and $35 million of credit was available pursuant to the terms of the Facility. The Facility has a maturity date of April 7, 2011.

The Company and the syndicate of lenders participating in the Facility entered into Amendment No. 2 to the Facility. This amendment, effective as of April 8, 2010, modified the covenant on minimum EBITDA by deleting that covenant and substituting in its place a covenant on the ratio of net debt to EBITDA. The covenant requires a maximum ratio of net debt to EBITDA to be no more than 3.50:1. As of December 31, 2010, the Company’s ratio was 0.96:1. The Facility also contains a covenant that requires a minimum fixed charge coverage ratio of 1.7x. As of December 31, 2010, the Company had a fixed charge coverage ratio of 4.71x.

During 2010, the Company applied $14.6 million of cash toward capital expenditures. These expenditures were funded by cash from operations.

During the years ending December 31, 2009 and 2010, the Company received $0.015 million and $0.047 million, respectively, from the exercise of employee stock options.

Given the Company’s ability to pass along raw material price increases to its customers, inflation has not had a material effect upon the Company during the period covered by this report. Given the rising demand for the products manufactured by the Company, and the prospects for increases in raw material costs and possible energy cost escalation, the Company cannot determine at this time if there will be any significant impact from inflation in the foreseeable future.

Off Balance Sheet Arrangements

The Company has no off balance sheet arrangements.

Contractual Obligations Table
(Dollars in Millions)

		Less Than												More Than
		1 Year				1-3 Years				3-5 Years				5 Years
Senior Notes (1)		$	15.714			$	31.429			$	31.429			$	5.714
Interest on Senior Notes			5.135				7.294				3.326				.175
Bank Facility			—				—				—				—
Operating Leases			.921				1.505				1.150				1.344
Purchase Obligations (2)			63.991				21.427				—				—
Other Long-Term Obligations:
Pensions (3)			13.251				28.860				—				—
Postretirement Benefits (4)			3.474				6.549				6.023				12.428

Critical Accounting Policies

Deferred Income Taxes

Deferred income taxes are accounted for under the asset and liability method whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates. Deferred income tax provisions or benefits are based on the change in the deferred tax assets and liabilities from period to period.

Pensions

The Company has domestic noncontributory defined benefit pension plans (“Plans”) covering a number of its employees. The Company contributed $3.428 million and $10.478 million, respectively, to the Plans in 2009 and 2010. The Company intends to contribute $13.3 million, $15.4 million and $13.4 million to the Plans in 2011, 2012 and 2013, respectively. The Company plans on funding those contributions from cash on hand, cash generated from operations, working capital reductions, treasury stock contributions and, if necessary, from the Facility. No estimates have been made for payments into the Plans beyond 2013.

The Plans’ assets are held in a trust and are primarily invested in U.S. Government securities, investment grade corporate bonds and marketable common stocks. The key assumptions the Company considers with respect to the assets in the Plans and funding the liabilities associated with the Plans are the discount rate, the long-term rate of return on Plans’ assets, the projected rate of increase in compensation levels and the actuarial estimate of mortality of participants in the Plans. The most sensitive assumption is the discount rate. For funding purposes, the Company’s independent actuaries assumed an annual long-term rate of return on the Plans’ assets of 8.05% and 8.47% for 2009 and 2010, respectively. For the ten-year period ending December 31, 2010, the Company experienced an annual rate of return on the Plans’ assets of 4.92%. The Company’s annual measurement date is December 31.

The Company used a rate of 4.55% for its discount rate assumption for 2010, a 12% reduction from the 5.16% rate used for 2009. An increase in the discount rate results in a decrease in the accumulated benefit obligation at the measurement date which may also result in a decrease in the additional minimum pension liability included as a credit to accumulated other comprehensive income. Such an increase also results in an actuarial gain which is amortized to pension expense in accordance with FASB ASC 715-30. A decrease in the discount rate will have the opposite effect in the pension liability and pension expense. The Company bases its discount rate on long maturity AA rated corporate debt securities. The Company cannot predict whether these interest rates will increase or decrease in future years.

The Company cannot predict the level of interest rates in the future and correspondingly cannot predict the future discount rate which will be applied to determine the Company’s projected benefit obligation. As demonstrated in the chart below, relatively small movements in the discount rate, up or down, can have a significant impact on the Company’s projected benefit obligation under the Plans.

Projected Plan Benefit Obligation as of December 31, 2010
(Dollars in Millions)
At 4.30% discount rate		$	233.557
At 4.55% discount rate		$	227.930
At 4.80% discount rate		$	222.542

Nor can the Company predict with any certainty what the actual rate of return will be for the Plans’ assets. As demonstrated in the chart below, a modest change in the presumed rate of return on the Plans’ assets will have a material impact upon the actual net periodic cost for the Plans.

Net Periodic Cost for Year Ending December 31, 2011
(Dollars in Millions)
8.22% expected return		$	9.247
8.47% expected return		$	8.873
8.72% expected return		$	8.499

Fair Value Measurement of Pension Assets

FASB ASC 820-10, Fair Value Measurements and Disclosures, establishes a framework and provides guidance on measuring the fair value of assets in a pension plan and how an employer should disclose the same. The framework establishes a fair value hierarchy that prioritizes the inputs to the valuation techniques used to measure fair value. The three levels of fair value hierarchy are described as follows:

	Level 1		Quoted prices in active markets for identical assets or liabilities.
	Level 2		Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
	Level 3		Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table sets forth by level (dollars in millions), within the fair value hierarchy, the Plans’ assets at fair value as of December 31, 2010:

		Quoted				Significant
		Prices in				Other				Significant
Fair Values at		Active				Observable				Unobservable
December 31, 2010		Markets				Inputs				Inputs
		Level 1				Level 2				Level 3				Total
Pension Plan Assets
Money Market Accounts		$	2.976			$	—			$	—			$	2.976
US Government Issues			26.506				10.991				—				37.497
Corporate Issues			—				27.508				—				27.508
Foreign Issues			—				7.488				—				7.488
Municipal Issues			—				.771				—				.771
Domestic Common Stocks			79.354				—				—				79.354
Foreign Stocks			1.168				—				—				1.168
Mutual Funds			5.658				—				—				5.658
Total		$	115.662			$	46.758			$	—			$	162.420

Long-Lived Assets

The Company monitors the recoverability of the carrying value of its long-lived assets. An impairment charge is recognized when an indicator of impairment occurs and the expected net undiscounted future cash flows from an asset’s use (including any proceeds from disposition) are less than the asset’s carrying value and the asset’s carrying value exceeds its fair value. Assets to be disposed of by sale are stated at the lower of their fair values or carrying amounts and depreciation or amortization is no longer recognized.

Goodwill and Other Intangible Assets

Goodwill represents the cost of acquired net assets in excess of their fair market values. Goodwill and other intangible assets with indefinite useful lives are not amortized but are tested for impairment at least annually in accordance with the provisions of FASB ASC 350-20, Intangibles — Goodwill and Other. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives and also reviewed at least annually for impairment.

