PREFORMED LINE PRODUCTS CO - Annual Report: 2008 (Form 10-K)

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2008

Preformed Line Products Company

(Exact name of registrant as specified in its charter)

Ohio		34-0676895
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
660 Beta Drive Mayfield Village, Ohio		44143
(Address of Principal Executive Office)		(Zip Code)

(440) 461-5200
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
Common Shares, $2 par value per share		NASDAQ

Securities registered pursuant to Section 12(g) of the Act: (None)

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the 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. o

     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):

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 and non-voting common shares held by non-affiliates of the registrant as of June 30, 2008 was $102,913,405, based on the closing price of such common shares, as reported on the NASDAQ National Market System. As of March 6, 2009 there were 5,225,630 common shares of the Company ($2 par value) outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 27, 2009 are incorporated by reference into Part III, Items 10, 11, 12, 13 and 14.

 

 

Table of Contents

						Page
Part I.
		Item 1.		Business			4
		Item 1A.		Risk Factors			12
		Item 1B.		Unresolved Staff Comments			14
		Item 2.		Properties			14
		Item 3.		Legal Proceedings			16
		Item 4.		Submission of Matters to a Vote of Security Holders			16
Part II.
		Item 5.		Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities			17
		Item 6.		Selected Financial Data			19
		Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
		Item 7A.		Quantitative and Qualitative Disclosures About Market Risk			33
		Item 8.		Financial Statements and Supplementary Data			34
		Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			63
		Item 9A.		Controls and Procedures			63
		Item 9B.		Other Information			65
Part III.
		Item 10.		Directors, and Executive Officers and Corporate Governance			65
		Item 11.		Executive Compensation			65
		Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			66
		Item 13.		Certain Relationships, Related Transactions, and Director Independence			66
		Item 14.		Principal Accounting Fees and Services			66
Part IV.
		Item 15.		Exhibits and Financial Statements Schedules			66
SIGNATURES							68
Schedule II — Valuation and Qualifying Accounts							69
EX-21
EX-23.1
EX-23.2
EX-31.1
EX-31.2
EX-32.1
EX-32.2

Forward-Looking Statements

          This Form 10-K and other documents we file with the Securities and Exchange Commission (SEC) contain forward-looking statements regarding the Company’s and management’s beliefs and expectations. As a general matter, forward-looking statements are those focused upon future plans, objectives or performance (as opposed to historical items) and include statements of anticipated events or trends and expectations and beliefs relating to matters not historical in nature. Such forward-looking statements are subject to uncertainties and factors relating to the Company’s operations and business environment, all of which are difficult to predict and many of which are beyond the Company’s control. Such uncertainties and factors could cause the Company’s actual results to differ materially from those matters expressed in or implied by such forward-looking statements.

     The following factors, among others, could affect the Company’s future performance and cause the Company’s actual results to differ materially from those expressed or implied by forward-looking statements made in this report:

	•		The overall demand for cable anchoring and control hardware for electrical transmission and distribution lines on a worldwide basis, which has a slow growth rate in mature markets such as the United States (U.S.), Canada, and Western Europe;
	•		The ability of our customers to raise funds needed to build the facilities their customers require;
	•		Technological developments that affect longer-term trends for communication lines such as wireless communication;
	•		The decreasing demands for product supporting copper-based infrastructure due to the introduction of products using new technologies or adoption of new industry standards;
	•		The Company’s success at continuing to develop proprietary technology to meet or exceed new industry performance standards and individual customer expectations;
	•		The Company’s success in implementing price increases to offset rising material costs;
	•		The Company’s success in strengthening and retaining relationships with the Company’s customers, growing sales at targeted accounts and expanding geographically;
	•		The extent to which the Company is successful in expanding the Company’s product line into new areas;
	•		The Company’s ability to identify, complete and integrate acquisitions for profitable growth;
	•		The potential impact of consolidation, deregulation and bankruptcy among the Company’s suppliers, competitors and customers;
	•		The relative degree of competitive and customer price pressure on the Company’s products;
	•		The cost, availability and quality of raw materials required for the manufacture of products;
	•		The effects of fluctuation in currency exchange rates upon the Company’s reported results from international operations, together with non-currency risks of investing in and conducting significant operations in foreign countries, including those relating to political, social, economic and regulatory factors;
	•		Changes in significant government regulations affecting environmental compliances;
	•		The telecommunication market’s continued deployment of Fiber-to-the-Premises;
	•		The Company’s ability to obtain funding for future acquisitions;

	•		The potential impact of the depressed housing market on the Company’s ongoing profitability and future growth opportunities;
	•		Those factors described under the heading “Risk Factors” on page 12.

Part I

Item 1. Business

Background

          Preformed Line Products Company and its subsidiaries (the “Company”) is an international designer and manufacturer of products and systems employed in the construction and maintenance of overhead and underground networks for the energy, telecommunication, cable operators, information (data communication) and other similar industries. The Company’s primary products support, protect, connect, terminate and secure cables and wires. The Company also provides solar hardware systems and mounting hardware for a variety of solar power applications. The Company’s goal is to continue to achieve profitable growth as a leader in the innovation, development, manufacture and marketing of technically advanced products and services related to energy, communications and cable systems and to take advantage of this leadership position to sell additional quality products in familiar markets.

          The Company serves a worldwide market through strategically located domestic and international manufacturing facilities. Each of the Company’s domestic and international manufacturing facilities have obtained an International Organization of Standardization (“ISO”) 9001:2000 Certified Management System, with the exception of Direct Power and Water Corporation (DPW), which was newly acquired during 2007. The ISO 9001:2000 certified management system is a globally recognized quality standard for manufacturing and assists the Company in marketing its products throughout the world. The Company’s customers include public and private energy utilities and communication companies, cable operators, financial institutions, governmental agencies, contractors and subcontractors, distributors and value-added resellers. The Company is not dependent on a single customer or a few customers. No single customer accounts for more than ten percent of the Company’s consolidated revenues.

          The Company’s products include:

	•		Formed Wire and Related Hardware Products
	•		Protective Closures
	•		Data Communication Cabinets
	•		Plastic Products
	•		Other Products

          Formed Wire Products and Related Hardware Products are used in the energy, communications, cable and special industries to support, protect, terminate and secure both power conductor and communication cables and to control cable dynamics (e.g., vibration). Formed wire products are based on the principle of forming a variety of stiff wire materials into a helical (spiral) shape. Advantages of using the Company’s helical formed wire products are that they are economical, dependable and easy to use. The Company introduced formed wire products to the power industry over 60 years ago and such products enjoy an almost universal acceptance in the Company’s markets. Related hardware products include hardware for supporting and protecting transmission conductors, spacers, spacer-dampers, stockbridge dampers, corona suppression devices and various compression fittings for dead-end applications. Formed wire and related hardware products are approximately 59% of the Company’s revenues in 2008, 60% in 2007 and 59% in 2006.

          Protective Closures, including splice cases, are used to protect fixed line communication networks, such as copper cable or fiber optic cable, from moisture, environmental hazards and other potential contaminants. Protective closures are approximately 24% of the Company’s revenues in 2008, 27% in 2007 and 28% in 2006.

          Data Communication Cabinets are products used in high-speed data systems to hold and protect electronic equipment. Data communication cabinets are approximately 5% of the Company’s revenues in 2008, 6% in 2007 and 5% in 2006.

          Plastic Products, including guy markers, tree guards, fiber optic cable markers and pedestal markers, are used in energy, communications, cable television and special industries to identify power conductors, communication cables and guy wires. Plastic products are approximately 3% of the Company’s revenues in 2008, 2% in 2007 and 3% in 2006.

          Other Products include hardware assemblies, pole line hardware, resale products, underground connectors, solar hardware systems and urethane products. They are used by energy, renewable energy, communications, cable and special industries for various applications and are defined as products that compliment the Company’s core line offerings. Other products are approximately 9% of the Company’s revenues in 2008 and 5% in 2007 and 2006.

Corporate History

          The Company was incorporated in Ohio in 1947 to manufacture and sell helically shaped “armor rods,” which are sets of stiff helically shaped wires applied on an electrical conductor at the point where it is suspended or held. Thomas F. Peterson, the Company’s founder, developed and patented a unique method to manufacture and apply these armor rods to protect electrical conductors on overhead power lines. Over a period of years Mr. Peterson and the Company developed, tested, patented, manufactured and marketed a variety of helically shaped products for use by the electrical and telephone industries. Although all of Mr. Peterson’s patents have now expired, those patents served as the nucleus for licensing the Company’s formed wire products abroad.

          The success of the Company’s formed wire products in the U.S. led to expansion abroad. The first international license agreement was established in the mid-1950s in Canada. In the late 1950s the Company’s products were being sold through joint ventures and licensees in Canada, England, Germany, Spain and Australia. Additionally, the Company began export operations and promoted products into other selected offshore markets. The Company continued its expansion program, bought out most of the original licensees, and, by the mid-1990s, had complete ownership of operations in Australia, Brazil, Canada, Great Britain, South Africa and Spain and held a minority interest in two joint ventures in Japan. The Company’s international subsidiaries have the necessary infrastructure (i.e. manufacturing, engineering, marketing and general management) to support local business activities. Each is staffed with local personnel to ensure that the Company is well versed in local business practices, cultural constraints, technical requirements and the intricacies of local client relationships.

          In 1968, the Company expanded into the underground telecommunications field by its acquisition of the Smith Company located in California. The Smith Company had a patented line of buried closures and pressurized splice cases. These closures and splice cases protect copper cable openings from environmental damage and degradation. The Company continued to build on expertise acquired through the acquisition of the Smith Company and in 1995 introduced the highly successful COYOTEâ Closure line of products. Since 1995 fourteen domestic and three international patents have been granted to the Company on the COYOTE Closure. None of the COYOTE Closure patents have expired. The earliest COYOTE Closure patent was filed in April 1995 and will not expire until April 2015.

          In 1993, the Company purchased the assets of Superior Modular Products Company. Located in Asheville, North Carolina, Superior Modular Products is a technical leader in the development and manufacture of high-speed interconnection devices for voice, data and video applications. This acquisition was the catalyst to expand the Company’s range of communication products to components for structuring cabling systems used inside a customer’s premises.

          Recognizing the need for a stronger presence in the fast growing Asian market, in 1996 the Company formed a joint venture in China and, in 2000, became sole owner of this venture.

          In 2000, the Company acquired Rack Technologies Pty. Ltd, headquartered in Sydney, Australia. Rack Technologies is a specialist manufacturer of rack system enclosures for the communications, electronics and

securities industries. This acquisition complements and broadens the Company’s existing line of data communication products used inside a customer’s premises.

          In 2002, the Company acquired the remaining 2.6% minority interest in its operations in Mexico. The 97.4% interest was acquired in 1969.

          In 2003, the Company sold its 24% interest in Toshin Denko Kabushiki Kaisha in Osaka, Japan. The Company’s investment in Toshin Denko dates back to 1961 when the joint venture company was founded.

          In 2004, the Company acquired the assets of Union Electric Manufacturing Co. Ltd, located in Bangkok, Thailand.

          In 2004, the Company sold its 49% interest in Japan PLP Co. Ltd., a joint venture in Japan.

          In 2007, the Company acquired the shares of DPW, located in New Mexico, U.S. This acquisition broadens the Company’s product lines and manufactures mounting hardware for a variety of solar power applications and provides designs and installations of solar power systems.

          In 2007, the Company acquired 83.74% of Belos SA (Belos), located in Bielsko-Biala, Poland. Belos is a manufacturer and supplier of fittings for various voltage power networks. This acquisition complements the Company’s existing line of energy products. In 2008, the Company acquired 8.3% additional shares of Belos.

          In 2008, the Company divested its data communication business Superior Modular Products (SMP).

          The Company’s World headquarters is located at 660 Beta Drive, Mayfield Village, Ohio 44143.

Business

          The demand for the Company’s products comes primarily from new, maintenance and repair construction for the energy, telecommunication and data communication industries. The Company’s customers use many of the Company’s products, including formed wire products, to revitalize the aging outside plant infrastructure. Many of the Company’s products are used on a proactive basis by the Company’s customers to reduce and prevent lost revenue. A single malfunctioning line could cause the loss of thousands of dollars per hour for a power or communication customer. A malfunctioning fiber cable could also result in substantial revenue loss. Repair construction by the Company’s customers generally occurs in the case of emergencies or natural disasters, such as hurricanes, tornadoes, earthquakes, floods or ice storms. Under these circumstances, the Company provides 24-hour service to provide the repair products to customers as quickly as possible.

