UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


~~(Mark One)~~

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

For the quarterly period ended ~~June 30, 2011~~March 31, 2012

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

For the transition period from to

Commission file number 0-3134

Park-Ohio Holdings Corp.

(Exact name of registrant as specified in its charter)


Ohio		34-1867219
~~Ohio~~		~~34-1867219~~
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6065 Parkland Boulevard, Cleveland, Ohio		44124
(Address of principal executive offices)		~~44124~~ (Zip Code)

440/947-2000
(Registrant’s telephone number, including area code)

Park-Ohio Holdings Corp. is a successor issuer to Park-Ohio Industries, Inc.

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 twelve months (or for such shorter period that the registrant was required to file such reports) and

(2)

Has been subject to such filing requirements for the past 90 days. Yes þ No o¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ¨ No 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 Rule12b-2 of the Exchange Act. (Check one):


Large accelerated filer o¨	Accelerated filer þ	Non-accelerated filer o¨	Smaller reporting company o¨
	(Do not check if a smaller reporting company)

~~(Do not check if a smaller reporting company)~~

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes o¨ No þ

Number of shares outstanding of registrant’s Common Stock, par value $1.00 per share, as of ~~July 29, 2011: 11,965,792.~~

April 30, 2012: 12,167,913.

The Exhibit Index is located on page ~~26.~~

27.

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES

INDEX


			Page

PART I. FINANCIAL INFORMATION
	~~Item 1.~~
Item 1.		Financial Statements		3
			Condensed consolidated balance sheets — ~~June 30, 2011~~March 31, 2012 and December 31, ~~2010~~2011		3
			Condensed consolidated statements of ~~operations~~income — Three ~~and six~~ months ended ~~June 30,~~March 31, 2012 and 2011 ~~and 2010~~		4
			Condensed consolidated ~~statement~~statements of ~~shareholders’ equity~~comprehensive income — ~~Six~~Three months ended ~~June 30,~~March 31, 2012 and 2011		5
			Condensed consolidated ~~statements~~statement of ~~cash flows~~shareholders’ equity — ~~Six~~Three months ended ~~June 30, 2011 and 2010~~ March 31, 2012		6
		Condensed consolidated statements of cash flows — Three months ended March 31, 2012 and 2011		7
		Notes to unaudited condensed consolidated financial statements — ~~June 30, 2011~~March 31, 2012		78
Item 2.			~~Report of independent registered public accounting firm~~		14
	~~Item 2.~~		Management’s Discussion and Analysis of Financial Condition and Results of Operations		1516
	Item 3.		Quantitative and Qualitative Disclosure About Market Risk		21
	~~Item 4.~~		~~Controls and Procedures~~		22
Item 4.
~~PART II. OTHER INFORMATION~~
	~~Item 1.~~Controls and Procedures		22

PART II. OTHER INFORMATION

Item 1.		Legal Proceedings		23
	Item 1A.		Risk Factors		24
	Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		24
	Item 6.		Exhibits		25
SIGNATURES				26
EXHIBIT INDEX				27
~~EX-15~~
~~EX-31.1~~
~~EX-31.2~~
~~EX-32~~
~~EX-101 INSTANCE DOCUMENT~~
~~EX-101 SCHEMA DOCUMENT~~
~~EX-101 CALCULATION LINKBASE DOCUMENT~~
~~EX-101 LABELS LINKBASE DOCUMENT~~
~~EX-101 PRESENTATION LINKBASE DOCUMENT~~
~~EX-101 DEFINITION LINKBASE DOCUMENT~~

PART I. Financial Information
ITEM 1.

Financial Statements

~~ITEM 1.~~

~~Financial Statements~~

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 30,
December 31,

2011 2010
(Dollars in thousands)

ASSETS
Current Assets
Cash and cash equivalents $ 60,094 $ 35,311
Accounts receivable, less allowances for doubtful accounts of $5,594 at June 30, 2011 and $6,011 at December 31, 2010 147,305 126,409
Inventories 205,752 192,542
Deferred tax assets 10,496 10,496
Unbilled contract revenue 17,556 12,751
Other current assets 12,156 12,800

Total Current Assets 453,359 390,309
Property, Plant and Equipment 257,047 253,077
Less accumulated depreciation 189,474 184,294

67,573 68,783
Other Assets
Goodwill 9,891 9,100
Other 90,511 84,340

$ 621,334 $ 552,532

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Trade accounts payable $ 116,494 $ 95,695
Accrued expenses 65,206 59,487
Current portion of long-term debt 1,291 13,756
Current portion of other postretirement benefits 2,178 2,178

Total Current Liabilities 185,169 171,116
Long-Term Liabilities, less current portion
Senior Notes 250,000 183,835
Revolving credit facility 90,500 113,300
Other long-term debt 4,948 5,322
Deferred tax liability 9,721 9,721
Other postretirement benefits and other long-term liabilities 22,660 22,863

377,829 335,041
Shareholders’ Equity
Capital stock, par value $1 a share:
Serial Preferred Stock -0- -0-
Common Stock 13,539 13,397
Additional paid-in capital 68,871 68,085
Retained deficit (11,421 ) (19,043 )
Treasury stock, at cost (18,740 ) (18,502 )
Accumulated other comprehensive income 6,087 2,438

58,336 46,375

$ 621,334 $ 552,532

(Unaudited)
March 31,
2012 December 31,
2011
(Dollars in thousands)
ASSETS
Current Assets

Cash and cash equivalents
$ 44,588    $ 78,001
Accounts receivable, less allowances for doubtful accounts of $5,469 at March 31, 2012 and $5,483 at December 31, 2011
191,062    139,941
Inventories, net
222,643    202,039
Deferred tax assets
22,544    20,561
Unbilled contract revenue
15,102    18,778
Other current assets
12,572    8,790

Total Current Assets
508,511    468,110
Property, plant and equipment:

Land and land improvements
6,471    3,654
Buildings
51,524    47,594
Machinery and equipment
226,392    208,727

284,387    259,975
Less accumulated depreciation
201,377    198,165

83,010    61,810
Other Assets:

Goodwill and other intangible assets
104,282    20,187
Other
64,578    63,833

$ 760,381    $ 613,940

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities

Trade accounts payable
$ 134,774    $ 99,588
Accrued expenses
102,308    73,651
Current portion of long-term debt
4,730    1,415
Current portion of other postretirement benefits
2,002    2,002