A two-step impairment test is required to identify potential goodwill impairment and measure the amount of the goodwill impairment loss to be recognized. In the first step, the fair value of each reporting unit is compared to its carrying value to determine if the goodwill is impaired. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, then goodwill is not impaired and the second step is not required. If the carrying value of the net assets assigned to the reporting unit exceeds its fair value, then the second step is performed in order to determine the implied fair value of the reporting unit’s goodwill and an impairment loss is recorded for an amount equal to the difference between the implied fair value and the carrying value of the goodwill.

For the purpose of goodwill analysis, the Company has only one reporting unit. Goodwill of $37.6 million represents the excess of the purchase price over the fair value of identifiable tangible and intangible net assets relating to business acquisitions. Goodwill increased significantly in 2008 due to the acquisitions of Aerex and Chen-Tech. It is an asset with an indefinite life and therefore is not amortized to expense, but is subject to annual impairment testing. The Company tests the goodwill for impairment at least annually by fair value impairment testing. The Company’s assessment of fair value used in the annual impairment testing takes into account a number of factors including EBITDA and revenue multiples of transactions in the Company’s industry as well as fair market value multiples of transactions of similarly situated enterprises. No impairments were recognized in the annual impairment tests conducted as of September 30, 2008, 2009 and 2010, respectively. Should goodwill become impaired in the future, the amount of impairment will be charged to SG&A expense. The Company has $19.1 million of amortizable customer relationships included in other intangible assets that are being amortized over 50 years with annual amortization of $0.4 million.

The control premium that a third party would be willing to pay to obtain a controlling interest in the Company was considered when determining fair value. Management considered recent transactions with comparable companies in the industry, and possible synergies to a market participant. The Company also considered the valuation ATI was proposing for the Company in a merged transaction. Management concluded there was a reasonable basis for the excess of estimated fair value of the Company over its market capitalization.

New Accounting Pronouncements

In January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-06, Fair Value Measurements and Disclosures — Improving Disclosures about Fair Value Measurements, (“ASU 2010-06”), that amends Accounting Standards Codification (“ASC”) Subtopic 820-10, Fair Value Measurements and Disclosures — Overall, and requires reporting entities to disclose (1) the amount of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers, and (2) separate information about purchases, sales, issuance and settlements in the reconciliation of fair value measurements using significant unobservable inputs (Level 3). ASU 2010-06 also requires reporting entities to provide fair value measurement disclosures for each class of assets and liabilities and disclose the inputs and valuation techniques for fair value measurements that fall within Levels 2 and 3 of the fair value hierarchy. These disclosures and clarification are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuance, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The Company adopted the provisions of ASU 2010-06 and the provisions of ASU 2010-06 did not have a material impact on the Company’s consolidated financial statements.

In February 2010, the FASB issued ASU 2010-09, Subsequent Events — Amendments to Certain Recognition and Disclosure Requirements, (“ASU 2010-09”), that amends ASC Subtopic 855-10, Subsequent Events — Overall (“ASC 855-10”). ASU 2010-09 requires an SEC filer to evaluate subsequent events through the date that the financial statements are issued but removed the requirement to disclose this date in the notes to the entity’s financial statements. The amendments are effective upon issuance of the final update and accordingly, the Company has adopted the provisions of ASU 2010-09. The adoption of these provisions did not have a material impact on the Company’s consolidated financial statements.

In December 2010, the FASB issued ASU 2010-28, Intangibles — Goodwill and Other — When to Perform Step 2 of the Goodwill Impairment test for Reporting Units with Zero or Negative Carrying Amounts, (“ASU 2010-28”), that amends ASC Subtopic 350-20, Intangibles — Goodwill and Other, and requires entities with reporting units that have carrying amounts that are zero or negative to assess whether it is more likely than not that the reporting units’ goodwill is impaired. In considering whether it is more likely than not that goodwill impairment exists, the entities shall evaluate whether there are adverse qualitative factors. If the entity determines that it is more likely than not that the goodwill of one or more of its reporting units is impaired, the entity should perform Step 2 of the goodwill impairment test for those reporting units. ASU 2010-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2010. Early adoption is not permitted. The adoption of these provisions is not expected to have a material impact on the Company’s consolidated financial statements.

In December 2010, the FASB issued ASU 2010-29, Business Combinations — Disclosure of Supplementary Pro Forma Information for Business Combinations, (“ASU 2010-29”), that amends ASC Subtopic 805-50, Business Combinations — Disclosures, and requires public entities that are required to present comparative financial statements to disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendment also requires public entities to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The Company adopted the provisions of ASU 2010-29. The adoption of these provisions did not have a material impact on the Company’s consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The Company believes that its exposure to market risk related to changes in foreign currency exchange rates and trade accounts receivable is immaterial.

Item 8. Financial Statements and Supplementary Data

The response to Item 8. Financial Statements and Supplementary Data incorporates by reference the information listed in the consolidated financial statements and accompanying schedules beginning on page F-1.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The disclosure controls and procedures of the Company are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers to allow timely decisions regarding disclosure.

Under the direction of the principal executive officer and the principal financial officer, the Company has evaluated the effectiveness of its disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2010. Based on that evaluation, the chief executive officer and the chief financial officer have concluded that the Company’s disclosure controls and procedures were effective.

There were no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of management’s evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses during the fourth quarter of 2010 or at any other time during 2010.

Management’s Annual Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal controls over the financial reporting of the Company. The Company’s management, under the supervision and with the participation of the Company’s principal executive officer and principal financial officer, has evaluated the effectiveness of the Company’s internal controls over financial reporting based upon the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, as of December 31, 2010, management concluded that the Company’s internal controls over financial reporting are operating effectively. Grant Thornton LLP, an independent registered public accounting firm, has issued an attestation report on the Company’s internal control over financial reporting, which is included herein.

Item 9B. Other Information

None.

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders
Ladish Co., Inc.

We have audited Ladish Co., Inc. (a Wisconsin Corporation) and subsidiaries’ internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Ladish Co., Inc. and subsidiaries’ management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on Ladish Co., Inc. and subsidiaries’ internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Ladish Co., Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control-Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Ladish Co., Inc. and subsidiaries as of December 31, 2010 and 2009, and the related statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2010 and our report dated March 8, 2011 expressed an unqualified opinion thereon.

/s/ Grant Thornton LLP

GRANT THORNTON LLP
Chicago, Illinois
March 8, 2011

PART III

Item 10. Directors and Executive Officers of the Registrant

The list of Executive Officers in Part I, Item 1. Business, paragraph captioned “Executive Officers of the Registrant” is incorporated by reference. The list of Directors of the Company is as follows:

Name		Age
Lawrence W. Bianchi			69
James C. Hill			62
Leon A. Kranz			71
Wayne E. Larsen			56
J. Robert Peart			48
John W. Splude			65
Gary J. Vroman			51

Other information required by Item 401 of Regulation S-K is as follows:

Lawrence W. Bianchi, 69. Director since 1998. Mr. Bianchi retired in 1993 as the Managing Partner of the Milwaukee, Wisconsin office of KPMG LLP. From 1994 to 1998, Mr. Bianchi served as CFO of the law firm of Foley & Lardner LLP. Mr. Bianchi’s principal occupation is investments. Mr. Bianchi has years of experience as a certified public accountant at a major public accounting firm. He serves as the chairman of the Company’s audit committee and is the designated “financial expert” on the audit committee.