          The Company has adapted the formed wire products’ helical technology for use in a wide variety of fiber optic cable applications that have special requirements. The Company’s formed wire products are uniquely qualified for these applications due to the gentle gripping over a greater length of the fiber cable. This is an advantage over traditional pole line hardware clamps that compress the cable to the point of possible fatigue and optical signal deterioration.

          The Company’s protective closures and splice cases are used to protect cable from moisture, environmental hazards and other potential contaminants. The Company’s splice cases are easily re-enterable closures that allow utility maintenance workers access to the cables located inside the closure to repair or add communications services. Over the years, the Company has made many significant improvements in the splice case that have greatly increased their versatility and application in the market place. The Company also designs and markets custom splice cases to satisfy specific customer requirements. This has allowed the Company to remain a strong partner with several primary customers and has earned the Company the reputation as a responsive and reliable supplier.

          Fiber optic cable was first deployed in the outside plant environment in the early 1980s. Through fiber optic technologies, a much greater amount of both voice and data communication can be transmitted reliably. In addition, this technology solved the cable congestion problem that the large count copper cable was causing in underground, buried and aerial applications. The Company developed and adapted copper closures for use in the

emerging fiber optic world. In the late 1980s, the Company developed a series of splice cases designed specifically for fiber application. In the mid-1990s, the Company developed its plastic COYOTE Closure, and has since expanded the product line to address emerging Fiber-to-the-Premise (FTTP) applications. The COYOTE Closure is an example of the Company developing a new line of proprietary products to meet the changing needs of its customers.

          The Company also designs and manufactures data communication cabinets and enclosures for data communication networks, offering a comprehensive line of copper and fiber optic cross-connect systems. The product line enables reliable, high-speed transmission of data over customers’ local area networks.

          With the acquisition of DPW in 2007, the Company expanded into the fast growing renewable energy sector. DPW provides a comprehensive line of mounting hardware for a variety of solar power applications including residential roof mounting, commercial roofing systems, top of pole mounting and customized solutions. DPW also provides design and installation services for residential and commercial solar power systems primarily in the western U.S.

Markets

          The Company markets its products to the energy, telecommunication, cable, data communication and special industries. While rapid changes in technology have blurred the distinctions between telephone, cable, and data communication, the energy industry is clearly distinct. The Company’s role in the energy industry is to supply formed wire products and related hardware used with the electrical conductors, cables and wires that transfer power from the generating facility to the ultimate user of that power. Formed wire products are used to support, protect, terminate and secure both power conductor and communication cables and to control cable dynamics.

          Electric Utilities — Transmission. The electric transmission grid is the interconnected network of high voltage aluminum conductors used to transport large blocks of electric power from generating facilities to distribution networks. Currently, there are three major power grids in the U.S.: the Eastern Interconnect, the Western Interconnect and the Texas Interconnect. Virtually all electrical energy utilities are connected with at least one other utility by one of these major grids. The Company believes that the transmission grid has been neglected throughout much of the U.S. for more than a decade. Additionally, because of deregulation, some electric utilities have turned this responsibility over to Independent System Operators (ISOs), who have also been slow to add transmission lines. With demand for power now exceeding supply in some areas, the need for the movement of bulk power from the energy-rich states to the energy-deficient areas means that new transmission lines will likely be built and many existing lines will likely be refurbished. In addition, passage of the economic stimulus bill in early 2009 that contains provisions for upgrading the aging transmission infrastructure and connecting renewable energy sources to the grid should attract new investment to fund new infrastructure projects in the industry. The Company believes that this will generate growth for the Company’s products in this market over at least the next several years. In addition, increased construction of international transmission grids is occurring in many regions of the world. However, consolidations in the markets that the Company services may also have an adverse impact on the Company’s revenues.

          Electric Utilities — Distribution. The distribution market includes those utilities that distribute power from a substation where voltage is reduced to levels appropriate for the consumer. Unlike the transmission market, distribution is still handled primarily by local electric utilities. These utilities are motivated to reduce cost in order to maintain and enhance their profitability. The Company believes that its growth in the distribution market will be achieved primarily as a result of incremental gains in market share driven by emphasizing the Company’s quality products and service over price. Internationally, particularly in the developing regions, there is increasing political pressure to extend the availability of electricity to additional populations. Through its global network of factories and sales offices, the Company is prepared to take advantage of this new growth in construction.

          Renewable Energy. The renewable energy market includes residential consumers, commercial businesses, off-grid operators, and utility companies that have an interest in alternative energy sources. Environmental concerns along with federal, state, and local utility incentives have fueled demand for renewable energy systems including solar, wind, and biofuel. The passage of the economic stimulus bill, which contains provisions for investment in clean energy technologies, should further drive future demand for alternative energy sources like solar. The industry

continues to grow rapidly as advancements in technology lead to greater efficiencies which drive down overall system costs. The Company currently provides hardware solutions, system design and installation services for solar power applications. The Company markets and sells these products and services to end-users, distributors, installers and integrators.

          Communication and Cable. Major developments, including growing competition between the cable and communications industries and increasing overall demand for high-speed communication services, have led to a changing regulatory and competitive environment in many markets throughout the world. The deployment of new access networks and improvements to existing networks for advanced applications continues to gain momentum.

          Cable operators, local communication operators and power utilities are building, rebuilding or upgrading signal delivery networks in developed countries. These networks are designed to deliver video and voice transmissions and provide Internet connectivity to individual residences and businesses. Operators deploy a variety of network technologies and architectures to carry broadband and narrowband signals. These architectures are constructed of electronic hardware connected via coaxial cables, copper wires or optical fibers. The Company manufactures closures that these industries use to securely connect and protect these vital networks.

          As critical components of the outdoor infrastructure, closures provide protection against weather and vandalism, and permit technicians who maintain and manage the system ready access to the devices. Cable operators and local telephone network operators place great reliance on manufacturers of protective closures because any material damage to the signal delivery networks is likely to disrupt communication services. In addition to closures, the Company supplies the communication and cable industry with its formed wire products to hold, support, protect and terminate the copper wires and cables and the fiber optic cables used by that industry to transfer voice, video or data signals.

          The industry has developed new technological methods to increase the usage of copper-based plant through high-speed digital subscriber lines (DSLs). The popularity of these services, the regulatory environment and the increasingly fierce competition between communications and cable operators has driven the recent move toward building out the “last mile” in fiber networks. FTTP is expected to be the next wave in broadband innovation by carrying fiber optic technology into homes and businesses. The Company has been actively developing products that address this market.

          Data Communication. The data communication market is being driven by the continual demand for increased bandwidth. Growing Internet Service Providers (ISPs), construction in Wide Area Networks (WANs) and demand for products in the workplace are all key elements to the increased demand for the connecting devices made by the Company. This market will increasingly be focused on the systems that provide the highest speed and highest quality signal, such as fiber optic and copper networks. The Company’s products are sold to a number of categories of customers including, (i) ISPs, (ii) large companies and organizations which have their own local area network for data communication, and (iii) distributors of structured cabling systems and components for use in the above markets.

          Special Industries. The Company’s formed wire products are also used in other industries which require a method of securing or terminating cables, including the metal building, tower and antenna industries, the arborist industry, and various applications within the marine systems industry. Products other than formed wire products are also marketed to other industries. For example, the Company’s urethane capabilities allow it to market products to the light rail industry. The Company continues to explore new and innovative uses of its manufacturing capabilities, however, these markets remain a small portion of overall consolidated sales.

International Operations

          The international operations of the Company are essentially the same as its domestic (PLP-USA) business, except for location. The Company manufactures similar types of products in its international plants as are sold domestically, sells to similar types of customers and faces similar types of competition (and in some cases the same competitors). Sources of supply of raw materials are not significantly different internationally. See Note K in the Notes To Consolidated Financial Statements for information and financial data relating to the Company’s international operations that represent reportable segments.

          While a number of the Company’s international plants are in developed countries, the Company believes it has strong market opportunities in developing countries where the need for the transmission and distribution of electrical power is significant. The Company is now serving the Far East market, other than China and Japan, primarily from Thailand. In addition, as the need arises, the Company is prepared to establish new manufacturing facilities abroad.

Sales and Marketing

          Domestically and internationally, the Company markets its products through a direct sales force and manufacturing representatives. The direct sales force is employed by the Company and works with the manufacturer’s representatives, as well as key direct accounts and distributors who also buy and resell the Company’s products. The manufacturer’s representatives are independent organizations that represent the Company as well as other complimentary product lines. These organizations are paid a commission based on the sales amount.

Research and Development

          The Company is committed to providing technical leadership through scientific research and product development in order to continue to expand the Company’s position as a supplier to the communications and power industries. Research is conducted on a continuous basis using internal experience in conjunction with outside professional expertise to develop state-of-the-art materials for several of the Company’s products. These products capitalize on cost-efficiency while offering exacting mechanical performance that meets or exceeds industry standards. The Company’s research and development activities have resulted in numerous patents being issued to the Company (see “Patents and Trademarks” below).

          Early in its history, the Company recognized the need to understand the performance of its products and the needs of its customers. To that end, the Company developed its own Research and Engineering Center in Mayfield Village, Ohio. Using the Research and Engineering Center, engineers and technicians simulate a wide range of external conditions encountered by the Company’s products to ensure quality, durability and performance. The work performed in the Research and Engineering Center includes advanced studies and experimentation with various forms of vibration. This work has contributed significantly to the collective knowledge base of the industries the Company serves and is the subject matter of many papers and seminars presented to these industries.

          The Company’s Research and Engineering Center is 29,000-square-foot located at its corporate headquarters in Mayfield Village, Ohio. The Company believes that this facility is one of the most sophisticated in the world in its specialized field. The expanded Research and Engineering Center also has an advanced prototyping technology machine on-site to develop models of new designs where intricate part details are studied prior to the construction of expensive production tooling. Today, the Company’s reputation for vibration testing, tensile testing, fiber optic cable testing, environmental testing, field vibration monitoring and third-party contract testing is a competitive advantage. In addition to testing, the work done at the Company’s Research and Development Center continues to fuel product development efforts. For example, the Company estimates that approximately 24% of 2008 revenues were attributed to products developed by the Company in the past five years. In addition, the Company’s position in the industry is further reinforced by its long-standing leadership role in many key international technical organizations which are charged with the responsibility of establishing industry wide specifications and performance criteria, including IEEE (Institute of Electrical and Electronics Engineers), CIGRE (Counsiel Internationale des Grands Reseaux Electriques a Haute Tension), and IEC (International Electromechanical Commission). Research and development costs are expensed as incurred. Research and development costs for new products were $2 million in 2008, $1.7 million in 2007 and $2.2 million in 2006.

Patents and Trademarks

     The Company applies for patents in the U.S. and other countries, as appropriate, to protect its significant patentable developments. As of December 31, 2008, the Company had in force 27 U.S. patents and 43 international patents in 11 countries and had pending eight U.S. patent applications and 11 international applications. While such domestic and international patents expire from time to time, the Company continues to

apply for and obtain patent protection on a regular basis. Patents held by the Company in the aggregate are of material importance in the operation of the Company’s business. The Company, however, does not believe that any single patent, or group of related patents, is essential to the Company’s business as a whole or to any of its businesses. Additionally, the Company owns and uses a substantial body of proprietary information and numerous trademarks. The Company relies on nondisclosure agreements to protect trade secrets and other proprietary data and technology. As of December 31, 2008, the Company had obtained U.S. registration on 27 trademarks and two trademark applications remained pending. International registrations amounted to 199 registrations in 35 countries, with 16 pending international registrations.

          Since June 8, 1995, U.S. patents have been issued for terms of 20 years beginning with the date of filing of the patent application. Prior to that time, a U.S. patent had a term of 17 years from the date of its issuance. Patents issued by international countries generally expire 20 years after filing. U.S. and international patents are not renewable after expiration of their initial term. U.S. and international trademarks are generally perpetual, renewable in 10-year increments upon a showing of continued use. To the knowledge of management, the Company has not been subject to any significant allegation or charges of infringement of intellectual property rights by any organization.