Total Current Liabilities
243,814    176,656
Long-Term Liabilities, less current portion

Senior Notes
250,000    250,000
Credit facility
138,029    93,000
Other long-term debt
3,051    3,165
Deferred tax liability
24,321    1,392
Other postretirement benefits and other long-term liabilities
25,159    24,285

440,560    371,842
Shareholders’ Equity

Capital stock, par value $1 a share:

Serial preferred stock:

Authorized — 632,470 shares: Issued and outstanding — none
-0-    -0-
Common stock:

Authorized — 40,000,000 shares: Issued – 13,831,274 shares in 2012 and 13,813,774 in 2011
13,831    13,814
Additional paid-in capital
71,116    70,248
Retained earnings
19,348    10,392
Treasury stock, at cost, 1,706,217 shares in 2012 and 1,673,926 shares in 2011
(21,266 ) (20,607 )
Accumulated other comprehensive (loss)
(7,022 ) (8,405 )

76,007    65,442

$ 760,381    $ 613,940

Note:
The balance sheet at December 31, ~~2010~~2011 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
See accompanying notes to these unaudited condensed consolidated financial statements. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~INCOME (UNAUDITED)

Three Months Ended
Six Months Ended

June 30, June 30,
2011 2010 2011 2010
(Amounts in thousands, except per share data)

Net sales $ 246,808 $ 198,303 $ 488,436 $ 390,004
Cost of products sold 201,628 165,005 401,321 327,368

Gross profit 45,180 33,298 87,115 62,636
Selling, general and administrative expenses 28,846 22,337 54,511 43,305

Operating income 16,334 10,961 32,604 19,331
Interest expense 14,229 6,167 20,092 11,603

Income before income taxes 2,105 4,794 12,512 7,728
Income taxes 3,212 1,379 4,890 2,247

Net income (loss) $ (1,107 ) $ 3,415 $ 7,622 $ 5,481

Amounts per common share:
Basic $ (.10 ) $ .30 $ .66 $ .49
Diluted $ (.10 ) $ .29 $ .64 $ .47
Common shares used in the computation:
Basic 11,545 11,475 11,503 11,229

Diluted 11,545 11,956 12,000 11,747

   Three Months Ended
March 31,
   2012    2011

(Amounts in thousands,
except per share data)

Net sales
   $ 263,056       $ 241,628
Cost of products sold
   214,177       199,693




Gross profit
   48,879       41,935
Selling, general and administrative expenses
   28,745       25,665




Operating income
   20,134       16,270
Interest expense
   6,735       5,863




Income before income taxes
   13,399       10,407
Income taxes
   4,443       1,678




Net income
   $ 8,956       $ 8,729




Amounts per common share:

Basic
   $ .76       $ .76
Diluted
   $ .74       $ .73
Common shares used in the computation:

Basic
   11,787       11,460




Diluted
   12,041       11,987




See accompanying notes to these unaudited condensed consolidated financial statements. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF ~~SHAREHOLDERS’ EQUITY~~COMPREHENSIVE INCOME (UNAUDITED)

Accumulated

Additional
Other

Common
Paid-In
Retained
Treasury
Comprehensive

Stock Capital Deficit Stock Income Total
(Dollars in thousands)

Balance at January 1, 2011 $ 13,397 $ 68,085 $ (19,043 ) $ (18,502 ) $ 2,438 $ 46,375
Comprehensive income:
Net income 7,622 7,622
Foreign currency translation adjustment 3,436 3,436
Pension and post retirement benefit adjustments, net of tax 213 213

Comprehensive income 11,271
Amortization of restricted stock 840 840
Restricted stock awards 140 (140 ) -0-
Purchase of treasury stock (12,130 shares) (238 ) (238 )
Exercise of stock options (2,500 shares) 2 6 8
Share-based compensation 80 80

Balance at June 30, 2011 $ 13,539 $ 68,871 $ (11,421 ) $ (18,740 ) $ 6,087 $ 58,336

   Three Months Ended
March 31,
       2012            2011
   (Amounts in thousands)
Net income
   $ 8,956       $ 8,729
Other comprehensive income:

Foreign currency translation
   1,221       2,620
Pension and post retirement benefit adjustments, net of tax
   162       106




Comprehensive income, net of tax
   $ 10,339       $ 11,455




See accompanying notes to these unaudited condensed consolidated financial statements. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF ~~CASH FLOWS~~SHAREHOLDERS’ EQUITY (UNAUDITED)

Six Months Ended

June 30,
2011 2010
(Dollars in thousands)

OPERATING ACTIVITIES

Net income $ 7,622 $ 5,481
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 8,277 8,437
Share-based compensation expense 920 840
Debt extinguishment costs 7,335 -0-
Changes in operating assets and liabilities:
Accounts receivable (20,896 ) (15,235 )
Inventories and other current assets (17,370 ) 19,678
Accounts payable and accrued expenses 26,518 16,354
Other (831 ) (9,121 )

Net Cash Provided by Operating Activities 11,575 26,434
INVESTING ACTIVITIES

Purchases of property, plant and equipment, net (5,258 ) (636 )

Net Cash Used by Investing Activities (5,258 ) (636 )
FINANCING ACTIVITIES

Payments on term loans and other debt (35,939 ) (2,017 )
(Payments on) proceeds from revolving credit facility 300 (14,400 )
Issuance of 8.125% senior notes, net of deferred financing costs 244,970 -0-
Redemption of 8.375% senior subordinated notes due 2014 (189,555 ) -0-
Bank debt issue costs (1,080 ) (3,847 )
Purchase of treasury stock (238 ) (766 )
Exercise of stock options 8 -0-

Net Cash Provided (Used) by Financing Activities 18,466 (21,030 )

Increase in Cash and Cash Equivalents 24,783 4,768
Cash and Cash Equivalents at Beginning of Period 35,311 23,098

Cash and Cash Equivalents at End of Period $ 60,094 $ 27,866

Taxes paid $ 1,769 $ 945
Interest paid (includes $5,720 of senior subordinated notes redemption costs) 15,389 11,268
   Common
Stock    Additional
Paid-In
Capital    Retained
Earnings    Treasury
Stock Accumulated
Other
Comprehensive
(Loss) Total
   (Dollars in thousands)
Balance at January 1, 2012
   $ 13,814       $ 70,248       $ 10,392       $ (20,607 ) $ (8,405 ) $ 65,442
Other comprehensive income
         8,956       1,383    10,339
Amortization of restricted stock
      617          617
Purchase of treasury stock (32,291 shares)
            (659 ) (659 )
Exercise of stock options (17,500 shares)
   17       244          261
Share-based compensation
      7          7








Balance at March 31, 2012
   $ 13,831       $ 71,116       $ 19,348       $ (21,266 ) $ (7,022 ) $ 76,007








See accompanying notes to these condensed consolidated financial statements. The accompanying notes
are an integral part of these unaudited condensed consolidated financial statements.