John J. Delaney, 61. Mr. Delaney has been President of Stowe since April 2006 and President of Aerex since November 2009. Prior to that period, Mr. Delaney served as General Sales Manager at Stowe.

Lawrence C. Hammond, 63. Mr. Hammond has served as Vice President, Human Resources since January 1994. Prior to that time he had served as Director of Industrial Relations at the Company and he had been Labor Counsel at the Company. Mr. Hammond has been with the Company since 1980.

James C. Hill, 62. Director since 2003. Mr. Hill was Chairman and Chief Executive Officer of Vision Metals, Inc., a steel tubing producer, from 1997 to 2001. Prior to that period he was Corporate Vice President of Quanex Corporation, a NYSE public company and President of its Tube Group from 1983 to 1997. Mr. Hill has served as a senior executive for a number of businesses in the metalworking industry. He brings to the Board of Directors years of manufacturing experience in heavy industry.

Leon A. Kranz, 71. Director since 2001. Mr. Kranz was formerly President and Chief Executive Officer of Weber Metals, Inc., a Paramount, California based metals processor, a position he held for more than ten years. Mr. Kranz spent the majority of his career in executive management in the aerospace and forging industries. He has extensive experience in dealing with the original equipment manufacturers which dominate the aerospace industry. He serves as chairman of the Company’s compensation committee.

Wayne E. Larsen, 56. Director since 2009 and previously a director from 1997 to 2003. Since 1995 Mr. Larsen has been Vice President Law/Finance and Secretary of the Company. He served as General Counsel and Secretary since 1989 after joining the Company as corporate counsel in 1981. Mr. Larsen is a Trustee of the Ladish Co. Foundation and a Director of the South Shore YMCA of Milwaukee and serves on the Advisory Board of U.S. Bank-Wisconsin. Mr. Larsen has been with the Company for 30 years, having served as an officer of the Company for 23 of those years. He is responsible for all financial and legal affairs of the Company.

J. Robert Peart, 48. Director since 2003. Mr. Peart is the Chief Investment Officer of Aircastle Advisor LLC, a position he assumed in 2010. Previously, he had served as Managing Director and Head of Guggenheim Securities, LLC’s Aviation Capital Markets Group since 2004. Prior to that period, he was Managing Director of Residco, a transportation investment banking concern. Mr. Peart brings a unique experience in the aerospace industry to the Board of Directors. He is extremely knowledgeable regarding the leasing of aircraft as well as the aftermarket for aerospace components.

John W. Splude, 65. Director since 2004. Mr. Splude recently retired as Executive Chairman of HK Systems, Inc., an automated material handling and logistics software provider, a position he held for over ten years. He is also a Director of Superior Die Cast and Ministry Health Care, a regent of Milwaukee School of Engineering, and serves on the Advisory Board of U.S. Bank-Wisconsin. Mr. Splude has extensive experience as both a financial executive and as a chief executive of industrial manufacturing operations. He was also a certified public accountant with both public and private accounting experience.

Randy B. Turner, 61. Mr. Turner has served as President of PCT since it was acquired by the Company in January 2000. Prior to joining the Company, Mr. Turner served as President of the corporate predecessor to PCT.

Gary J. Vroman, 51. Mr. Vroman has served as President and Chief Executive Officer of the Company since September 2009 after serving as President of Forging since January 1, 2008. Prior to that time, he was Vice President, Sales and Marketing of Forging since December 1995. Mr. Vroman has been with the Company since 1982. He is a Trustee of the Ladish Co. Foundation and a regent of Milwaukee School of Engineering. Mr. Vroman has 28 years of experience at the Company. He has served in numerous sales, marketing and executive positions at the Company.

The Company’s ethics code is reflected in its policies addressing i) conflict of interest, ii) compliance with antitrust laws, iii) improper payments, iv) falsification of records, and v) insider trading. These policies apply to all Company employees including the principal executive officer, the principal financial officer, controller and members of the Board of Directors. On an annual basis, the Company requires its key management personnel to certify their review and compliance with these policies. A copy of the policies was filed as an exhibit to the Form 10-K on March 25, 2003. The policies can also be found on the Company’s website, www.ladishco.com.

Board of Directors and Corporate Governance

The directors hold regular quarterly meetings, in addition to the meeting immediately following the Annual Meeting of Stockholders, attend special meetings, as required, and spend such time on our corporate affairs as their duties require. During the fiscal year ended December 31, 2010, the Board of Directors held twenty-one (21) meetings. All of our directors attended at least seventy-five percent (75%) of the meetings of the Board of Directors and the committees on which they served during the fiscal year ended December 31, 2010. All Board members are encouraged to attend the Annual Meeting and all Board members attended the 2010 Annual Meeting of Stockholders. All Directors, except for Messrs. Larsen and Vroman, are considered independent by Nasdaq listing standards. During the fiscal year ended December 31, 2010, there were three standing committees, those being an Audit Committee, an Independent/Nominating Committee and a Compensation Committee.

Audit Committee

For the year ending December 31, 2010, the members of the Audit Committee were Chairman Lawrence W. Bianchi, J. Robert Peart and John W. Splude. Each member of the Audit Committee is “independent” according to the definition of independence contained in Rule 4200(a)(15) of the Nasdaq listing standards and Rule 10A-3 of the Securities Exchange Act of 1934. The Board of Directors has designated Mr. Bianchi, an independent director, as the Audit Committee “financial expert,” as defined in Item 407(d) of Regulation S-K. The Audit Committee is established in accordance with section 3(a)(58) (A) of the Securities Exchange Act of 1934. The Audit Committee is responsible for annually selecting an independent registered public accounting firm to serve as our auditors, to meet with and review reports of our auditors and approve the fees payable to them. The independence of the independent registered public accounting firm auditing our financial statements is one of the factors evaluated by the Audit Committee when recommending auditors. During fiscal years 2009 and 2010, our auditors were Grant Thornton LLP. The Audit Committee Charter provides that the Audit Committee must approve the fees to be paid to the independent auditor for outside auditing services and pre-approve the use of the independent auditor for any other service. All services provided by Grant Thornton LLP in 2009 and 2010 were authorized by the Audit Committee in accordance with the Audit Committee Charter.