          In the normal course of business, the Company occasionally makes and receives inquiries with regard to possible patent and trademark infringement. The extent of such inquiries from third parties has been limited generally to verbal remarks to Company representatives. The Company believes that it is unlikely that the outcome of these inquiries will have a material adverse effect on the Company’s financial position.

Competition

          All of the markets that the Company serves are highly competitive. In each market, the principal methods of competition are price, performance, and service. The Company believes, however, that several factors (described below) provide the Company with a competitive advantage.

	•		The Company has a strong and stable workforce. This consistent and continuous knowledge base has afforded the Company the ability to provide superior service to the Company’s customers and representatives.
	•		The Company’s Research and Engineering Center in Mayfield Village, Ohio and Research and Engineering department’s subsidiary locations maintain a strong technical support function to develop unique solutions to customer problems.
	•		The Company is vertically integrated both in manufacturing and distribution and is continually upgrading equipment and processes.
	•		The Company is sensitive to the marketplace and provides an extra measure of service in cases of emergency, storm damage and other rush situations. This high level of customer service and customer responsiveness is a hallmark of the Company.
	•		The Company’s 14 manufacturing locations ensure close support and proximity to customers worldwide.

          Domestically, there are several competitors for formed wire products. Although it has other competitors in many of the countries where it has plants, the Company has leveraged its expertise and is very strong in the global market. The Company believes that it is the world’s largest manufacturer of formed wire products for energy and communications markets. However, the Company’s formed wire products compete against other pole line hardware products manufactured by other companies.

          Minnesota Manufacturing and Mining Company (“3M”) is the primary domestic competitor of the Company for pressurized copper closures. Based on its experience in the industry, the Company believes it maintains a strong market share position.

          The fiber optic closure market is one of the most competitive product areas for the Company, with the Company competing against, among others, Tyco International Ltd., 3M and Corning Cable Systems. There are a number of primary competitors and several smaller niche competitors that compete at all levels in the marketplace. The Company believes that it is one of four leading suppliers of fiber optic closures.

          The Company’s data communication competitors range from assemblers of low cost, low quality components, to well-established multinational corporations. The Company’s competitive strength is its technological leadership and manufacturing expertise. Additionally, the Company provides products to its licensees and other companies on a privately branded basis. Patented technology developed by the Company is currently licensed to many of its largest competitors. Low-cost Asian competitors, however, keep pressure on prices and will continue to do so.

Sources and Availability of Raw Materials

          The principal raw materials used by the Company are galvanized wire, stainless steel, aluminum covered steel wire, aluminum re-draw rod, plastic resins, glass-filled plastic compounds, neoprene rubbers and aluminum castings. The Company also uses certain other materials such as fasteners, packaging materials and communications cable. The Company believes that it has adequate sources of supply for the raw materials used in its manufacturing processes and it regularly attempts to develop and maintain sources of supply in order to extend availability and encourage competitive pricing of these products.

          Most plastic resins are purchased under contracts to stabilize costs and improve delivery performance and are available from a number of reliable suppliers. Wire and re-draw rod are purchased in standard stock diameters and coils under contracts from a number of reliable suppliers. Contracts have firm prices except for fluctuations of base metals and petroleum prices, which result in surcharges when global demand is greater than the available supply.

          The Company also relies on certain other manufacturers to supply products that complement the Company’s product lines, such as aluminum and ferrous castings, fiber optic cable and connectors, circuit boards and various metal racks and cabinets. The Company believes there are multiple sources of supply for these products.

          The Company relies on sole source manufacturers for certain raw materials used in production. The current state of economic uncertainty presents a risk that existing suppliers could go out of business. However, there are multiple sources for these materials available, and the Company could relocate the tooling and processes to other manufacturers if necessary.

          Due to increasing worldwide demand for carbon steel, stainless steel, aluminum and zinc the costs of raw materials continued to escalate throughout 2008. By the end of 2008, due to the current recession demand has eased and there is downward pressure on costs on most of the Company’s key raw materials.

Backlog Orders

          The Company’s backlog was approximately $26.1 million at the end of 2008. The Company’s order backlog generally represents four to six weeks of sales. All customer orders entered are firm at the time of entry. Substantially all orders are shipped within a two to four week period unless the customer requests an alternative date.

Seasonality

          The Company markets products that are used by utility maintenance and construction crews worldwide. The products are marketed through distributors and directly to end users, who maintain stock to ensure adequate supply for their customers or construction crews. As a result, the Company does not have a wide variation in sales from quarter to quarter.

Environmental

          The Company is subject to extensive and changing federal, state, and local environmental laws, including laws and regulations that (i) relate to air and water quality, (ii) impose limitations on the discharge of pollutants into the environment, (iii) establish standards for the treatment, storage and disposal of toxic and hazardous waste, and (iv) require proper storage, handling, packaging, labeling, and transporting of products and components classified as hazardous materials. Stringent fines and penalties may be imposed for noncompliance with these environmental laws. In addition, environmental laws could impose liability for costs associated with investigating and remediating contamination at the Company’s facilities or at third-party facilities at which the Company has arranged for the disposal treatment of hazardous materials.

          Although no assurances can be given, the Company believes it is in compliance in all material respects, with all applicable environmental laws and the Company is not aware of any noncompliance or obligation to investigate or remediate contamination that could reasonably be expected to result in a material liability. The Company does not expect to make any material capital expenditure during 2009 for environmental control facilities. The environmental laws continue to be amended and revised to impose stricter obligations, and compliance with future additional environmental requirements could necessitate capital outlays. However, the Company does not believe that these expenditures should ultimately result in a material adverse effect on its financial position or results of operations. The Company cannot predict the precise effect such future requirements, if enacted, would have on the Company. The Company believes that such regulations would be enacted over time and would affect the industry as a whole.

Employees

          At December 31, 2008, the Company had 1,858 employees. Approximately 37% of the Company’s employees are located in the U.S.

Available Information

          The Company maintains an Internet site at http://www.preformed.com, on which the Company makes available, free of charge, the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the SEC. The Company’s SEC reports can be accessed through the investor relations section of its Internet site. The information found on the Company’s Internet site is not part of this or any other report that is filed or furnished to the SEC.

          The public may read and copy any materials the Company files with or furnishes to the SEC at the SEC’s Public Reference Room at 100 F. Street, NE., Washington, DC 20549. Information on the operation of the Public Reference Room is available by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information filed with the SEC by electronic filers. The SEC’s Internet site is http://www.sec.gov. The Company also has a link from its Internet site to the SEC’s Internet site, this link can be found on the investor relations page of the Company’s Internet site.

Item 1A. Risk Factors

Due to the Company’s dependency on the energy, telecommunication and renewable energy industries, the Company is susceptible to negative trends relating to those industries that could adversely affect the Company’s operating results.

          The Company’s sales to the energy and telecommunication industries represent a substantial portion of the Company’s historical sales. The concentration of revenue in such industries is expected to continue into the foreseeable future. Demand for products to these industries depends primarily on capital spending by customers for constructing, rebuilding, maintaining or upgrading their systems. The amount of capital spending and, therefore, the Company’s sales and profitability are affected by a variety of factors, including general economic conditions, access by customers to financing, government regulation, demand for energy and cable services, and technological factors. As a result, some customers may not continue as going concerns, which could have a material adverse effect on the

Company’s business, operating results and financial condition. Consolidation and deregulation present the additional risk to the Company in that combined or deregulated customers will rely on relationships with a source other than the Company. Consolidation and deregulation may also increase the pressure on suppliers, such as the Company, to sell product at lower prices.

The Company’s business will suffer if the Company fails to develop and successfully introduce new and enhanced products that meet the changing needs of the Company’s customers.

          The Company’s ability to anticipate changes in technology and industry standards and to successfully develop and introduce new products on a timely basis will be a significant factor in the Company’s ability to grow and remain competitive. New product development often requires long-term forecasting of market trends, development and implementation of new designs and processes and a substantial capital commitment. The trend toward consolidation of the energy, telecommunication and data communication industries may require the Company to quickly adapt to rapidly changing market conditions and customer requirements. Any failure by the Company to anticipate or respond in a cost-effective and timely manner to technological developments or changes in industry standards or customer requirements, or any significant delays in product development or introduction or any failure of new products to be widely accepted by the Company’s customers, could have a material adverse effect on the Company’s business, operating results and financial condition as a result of reduced net sales.

The intense competition in the Company’s markets, particularly telecommunication, may lead to a reduction in sales and profits.

          The markets in which the Company operates are highly competitive. The level of intensity of competition may increase in the foreseeable future due to anticipated growth in the telecommunication and data communication industries. The Company’s competitors in the telecommunication and data communication markets are larger companies with significant influence over the distribution network. There can be no assurance that the Company will be able to compete successfully against its competitors, many of which may have access to greater financial resources than the Company. In addition, the pace of technological development in the telecommunication and data communication markets is rapid and the Company cannot assure that these advances (i.e., wireless, fiber optic network infrastructure, etc.) will not adversely affect the Company’s ability to compete in this market.

The introduction of products embodying new technologies or the emergence of new industry standards can render existing products or products under development obsolete or unmarketable.

          The energy, telecommunication and data communication industries are characterized by rapid technological change. Satellite, wireless and other communication technologies currently being deployed may represent a threat to copper, coaxial and fiber optic-based systems by reducing the need for wire-line networks. There can be no assurance that future advances or further development of these or other new technologies will not have a material adverse effect on the Company’s business, operating results and financial condition as a result of lost sales.

Price increases of raw materials could result in lower earnings.

          The Company’s cost of sales may be materially adversely affected by increases in the market prices of the raw materials used in the Company’s manufacturing processes. There can be no assurance that price increases in raw materials can be passed onto the Company’s customers through increases in product prices. As a result, the Company’s operating results could be adversely affected.

The Company’s international operations subject the Company to additional business risks.

          International sales account for a substantial portion of the Company’s net sales (54%, 53% and 54% in 2008, 2007 and 2006, respectively) and the Company expects these sales will increase as a percentage of net sales in the future. Due to its international sales, the Company is subject to the risks of conducting business internationally, including unexpected changes in, or impositions of, legislative or regulatory requirements, fluctuations in the U.S. dollar which could materially adversely affect U.S. dollar revenues or operating expenses, tariffs and other barriers and restrictions, potentially longer payment cycles, greater difficulty in accounts receivable collection, reduced or limited protection of intellectual property rights, potentially adverse taxes and the burdens of complying with a

variety of international laws and communications standards. The Company is also subject to general geopolitical risks, such as political and economic instability and changes in diplomatic and trade relationships, in connection with its international operations. There can be no assurance that these risks of conducting business internationally will not have a material adverse effect on the Company’s business, operating results and financial condition.

The Company may not be able to successfully integrate businesses that it may acquire in the future.

          A portion of the Company’s growth in sales and earnings has been generated from acquisitions. The Company expects to continue a strategy of identifying and acquiring businesses with complementary products. In connection with this strategy, the Company faces certain risks and uncertainties relating to acquisitions. The factors affecting this exposure are in addition to the risks faced in the Company’s day-to-day operations. Acquisitions involve a number of special risks, including the risks pertaining to integrating acquired businesses. In addition, the Company may incur debt to finance future acquisitions, and the Company may issue securities in connection with future acquisitions that may dilute the holdings of current and future shareholders. Covenant restrictions relating to additional indebtedness could restrict the Company’s ability to pay dividends, fund capital expenditures, consummate additional acquisitions and significantly increase the Company’s interest expense. Any failure to successfully complete acquisitions or to successfully integrate such strategic acquisitions could have a material adverse effect on the Company’s business, operating results and financial condition.

The Company may have interruptions in its businesses due to the uncertainty of the global economy, specifically the potential impact of bankruptcy among the Company’s suppliers and inability of available funding for the Company’s customers.