6

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
   Three Months Ended
March 31,
   2012 2011
   (Dollars in thousands)
OPERATING ACTIVITIES

Net income
   $ 8,956    $ 8,729
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization
   3,501    3,957
Share-based compensation expense
   624    428
Changes in operating assets and liabilities:

Accounts receivable
   (20,201 ) (20,061 )
Inventories and other current assets
   (7,449 ) (7,033 )
Accounts payable and accrued expenses
   30,403    25,989
Other
   1,266    961


Net Cash Provided by Operating Activities
   17,100    12,970
INVESTING ACTIVITIES

Purchases of property, plant and equipment, net
   (2,829 ) (1,515 )
Acquisitions, net of cash acquired
   (94,641 ) -0-


Net Cash Used by Investing Activities
   (97,470 ) (1,515 )
FINANCING ACTIVITIES

Proceeds from term loan and other debt
   24,630    -0-
Proceeds from (payments on) revolving credit facility
   23,600    (15,728 )
Debt issue costs
   (875 ) -0-
Exercise of stock options
   261    -0-
Purchase of treasury stock
   (659 ) (224 )


Net Cash Provided (Used) by Financing Activities
   46,957    (15,952 )


Decrease in Cash and Cash Equivalents
   (33,413 ) (4,497 )
Cash and Cash Equivalents at Beginning of Period
   78,001    35,311


Cash and Cash Equivalents at End of Period
   $ 44,588    $ 30,814


Taxes paid
   $ 1,338    $ 463
Interest paid
   $ 669    $ 1,389
See accompanying notes to these condensed consolidated financial statements. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~June 30, 2011~~
March 31, 2012
(Dollars and shares in thousands, except per share amounts)

NOTE A — Basis of Presentation

The ~~condensed~~ consolidated financial statements include the accounts of Park-Ohio Holdings Corp. and its subsidiaries ~~(the~~(collectively, the “Company”). All significant intercompany transactions have been eliminated in consolidation.

Certain amounts in the prior years’ financial statements have been reclassified to conform to the current year presentation.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted for interim financial information and with the instructions toForm 10-Q and Article 10 ofRegulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month ~~and six-month periods~~period ended ~~June 30, 2011~~March 31, 2012, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2011.~~2012. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report onForm 10-K for the year ended December 31, ~~2010.~~

2011.
NOTE B — Recent Accounting Pronouncements
Accounting Pronouncements Adopted in the Three Months Ended March 31, 2012
In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.” ASU No. 2011-05 amends existing guidance by allowing only two options for presenting components of net income and other comprehensive income: (1) in a single continuous financial statement, statement of comprehensive income or (2) in two separate but consecutive financial statements, consisting of an income statement followed by a separate statement on other comprehensive income. Also, items that are reclassified from other comprehensive income to net income must be presented on the face of the financial statements. ASU No. 2011-05 requires retrospective application, and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. In December 2011, the FASB issued ASU No. 2011-12, deferring its requirements that companies present reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income on the face of the financial statements. Entities continue to be required to present amounts reclassified out of accumulated other comprehensive income on the face of the financial statements or disclose those amounts in the notes to the financial statements. The requirement to present reclassification adjustments in interim periods was also deferred. However, entities are required to report a total for comprehensive income in condensed financial statements of interim periods in a single continuous statement or in two consecutive statements. The FASB is reconsidering the presentation requirements for reclassification adjustments. The Company adopted ASU No. 2011-5 in the first quarter of 2012 and elected to present the components of net income and comprehensive income in two separate but consecutive statements.
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE C — Segments

The Company operates through three segments: Supply Technologies, Aluminum Products and Manufactured Products. Supply Technologies provides our customers with Total Supply Managementtm^™ services for a broad range of high-volume, specialty production components. Total Supply Managementtm^™ manages the efficiencies of every aspect of supplying production parts and materials to our customers’ manufacturing floor, from strategic planning to program implementation, and includes such services as engineering and design support, part usage and cost analysis, supplier selection, quality assurance, bar coding, product packaging and tracking,just-in-time andpoint-of-use delivery, electronic billing services and ongoing technical support. Aluminum Products manufactures cast aluminum components for automotive, agricultural equipment, construction equipment, heavy-duty truck and marine equipment industries. Aluminum Products also provides value-added services such as design and engineering, machining and assembly. Manufactured Products operates a diverse group of niche manufacturing businesses that design and manufacture a broad range of high quality products engineered for specific customer applications.

Results by business segment were as follows:
   Three Months Ended
March 31,
   2012 2011
Net sales:

Supply Technologies
   $ 134,351    $ 123,226
Aluminum Products
   36,165    39,041
Manufactured Products
   92,540    79,361


   $ 263,056    $ 241,628


Income (loss) before income taxes:

Supply Technologies
   $ 10,077    $ 8,633
Aluminum Products
   1,059    3,314
Manufactured Products
   14,090    8,546


   25,226    20,493
Corporate costs
   (5,092 ) (4,223 )
Interest expense
   (6,735 ) (5,863 )


   $ 13,399    $ 10,407


   March 31,
2012 December 31,
2011
Identifiable assets:

Supply Technologies
   $ 236,324    $ 228,629
Aluminum Products
   216,988    61,002
Manufactured Products
   220,168    203,782
General corporate
   86,901    120,527


   $ 760,381    $ 613,940


For the three months ended March 31, 2012, sales of the Manufactured Products segment consisted of capital equipment (74%), forged and machined products (19%) and rubber products (7%). Engineered specialty products sales represent approximately 13% of Supply Technologies segment sales for the three months ended March 31, 2012.
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
~~Results by business segment were as follows:~~