The Audit Committee assessed the level of non-audit services in determining that our auditors, Grant Thornton LLP, to be independent. Following conclusion of the 2010 audit by Grant Thornton LLP, the Audit Committee confirms that:

•

the Audit Committee has reviewed and discussed the audited financial statements with management;

•

the Audit Committee has discussed with Grant Thornton LLP the matters required to be discussed by SAS 114, as amended (AICPA, professional standards, Vol. 1., AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T;

•

the Audit Committee has received the written disclosures and the letter from Grant Thornton LLP required by Independence Standards Board Statement No. 1, as adopted by the Public Company Accounting Oversight Board in Rule 3600T, and has discussed with Grant Thornton LLP the independence of Grant Thornton LLP; and

•

the Audit Committee recommended, based on the reviews and discussions described above, to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K.

The Audit Committee Charter was reviewed by the Audit Committee in 2010 and no changes were made. The Charter was filed as an Exhibit to the Company’s Proxy Statement for the 2003 Annual Meeting of Stockholders. We have made the Charter available on the Company’s website, www.ladishco.com. In addition, the Audit Committee provides oversight to our total financial status as well as assisting us with assessments of pension-asset performance and investment criteria. The Audit Committee met five (5) times in 2010 for all of the above purposes.

By the Audit Committee
Lawrence W. Bianchi, J. Robert Peart and John W. Splude

Independent/Nominating Committee

Our Independent/Nominating Committee was established in 2004. The Independent/Nominating Committee is made up of directors who are not part of our management. For 2010, the Independent/Nominating Committee consisted of Lawrence W. Bianchi, James C. Hill, Leon A. Kranz, J. Robert Peart and John W. Splude, all of whom are considered to be independent by Nasdaq listing standards. Among other duties, the Independent/Nominating Committee is responsible for nominating the slate of directors to be considered for election at our annual meeting of stockholders. The Independent/Nominating Committee met once in 2010. The Independent/Nominating Committee has adopted a Charter which was filed as an Exhibit to the Proxy Statement for the 2004 Annual Meeting of Stockholders. We have also made the Charter available on the Company’s website, www.ladishco.com. Pursuant to the terms of the Independent/Nominating Committee Charter, the Independent/Nominating Committee will evaluate all prospective director nominees including all those nominated by our stockholders. Stockholders who wish to submit a nominee for director should direct that request to our President or Secretary who will forward the same to the Independent/Nominating Committee. In 2010, the Independent/Nominating Committee did not receive any director nominees from our stockholders. The Independent/Nominating Committee does not apply a prescribed set of qualifications when assessing a nominee, and does not specifically consider diversity of nominees (other than diversity of relevant business experience and skills), rather the Independent/Nominating Committee evaluates and makes appropriate inquiries into the backgrounds and qualifications of all nominees for director.

In identifying and evaluating nominees for director, the Independent/Nominating Committee seeks to ensure that the Board possesses, in the aggregate, the strategic, managerial and financial skills and experience necessary to fulfill its duties and to achieve its objectives, and seeks to ensure that the Board is comprised of directors who have broad and diverse backgrounds, possessing knowledge in areas that are important to the Company. The Independent/Nominating Committee looks at each nominee on a case-by-case basis regardless of who recommended the nominee. In looking at the qualifications of each candidate to determine if their election would further the goals described above, the Independent/Nominating Committee takes into account all factors it considers appropriate, which may include strength of character, mature judgment, career specialization, relevant technical skills or financial acumen, diversity of viewpoint and industry knowledge. In addition, the Board and the Independent/Nominating Committee believe that the following specific qualities and skills are necessary for all directors to possess:

•

A director must display high personal and professional ethics, integrity and values.

•

A director must have the ability to exercise sound business judgment.

•

A director must be accomplished in his or her respective field, with broad experience at the administrative and/or policy-making level in business, government, education, technology or public interest.

•

A director must have relevant expertise and experience, and be able to offer advice and guidance based on that expertise and experience.

•

A director must be independent of any particular constituency, be able to represent all of our stockholders and be committed to enhancing long-term stockholder value.

•

A director must have sufficient time available to devote to activities of the Board of Directors and to enhance his or her knowledge of our business.

The Independent/Nominating Committee also believes the following qualities or skills are necessary for one or more directors to possess:

•

At least one independent director must have the requisite experience and expertise to be designated as an “audit committee financial expert,” as defined by applicable rules of the Securities and Exchange Commission, and have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the member’s financial sophistication, as required by the rules of NASDAQ.

•

One or more of the directors generally must be active or former executive officers of public or private companies or leaders of major complex organizations, including commercial, scientific, government, educational and other similar institutions.

•

Directors should be selected so that the Board is comprised of persons with diverse business experience and skills.

By the Independent/Nominating Committee
Lawrence W. Bianchi, James C. Hill, Leon A. Kranz, J. Robert Peart and John W. Splude

Compensation Committee

The members of the Compensation Committee for the year ending December 31, 2010 were Chairman Leon A. Kranz, James C. Hill and John W. Splude. The Compensation Committee is responsible for (i) setting the overall policy of our executive compensation program; (ii) establishing the base salary level for the executive officers; (iii) reviewing and approving the annual incentive program for our executives; and (iv) acting as the administrator of our 1996 Stock Option Program, the 2006 Long-Term Incentive Plan and the 2010 Restricted Stock Unit Plan. The Compensation Committee met four (4) times in 2010. Our executive compensation program is designed to be closely linked to corporate performance and returns to stockholders. To this end, we have developed an overall compensation strategy and specific compensation plan that tie a very significant portion of executive compensation to our success in meeting specified performance goals. The primary criteria used by the Compensation Committee in assessing the performance of the Chief Executive Officer are our results as measured by earnings before interest, taxes, depreciation and amortization (“EBITDA”), our success in generating cash and our strategic direction. By monitoring these areas, the Compensation Committee determines whether the Chief Executive Officer is achieving the Compensation Committee’s expectations. In addition, the Compensation Committee also assesses the accomplishments of the Chief Executive Officer and the other executive officers with respect to activities such as acquisitions, divestitures and raising capital for the business.

The Compensation Committee regularly reports its actions and recommendations to the full Board of Directors. The Compensation Committee Charter was adopted in February 1999. We have made the Charter available on the Company’s website, www.ladishco.com. In 2010, none of the actions or recommendations of the Compensation Committee were modified or rejected by the Board of Directors.

By the Compensation Committee
James C. Hill, Leon A. Kranz and John W. Splude

Compensation of Directors

Non-employee directors receive an annual fee of forty thousand dollars ($40,000.00) which is payable quarterly. Non-employee directors also receive a fee of one thousand dollars ($1,000.00) for each Board meeting personally attended. Chairmen of the Audit Committee and the Compensation Committee receive an additional annual fee of four thousand dollars ($4,000.00). We reimburse all directors for expenses associated with attending Board meetings and Board Committee meetings.