          The Company relies on sole source manufacturers for certain materials that complement the Company’s product lines. The current state of economic uncertainty presents a risk that existing suppliers could go out of business. While there are multiple sources for these materials available and the Company could relocate the tooling and processes to other manufacturers if needed, there could be an adverse effect on the supply and the Company’s ability to make products on a timely basis if multiple key suppliers fail during this time of uncertainty. Additionally, as the financial markets are experiencing unprecedented volatility, lower levels of liquidity may be available. Although the Company is not dependent on a single customer or a few customers, the inability to obtain funding may postpone customer spending and adversely affect the Company’s business, operating results and financial condition.

Item 1B. Unresolved Staff Comments

          The Company does not have any unresolved staff comments.

Item 2. Properties

          The Company currently owns or leases 16 facilities, which together contain approximately 1.6 million square feet of manufacturing, warehouse, research and development, sales and office space worldwide. Most of the Company’s international facilities contain space for offices, research and engineering (R&E), warehousing and manufacturing with manufacturing using a majority of the space. The following table provides information regarding the Company’s principal facilities:

Location		Use		Owned/Leased		Square Feet				Reportable Segment
1. Mayfield Village, Ohio		Corporate Headquarters Research and Engineering (R&E) Center		Owned			62,000			PLP-USA
2. Rogers, Arkansas		Manufacturing Warehouse Office		Owned			310,000			PLP-USA
3. Albemarle, North Carolina		Manufacturing Warehouse Office		Owned			261,000			PLP-USA
4. Sydney, Australia		Manufacturing R&E Warehouse Office		Owned			123,000			Australia
5. São Paulo, Brazil		Manufacturing R&E Warehouse Office		Owned			148,500			Brazil
6. Cambridge, Ontario, Canada		Manufacturing Warehouse Office		Owned			73,300			Canada
7. Andover, Hampshire, England		Manufacturing R&E Warehouse Office		Building Owned; Land Leased			89,400			All Other
8. Queretaro, Mexico		Manufacturing Warehouse Office		Owned			52,900			All Other
9. Beijing, China		Manufacturing Warehouse Office		Building Owned; Land Leased			123,300			All Other
10. Pietermaritzburg, South Africa		Manufacturing R&E Warehouse Office		Owned			73,100			South Africa
11. Sevilla, Spain		Manufacturing R&E Warehouse Office		Owned			63,300			All Other
12. Bangkok, Thailand		Manufacturing Warehouse Office		Owned			60,000			All Other
13. Albuquerque, New Mexico		Manufacturing Warehouse Office		Leased			25,100			All Other
14. Bielsko-Biala, Poland		Manufacturing Warehouse Office		Buildings Owned; Land Leased			174,400			Poland

Item 3. Legal Proceedings

          From time to time, the Company may be subject to litigation incidental to its business. The Company is not a party to any pending legal proceedings that the Company believes would, individually or in the aggregate, have a material adverse effect on its financial condition, results of operations or cash flows.

Item 4. Submission of Matters to a Vote of Security Holders

          No matter was submitted to a vote of the security holders of the Registrant during the quarter ended December 31, 2008.

Executive Officers of the Registrant

          Each executive officer is elected by the Board of Directors, serves at its pleasure and holds office until a successor is appointed, or until the earliest of death, resignation or removal.

Name		Age				Position
Robert G. Ruhlman			52			Chairman, President and Chief Executive Officer
Eric R. Graef			56			Chief Financial Officer and Vice President — Finance
William H. Haag			45			Vice President — International Operations
J. Cecil Curlee Jr.			52			Vice President — Human Resources
Dennis F. McKenna			42			Vice President — Marketing and Business Development
David C. Sunkle			50			Vice President — Research and Engineering and Manufacturing
Caroline S. Vaccariello			42			General Counsel and Corporate Secretary

          The following sets forth the name and recent business experience for each person who is an executive officer of the Company at March 1, 2009.

          Robert G. Ruhlman was elected Chairman in July 2004. Mr. Ruhlman has served as Chief Executive Officer since July 2000 and as President since 1995 (positions he continues to hold). Mr. Ruhlman is the brother of Randall M. Ruhlman and son of Barbara P. Ruhlman, both Directors of the Company.

          Eric R. Graef was elected Vice President—Finance in December 1999 and Chief Financial Officer in December, 2007.

          William H. Haag was elected Vice President—International Operations in April 1999.

          J. Cecil Curlee Jr. was hired in 1982 in the position of Personnel Manager at the Albemarle, North Carolina facility. He was promoted to Director of Employee Relations in September 2002 and was elected Vice President—Human Resources in January 2003.

          Dennis F. McKenna was elected Vice President—Marketing and Business Development in April 2004. Mr. McKenna joined the Company in 1993 as a sales engineer and has served in various international and domestic product management, operations, and general management roles within the Company.

          David C. Sunkle was elected Vice President-Research and Engineering in January 2007. In addition, Mr. Sunkle has taken on the role of the Vice President — Manufacturing since July 2008. Mr. Sunkle joined the Company in 1978. He has served a variety of positions in Research and Engineering until 2002 when he became Director of International Operations. In 2006, Mr. Sunkle rejoined Research and Engineering as the Director of Engineering.

          Caroline S. Vaccariello was elected General Counsel and Corporate Secretary in January 2007. Ms. Vaccariello joined the Company in 2005 as General Counsel and has led the Company’s legal affairs since that time. Prior to that time, Ms. Vaccariello worked as an attorney for The Timken Company from 2003 to 2005.

Part II

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

          The Company’s Common Shares are traded on NASDAQ under the trading symbol “PLPC”. As of March 11, 2009, the Company had approximately 722 shareholders of record. The following table sets forth for the periods indicated (i) the high and low closing sale prices per share of the Company’s Common Shares as reported by the NASDAQ and (ii) the amount per share of cash dividends paid by the Company.

          While the Company expects to continue to pay dividends of a comparable amount in the near term, the declaration and payment of future dividends will be made at the discretion of the Company’s Board of Directors in light of then current needs of the Company. Therefore, there can be no assurance that the Company will continue to make such dividend payments in the future.

		Year ended December 31
		2008												2007
Quarter		High				Low				Dividend				High				Low				Dividend
First		$	59.96			$	42.95			$	0.20			$	36.67			$	33.40			$	0.20
Second			53.88				40.31				0.20				54.32				36.11				0.20
Third			65.50				37.66				0.20				58.26				42.82				0.20
Fourth			56.97				31.82				0.20				61.08				49.04				0.20

Equity Compensation Plan Information

Number of securities

Weighted-average

remaining available for

Number of securities to

exercise price of

future issuance under equity

be issued upon exercise

outstanding

compensation plans

of outstanding options,

options, warrants

(excluding securities

Plan Category

warrants and rights (a)

and rights

reflected in column (a)

Equity compensation plans approved by security holders

43,637

$

54.24

356,363

Equity compensation plans not approved by security holders

107,092

$

27.83

9,000

Total

150,729

365,363

Performance Graph

          Set forth below is a line graph comparing the cumulative total return of a hypothetical investment in the Company’s Common Shares with the cumulative total return of hypothetical investments in the NASDAQ Market Index and the Hemscott Industry Group 627 (Industrial Electrical Equipment) Index based on the respective market price of each investment at December 31, 2003, December 31, 2004, December 31, 2005, December 31, 2006, December 31, 2007, and December 31, 2008, assuming in each case an initial investment of $100 on December 31, 2003, and reinvestment of dividends.

COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG PREFORMED LINE PRODUCTS CO.,
NASDAQ MARKET INDEX AND HEMSCOTT GROUP INDEX

ASSUMES $100 INVESTED ON JAN. 01, 2003
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 2008

	COMPANY / INDEX / MARKET			2003					2004					2005					2006					2007					2008
	PREFORMED LINE PRODUCTS CO				100.00					96.82					145.90					123.06					212.96					166.33
	HEMSCOTT GROUP INDEX				100.00					111.02					133.61					178.83					247.12					128.38
	NASDAQ MARKET INDEX				100.00					108.41					110.79					122.16					134.29					79.25

Purchases of Equity Securities

										Total Number of				Maximum Number of
										Shares Purchased as				Shares that may yet
										Part of Publicly				be Purchased under
		Total Number of				Average Price Paid				Announced Plans or				the Plans or
Period (2008)		Shares Purchased				per Share				Programs				Programs
October			—				—				185,748				14,252
November			—				—				185,748				14,252
December			—				—				185,748				14,252
Total			—

          On February 15, 2007, the Board of Directors authorized a plan to repurchase up to 200,000 shares of Preformed Line Products Company Common Shares. There were no repurchases for the three-month period ended December 31, 2008.

Item 6. Selected Financial Data

		2008				2007				2006				2005				2004
						(Thousands of dollars, except per share data)
Net Sales and Income
Net sales		$	269,742			$	233,289			$	196,910			$	186,232			$	165,515
Operating income			23,988				21,133				16,359				16,673				15,211
Income before income taxes, equity in net income of joint ventures, minority interests and discontinued operations			24,760				21,321				17,180				17,288				15,333
Income from continuing operations			16,754				13,766				11,827				11,170				14,014
Net income			17,623				14,159				12,103				12,030				13,094
Per Share Amounts
Income from continuing operations — basic		$	3.17			$	2.57			$	2.11			$	1.95			$	2.44
Net income — basic			3.34				2.64				2.16				2.10				2.28
Income from continuing operations — diluted			3.14				2.54				2.09				1.93				2.42
Net income — diluted			3.30				2.61				2.14				2.08				2.26
Dividends declared			0.80				0.80				0.80				0.80				0.80
Shareholders’ equity			26.08				27.82				24.47				23.32				22.51
Other Financial Information
Current assets		$	112,670			$	123,450			$	100,374			$	110,304			$	101,537
Total assets			190,875				203,866				170,852				168,458				158,742
Current liabilities			35,248				42,349				32,372				33,900				27,251
Long-term debt (including current portion)			3,147				4,959				4,361				4,928				3,634
Capital leases			112				373				478				305				574
Shareholders’ equity			136,265				149,721				131,148				133,715				128,464

          On May 30, 2008, the Company divested its Superior Modular Products subsidiary. The net sales and income and per share amounts sections for the years noted above have been restated to provide comparable information excluding the divestiture of the SMP operations.

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

          The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and related Notes To Consolidated Financial Statements included in Item 8 in this report.

          Preformed Line Products Company and its subsidiaries (the “Company”, “PLPC”, “we”, “us”, or “our”) is an international designer and manufacturer of products and systems employed in the construction and maintenance of overhead and underground networks for the energy, telecommunication, cable operators, information (data communication), and other similar industries. Our primary products support, protect, connect, terminate, and secure cables and wires. We also provide solar hardware systems and mounting hardware for a variety of solar power applications. Our goal is to continue to achieve profitable growth as a leader in the innovation, development, manufacture, and marketing of technically advanced products and services related to energy, communications, and cable systems and to take advantage of this leadership position to sell additional quality products in familiar markets.

          The reportable segments are PLP-USA, Australia, Brazil, South Africa, Canada, Poland and All Other. Our PLP-USA segment is comprised of our U.S. operations primarily supporting our domestic energy and telecommunications products. The Australia segment is comprised of all of our operations in Australia supporting energy, telecommunications, data communications, and solar products. Our Brazil and South Africa segments are comprised of the manufacturing and sales operations from those locations which meet at least one of the criteria of a reportable segment. Our final two segments are Canada and Poland, which are comprised of manufacturing and sales operations, and have been included as segments to comply with reporting segments for 75% of consolidated sales. Our remaining operations are included in All Other segment as none of these operations meet the criteria for a

reportable segment and individually represent less than 10% for each of our combined net sales, consolidated net income, and consolidated assets.

Market overview

          Our business continues to be concentrated in the energy and communications markets. During the past couple of years, industry consolidation continued as distributors and service provider consolidations took place in all of our major markets. This trend is expected to continue in 2009. We have a growing concern that the continued global economic deterioration coupled with an already depressed U.S. housing market could further affect construction projects and negatively impact growth opportunities in our core markets going forward.

          In 2008, we experienced growth in our energy markets. We continued to see the investment in new transmission grids, new technologies, and upgrading and maintenance of the existing energy infrastructure. We expect the distribution energy market to slow in 2009 but anticipate continued growth in demand for transmission and fiber optic products.