Three Months Ended
Six Months Ended

June 30, June 30,
2011 2010 2011 2010

Net sales:
Supply Technologies $ 125,522 $ 97,185 $ 248,748 $ 191,423
Aluminum products 33,452 37,572 72,493 74,160
Manufactured products 87,834 63,546 167,195 124,421

$ 246,808 $ 198,303 $ 488,436 $ 390,004

Income (loss) before income taxes:
Supply Technologies $ 8,419 $ 5,311 $ 17,052 $ 9,795
Aluminum products 1,304 2,299 4,618 4,235
Manufactured products 11,333 7,597 19,879 12,529

21,056 15,207 41,549 26,559
Corporate costs (4,722 ) (4,246 ) (8,945 ) (7,228 )
Interest expense (14,229 ) (6,167 ) (20,092 ) (11,603 )

Income before income taxes $ 2,105 $ 4,794 $ 12,512 $ 7,728

June 30,
December 31,

2011 2010

Identifiable assets were as follows:
Supply Technologies $ 234,491 $ 217,915
Aluminum products 66,195 66,219
Manufactured products 202,549 188,017
General corporate 118,099 80,381

$ 621,334 $ 552,532

~~NOTE C — Recent Accounting Pronouncements~~
In June 2011, the Financial Accounting Standards Board (“FASB”) amended Accounting Standards Codification (“ASC”) 220, “Presentation of Comprehensive Income.” This amendment will require companies to present the components of net income and other comprehensive income either as one continuous statement or as two consecutive statements. It eliminates the option to present components of other comprehensive income as part of the statement of changes in shareholders’ equity. The amended guidance, which must be applied retroactively, is effective for interim and annual periods beginning after December 15, 2011, with earlier adoption permitted. This Accounting Standards Update (“ASU”) impacts presentation only and will have no effect on our financial position, results of operations or cash flows.
In May 2011, the FASB amended ASC 820, “Fair Value Measurement.” This amendment is intended to result in convergence between U.S. GAAP and International Financial Reporting Standards (“IFRS”) requirements for measurement of and disclosures about fair value. This guidance clarifies the application of existing fair value measurements and disclosures, and changes certain principles or requirements for fair value measurements and disclosures. The amendment is effective for interim and annual periods beginning after December 15, 2011. The adoption of this amendment will not have a material impact on our consolidated financial statements.

8
~~PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES~~
~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~
NOTE D — Inventories
The components of inventory consist of the following:

June 30,
December 31,

2011 2010

Finished goods $ 122,825 $ 116,202
Work in process 25,366 24,339
Raw materials and supplies 57,561 52,001

$ 205,752 $ 192,542

   March 31,
2012    December 31,
2011
Finished goods
   $ 121,445       $ 122,010
Work in process
   28,702       20,660
Raw materials and supplies
   72,496       59,369




   $ 222,643       $ 202,039




NOTE E — Shareholders’ Equity
At ~~June 30, 2011,~~March 31, 2012, capital stock ~~consists~~consisted of (i) Serial Preferred Stock, of which 632,470 shares were authorized and none were issued, and (ii) Common Stock, of which 40,000,000 shares were authorized and ~~13,539,174~~13,831,274 shares were issued, of which ~~11,967,848~~12,125,057 were outstanding and ~~1,571,326~~1,706,217 were treasury shares.

NOTE F — Net Income Per Common Share
The following table sets forth the computation of basic and diluted earnings per share:

Three Months Ended
Six Months Ended

June 30, June 30,
2011 2010 2011 2010

NUMERATOR

Net income (loss) $ (1,107 ) $ 3,415 $ 7,622 $ 5,481

DENOMINATOR

Denominator for basic earnings per share — weighted average shares 11,545 11,475 11,503 11,229
Effect of dilutive securities:
Employee stock options -0- 481 497 518

Denominator for diluted earnings per share — weighted average shares and assumed conversions 11,545 11,956 12,000 11,747

Amounts per common share:
Basic $ (.10 ) $ .30 $ .66 $ .49
Diluted $ (.10 ) $ .29 $ .64 $ .47
   Three Months Ended
March 31,
   2012    2011
NUMERATOR

Net income
   $ 8,956       $ 8,729




DENOMINATOR

Denominator for basic earnings per share — weighted average shares
   11,787       11,460
Effect of dilutive securities:

Employee stock options
   254       527




Denominator for diluted earnings per share — weighted average shares and assumed conversions
   12,041       11,987




Amounts per common share:

Basic
   $ .76       $ .76
Diluted
   $ .74       $ .73
Basic earnings per common share is computed as net income available to common shareholders divided by the weighted average basic shares outstanding. Diluted earnings per common share is computed as net income available to common shareholders divided by the weighted average diluted shares outstanding.
Pursuant to ASC 260, “Earnings Per Share,” when a loss is reported the denominator of diluted earnings per share cannot be adjusted for the dilutive impact of stock options and awards because doing so will result in anti-dilution. Therefore, for the three months ended June 30, 2011, basic weighted-average shares outstanding are used in calculating diluted earnings per share.
Outstanding stock options with exercise prices greater than the average price of the common shares are anti-dilutive and are not included in the computation of diluted earnings per share. Stock options on 40,000 and 20,000 shares were excluded in the ~~six~~three months ended ~~June 30,~~March 31, 2012 and 2011, ~~and 206,000 were excluded for the three months and six months ended June 30, 2010~~respectively, because they were anti-dilutive.

9
~~PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES~~
~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~
NOTE G — Stock-Based Compensation
Total ~~stock~~stock-based compensation expense recorded in the first ~~six~~three months of 2012 and 2011 was $624 and ~~2010 was $920 and $840,~~$428, respectively. Total stock compensation expense recorded in the second quarter of 2011 and 2010 was $492 and $378, respectively. There were 140,000 shares of restricted stock awarded during the six months ended June 30, 2011 at a price of $20.90 per share, all of which were awarded in the three months ended June 30, 2011. There were no stock ~~options awarded~~option or restricted stock awards during the ~~six months ended June 30, 2011 and 2010. There were 5,000 shares of restricted stock awarded during the~~first three months of 2012 and ~~six months ended June 30, 2010.~~2011. As of ~~June 30, 2011,~~March 31, 2012, there was ~~$3,912~~$3,141 of unrecognized compensation cost related to non-vested stock-based compensation, which ~~cost~~ is expected to be recognized over a weighted average period of ~~2.34~~2.1 years.