Director Compensation

																		Change in
																		Pension Value
																		and
														Non-Equity				Nonqualified
		Fees Earned				Stock				Option				Incentive Plan				Deferred				All Other
		or Paid in				Awards				Awards				Compensation				Compensation				Compensation
Name		Cash ($)				($)				($)				($)				Earnings ($)				($)				Total ($)
Lawrence W. Bianchi		$	48,000			$	558,000			$	0			$	0			$	0			$	0			$	606,000
James C. Hill		$	44,000			$	558,000			$	0			$	0			$	0			$	0			$	602,000
Leon A. Kranz		$	48,000			$	558,000			$	0			$	0			$	0			$	0			$	606,000
J. Robert Peart		$	44,000			$	558,000			$	0			$	0			$	0			$	0			$	602,000
John W. Splude		$	44,000			$	558,000			$	0			$	0			$	0			$	0			$	602,000

Item 11. Executive Compensation

Compensation Discussion and Analysis

Overview of Our Executive Compensation Philosophy

We recognize the importance of maintaining sound principles for the development and administration of our executive compensation and benefit programs. Specifically, our executive compensation and benefit programs are designed to advance the following core principles:

•

We strive to compensate our executives at levels competitive with industry and geographic peers to ensure we attract and retain key management employees.

•

We provide our executives with the opportunity to earn reasonable pay for targeted performance as measured against our peer group of companies.

•

We link our executives’ compensation, particularly annual cash bonuses, to established performance goals.

We believe that a disciplined focus on these core principles will benefit us, and ultimately our stockholders in the long term by ensuring that we can attract and retain highly qualified executives who are committed to our long-term success.

Role of Our Compensation Committee

Our Compensation Committee approves, administers and interprets our executive compensation and benefit policies, including our Executive Officer Incentive Plan, the Stock Option Program, the Long-Term Incentive Plan and the Restricted Stock Unit Plan. Our Compensation Committee is appointed by the Board, and consists entirely of directors who are “outside directors” for purposes of Section 162(m) of the Internal Revenue Code and “non-employee directors” for purposes of Rule 16b-3 under the Exchange Act. Our Compensation Committee is comprised of Leon A. Kranz, John W. Splude and James C. Hill, and is chaired by Mr. Kranz.

Our Compensation Committee reviews and makes recommendations to the Board to ensure that our executive compensation and benefit programs are consistent with our compensation philosophy and corporate governance guidelines and, subject to the approval of the Board, is responsible for establishing the executive compensation packages offered to our named executive officers. Our executives’ base salaries, target annual bonus levels and target annual long-term incentive award values are set at levels competitive with industry and geographic peers, with the opportunity to earn reasonable pay for targeted performance as measured against our peer group of companies.

Our Compensation Committee has taken the following steps to ensure our executive compensation and benefit programs are consistent with our compensation philosophy and corporate governance guidelines:

•

Periodically utilized studies and surveys of Towers Watson and Hewitt Associates to assess the competitiveness of our overall executive compensation and benefits program, and provide a high level review of our Executive Officer Incentive Plan, the Stock Option Program, the Long-Term Incentive Plan and the Restricted Stock Unit Plan;

•

Aligned executive compensation structures based on targeting a competitive level of pay as measured against our peer group of companies;

•

Maintained a practice of reviewing the performance and determining the total compensation earned, paid or awarded to our CEO independent of input from him;

•

Reviewed on an annual basis the performance of our other named executive officers and other key employees with assistance from our CEO and determined proper total compensation based on competitive levels as measured against similarly situated companies; and

•

Maintained the practice of holding executive sessions (without management present) at every Committee meeting.

The Compensation Committee directed that we acquire an independent evaluation of total executive compensation which should consider such elements as base salary, short term incentive compensation and long term incentive compensation all in relation to a group of peer companies. In the fourth quarter of 2009, we obtained an updated Executive Market Review from the firm Towers Watson. This review evaluated executive compensation at Ladish and benchmarked the Ladish executives against a peer group which included such businesses as Carpenter Technology, Park Ohio Holdings, Brush Engineered Materials, Cubic Corp, Gencorp, Transdigm Group, Haynes International, ESCO Technologies, RTI International Metals, Standex International, HEICO, Daktronics, Cascade, Kaydon, Ducommun, Ampco-Pittsburgh, Insteel Industries, Argon St, Badger Meter, and LMI Aerospace.

Total Compensation

We intend to continue our strategy of compensating our named executive officers at competitive levels, with the opportunity to earn reasonable pay for targeted performance, through programs that emphasize performance-based incentive compensation in the form of cash. To that end, total executive compensation is structured to ensure that there is a focus on our financial performance and stockholder return. We believe total compensation paid in 2010 was reasonable. Further, in light of our compensation philosophy, we believe that the total compensation package for our executives should continue to consist of base salary, annual cash incentive awards (bonus), long-term incentive compensation, and certain other benefits and perquisites.

Elements of Compensation

Base Salary

Our Compensation Committee, in consultation with our CEO, strives to establish competitive base salaries for our named executive officers (other than the CEO) as measured against similarly situated companies. When determining the amount of base salary for each of our named executive officers, our Compensation Committee considers the salaries of similarly situated personnel in similar companies. When making adjustments in base salaries, our Compensation Committee generally considers corporate financial performance and return to stockholders. In individual cases where appropriate, our Compensation Committee also considers non-financial performance measures, such as increases in market share, manufacturing efficiency gains, improvements in product quality, and improvements in relations with customers, suppliers, and employees. For 2010, the base salaries of Messrs. Vroman, Larsen, Turner, Delaney and Hammond were increased by approximately 19%, 4%, 4%, 14% and 5%, respectively. Base salaries of the named executive officers are reviewed annually. In 2010, base salaries paid to Messrs. Vroman, Larsen, Turner, Delaney and Hammond represented 6%, 6%, 10%, 9% and 8%, respectively, of the their total compensation.

Executive Officer Incentive Plan

Our Executive Officer Incentive Plan provides for the award of annual cash bonuses to our named executive officers. In years of strong financial performance, our named executive officers can earn cash bonuses that we consider reasonable compared to similarly situated companies.

The Executive Officer Incentive Plan is intended to reinforce our corporate goals, promote achievement of certain financial goals and reward the performance of individual officers in fulfilling their personal responsibilities. Consistent with our compensation philosophy, cash bonus payments to our named executive officers are contingent upon the achievement of a specific performance target during the applicable performance period. Specific performance targets may be based on EBITDA, Return on Assets, EPS, stock price or similar criteria. Each performance target may also have a threshold, target and maximum payout level.

For 2010, the specific performance targets for each of Messrs. Vroman, Larsen, Turner, Delaney and Hammond were $37.103 million Ladish EBITDA, $37.103 million Ladish EBITDA, $5.065 million Pacific Cast Technologies EBITDA, $5.208 million Stowe/Aerex EBITDA and $37.103 million Ladish EBITDA, respectively. EBITDA is calculated in a consistent manner for each of our business units as well as for the Company on a consolidated basis.