          Our international business is more concentrated in the energy markets. Historically, our international sales were primarily to the distribution portion of the energy market. We continued to increase our energy distribution sales while also experiencing significant sales growth in the energy transmission market. We have acquired approximately 92% of Belos SA (Belos), located in Bielsko-Biala, Poland, broadening our transmission product offering for the energy markets. Even though we expect the distribution portion of the energy market to decrease in 2009 as a whole, we expect the international energy markets to continue to grow for the foreseeable future as new construction projects are added in developing markets and there is a need to rebuild and refurbish the international energy transmission and distribution infrastructure. We believe that we are well positioned to supply the needs of the world’s diverse energy market requirements as a result of our strategically located operations and array of product designs and technologies.

          In our communications markets, telecommunication companies continued to curtail their investment in the construction and maintenance of copper networks while diverting some of these resources into Fiber-to-the-Premise (FTTP) projects. We anticipate the investment in the copper network will continue to decline. Additionally, the large communications carriers are rationalizing their vendor base, which results in downward pressure on prices.

          In 2008, we saw an improvement in the U.S. investment spending on infrastructure by the telephone companies, cable television (CATVs) providers and by municipalities. Additionally, many of our new product offerings which are presently in the approval process and undergoing third party testing should provide an opportunity to enhance our product offerings to all communication providers. Many new products were launched in 2008 which should help us gain additional business from these providers. Even though the communication market is expecting to be flat or even down in 2009, we are optimistic that we will fare better than most due to the new products being offered to the marketplace. In 2008, we continued to develop our brand and product awareness internationally as part of a concentrated effort in FTTP. As a result, several international carriers are conducting field trials of our products to be used on future FTTP projects. In addition, the passage of an economic stimulus bill that contains provisions for upgrading the aging transmission infrastructure and connecting renewable energy sources to the grid should attract new investment into the industry. We believe that this will generate growth for our products in this market over at least the next several years.

Discontinued Operations

          Our consolidated financial statements were impacted by the divestiture of Superior Modular Products (SMP) on May 30, 2008. We sold our SMP subsidiary for $11.7 million, for a $.8 million gain, net of tax and expenses incurred related to the divestiture. The sale includes $1.5 million to be held in escrow for a period of one year. We have not provided any significant continuing involvement in the operations of SMP after the closing of the sale. For tax purposes, the sale of SMP generated a capital loss, which was not deductible except for amounts used to offset capital gains in the current year. A full valuation allowance was provided against the deferred tax asset on the remaining portion of the capital loss carryover.

          The operating results of SMP are presented in our consolidated statements of income as discontinued operations, net of tax, and all periods presented have been reclassified. For the year ended December 31, 2008, income from discontinued operation, net of tax was $.9 million, or $.16 per diluted share, compared to income of $.4 million, or $.07 per diluted share, for the same period in 2007.

Preface

          Our consolidated financial results for the years ended December 31, 2008, 2007 and 2006 included the financial results of our solar energy operation, Direct Power and Water (DPW), acquired on March 22, 2007 as well as the results of Belos, in Poland, acquired on September 6, 2007. The results of the DPW operation are included in our All Other segment and the results of the Belos operations are included as the separate Poland reportable segment.

          For the year ended December 31, 2008, we achieved record net sales of $269.7 million, which increased $36.5 million, or 16%, in 2008 compared to 2007. The net sales increase for the year ended December 31, 2008 was driven by a 12% increase in the U.S. net sales and an 18% increase in total foreign net sales. The favorable impact of the change in the conversion rate of local currencies to U.S. dollars for the year ended December 31, 2008 compared to 2007, contributed $3.5 million to the increase in net sales. Our net sales increased $20.6 million as a result of the acquisitions of Belos and DPW. The increase in sales was partially offset by an increase in material cost of sales resulting in a 12% increase in gross profit. Costs and expenses increased 12%, partially offsetting the gross profit improvement, with the result being an increase in operating income of $2.9 million, or 14%, from 2007. Income from continuing operations of $16.8 million increased $3 million, or 22%, compared to 2007. For the year ended December 31, 2008, income from continuing operations per diluted share of $3.14 increased $.60 from 2007. Our financial position remains strong as we generated substantial operating cash flow in 2008 of $2.4 million, an increase of 16%.

2008 Results of Operations compared to 2007

          Net Sales. In 2008, net sales were a record $269.7 million, an increase of $36.5 million, or 16%, from 2007 as summarized in the following table:

		Year ended December 31,
														Change
														due to
														currency								%
														conversion				Net				Net
thousands of dollars		2008				2007				Change				rate changes				change				change
Net sales
PLP-USA		$	111,721			$	103,173			$	8,548			$	—			$	8,548				8	%
Australia			27,244				29,855				(2,611	)			878				(3,489	)			(12	)
Brazil			30,279				26,236				4,043				2,684				1,359				5
South Africa			9,535				8,049				1,486				(1,676	)			3,162				39
Canada			9,952				10,620				(668	)			153				(821	)			(8	)
Poland			20,602				5,202				15,400				—				15,400			NM
All Other			60,409				50,154				10,255				1,420				8,835				18
Consolidated		$	269,742			$	233,289			$	36,453			$	3,459			$	32,994				14	%

          The increase in PLP-USA net sales of $8.5 million, or 8%, was due primarily to sales volume increases of $2.2 million and price/mix increases of $5.9 million primarily related to our energy sales. We anticipate a flat to slight increase in sales in 2009, although we believe PLP-USA sales for the year may be negatively impacted by a continued declining economy and depressed housing market. International net sales in 2008 were favorably impacted by $3.5 million when converted to U.S. dollars, as a result of a weaker U.S. dollar to certain foreign currencies. Excluding the effect of currency conversion, Australia net sales decreased $3.5 million, or 12%, primarily as a result of lower energy volume sales compared to 2007. Excluding the effect of currency conversion, Brazil net sales increased $1.4 million, or 5%, primarily as a result of increased volume in energy and

telecommunication sales. Excluding the effect of currency conversion, South Africa net sales increased $3.2 million, or 39%, due to increased sales volume in the energy market. Excluding the effect of currency conversion, Canada net sales decreased $.8 million, or 8%, due to lower sales volume. Poland net sales of $20.6 million increased $15.4 million due to the inclusion of their results for the entire year ended December 31, 2008, as compared to the inclusion of only four months in 2007. Excluding the effect of currency conversion, All Other net sales increased $8.8 million, or 18%, compared to 2007, primarily due to an increase in energy volume and the inclusion of DPW’s net sales for the entire year ended December 31, 2008 compared to only nine months in 2007. We continue to see competitive pricing pressures globally as well as a decline in the global economic markets which will continue to negatively affect sales and profitability in 2009.

          Gross Profit. Gross profit of $87.3 million for 2008 increased $9.4 million, or 12%, compared to 2007 as summarized in the following table:

		Year ended December 31,
														Change
														due to
														currency								%
														conversion				Net				Net
thousands of dollars		2008				2007				Change				rate changes				change				change
Gross profit
PLP-USA		$	35,973			$	33,680			$	2,293			$	—			$	2,293				7	%
Australia			8,534				9,911				(1,377	)			207				(1,584	)			(16	)
Brazil			8,193				8,048				145				473				(328	)			(4	)
South Africa			4,271				3,258				1,013				(668	)			1,681				52
Canada			4,331				4,812				(481	)			64				(545	)			(11	)
Poland			5,471				828				4,643				—				4,643			NM
All Other			20,494				17,364				3,130				327				2,803				16
Consolidated		$	87,267			$	77,901			$	9,366			$	403			$	8,963				12	%

          PLP-USA gross profit of $36 million for the year ended December 31, 2008 increased $2.3 million, or 7%, compared to 2007. PLP-USA gross profit increased $2.8 million due to higher net sales, and $2.7 million due to improved manufacturing efficiencies partially offset by higher material costs of $3.2 million. Excluding the effect of currency conversion, the Australia gross profit decrease of $1.6 million was a result of $1.2 million lower net sales and $.7 million higher per unit manufacturing costs. Excluding the effect of currency conversion, the Brazil gross profit decrease of $.3 million is primarily due to a favorable excess and obsolescence reserve adjustment of $.6 million included in the year ended December 31, 2007 offset by higher net sales. Excluding the effect of currency conversion, South Africa gross profit of $4.3 million increased $1.7 million due primarily to a $1.1 million increase in net sales. Excluding the effect of currency conversion, Canada gross profit decreased $.5 million, of which $.2 million was related to a decrease in net sales and $.4 million was related to an increase in material costs offset by improved manufacturing efficiencies. Our consolidated gross profit increased $4.6 million as a result of the Poland acquisition in September of 2007. Poland is included for the entire year of 2008 but only for four months in 2007. Excluding the effect of currency conversion, All Other gross profit increased $2.8 million primarily as a result of increased sales of $8.8 million.

          Cost and expenses. Costs and expenses increased $6.5 million, or 12%, compared to 2007 as summarized in the following table:

		Year ended December 31,
														Change
														due to
														currency								%
														conversion				Net				Net
thousands of dollars		2008				2007				Change				rate changes				change				change
Costs and expenses
PLP-USA		$	33,633			$	31,787			$	1,846			$	—			$	1,846				6	%
Australia			6,591				5,819				772				125				647				11
Brazil			5,789				4,735				1,054				339				715				15
South Africa			1,235				1,270				(35	)			(210	)			175				14
Canada			1,659				1,586				73				(12	)			85				5
Poland			2,775				854				1,921				—				1,921			NM
All Other			11,597				10,717				880				296				584				5
Consolidated		$	63,279			$	56,768			$	6,511			$	538			$	5,973				11	%

          PLP-USA costs and expenses increased $1.8 million primarily due to increases in personnel related expenses of $1 million, commissions of $.5 million, product testing expenses of $.3 million, tax compliance expense of $.2 million and an increase in the loss on foreign currency of $.7 million, partially offset by a $.9 million decrease in sales promotional expense. Excluding the effect of currency conversion, Australia costs and expenses increased $.6 million due to increased personnel related costs and consulting fees. Excluding the effect of currency conversion, Brazil costs and expenses increased $.7 million primarily due to personnel related expenses. Excluding the effect of currency conversion, South Africa costs and expenses increased $.2 million primarily due to increased personnel related expenses and travel costs. Poland costs and expenses increased $1.9 million due to the inclusion of their costs for the entire year ended December 31, 2008 compared to only four months in 2007. Excluding the effect of currency conversion, All Other costs and expenses increased $.6 million primarily due to a $.2 million increase in personnel related expenses and a $.4 million increase related to the inclusion of DPW’s costs and expenses for the entire year ended December 31, 2008 compared to only nine months in 2007.

          Operating income. Operating income of $24 million for the year ended December 31, 2008 increased $2.9 million, or 14%, compared to 2007. This increase was primarily a result of the $9.4 million increase in gross profit being partially offset by the $6.5 million increase in costs and expenses. PLP-USA operating income of $6.9 million increased $.8 million primarily as a result of the $2.3 million increase in gross profit and a $.4 million increase in intercompany royalty income offset by an increase in costs and expenses of $1.9 million. Australia operating income of $.7 million decreased $2 million compared to 2007 primarily as a result a decrease in gross profit of $1.4 million coupled with an increase of $.7 million in costs and expenses, offset by a $.1 million decrease in intercompany royalty expense. Brazil operating income of $2.1 million decreased $1.2 million primarily as a result of the $.1 million increase in gross profit offset by an increase of $1.1 million in costs and expenses and a $.2 million in intercompany royalty expense. South Africa operating income of $2.6 million increased $1 million primarily as a result of a $1 million improvement in gross profit compared to 2007. Canada operating income of $2.2 million for the year ended December 31, 2008 decreased $.5 million compared to 2007 due to the decrease in gross profit. Poland operating income increased $2.7 million due to the inclusion of its results for the entire year ended December 31, 2008 compared to only four months in 2007. All Other operating income of $6.7 million increased $2 million compared to 2007 primarily as a result of the $3.1 million increase in gross profit being partially offset by $.9 million in increased costs and expenses and $.2 million in intercompany royalty expense.

          Other income. Other income for the year ended December 31, 2008 of $.8 million increased $.6 million compared to 2007. The primary reason for the increase in other income related to the discovery of natural gas at PLP-USA located on our corporate headquarters property in Mayfield Village, Ohio. Production of the natural gas well commenced in May 2008. The increase related to the natural gas well was offset against a decrease in interest income compared to 2007.