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE H — Pension Plans and Other Postretirement Benefits
The components of net periodic benefit cost recognized during interim periods ~~was~~were as follows:

Pension Benefits Postretirement Benefits
Three Months
Six Months
Three Months
Six Months

Ended June 30, Ended June 30, Ended June 30, Ended June 30,
2011 2010 2011 2010 2011 2010 2011 2010

Service costs $ 604 $ 81 $ 713 $ 162 $ 12 $ 9 $ 24 $ 18
Interest costs 596 643 1,192 1,286 228 248 456 496
Expected return on plan assets (2,239 ) (1,984 ) (4,468 ) (3,968 ) -0- -0- -0- -0-
Transition obligation (10 ) (10 ) (20 ) (20 ) -0- -0- -0- -0-
Amortization of prior service cost 11 15 22 30 (24 ) (24 ) (48 ) (48 )
Recognized net actuarial loss -0- 82 -0- 164 129 107 258 214

Benefit (income) costs $ (1,038 ) $ (1,173 ) $ (2,561 ) $ (2,346 ) $ 345 $ 340 $ 690 $ 680

   Three Months Ended
March 31,
   Pension Benefits Postretirement
Benefits
       2012         2011         2012         2011
Service costs
   $ 542    $ 109    $ 15    $ 12
Interest costs
   565    596    201    228
Expected return on plan assets
   (2,059 ) (2,229 ) -0-    -0-
Transition obligation
   (10 ) (10 ) -0-    -0-
Amortization of prior service cost
   11    11    (24 ) (24 )
Recognized net actuarial loss
   241    -0-    186    129


(Income) benefit costs
   $ (710 ) $ (1,523 ) $ 378    $ 345


NOTE I — Comprehensive Income
~~Total comprehensive income (loss) was as follows:~~

Three Months Ended
Six Months Ended

June 30, June 30,
2011 2010 2011 2010

Net income (loss) $ (1,107 ) $ 3,415 $ 7,622 $ 5,481
Foreign currency translation 816 (3,832 ) 3,436 (5,859 )
Pension and post retirement benefit adjustments, net of tax 107 195 213 390

Total comprehensive income (loss) $ (184 ) $ (222 ) $ 11,271 $ 12

The components of accumulated comprehensive ~~loss~~income at ~~June 30, 2011~~March 31, 2012 and December 31, ~~2010~~2011 are as follows:

June 30,
December 31,

2011 2010

Foreign currency translation adjustment $ 9,675 $ 6,239
Pension and postretirement benefit adjustments, net of tax (3,588 ) (3,801 )

$ 6,087 $ 2,438

10
   March 31,
2012 December 31,
2011
Foreign currency translation adjustment
   $ 6,073    $ 4,852
Pension and postretirement benefit adjustments, net of tax
   (13,095 ) (13,257 )


   $ (7,022 ) $ (8,405 )


The pension and postretirement benefit liability amounts were net of deferred taxes of $5,571 at March 31, 2012 and December 31, 2011. No income taxes are provided on foreign currency translation adjustments as foreign earnings are considered permanently invested.
~~PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES~~
~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~
NOTE J — Accrued Warranty Costs
The Company estimates the amount of warranty claims on sold products that may be incurred based on current and historical data. The actual warranty expense could differ from the estimates made by the Company based on product performance. The following table presents the changes in the Company’s product warranty liability:

2011 2010

Balance at January 1 $ 4,046 $ 2,760
Claims paid during the year (313 ) (541 )
Additional warranties issued during the first six months 371 907

Balance at June 30 $ 4,104 $ 3,126

   2012 2011
Balance at January 1
   $ 4,208    $ 4,046
Claims paid during the quarter
   (592 ) (127 )
Additional warranties issued during the quarter
   817    149
Acquired warranty liabilities
   3,317    -0-


Balance at March 31
   $ 7,750    $ 4,068


NOTE K — Income Taxes
The Company’s tax provision for interim periods is determined using an estimate of its annual effective income tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the Company updates the estimated annual effective income tax rate and, if the estimated income tax rate changes, a cumulative adjustment is made.
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The ~~reported~~ effective income tax rate ~~for full-year~~in the first three months of 2012 and 2011 ~~including discrete items~~was 33.2% and 16.1%, respectively. The 2012 annual effective income tax rate is estimated to be approximately ~~32%~~33% and is lower than the 35% ~~U.S.~~United States federal statutory rate primarily due to ~~anticipated income in the United States for which the Company will record no tax expense due to a full valuation allowance against its U.S. net deferred tax assets and~~ anticipated income earned in jurisdictions outside of the United States where the effective income tax rate is lower than in the United States.
The reported effective tax rate in the first six months of 2011 and 2010 was 39.1% and 29.1%, respectively. The primary reason for the variance is due to a provision for foreign income taxes of $2.1 million resulting from the retirement of our 8.375% senior subordinated notes due 2014 that were held by a foreign affiliate. The underlying effective tax rate on operations for the first six months of 2011 and 2010 was 22.5% and 29.1%, respectively. The primary reason for the variance is due to a change in the mix of income of foreign affiliates.
~~There have been no material changes to the balance of unrecognized tax benefits reported at December 31, 2010.~~

NOTE L — Fair Value Measurements
The Company measures financial assets and liabilities at fair value in three levels of inputs. The three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies, is:
Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets.
Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3 — Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.
~~The fair value of the 8.375% Senior Subordinated Notes due 2014 approximated $187,512 at December 31, 2010.~~
The fair value of the 8.125% Senior Notes due 2021 ~~approximated book value at June 30, 2011. The fair value estimates are~~is estimated based on a third party’s bid price.