In addition to setting performance targets, the Compensation Committee also sets each named executive officer’s target bonus percentage amount. This amount is based on a percentage of each named executive officer’s base salary. In determining the target bonus percentage amount, our Compensation Committee considers the executive’s base salary and determines what target bonus percentage amount is required to keep the executive’s annual total cash compensation at a competitive level as compared to similarly situated companies. In addition, the Compensation Committee may also consider other various factors, including the impact an executive can have on meeting the stated performance target, previous performance, length of service to the Company and the amount of cash bonuses paid by similarly situated companies. For 2010, Messrs. Vroman, Larsen, Turner, Delaney and Hammond had target bonus percentage amounts of 85%, 75%, 75%, 75% and 75%, respectively, of base salary, which equated to a targeted bonus amount of $403,750, $234,000, $168,750, $150,000 and $143,250, respectively, which was to be paid upon the achievement of the above described performance targets for each of such officers. In 2010, due to Ladish and its operating units significantly exceeding performance targets, Messrs. Vroman, Larsen, Turner, Delaney and Hammond received cash bonuses of $960,000, $640,000, $320,000, $320,000 and $320,000. Because of the relative importance of our Executive Officer Incentive Plan to total compensation and its direct link to the achievement of specific performance targets, we believe that the Executive Officer Incentive Plan remains an important part of our compensation program.

Stock Options

We established the Stock Option Program in 1996 to promote our long-term financial success by providing for the award of equity-based incentives to key employees and other persons providing material services to us. Initially approximately forty (40) persons were granted options. The Stock Option Program provided a means whereby such individuals acquired shares of Common Stock through the grant of stock options and stock appreciation rights. In 2010, no stock options were awarded. We have not awarded stock options since 2000. In 2010, all of the remaining, outstanding options were exercised.

2006 Long-Term Incentive Plan

In 2006, the Compensation Committee approved and recommended that the full Board of Directors adopt the Long-Term Incentive Plan in recognition of the fact the Stock Option Program has no further stock options and our executives have not received any stock options since 2000. The Long-Term Incentive Plan allows the Compensation Committee to annually make discretionary awards of deferred compensation into investment accounts of designated executives and key management. These discretionary awards vest over a four (4) year period. The overall objective of the Long-Term Incentive Plan is to attract and retain the best possible executive talent, to motivate these executives to achieve the goals inherent in our business strategy and to provide a compensation package that recognizes individual contributions as well as overall business results. For the year ending December 31, 2010, no discretionary Long-Term Incentive Plan awards were awarded to Messrs. Vroman, Larsen, Turner, Delaney and Hammond. As of December 31, 2009 and 2010, the rabbi trust into which Long-Term Incentive Plan payments are made, had $773,893 and $734,966 in assets, respectively.

2010 Restricted Stock Unit Plan

The 2010 Restricted Stock Unit Plan of Ladish was approved by the Board of Directors on March 29, 2010 and was subsequently authorized by Ladish stockholders on May 5, 2010. The restricted stock units were awarded by the Board on May 5, 2010. The grant of restricted stock units vests evenly over the course of five years. Even though vested, the awards are not exercisable until such time as the recipient, if an employee, leaves the employment of Ladish, or a recipient who is a director ceases to serve on the Ladish Board of Directors. In the event of a change of control of the ownership of Ladish, the restricted stock units immediately vest and are fully exercisable.

Other Benefits

We maintain certain other plans which provide, or may provide compensation and benefits to our named executive officers. These plans are principally our pension plan, supplemental executive retirement plan, 401(k) plan and deferred compensation plan. We have elected to provide these benefits in order to attract and retain crucial talent, as well as ensuring a secure retirement for employees who contribute to our success over a sustained period of time.

Pension Plan

We maintain a defined benefit pension plan for all salaried employees at our main Wisconsin facility including three of the named executive officers. Compensation covered by our pension plan includes salary. Upon termination of employment, the employee may receive benefits in the form of a monthly payment on a straight life annuity basis and such amounts are not subject to any deduction for Social Security or other offset amounts. For more information concerning our defined benefit plan, see the discussion following the Pension Benefit Table, “Defined Benefit Plan.”

Several of our operating business units do not have a defined benefit pension plan for the employees of those units. For certain of those employees, we have established a deferred compensation plan in lieu of a defined benefit plan. The assets in these deferred compensation plans are held in rabbi trusts. As of December 31, 2009 and 2010, there were $422,527 and $530,892, respectively, of assets in these rabbi trusts. In 2010, we contributed $11,250 and $5,852 into this program on behalf of Messrs. Turner and Delaney, respectively.

Supplemental Retirement Agreements

We have a supplemental executive retirement agreement with three of the five named executive officers, which supplements each such officer’s retirement income. Under the agreements, such named executive officers are entitled to receive a monthly retirement for the lifetime of such officer. These supplemental retirement agreements provide that the calculation of average base salary for these individuals can include up to 20% of bonus amounts. For more information concerning the supplemental executive retirement agreements, see the discussion following the Pension Benefit Table, “Officer Plans.”

401(k) Plan

The Ladish Co., Inc. Savings and Deferral Investment Plan, which has been qualified under section 401(k) of the Internal Revenue Code, provides that, subject to the limitations of the Internal Revenue Code, salaried, non-union employees with six months’ service may contribute 1% to 50% of their annual base salary to the Savings and Deferral Investment Plan and we may provide a matching contribution in an amount to be determined by the Board of Directors. Employees’ contributions of 1% to 50% can be “before tax” contributions, “after tax” contributions or a combination of both. The employees’ contributions and our matching contribution may be placed by the employee in a fixed income fund, an equity investment fund or various combinations of each.

Deferred Compensation

The Elective Deferred Compensation Plan was approved by the Board of Directors during 2000 and became effective during the fourth quarter of 2000. The Elective Deferred Compensation Plan is available to management employees of the Company and its subsidiaries. Participants in the Elective Deferred Compensation Plan may elect to defer salary and/or bonus on an unsecured basis and may select any of eight investment options. We do not match contributions to the Elective Deferred Compensation Plan and we do not guaranty any return on any of the investment options available to the participants in the Elective Deferred Compensation Plan. Amounts deferred under the Elective Deferred Compensation Plan are placed into a rabbi trust. This rabbi trust had assets of $2,526,843 and $2,087,939, respectively, as of December 31, 2009 and 2010.

Perquisites

In 2010, we provided certain perquisites as summarized below:

Company Cars for Personal Use

During 2010, Messrs. Vroman, Larsen, Turner, Delaney and Hammond used our vehicles for personal travel, resulting in a benefit to the executives of $14,297, $9,436, $6,000, $15,464 and $11,905, respectively.

Life Insurance

We provide supplemental term life insurance to certain of our executives. For 2010, this benefit was valued at $1,296, $2,304, $3,034, $147 and $3,276, respectively, for Messrs. Vroman, Larsen, Turner, Delaney and Hammond.

Risk

The nature of the Company’s business does not subject it to high degrees of risk. Correspondingly, the Company’s compensation policies and practices are not directly related to the Company’s risk management. Rather, the Company bases its compensation policies and practices on the direct financial results of the Company. None of the Company’s executives or highly-paid individuals participate in a compensation program whereby their compensation could increase through subjecting the Company to added risk.

The Summary Compensation Table sets forth for fiscal years December 31, 2010, 2009 and 2008 all compensation awarded to, earned by or paid to our Chief Executive Officer, the Principal Financial Officer and each of the other three (3) most highly compensated executive officers.