          Income taxes. Income taxes from continuing operations for the year ended December 31, 2008 of $7.7 million were $.2 million higher than 2007. The effective tax rate in 2008 on income taxes from continuing operations was 31.2% compared to 35.2% in 2007. The 2008 effective tax rate is lower than the 34% statutory rate primarily due to increased earnings in jurisdictions with lower tax rates and a decrease in unrecognized tax benefits for uncertain tax positions. The 2007 effective tax rate is higher than the 34% statutory rate primarily due to the increase in the valuation allowance for foreign net operating losses that may not be utilized.

          Income from continuing operations. Income from continuing operations was $16.8 million, or $3.14 per diluted share, compared to income from continuing operations of $13.8 million, or $2.54 per diluted share for 2007 as summarized in the following table:

		Year ended December 31,
														Change
														due to
														currency								%
														conversion				Net				Net
thousands of dollars		2008				2007				Change				rate changes				change				change
Income from continuing operations
PLP-USA		$	4,877			$	4,018			$	859			$	—			$	859				21	%
Australia			501				1,736				(1,235	)			(23	)			(1,212	)			(70	)
Brazil			1,336				2,286				(950	)			63				(1,013	)			(44	)
South Africa			1,980				1,185				795				(306	)			1,101				93
Canada			1,537				1,811				(274	)			61				(335	)			(18	)
Poland			1,726				(61	)			1,787				—				1,787			NM
All Other			4,797				2,791				2,006				(20	)			2,026				73
Consolidated		$	16,754			$	13,766			$	2,988			$	(225	)		$	3,213				23	%

          PLP-USA income from continuing operations of $4.9 million increased $.9 million compared to 2007 primarily as a result of the $.8 million increase in operating income, an increase in other income of $.3 million, offset by an increase in income tax expense. Australia income from continuing operations of $.5 million decreased $1.2 million primarily due to the $2 million decrease in operating income being partially offset by lower other expenses of $.2 million and a reduction in income taxes of $.6 million. Brazil income from continuing operations of $1.3 million decreased $1 million as a result of the $1.2 million decrease in operating income being partially offset by lower income taxes. South Africa income from continuing operations of $2 million increased $.8 million as a result of the $1 million increase in operating profit being partially offset by a $.2 million increase in income tax expense. Canada income from continuing operations of $1.5 million decreased $.3 million as a result of the $.5 million decrease in operating income partially offset by a reduction in income tax expense. Poland income from continuing operations of $1.7 million is a result of $2.7 million in operating income being partially offset by other expense, income taxes, and minority interest. All Other income from continuing operations of $4.8 million increased $2 million primarily as a result of the $2 million increase in operating income and a $.1 million increase in other income partially offset by a $.1 million increase in income taxes compared to 2007.

2007 Results of Operations compared to 2006

          Net Sales. In 2007, net sales were $233.3 million, an increase of $36.4 million, or 18%, from 2006 as summarized in the following table:

	Year ended December 31,
														Change
														due to
														currency								%
														conversion				Net				Net
thousands of dollars		2007				2006				Change				rate changes				change				change
Net sales
PLP-USA		$	103,173			$	91,412			$	11,761			$	—			$	11,761				13	%
Australia			29,855				25,867				3,988				3,093				895				3
Brazil			26,236				20,990				5,246				2,887				2,359				11
South Africa			8,049				8,244				(195	)			(244	)			49				1
Canada			10,620				9,824				796				618				178				2
Poland			5,202				—				5,202				—				5,202				100
All Other			50,154				40,573				9,581				2,982				6,599				16
Consolidated		$	233,289			$	196,910			$	36,379			$	9,336			$	27,043				14	%

          PLP-USA net sales of $103.2 million increased $11.8 million, or 13%, compared to 2006. Approximately 60% of the increase in net sales was due to an increase in volume. International net sales in 2007 were favorably impacted by $9.3 million when converted to U.S. dollars, as a result of a weaker U.S. dollar to certain foreign currencies. Excluding the effect of currency conversion, Australia net sales increased $.9 million, or 3%, Canada net sales increased $.2 million, or 2%, and South Africa net sales increased less than $.1 million, or 1%, all due primarily to volume. Brazil net sales increased $2.4 million, or 11%, compared to 2006 due primarily to increased volume in transmission products. Our Polish operation was acquired in the third quarter 2007. Poland net sales of $5.2 million were included for only four months in the year ended December 31, 2007, but not in 2006. Excluding the effects of currency conversion, All Other net sales increased $6.6 million, or 16%, compared to 2006. The inclusion of DPW net sales accounted for all the 2007 increase in All Other net sales.

          Gross profit. Gross profit of $77.9 million for 2007 increased $13.2 million, or 20%, compared to 2006 as summarized in the following table:

	Year ended December 31,
														Change
														due to
														currency								%
														conversion				Net				Net
thousands of dollars		2007				2006				Change				rate changes				change				change
Gross profit
PLP-USA		$	33,680			$	27,914			$	5,766			$	—			$	5,766				21	%
Australia			9,911				8,349				1,562				1,031				531				6
Brazil			8,048				6,020				2,028				856				1,172				19
South Africa			3,258				3,515				(257	)			(140	)			(117	)			(3	)
Canada			4,812				4,330				482				301				181				4
Poland			828				—				828				—				828				100
All Other			17,364				14,597				2,767				1,027				1,740				12
Consolidated		$	77,901			$	64,725			$	13,176			$	3,075			$	10,101				16	%

          PLP-USA gross profit of $33.7 million increased $5.8 million, or 21%, due primarily to $6 million related to higher net sales partially offset by a $.2 million increase in production and shipping costs. The conversion of local currency to U.S. dollars favorably impacted gross profit by $3.1 million. Excluding the impact of currency conversion, Australia gross profit increased $.5 million and Canada gross profit increased $.2 million due primarily to increased sales and improved product margins. Excluding the effect of currency conversion, Brazil gross profit increased $1.2 million due to an excess and obsolescence reserve adjustment. During 2007, management’s comprehensive review of the components of the Company’s Brazil operation’s excess and obsolescence reserve calculation discovered that the details of the reserve account included an inappropriate reserve of $.6 million at December 31, 2006. Based on the timing of the completion of certain aspects of this review, the Company recorded

a $.4 million adjustment in the first quarter of 2007 and an additional adjustment of $.2 million in the second quarter of 2007 related to the excess and obsolete reserve at December 31, 2006. Also during the 2007 year-end closing process, management’s detailed review of the calculation of the Company’s elimination of intercompany profit in ending inventory identified an adjustment of $.9 million in additional profit in ending inventory of which $.5 million related to profit in ending inventory at December 31, 2006. Management has determined that the 2006 amounts, which were recorded in 2007, were not material quantitatively or qualitatively, either individually or on a net basis, to 2006 and 2007 results of operations. Excluding the effect of currency conversion, South Africa gross profit decreased $.1 million primarily as a result of higher product costs. Our consolidated gross profit increased $.8 million as a result of the inclusion of Poland gross profit for only four months in the year ended December 31, 2007. All Other gross profit increased $1.7 million. The inclusion of DPW in 2007 results accounted for 78% of the increase in All Other gross profit.

          Costs and expenses. Costs and expenses increased $8.4 million, or 17%, compared to 2006 as summarized in the following table:

		Year ended December 31,
														Change
														due to
														currency								%
														conversion				Net				Net
thousands of dollars		2007				2006				Change				rate changes				change				change
Costs and expenses
PLP-USA		$	31,787			$	27,436			$	4,311			$	—			$	4,351				16	%
Australia			5,819				4,891				928				605				323				7
Brazil			4,735				4,508				227				505				(278	)			(6	)
South Africa			1,270				1,357				(87	)			(44	)			(43	)			(3	)
Canada			1,586				1,428				158				81				77				5
Poland			854				—				854				—				854				100
All Other			10,717				8,746				1,971				675				1,296				15
Consolidated		$	56,768			$	48,366			$	8,362			$	1,822			$	6,580				14	%

          PLP-USA costs and expenses increased $4.4 million primarily as a result of a $.8 million increase in commission expense, a $2.3 million increase in personnel expenses, a $1 million increase in auditing fees, one-half of which is nonrecurring, and a $.2 million increase in travel related expenses compared to 2006. The weaker dollar unfavorably impacted costs and expenses by $1.8 million when international costs in local currency were translated to U.S. dollars compared to 2006. Excluding the effects of currency exchange rate change compared to 2006, Australia costs and expenses increased $.3 million due primarily to an increase in personnel related expenses. Brazil costs and expenses decreased $.3 million net of the effects of currency exchange rate change due primarily to lower Sarbanes-Oxley consulting and auditing fees. South Africa decreased costs and expenses of less than $.1 million were primarily a result of lower personnel related expenses and auditing fees. Excluding the effects of currency exchange rate change, Canada costs and expenses increased $.1 million primarily as a result of an increase in professional fees. Costs and expenses increased by $.9 million due to the inclusion of Poland for only four months in the year ended December 31, 2007. Excluding the effects of the currency exchange rate change compared to 2006, All Other costs and expenses increased $1.3 million. This increase was primarily a result of including DPW costs and expenses of $1 million in 2007 results and recording a $.2 million goodwill impairment charge.

          Operating income. Operating income of $21.1 million for the year ended December 31, 2007 increased $4.8 million, or 29%, compared to 2006. This increase was primarily the result of the $13.2 million increase in gross profit being partially offset by the $8.4 million increase in costs and expenses. PLP-USA operating income increased $1.5 million primarily as a result of the $5.8 million increase in gross profit offset by the $4.3 million increase in costs and expenses. Australia operating income increased $.4 million as a result of the $1.6 million increase in gross profit partially offset by the $.9 million increase in costs and expenses and a $.2 million increase in intercompany royalty expense. Brazil operating income increased $2 million as a result of the $2 million increase in gross profit and a $.2 million reduction in intercompany royalty expense partially offset by the $.2 million increase in costs and expenses. South Africa operating income decreased $.2 million as a result of the $.3 million decrease in

gross profit being partially offset by the decrease in costs and expenses. Canada operating income of $2.7 million increased $.3 million primarily as a result of the $.5 million increase in gross profit partially offset by the $.2 million increase in costs and expenses. All Other operating income of $4.6 million increased $.8 million as a result of the $2.8 million increase in gross profit partially offset by the $2 million increase in cost and expenses.

          Other income. Other income for the year ended December 31, 2007 of $.2 million decreased $.6 million compared to 2006 as a result of a $.4 million decrease in interest income net of interest expense and a $.2 million increase in miscellaneous non-operating expenses.

          Income taxes. Income taxes from continuing operations for the year ended December 31, 2007 of $7.5 million were $2.1 million higher than the previous year. The effective tax rate in 2007 on income taxes from continuing operations was 35.2% compared to 31.2% in 2006. The 2007 effective tax rate is higher than the 34% statutory rate primarily as a result of a provision for a valuation allowance against foreign net operating loss carryforwards. The 2006 effective tax rate is lower than the 34% statutory rate primarily as a result of a reduction in the valuation related to foreign tax credit carryfowards.