11
The fair value approximated $257,500 at March 31, 2012 and $247,500 at December 31, 2011.
NOTE M — Financing Arrangements
The Company is a party to a credit and security agreement dated November 5, 2003, as amended (the “Credit Agreement”), with a group of banks, under which it may borrow or issue standby letters of credit or commercial letters of credit. On March 23, 2012, the Credit Agreement was amended and restated to, among other things, increase the revolving loan commitment from $200,000 to $220,000, and provide a term loan for $25,000 that is secured by certain real estate and machinery and equipment. Amounts borrowed under the revolving credit facility may be borrowed at either (i) LIBOR plus 1.75% to 2.75% or (ii) the bank’s prime lending rate minus .25% to 1.00%, at the Company’s election. The LIBOR-based interest rate is dependent on the Company’s debt service coverage ratio, as defined in the Credit Agreement. Under the Credit Agreement, a detailed borrowing base formula provides borrowing availability to the Company based on percentages of eligible accounts receivable and inventory. Interest on the term loan is at either (i) LIBOR plus 2.75% or (ii) the bank’s prime lending rate plus .25%, at the Company’s election. The term loan is amortized based on a seven-year schedule with the balance due at maturity.
Long-term debt consists of the following:
   March 31,
2012    December 31,
2011
8.125% senior notes due 2021
   $ 250,000       $ 250,000
Revolving credit
   116,600       93,000
Term loan
   25,000       -0-
Other
   4,210       4,580




   395,810       347,580
Less current maturities
   4,730       1,415




Total
   $ 391,080       $ 346,165




PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
~~NOTE M — Financing Arrangement~~
~~Long-term debt consists of the following:~~

June 30,
December 31,

2011 2010

8.125% senior notes due 2021 $ 250,000 $ -0-
8.375% senior subordinated notes due 2014 -0- 183,835
Revolving credit 90,500 90,200
Term loan A -0- 25,900
Term loan B -0- 8,400
Other 6,239 7,878

346,739 316,213
Less current maturities 1,291 13,756

Total $ 345,448 $ 302,457

On April 7, 2011, the Company completed the sale of $250,000 in the aggregate principal amount of 8.125% Senior Notes due 2021 (the “Notes”). The Notes bear an interest rate of 8.125% per annum, payable semi-annually in arrears on April 1 and October 1 of each year commencing on October 1, 2011. The Notes mature on April 1, 2021. In connection with the sale of the Notes, the Company also entered into a fourth amended and restated credit agreement (the “Amended Credit Agreement”). The Amended Credit Agreement among other things, provides an increased credit facility up to $200,000, extends the maturity date of the facility to April 7, 2016 and amends fee and pricing terms. Furthermore, the Company has the option, pursuant to the Amended Credit Agreement, to increase the availability under the revolving credit facility by $50,000. At June 30, 2011 the Company had approximately $74,388 of unused borrowing capacity available under the revolving credit facility. The Company also purchased all of its outstanding $183,835 aggregate principal amount of 8.375% senior subordinated notes due 2014 that were not held by its affiliates, repaid all of the term loan A and term loan B outstanding under its then existing credit facility and retired the 8.375% senior subordinated notes due 2014 totaling $26,165 that were held by an affiliate. The Company incurred debt extinguishment costs related primarily to premiums and other transaction costs associated with the tender and early redemption and wrote off deferred financing costs totaling $7,335 and recorded a provision for foreign income taxes of $2,100 resulting from the retirement of the 8.375% senior subordinated notes due 2014 that were held by an affiliate.

NOTE N — Accounts Receivable
During the first ~~six~~three months of ~~2011~~2012 and ~~2010,~~2011, the Company sold approximately ~~$27,467~~$20,432 and ~~$12,825,~~$11,690, respectively, of accounts receivable to mitigate accounts receivable concentration risk and to provide additional financing capacity and recorded ~~a loss~~losses in the amount of ~~$122~~$94 and ~~$42,~~$53, respectively, in the ~~Condensed Consolidated Statements~~condensed consolidated statements of ~~Operations.~~income. These losses represented implicit interest on the transactions.

NOTE O — Acquisition
On ~~December 31, 2010,~~March 23, 2012, the Company ~~through its subsidiary Ajax Tocco Magnathermic acquired~~completed the ~~assets~~acquisition of Fluid Routing Solutions Holding Corp. (“FRS”), a leading manufacturer of industrial hose products and fuel filler and hydraulic fluid assemblies, in an all cash transaction valued at $97,451. FRS products include fuel filler, hydraulic, and thermoplastic assemblies and several forms of manufactured hose, including bulk and formed fuel, power steering, transmission oil cooling, hydraulic and thermoplastic hose. FRS sells to automotive and industrial customers throughout North America, Europe and Asia. FRS has five production facilities located in Florida, Michigan, Ohio, Tennessee and the related induction heating intellectual property of ABP Induction’s United States heating business operating as Pillar Induction (“Pillar”). Pillar provides complete turnkey automated induction power systems and aftermarket parts and service to a worldwide market.
~~The assets of Pillar have been integrated into~~Czech Republic. FRS is included in the Company’s ~~manufactured products segment.~~Aluminum Products segment pending further evaluation. The Company funded the acquisition with cash of $40,000 ($10,000 domestic and $30,000 foreign), a $25,000 seven-year amortizing term loan provided by the Credit Agreement and secured by certain real estate and machinery and equipment of the Company and $32,500 of borrowings under the revolving credit facility provided by the Credit Agreement. The acquisition was accounted for under the acquisition method of accounting. Under the acquisition method of accounting, the total estimated purchase price is allocated to ~~Pillar’s~~FRS’ net tangible assets and intangible assets acquired and liabilities

12
~~PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES~~
~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~
assumed based on their estimated fair values as of ~~December 31, 2010,~~March 23, 2012, the effective date of the acquisition. Based on management’s valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on estimates and assumptions that are subject to change, the purchase price is allocated as follows:

Accounts receivable $ 3,164
Inventories 2,782
Prepaid expenses and other current assets 178
Property, plant and equipment 447
Customer relationships 3,480
Technological know how 1,890
Trade name and other intangible assets 710
Accounts payable (1,202 )
Accrued expenses (2,133 )
Goodwill 990

Total purchase price $ 10,306

Cash and cash equivalents
   $ 2,809
Accounts receivable
   30,920
Inventories
   11,617
Prepaid expenses and other current assets
   3,626
Property, plant and equipment
   21,143
Customer relationships
   30,000
Trademarks and trade name
   10,900
Other assets
   213
Accounts payable
   (17,814 )
Accrued expenses
   (15,622 )
Deferred tax liability
   (22,912 )
Other long-term liabilities
   (776 )
Goodwill
   43,348


Total purchase price
   $ 97,452


The areas of purchase price allocation ~~was~~that are not yet finalized ~~during March 2011 and reflects~~relate to the working capital adjustment as of ~~December 31, 2010.~~March 23, 2012, and completion of appraisals for the inventories, property plant and equipment and intangible assets. There were ~~no significant~~$262 of direct transaction costs included in selling, general and administrative expenses during the first ~~six~~three months of ~~2011.~~
During the third quarter of 2010, the Company also completed the acquisition of the ACS business (“ACS”) of Lawson Products, Inc. and substantially all of the assets of Rome Die Casting LLC (“Rome”). 2012.
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following unaudited pro forma information is provided to present a summary of the combined results of the Company’s operations with ~~ACS, Rome and Pillar~~FRS as if the ~~acquisitions~~acquisition had occurred on January 1, ~~2010.~~2011. The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of what the results would have been had the ~~acquisitions~~acquisition been completed at the date indicated above.