Summary Compensation Table

																										Change in
																										Pension Value
																										&
																						Non-Equity				Nonqualified
																						Incentive				Deferred				All Other
																						Plan				Compensa-				Compen-
Name and Principal														Stock				Option				Compensa-				tion Earnings				sation
Position		Year				Salary				Bonus				Awards				Awards				tion				(1)(2)(3)				(4)				Total
Gary J. Vroman			2010			$	449,040				—			$	5,880,000				—			$	960,000			$	296,703			$	15,593			$	7,601,336
President & Chief			2009			$	311,235				—				—				—				—			$	173,839			$	13,847			$	498,921
Executive Officer			2008			$	286,312			$	24,650				—				—			$	95,700			$	131,985			$	12,425			$	551,072
Wayne E. Larsen			2010			$	311,815				—			$	4,410,000				—			$	640,000			$	300,421			$	11,740			$	5,673,976
Vice President Law/			2009			$	295,386				—				—				—				—			$	237,961			$	10,264			$	543,611
Finance & Secretary			2008			$	280,963			$	25,500				—				—			$	169,500			$	62,626			$	9,364			$	547,953
Randy B. Turner			2010			$	229,173				—			$	1,764,000				—			$	320,000			$	16,988			$	9,034			$	2,339,195
President — Pacific Cast			2009			$	215,000				—				—				—			$	60,200			$	15,784			$	7,968			$	298,952
Technologies, Inc.			2008			$	214,519			$	18,275				—				—			$	81,700			$	(18,944	)		$	7,961			$	303,511
John J. Delaney (5)			2010			$	200,000				—			$	1,764,000				—			$	320,000			$	9,827			$	15,611			$	2,309,438
President — Stowe			2009				—				—				—				—				—				—				—				—
Machine Co., Inc. & Aerex LLC			2008				—				—				—				—				—				—				—				—
Lawrence C. Hammond			2010			$	190,864				—				1,764,000				—			$	320,000			$	94,685			$	15,181			$	2,384,730
Vice President			2009			$	178,500				—				—				—				—			$	205,445			$	14,316			$	398,261
Human Resources			2008			$	173,693			$	15,470				—				—			$	63,700			$	(30,027	)		$	18,647			$	241,483

2010 Grants of Plan-Based Awards

																														All
																														Other				All Other
																														Stock				Option
																														Awards:				Awards:
																														Number				Number				Exercise
																														of				of				or Base
						Estimated Possible Payouts Under												Estimated Future Payouts Under												Shares				Securities				Price of
						Non-Equity Incentive Plan Awards												Equity Incentive Plan Awards												of Stock				Underlying				Option
		Grant												No				Threshold				Target				Maximum				or Units				Options				Awards
Name		Date				Threshold				Target				Maximum				(#)				(#)				(#)				(#)				(#)				($/Sh)
Gary J. Vroman			1/28/10			$	190,000			$	403,750				—				—				—				—				—				—				—
Wayne E. Larsen			1/28/10			$	109,200			$	234,000				—				—				—				—				—				—				—
Randy B. Turner			1/28/10			$	78,750			$	168,750				—				—				—				—				—				—				—
John J. Delaney			1/28/10			$	70,000			$	150,000				—				—				—				—				—				—				—
Lawrence C. Hammond			1/28/10			$	66,850			$	143,250				—				—				—				—				—				—				—

Disclosure Regarding the Summary Compensation Table. We have structured our executive compensation program to attract and retain key employees by tying the individual’s total compensation to both our performance and the individual executive’s performance and contribution. We consider annual performance which is reflected in the awards under the Executive Officer Incentive Plan as well as long-term contributions which are reflected in base salary and the Long-Term Incentive Plan. Retention of key employees is addressed by separate agreements with those individuals. We have entered into employment agreements with Messrs. Vroman, Larsen, and Hammond which are substantially similar in all respects. The basic agreement provides for a number of benefits all of which vest after 10 years of employment, three of which must be as an officer, and include group term life insurance, health and dental coverage and long-term disability coverage. We have separate agreements with Messrs. Turner and Delaney. See “Potential Payments Upon Termination or Change-in-Control.”

Outstanding Equity Awards at December 31, 2010

Option Awards

Stock Awards

Equity

Equity

Incentive

Market

Incentive

Plan

Value

Plan

Awards:

Number

of

Awards:

Market or

Equity

of

Shares

Number of

Payout

Incentive

Shares

or

Unearned

Value of

Plan Awards

or Units

Units

Shares,

Unearned

Number of

Number of

Number of

of Stock

of

Units or

Shares,

Securities

Securities

Securities

That

Stock

Other

Units or

Underlying

Underlying

Underlying

Option

Have

That

Rights

Other

Unexercised

Unexercised

Unexercised

Option

Expira-

Not

Have

That Have

Rights

Options (#)

Options (#)

Unearned

Exercise

tion

Vested

Not

Not Vested

That Have

Name

Exercisable

Unexercisable

Options (#)

Price

Date

(#)

Vested

(#)

Not Vested

Gary J. Vroman

—

—

—

—

—

122,500

$

5,880,000

—

—

Wayne E. Larsen

—

—

—

—

—

91,875

$

4,410,000

—

—

Randy B. Turner

—

—

—

—

—

36,750

$

1,764,000

—

—

John J. Delaney

—

—

—

—

—

36,750

$

1,764,000

—

—

Lawrence C. Hammond

—

—

—

—

—

36,750

$

1,764,000

—

—

2010 Restricted Stock Units

Option Awards

Stock Awards

Number of

Number of

Shares Acquired

Value Realized

Shares Acquired

Value Realized

Name

on Exercise (#)

on Exercise

on Vesting (#)

on Vesting

Gary J. Vroman

—

—

—

—

Wayne E. Larsen

—

—

—

—

Randy B. Turner

—

—

—

—

John J. Delaney

—

—

—

—

Lawrence C. Hammond

—

—

—

—

Pension Benefits as of December 31, 2010

												Payments
				Years of				Present Value of				During
				Credited				Accumulated				Last
Name		Plan Name		Service				Benefit				Fiscal Year
Gary J. Vroman		Salaried Pension Plan			28.6			$	463,252				—
		Supplemental Retirement Agreement			15.3			$	716,373				—
Wayne E. Larsen		Salaried Pension Plan			29.9			$	634,652				—
		Supplemental Retirement Agreement			24.9			$	812,927				—
Randy B. Turner		—			—				—				—
John J. Delaney		—			—				—				—
Lawrence C. Hammond		Salaried Pension Plan			30.2			$	620,423				—
		Supplemental Retirement Agreement			17.1			$	570,293				—

Defined Benefit Plan

The Ladish Co., Inc. Salaried Pension Plan (the “Pension Plan”) is a “defined benefit” pension plan generally covering salaried, non-union employees at the Cudahy, Wisconsin facility who are not covered by any other defined benefit plan to which we make contributions pursuant to a collective bargaining agreement.