          Income from continuing operations. As a result of the preceding items, income from continuing operations for the year ended December 31, 2007 was $13.8 million, or $2.54 per diluted share, compared to income from continuing operations of $11.8 million, or $2.09 per diluted share, for the same period in 2006 as summarized in the following table:

		Year ended December 31,
														Change
														due to
														currency								%
														conversion				Net				Net
thousands of dollars		2007				2006				Change				rate changes				change				change
Income from continuing operations
PLP-USA		$	4,018			$	3,920			$	98			$	—			$	98				3	%
Australia			1,736				1,389				347				181				166				12
Brazil			2,286				924				1,362				243				1,119				121
South Africa			1,185				1,319				(134	)			(64	)			(70	)			(5	)
Canada			1,811				1,693				118				59				59				3
Poland			(61	)			—				(61	)			—				(61	)			NM
All Other			2,791				2,582				209				76				133				5
Consolidated		$	13,766			$	11,827			$	1,939			$	495			$	1,444				12	%
NM — not meaningful

          PLP-USA income from continuing operations of $4 million increased $.1 million compared to 2006 as a result of a $1.5 million increase in operating income partially offset by a $.3 million decrease in interest income, a $.3 million increase in other expense and a $.8 million increase in income taxes. Australia income from continuing operations of $1.7 million in 2007 increased $.3 million compared to 2006 due primarily to a $.4 million increase in operating income partially offset by a $.1 million increase in income taxes. Brazil income from continuing operations of $2.3 million increased $1.4 million compared to 2006 due to a $2 million increase in operating income partially offset by a $.1 million increase in interest expense and a $.5 million increase in income taxes. South Africa income from continuing operations of $1.2 million decreased $.1 million compared to 2006 primarily due to a $.2 million decrease in operating income partially offset by a $.1 million increase in interest income. Canada income from continuing operations of $1.8 million increased $.1 million from 2006 due primarily to a $.3 million increase in operating income partially offset by a $.1 million reduction in interest income and a $.1 million increase in income taxes. All Other income from continuing operations of $2.8 million increased $.2 million compared to 2006 primarily as a result of a $.8 million increase in operating income partially offset by a $.6 million increase in income taxes.

Working Capital, Liquidity and Capital Resources

          Cash decreased $2.7 million for the year ended December 31, 2008. Net cash provided by operating activities was $17.3 million. The major investing and financing uses of cash were capital expenditures of $10 million, business acquisitions of $3.8 million, dividends of $4.2 million, repurchases of common shares of $7.5 million, net debt repayments of $1.9 million offset by cash proceeds of $11.1 million from the sale of SMP, net of transaction expenses.

          Net cash provided by operating activities increased $2.4 million compared to 2007 primarily as a result of a $3 million increase in net income, an increase of non-cash items of $1.8 million offset by an increase in operating assets (net of operating liabilities) of $2.4 million. Non-cash items increased primarily due to a $.5 million change in deferred taxes, offset by an increase in depreciation of $1.1 million and an increase in inventory reserves of $1.2 million.

          Net cash used in investing activities of $2.4 million represents a decrease of $14.9 million when compared to cash used in investing activities in 2007. In May 2008, we sold SMP for $11.7 million, net of transaction expenses, with an after-tax gain of $.8 million and a holdback of $1.5 million held in escrow for a period of one year. Also in May 2008, we formed a joint venture with BlueSky Energy Pty Ltd for an initial cash payment of $.3 million. Additional payouts for acquisitions during 2008 consisted of $.8 million related to DPW and $2.8 million for Belos mostly due to earn out payments. In March 2007, we acquired all of the issued and outstanding shares of DPW for an initial payment of $2.6 million. In September 2007, we acquired 83.74% of the issued and outstanding shares of Belos for an initial payment of $6 million. Capital expenditures increased $.8 million in the year ended December 31, 2008 when compared to the same period in 2007 due mostly to a solar installation project at our Spain subsidiary, additional machinery investment at our Brazil and Poland subsidiaries and PLP-USA locations, and a new building added at our China subsidiary.

          Cash used in financing activities was $13.1 million compared to $4.6 million in 2007. This increase was primarily a result of common shares repurchased of $7.5 million and $1.3 million higher debt repayments in 2008 compared to 2007.

          We have commitments under operating leases primarily for office and manufacturing space, transportation equipment, office and computer equipment and capital leases primarily for equipment. One such lease is for our aircraft with a lease commitment through April 2012. Under the terms of the lease, we maintain the risk to make up a deficiency from market value attributable to damage, extraordinary wear and tear, excess air hours or exceeding maintenance overhaul schedules required by the Federal Aviation Administration. At the present time, we believe our risks, if any, to be immaterial because the estimated market value of the aircraft approximates its residual value.

          Our financial position remains strong and our current ratio at December 31, 2008 was 3.2 to 1 compared to 2.9 to 1 at December 31, 2007. Our current ratio increased primarily due to increases in inventory and decreases in debt, trade payables and accrued expenses related to acquisitions. At December 31, 2008, our unused balance under our main credit facility was $20 million and our bank debt to equity percentage was 5%. The revolving credit agreement contains, among other provisions, requirements for maintaining levels of working capital, net worth and profitability. At December 31, 2008, we were in compliance with these covenants. We believe our future operating cash flows will be more than sufficient to cover debt repayments, other contractual obligations, capital expenditures and dividends. In addition, we believe our existing cash of $19.9 million, together with our untapped borrowing capacity, provides substantial financial resources. If we were to incur significant additional indebtedness, we expect to be able to meet liquidity needs under the credit facilities. We do not believe we would increase our debt to a level that would have a material adverse impact upon results of operations or financial condition.

          The global economies are currently undergoing a period of economic uncertainty, and the related financial markets are experiencing unprecedented volatility. The current financial turmoil is adversely affecting the banking system and financial markets. The possibility that financial institutions may consolidate or fail has resulted in a tightening in the credit markets, a low level of liquidity in many financial markets, and extreme volatility in fixed income, credit, currency, and equity markets. Uncertainty about current global economic conditions poses a risk as customers may postpone spending in response to tighter credit, negative financial news and/or declines in income or asset values, or lower demand for their products or services which could have a material negative effect on the

demand for our products. If the future economic environment continues to be less favorable than it has been in recent years, we could experience difficulties in our ability to obtain the required capital to pursue possible acquisitions. In addition, there could be exposure related to the financial viability of certain third-party suppliers, some of which are our sole source for a particular supply item, and risk of potential customer bankruptcies and/or slower payments. The volatility in the financial markets will also affect the valuation of our pension assets and postretirement liabilities, resulting in potentially higher postretirement costs in future periods. Also, if the dollar continues to strengthen, there will be a negative impact on sales and income from continuing operations when the results of our foreign operations are converted to U.S dollars.

          Contractual obligations and other commercial commitments are summarized in the following tables:

		Payments Due by Period
						Less than 1												After 5
Contractual Obligations		Total				year				1-3 years				4-5 years				years
Thousands of dollars
Notes payable to bank (A)		$	3,175			$	3,175			$	—			$	—			$	—
Long-term debt (B)			3,531				632				1,969				930				—
Capital leases			112				64				31				17				—
Operating leases			12,109				1,275				1,910				449				8,475
Purchase commitments			1,964				1,964				—				—				—
Pension contribution and other retirement plans (C)			1,300				1,300				—				—				—
Income taxes payable, non-current (D)			—				—				—				—				—

		Amount of Commitment Expiration by Period
						Less than 1												After 5
Other Commercial Commitments		Total				year				1-3 years				4-5 years				years
Thousands of dollars
Letters of credit		$	8,972			$	8,412			$	501			$	59			$	—
Guarantees			312				257				55				—				—

Critical Accounting Policies and Estimates

          Our discussion and analysis of our financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Actual results may differ from these estimates under different assumptions or conditions.

          Critical accounting policies are defined as those that are reflective of significant judgment and uncertainties, and potentially may result in materially different outcomes under different assumptions and conditions.

Sales Recognition

          We record sales when products are shipped and the title and risk of loss has passed to unaffiliated customers. Revenue related to shipping and handling costs billed-to customers are included in net sales and the related shipping and handling costs are included in cost of products sold.

Receivable Allowances

          Allowance for Doubtful Accounts

          We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. We record estimated allowances for uncollectible accounts receivable based upon the number of days the accounts are past due, the current business environment, and specific information such as bankruptcy or liquidity issues of customers. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. During 2008, we recorded a provision for doubtful accounts of $.1 million. The allowance for doubtful accounts represents approximately 1% of our trade receivable at December 31, 2008 and 2% of our trade receivable at December 31, 2007.

          Reserve for credit memos

          We maintain an allowance for future sales credits related to sales recorded during the year. Our estimated allowance is based on historical sales credits issued in the subsequent year related to the prior year and any significant open return good authorizations as of the balance sheet date. Our allowance is updated on a quarterly basis. The reserve for out of period credits represents approximately 1% of our trade receivables at December 31, 2008 and 2007.

Excess and Obsolescence Reserves

          We provide excess and obsolescence reserves to state inventories at the lower of cost or estimated market value. We identify inventory items which have had no usage or are in excess of the usages over the historical 12 to 36 months. A management team with representatives from marketing, manufacturing, engineering and finance reviews these inventory items, determines the disposition of the inventory and assesses the estimated market value based on their knowledge of the product and market conditions. These conditions include, among other things, future demand for product, product utility, unique customer order patterns or unique raw material purchase patterns, changes in customer and quality issues. At December 31, 2008 and 2007, the allowance for excess and obsolete inventory was 5% and 6% of gross inventory. If the impact of market conditions worsens from those projected by management, additional inventory write-downs may be necessary.

Impairment of Long-Lived Assets

          We record impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the discounted cash flows estimated to be generated by those assets are less than the carrying value of those items. Our cash flows are based on historical results adjusted to reflect the best estimate of future market and operating conditions. The net carrying value of assets not recoverable is then reduced to fair value. The estimates of fair value represent the best estimate based on industry trends and reference to market rates and transactions.

Goodwill

          We perform our annual impairment test for goodwill and intangibles with indefinite lives utilizing a discounted cash flow methodology, market comparables, and an overall market capitalization reasonableness test in computing fair value by reporting unit. We then compare the fair value of the reporting unit with its carrying value to assess if goodwill and other indefinite life intangibles have been impaired. Based on the assumptions as to

growth, discount rates and the weighting used for each respective valuation methodology, results of the valuations could be significantly changed. However, we believe that the methodologies and weightings used are reasonable and result in appropriate fair values of the reporting units.

          Our measurement date for our annual impairment test is January 1 of each year. We perform interim impairment tests if trigger events or changes in circumstances indicate the carrying amount may be impaired. There were no trigger events during 2008 and as such, only an annual impairment test was performed. During 2007 losses continued for our Thailand operation which presented an indicator that the goodwill may be impaired. The goodwill for the Thailand operation in the amount of $.2 million was impaired and written off as of January 1, 2007.

Deferred Tax Assets

          Deferred taxes are recognized at currently enacted tax rates for temporary differences between the financial reporting and income tax bases of assets and liabilities and operating loss and tax credit carryforwards. We established a valuation allowance to record our deferred tax assets at an amount that is more likely than not to be realized. In the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of their recorded amount, an adjustment to the valuation allowance would increase income in the period such determination was made. Likewise, should we determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the valuation allowance would be charged to expense in the period such determination was made.

Uncertain Tax Positions

          We identify tax positions taken on the federal, state, local and foreign income tax returns filed or to be filed. A tax position can include: a reduction in taxable income reported in a previously filed tax return or expected to be reported on a future tax return that impacts the measurement of current or deferred income tax assets or liabilities in the period being reported; a decision not to file a tax return; an allocation or a shift of income between jurisdictions; the characterization of income or a decision to exclude reporting taxable income in a tax return; or a decision to classify a transaction, entity or other position in a tax return as tax exempt. We determine whether a tax position is an uncertain or a routine business transaction tax position that is more-likely-than-not to be sustained at the full amount upon examination.

          Under FIN 48, tax benefits from uncertain tax positions that reduce our current or future income tax liability, are reported in our financial statements only to the extent that each benefit was recognized and measured under a two step approach. The first step requires us to assess whether each tax position based on its technical merits and facts and circumstances as of the reporting date, is more-likely-than-not to be sustained upon examination. The second step measures the amount of tax benefit that we recognize in the financial statements, based on a cumulative probability approach. A tax position that meets the more-likely-than-not threshold that is not highly certain is measured based on the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement with the tax authority, assuming that the tax authority has examined the position and has full knowledge of all relevant information.

          FIN 48 requires subjectivity of judgments to identify outcomes and to assign probability in order to estimate the settlement amount. We provide estimates in order to determine settlement amounts. During the year ended December 31, 2008, we recognized a benefit of $.4 million of uncertain tax positions. At December 31, 2008, the total reserve for uncertain tax positions and related interest is $1.2 million.