Three Months Ended
Six Months Ended
June 30, 2010 June 30, 2010

Pro forma revenues $ 221,571 $ 434,324
Pro forma net income 2,871 4,996
Earnings per share:
Basic .25 .44
Diluted .24 .43

13
   Three Months Ended
March 31,
   2012    2011
Pro forma revenues
   $ 313,925       $ 288,961
Pro forma net income
   $ 5,297       $ 8,292
Earnings per share:

Basic
   $ .45       $ .72
Diluted
   $ .44       $ .69
~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~
~~Board of Directors and Shareholders~~
~~Park-Ohio Holdings Corp.~~
We have reviewed the accompanying condensed consolidated balance sheet of Park-Ohio Holdings Corp. and subsidiaries as of June 30, 2011, and the related condensed consolidated statements of operationsPro forma net income for the ~~three-month~~three months ended March 31, 2012 was impacted by transaction and ~~six-month periods ended June 30, 2011~~other non-recurring costs incurred by FRS.
Note P — Commitments and ~~2010,~~Contingencies
The Company is subject to various pending and threatened legal proceedings arising in the ~~condensed consolidated statement~~ordinary course of ~~shareholders’ equity for~~business. Although the ~~six-month period ended June 30, 2011~~Company cannot precisely predict the amount of any liability that may ultimately arise with respect to any of these matters, the Company records provisions when it considers the liability probable and ~~cash flows for~~reasonably estimable. Our provisions are based on historical experience and legal advice, reviewed quarterly and adjusted according to developments. Estimating probable losses requires the ~~six-month periods ended June 30, 2011~~analysis of multiple forecasted factors that often depend on judgments about potential actions by third parties, such as regulators, courts, and ~~2010. These~~state and federal legislatures. Changes in the amounts of our loss provisions, which can be material, affect our financial ~~statements~~condition. Due to the inherent uncertainties in the process undertaken to estimate potential losses, we are ~~the responsibility~~unable to estimate an additional range of ~~the Company’s management.~~
~~We conducted~~loss in excess of our ~~review~~accruals. While it is reasonably possible that such excess liabilities, if they were to occur, could be material to operating results in ~~accordance with the standards~~any given quarter or year of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly,their recognition, we do not ~~express~~believe that it is reasonably possible that such ~~an opinion.~~
~~Based upon~~excess liabilities would have a material adverse effect on our ~~review, we are not aware~~long-term results of ~~any material modifications that should be made to the condensed~~operations, liquidity or consolidated financial ~~statements referred to above for them to be~~position.
Our subsidiaries are involved in ~~conformity with U.S. generally accepted accounting principles.~~
~~We have previously audited, in accordance with standards~~a number of contractual and warranty related disputes. At this time, we cannot reasonably determine the ~~Public Company Accounting Oversight Board (United States), the consolidated balance sheet~~probability of ~~Park-Ohio Holdings Corp. and subsidiaries as of December 31, 2010~~a loss, and the ~~related consolidated statements~~timing and amount of ~~operations, shareholders’ equity,~~loss, if any, cannot be reasonably estimated. We believe that appropriate liabilities for these contingencies have been recorded; however, actual results may differ materially from our estimates.
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE Q — Goodwill and ~~cash flows for~~Other Intangible Assets
The change in goodwill and other intangibles assets reflected on the year then ended, not presented herein; and in our report dated March 8, 2011, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2010, is fairly stated, in all material respects, in relation to the consolidated balance sheet from ~~which it has been derived.~~
~~/s/~~  ~~Ernst & Young LLP~~
~~Cleveland, Ohio~~
~~August 5,~~December 31, 2011

14
to March 31, 2012 was the result of foreign currency translation and an increase of $84,248 related to the acquisition of FRS. Information regarding other intangible assets as of March 31, 2012 and December 31, 2011 follows:
   March 31, 2012    December 31, 2011
   Acquisition
Costs    Accumulated
Amortization    Net    Acquisition
Costs    Accumulated
Amortization    Net
Non-contractual customer relationships
   $ 41,670       $ 3,451       $ 38,219       $ 11,670       $ 3,320       $ 8,350
Other
   3,420       1,120       2,300       3,420       1,046       2,374












   $ 45,090       $ 4,571       $ 40,519       $ 15,090       $ 4,366       $ 10,724









Tradenames
         10,900             -0-
Goodwill
         52,863             9,463




Total
         $ 104,282             $ 20,187




Amortization expense for the first three months of 2012 was $205 and is estimated to be $3,100 in 2012, $3,086 in 2013 and $3,028 for each of the three subsequent years thereafter. The weighted-average amortization period for the acquired intangible assets was approximately 15 years.
~~Item 2.~~ ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our condensed consolidated financial statements include the accounts of Park-Ohio Holdings Corp. and its ~~subsidiaries.~~subsidiaries (collectively, “we” or the “Company”). All significant intercompany transactions have been eliminated in consolidation.