Upon reaching normal retirement at or after age 65, a participant is generally entitled to receive an annual retirement benefit for life. The Pension Plan provides alternative actuarially equivalent forms of benefit payment. Vesting under the Pension Plan occurs after five years of continued service.

The monthly retirement benefit at the normal retirement age of at least 65 is determined pursuant to a formula as follows: 1.25% of the average base salary (exclusive of bonuses or other incentive or special compensation) of the individual during the consecutive five year period of service within the ten years preceding termination of employment (or after age 45, if longer) that his/her earnings were highest multiplied by the number of years of benefit service (as defined in the plan). Monthly normal retirement benefits are payable on a straight life annuity basis and such amounts are not subject to any deduction for Social Security or other offset amounts.

The following table sets forth the annual benefits payable to a participant who qualified for normal retirement in 2010, with the specified highest average earnings during the consecutive five year period of service within the ten years prior to retirement and the specified years of benefit service:

Average Annual Earnings
for Highest 5-Year Period
Within the 10-Years		Years of Benefit Service
Preceding Retirement		10				15				20				25				30				40
$50,000		$	6,250			$	9,375			$	12,500			$	15,625			$	18,750			$	25,000
$100,000		$	12,500			$	18,750			$	25,000			$	31,250			$	37,500			$	50,000
$150,000		$	18,750			$	28,125			$	37,500			$	46,875			$	56,250			$	75,000
$200,000		$	25,000			$	37,500			$	50,000			$	62,500			$	75,000			$	100,000
$250,000		$	31,250			$	46,875			$	62,500			$	78,125			$	93,750			$	125,000
$300,000		$	37,500			$	56,250			$	75,000			$	93,750			$	112,500			$	150,000

The years of benefit service for Messrs. Vroman, Larsen and Hammond as of December 31, 2010 were 28.6, 29.9 and 30.2, respectively.

Officer Plans

We have entered into officer agreements with four current officers of the Company, including Messrs. Vroman, Larsen and Hammond. Each employee covered by the agreements, upon full vesting, is entitled to receive supplemental disability or retirement benefits; provided that in no event may a person’s total retirement benefits under the agreements exceed 60% of the monthly average base salary (inclusive of bonuses or other compensation) during the five calendar years immediately preceding retirement.

The retirement benefit at the normal retirement age of at least 62 is determined pursuant to a formula as follows: 60% of the monthly average of the employee’s base salary plus any incentive compensation which does not exceed twenty percent of the base salary during the five calendar years of highest compensation over ten years immediately preceding retirement multiplied by years of service, up to 15, and divided by 15. If an employee suffers a disability (as defined in the plan), he is entitled to benefits paid under the same formula as in the preceding sentence (with his years of service calculated as if he had retired at age 62), reduced by other disability benefits paid by us or through workers’ compensation (unless he is receiving fixed statutory payments for certain bodily injuries).

Any amount to be paid under the agreements shall be reduced by any benefit paid to an employee or his beneficiary pursuant to the pension plan. All assumptions utilized by the Pension Plan and the Officer Plans can be found in pension footnote No. 8 to our audited financial statements contained in our Annual Report on Form 10-K for the year ending December 31, 2010.

2010 Nonqualified Deferred Compensation

		Executive				Registrant				Aggregate				Aggregate				Aggregate
		Contributions in				Contributions in				Earnings in				Withdrawals/				Balance at
Name		2010				2010 (1)				2010				Distributions				December 31, 2010
Gary J. Vroman			—				—			$	11,289				—			$	78,422
Wayne E. Larsen		$	31,182				—			$	111,848				—			$	976,173
Randy B. Turner			—				—			$	16,988				—			$	115,700
John J. Delaney			—				—			$	9,827				—			$	81,913
Lawrence C. Hammond		$	124,630				—			$	81,792				—			$	602,848

Participants in the Elective Deferred Compensation Plan may elect to defer salary and/or bonus on an unsecured basis and may select any of eight investment options. We do not match contributions to this Plan and we do not guaranty any return on any of the investment options in this Plan.

Potential Payments Upon Termination or Change-in-Control

We have entered into employment agreements with Messrs. Vroman, Larsen and Hammond which are substantially similar in all respects. The basic employment agreement provides for a number of benefits, all of which vest after ten years of employment, including group term life insurance, health and dental coverage and long-term disability coverage.

The agreements provide that, upon the involuntary termination of the employee other than for cause, we are required to pay the employee 24 months of severance pay, determined by the employee’s base monthly salary at the time of termination. In the case of Messrs. Vroman and Larsen they are entitled to 30 months of severance pay. Upon retirement at age 62, the employee will receive his normal retirement benefits. Such benefits include a monthly payment equal to 60% of the employee’s average compensation (i.e., monthly average of compensation for the five years of highest compensation over the ten years prior to retirement) multiplied by a fraction, the numerator of which is the length of service of the employee up to 15 and the denominator of which is 15. There are also provisions adjusting this calculation in the event of early retirement. Disabled employees can also be eligible for certain retirement benefits. All retirement benefits are tolled during any period of re-employment by us. Each agreement further provides that any compensation paid by us shall be reduced by any benefit paid under our salaried employees’ retirement plan. Mr. Turner has a separate agreement with us which provides for 12 months of severance pay in the event of involuntary separation other than for cause.

Tables Summarizing Payments Following Termination

The following tables describe the potential payments upon termination. These tables assume the executive’s employment was terminated on December 31, 2010, the last business day of our fiscal year.

The following table sets forth certain information relating to compensation following a termination of employment of Gary J. Vroman.

						Involuntary
Executive Benefits and		Voluntary				Not For Cause				For Cause
Payments Upon Termination		Termination				Termination				Termination				Death				Disability
Compensation:
Severance		$	—			$	1,187,500			$	—			$	—			$	—
Supplemental Retirement Plan			716,373				716,373				716,373				716,373				716,373
Benefits and Perquisites:
Post-Termination Health Insurance (1)			360,098				360,098				360,098				215,269				360,098
Life Insurance Proceeds (2)			100,000				100,000				100,000				200,000				100,000
Disability Benefits (3)			180,000				180,000				180,000				—				180,000
Total:		$	1,356,471			$	2,543,971			$	1,356,471			$	1,131,642			$	1,356,471

The following table sets forth certain information relating to compensation following a termination of employment of Wayne E. Larsen.

						Involuntary
Executive Benefits and		Voluntary				Not For Cause				For Cause
Payments Upon Termination		Termination				Termination				Termination				Death				Disability
Compensation:
Severance		$	—			$	780,000			$	—			$	—			$	—
Supplemental Retirement Plan			812,927				812,927				812,927				812,927				812,927
Benefits and Perquisites:
Post-Termination Health Insurance (1)(4)			339,463				339,463				339,463				201,078				339,463
Life Insurance Proceeds (2)			100,000				100,000				100,000				200,000				100,000
Disability Benefits (3)			180,000				180,000				180,000				—				180,000
Total:		$	1,432,390			$	2,212,390			$	1,432,390			$	1,214,005			$	1,432,390