Business Combinations

          We account for business acquisitions using the purchase method, which requires us to allocate the cost of an acquired business to the acquired tangible and intangible assets and the liabilities based on their estimated fair values at acquisition date. We recognize the excess of an acquired business’s cost over the fair value of acquired assets less liabilities as goodwill. When the amount assigned to assets acquired and liabilities assumed exceeds the cost of the acquired business, we recognize an additional cost element for the acquired business related to any contingent consideration and recognize a liability for the lesser of the maximum amount of the contingent consideration or the excess. When the amount assigned to assets acquired and liabilities assumed exceeds the cost

of the acquired business including any related contingent consideration, we allocate the excess as a pro rata reduction of the amounts that otherwise would have been assigned to the acquired property and equipment and other intangible assets of the acquired business. Generally we use third-party appraisers to determine the fair values and lives of property and identifiable intangibles and consult with actuaries to determine the fair value of obligations under retirement plans assumed and legal counsel to assess obligations associated with legal and environmental claims, if any.

Pensions

          We record plan assets, obligations and expenses related to pension benefit plans based on actuarial valuations, which include key assumptions on discount rates, expected returns on plan assets and compensation increases. These actuarial assumptions are reviewed annually and modified as appropriate. The effect of modifications is generally recorded or amortized over future periods. The discount rate of 5.75 % at December 31, 2008 reflects an analysis of yield curves as of the end of the year and the schedule of expected cash needs of the plan. The expected long-term return on plan assets of 8.0% reflects the plan’s historical returns and represents our best estimate of the likely future returns on the plan’s asset mix. We believe the assumptions used in recording obligations under the plans are reasonable based on prior experience, market conditions and the advice of plan actuaries. However, an increase in the discount rate would decrease the plan obligations and the net periodic benefit cost, while a decrease in the discount rate would increase the plan obligations and the net periodic benefit cost. In addition, an increase in the expected long-term return on plan assets would decrease the net periodic pension cost, while a decrease in expected long-term return on plan assets would increase the net periodic pension cost.

Recently Issued Accounting Pronouncements

          In December 2008, the Financial Accounting Standards Board (FASB) issued Financial Staff Position (FSP) Financial Accounting Standard 132R-1 “Employers’ Disclosures about Postretirement Benefit Plan Assets” (FAS 132R-1), which amends FASB Statement 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits.” Beginning in fiscal years ending after December 15, 2009, employers will be required to provide more transparency about the assets in their postretirement benefit plans, including defined benefit pension plans. FAS 132R-1 was issued in response to users’ concerns that employers’ financial statements do not provide adequate transparency about the types of assets and associated risks in employers’ postretirement plans. In current disclosures of the major categories of plan assets, many employers provide information about only four asset categories: equity, debt, real estate, and other investments. For many employers, the “other investment” category has increased to include a significant percentage of plan assets. Users indicate that such disclosure is not sufficiently specific to permit evaluation of the nature and risks of assets held as investments. FAS 132R-1’s amended disclosure requirements about plan assets are principles-based. The objectives of the disclosures are to provide users with an understanding of the following:

	•		How investment decisions are made, including factors necessary to understanding investment policies and strategies
	•		The major categories of plan assets
	•		The inputs and valuation techniques used to measure the fair value of plan assets
	•		The effect of fair value measurements using significant unobservable inputs (Level 3 measurements in Statement 157 on changes in plan assets for the period)
	•		Significant concentrations of risk within plan assets

          The Company does not expect the adoption of this standard to have an impact on its financial position, results of operations, or cash flows.

          In May 2008, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (SFAS 162). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements. SFAS 162 will be effective 60 days following the Securities and Exchange Commission’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles.” The Company does not expect the adoption of this standard to have an impact on its financial position, results of operations, or cash flows.

          In April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets” (FSP 142-3). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets” (SFAS 142). The intent of FSP 142-3 is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R and other U.S. generally accepted accounting principles. FSP 142-3 applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning after December 15, 2008.

          In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (SFAS 161). SFAS 161 requires companies with derivative instruments to disclose information on how derivative instruments and related hedged items are accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities, and how derivative instruments and related hedged items affect a Company’s financial position, financial performance and cash flows.” SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Because the Company does not currently use derivative instruments and hedging of foreign currencies is minimal, the Company does not expect this statement to have a material impact on our consolidated financial statements

          In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements an amendment of ARB No. 51” (SFAS 160). This standard amends ARB No. 51 to establish accounting and reporting for the noncontrolling interest in a subsidiary and for deconsolidation of a subsidiary. It also amends certain of ARB No. 51’s consolidation procedures for consistency with the requirements of FASB Statement No. 141 (revised 2007), “Business Combinations.” This standard is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008.

          In December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (SFAS 141R). SFAS 141R revises the principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree, and the goodwill acquired in a business combination or gain from a bargain purchase. SFAS 141R also revises the principles and requirements for how the acquirer determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This standard is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The adoption of SFAS 141R will have an impact on accounting for business combinations once adopted, but the effect is dependent upon acquisitions after that time.

          SFAS 160 and 141R will be applied prospectively to future business combinations entered into beginning in 2009. Certain provisions of SFAS 160 relating to presentation of noncontrolling interests in consolidated balance sheets and statements of consolidated income are required to be adopted retrospectively.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

          The Company operates manufacturing facilities and offices around the world and uses fixed and floating rate debt to finance the Company’s global operations. As a result, the Company is subject to business risks inherent in non-U.S. activities, including political and economic uncertainty, import and export limitations and market risk related to changes in interest rates and foreign currency exchange rates. The Company believes the political and economic risks related to the Company’s international operations are mitigated due to the stability of the countries in which the Company’s largest international operations are located.

          The Company had one di minimus derivative instrument at our Poland subsidiary. The Company does not hold derivatives for trading purposes.

          The Company is exposed to market risk, including changes in interest rates. The Company is subject to interest rate risk on its variable rate revolving credit facilities and term notes, which consisted of borrowings of $6 million at December 31, 2008. A 100 basis point increase in the interest rate would have resulted in an increase in interest expense of approximately $.1 million for the year ended December 31, 2008.

          The Company’s primary currency rate exposures are related to foreign denominated debt, intercompany debt, forward exchange contracts, foreign denominated receivables and cash and short-term investments. A hypothetical 10% change in currency rates would have a favorable/unfavorable impact on fair values of $2.3 million and on income before tax of less than $.1 million.

Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
of Preformed Line Products Company

We have audited the accompanying consolidated balance sheet of Preformed Line Products Company as of December 31, 2008, and the related statements of consolidated income, cash flows, and shareholders’ equity for the year then ended. Our audit also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule 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 the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Preformed Line Products Company at December 31, 2008, and the consolidated results of its operations and its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Preformed Line Products Company’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 10, 2009 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Cleveland, Ohio
March 10, 2009

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Preformed Line Products Company

We have audited the accompanying consolidated balance sheet of Preformed Line Products Company and subsidiaries (the “Company”) as of December 31, 2007, and the related consolidated statements of income, shareholders’ equity and cash flows for the years ended December 31, 2007 and 2006. Our audits also included the consolidated financial statement schedule listed in the Index at Item 15(a). These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audits 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 the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such 2007 and 2006 consolidated financial statements present fairly, in all material respects, the financial position of Preformed Line Products Company and subsidiaries as of December 31, 2007, and the results of their operations and their cash flows for the years ended December 31, 2007 and 2006, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such 2007 and 2006 consolidated financial statement schedule, when considered in relation to the basic 2007 and 2006 consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Notes N and K to the consolidated financial statements, the accompanying 2007 and 2006 financial statements and related disclosures have been retrospectively adjusted for discontinued operations and a change in the composition of reportable segments.

As discussed in Note F to the consolidated financial statements, the Company changed its method of accounting for uncertain tax positions with the adoption of Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” effective January 1, 2007. Also as discussed in Note C to the consolidated financial statements, the Company changed its method of accounting for defined benefit pension and other postretirement plans with the adoption of SFAS No. 158, “Employers’ Accounting For Defined Benefit Pension and Other Postretirement Plans” effective December 31, 2006.

/s/ Deloitte & Touche LLP

Cleveland, Ohio
April 4, 2008

(March 13, 2009 as to Notes N and K)

PREFORMED LINE PRODUCTS COMPANY
CONSOLIDATED BALANCE SHEETS

		December 31
		2008				2007
		(Thousands of dollars, except
		share and per share data)
ASSETS
Cash and cash equivalents		$	19,869			$	23,392
Accounts receivable, less allowances of $972 ($1,199 in 2007)			36,899				37,002
Inventories — net			48,412				43,788
Deferred income taxes			2,786				2,982
Prepaids and other			4,704				4,098
Current assets of discontinued operations			—				12,188
TOTAL CURRENT ASSETS			112,670				123,450
Property and equipment — net			55,940				58,506
Patents and other intangibles — net			3,858				5,637
Goodwill			5,520				3,928
Deferred income taxes			6,943				3,744
Other assets			5,944				8,601
TOTAL ASSETS		$	190,875			$	203,866
LIABILITIES AND SHAREHOLDERS’ EQUITY
Notes payable to banks		$	3,101			$	4,076
Current portion of long-term debt			494				1,949
Trade accounts payable			14,632				15,178
Accrued compensation and amounts withheld from employees			6,606				6,995
Accrued expenses and other liabilities			4,574				6,829
Accrued profit-sharing and other benefits			3,687				3,577
Dividends payable			1,054				1,076
Income taxes payable			1,100				772
Current liabilities of discontinued operations			—				1,897
TOTAL CURRENT LIABILITIES			35,248				42,349
Long-term debt, less current portion			2,653				3,010
Unfunded pension obligation			11,303				2,787
Income taxes payable, noncurrent			1,405				1,837
Deferred income taxes			725				1,486
Other noncurrent liabilities			2,540				1,772
Minority interests			736				904
SHAREHOLDERS’ EQUITY
Common stock — $2 par value per share, 15,000,000 shares authorized, 5,223,830 and 5,380,956 issued and outstanding, net of 551,059 and 378,333 treasury shares at par, respectively			10,448				10,762
Paid in capital			3,704				2,720
Retained earnings			146,624				140,339
Accumulated other comprehensive loss			(24,511	)			(4,100	)
TOTAL SHAREHOLDERS’ EQUITY			136,265				149,721
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	190,875			$	203,866

See notes to consolidated financial statements.

PREFORMED LINE PRODUCTS COMPANY
STATEMENTS OF CONSOLIDATED INCOME

		Year ended December 31
		2008				2007				2006
		(Thousands of dollars, except share and per share data)
Net sales		$	269,742			$	233,289			$	196,910
Cost of products sold			182,475				155,388				132,185
GROSS PROFIT			87,267				77,901				64,725
Costs and expenses
Selling			23,555				22,623				19,134
General and administrative			30,014				26,416				22,200
Research and engineering			8,870				7,192				6,646
Other operating expenses — net			840				338				386
Goodwill impairment			—				199				—
			63,279				56,768				48,366
OPERATING INCOME			23,988				21,133				16,359
Other income (expense)
Interest income			846				1,088				1,456
Interest expense			(544	)			(595	)			(564	)
Other income (expense)			470				(305	)			(71	)
			772				188				821
INCOME BEFORE INCOME TAXES, MINORITY INTERESTS AND DISCONTINUED OPERATIONS			24,760				21,321				17,180
Income taxes			7,718				7,501				5,353
INCOME BEFORE MINORITY INTERESTS AND DISCONTINUED OPERATIONS			17,042				13,820				11,827
Minority interests, net of tax			(288	)			(54	)			—
INCOME FROM CONTINUING OPERATIONS			16,754				13,766				11,827
Income from discontinued operations, net of tax			869				393				276
NET INCOME		$	17,623			$	14,159			$	12,103
Income per share from continuing operations — basic		$	3.17			$	2.57			$	2.11
Income per share from discontinued operations — basic		$	0.17			$	0.07			$	0.05
Total net income per share — basic		$	3.34			$	2.64			$	2.16
Income per share from continuing operations — diluted		$	3.14			$	2.54			$	2.09
Income per share from discontinued operations — diluted		$	0.16			$	0.07			$	0.05
Total net income per share — diluted		$	3.30			$	2.61			$	2.14
Cash dividends declared per share		$	0.80			$	0.80			$	0.80
Weighted-average number of shares outstanding — basic			5,279				5,372				5,611
Weighted-average number of shares outstanding — diluted			5,339				5,416				5,660