Executive Overview
We are an industrial Total Supply Management^tm™ and diversified manufacturing business, operating in three segments: Supply Technologies, Aluminum Products and Manufactured Products. Our Supply Technologies business provides our customers with Total Supply Management^tm™, a proactive solutions approach that manages the efficiencies of every aspect of supplying production parts and materials to our customers’ manufacturing floor, from strategic planning to program implementation. Total Supply Management^tm™ includes such services as engineering and design support, part usage and cost analysis, supplier selection, quality assurance, bar coding, product packaging and tracking,just-in-time andpoint-of-use delivery, electronic billing services and ongoing technical support. The principal customers of Supply Technologies are in the heavy-duty truck, automotive and vehicle parts, electrical distribution and controls, consumer electronics, power sports/fitness equipment, HVAC, agricultural and construction equipment, semiconductor equipment, plumbing, aerospace and defense, and appliance industries. Aluminum Products casts and machines aluminum engine, transmission, brake, suspension and other components such as pump housings, clutch retainers/pistons, control arms, knuckles, master cylinders, pinion housings, brake calipers, oil pans and flywheel spacers for automotive, agricultural, ~~equipment,~~ construction, ~~equipment,~~ heavy-duty truck and marine ~~equipment~~ original equipment manufacturers (“OEMs”), primarily on a sole-source basis. Aluminum Products also provides value-added services such as design and engineering and assembly. Manufactured Products operates a diverse group of niche manufacturing businesses that design and manufacture a broad range of highly-engineered products including induction heating and melting systems, pipe threading systems, industrial oven systems, injection molded rubber components, and forged and machined products. Manufactured Products also produces and provides services and spare parts for the equipment it manufactures. The principal customers of Manufactured Products are OEMs,sub-assemblers and end users in the ferrous and non-ferrous metals, silicon, coatings, forging, foundry, heavy-duty truck, construction equipment, automotive, oil and gas, rail and locomotive manufacturing and aerospace and defense industries. Sales, earnings and other relevant financial data for these three segments are provided in Note BC to the condensed consolidated financial statements, included elsewhere herein.
During the third quarter of 2010, Supply Technologies completed the acquisition of certain assets and assumed specific liabilities relating to the ACS business of Lawson Products, Inc. for $16.0 million in cash and a $2.2 million subordinated promissory note payable in equal quarterly installments over three years ($1.4 million outstanding at June 30, 2011). ACS is a provider of supply chain management solutions for a broad range of production components through its service centers throughout North America.
On September 30, 2010, the Company entered a Bill of Sale with Rome Die Casting LLC (“Rome”), a producer of aluminum high pressure die castings, pursuant to which Rome agreed to transfer to the Company substantially all of its assets in exchange for approximately $7.5 million of notes receivable due from Rome.
On December 31, 2010, the Company, through its subsidiary Ajax Tocco Magnathermic, acquired the assets and the related induction heating intellectual property of ABP Induction’s United States heating business operating as Pillar Induction (“Pillar”) for $10.3 million in cash. Pillar provides complete turnkey automated induction power systems and aftermarket parts and service to a worldwide market.
On April 7, 2011, the Company completed the sale of $250 million in aggregate principal amount of 8.125% Senior Notes due 2021 (the “Notes”). in an offering exempt from the registration requirements of the Securities Act of 1933. The Notes bear an interest rate of 8.125% per annum and will be payable semi-annually in arrears on April 1 and October 1 of each year commencing on October 1, 2011. The Notes mature on April 1, 2021. In connection with the sale of the Notes, the Company entered into a fourth amended and restated credit agreement (the “Amended Credit Agreement”). The Amended Credit Agreement among other things, provides an increased credit facility up to $200 million, extends the maturity date of the borrowings under the facility to April 7, 2016 and amends fee and pricing terms. Furthermore, the Company has the option, pursuant to the Amended Credit Agreement, to increase the availability under the revolving credit facility by $50 million. The Company also purchased all of its outstanding ~~$183.8 million~~8.375% senior subordinated notes due 2014 in aggregate principal amount of ~~8.375% senior~~

15
~~subordinated notes due 2014~~$183.8 million that were not held by its affiliates, repaid all of the term loan A and term loan B outstanding under its then existing credit facility and retired the 8.375% senior subordinated notes due 2014 in the aggregate principal amount of $26.2 million that were held by its affiliates.
On March 23, 2012, the Company completed the acquisition of Fluid Routing Solutions Holding Corp. (“FRS”), a leading manufacturer of industrial hose products and fuel filler and hydraulic fluid assemblies, in an ~~affiliate.~~all cash transaction valued at $97.5 million. FRS products include fuel filler, hydraulic, and thermoplastic assemblies and several forms of manufactured hose including bulk and formed fuel, power steering, transmission oil cooling, hydraulic and thermoplastic hose. FRS sells to automotive and industrial customers throughout North America, Europe and Asia. FRS has five production facilities located in Florida, Michigan, Ohio, Tennessee and the Czech Republic. FRS is included in the Company’s Aluminum Products segment pending further evaluation.
In connection with the acquisition of FRS, the Company amended and restated its existing credit and security agreement dated November 5, 2003, as amended (the “Credit Agreement”), to, among other things, increase the revolving loan commitment from $200 million to $220 million and provide a seven-year amortizing term loan for $25 million that is secured by certain real estate and machinery and equipment. The Company ~~incurred debt extinguishment costs related to premiums~~funded the acquisition with cash of $40 million ($10 million domestic and ~~other transaction costs associated with~~$30 million foreign), the ~~tender~~$25 million term loan provided by the Credit Agreement and ~~early redemption and wrote off deferred financing costs totaling $7.3~~$32.5 million ~~and recorded a provision for foreign income taxes~~ of ~~$2.1 million resulting from~~borrowings under the ~~retirement of~~revolving credit facility provided by the ~~8.375% senior subordinated notes due 2014 that were held by an affiliate.~~
Credit Agreement.
Critical Accounting Policies
Our critical accounting policies are described in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in the notes to our Consolidated Financial Statements for the year ended December 31, ~~2010~~2011, contained in our ~~2010~~2011 Annual Report onForm 10-K. ~~Any~~ There were no new accounting policies or updates to existing accounting policies as a result of new accounting pronouncements ~~have been~~ discussed in the notes to our ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements in this Quarterly Report onForm 10-Q. The application of our critical accounting policies may require management to make judgments and estimates about the amounts reflected in the ~~Condensed Consolidated Financial Statements.~~condensed consolidated financial statements. Management uses historical experience and all available information to make these estimates and judgments, and different amounts could be reported using different assumptions and estimates.

Results of Operations
~~Six~~Three Months 2012 versus Three Months 2011 ~~versus Six Months 2010~~
Net Sales by Segment:

Six Months

Ended

June 30, Percent

2011 2010 Change Change
(Dollars in millions)

Supply Technologies $ 248.7 $ 191.4 $ 57.3 30 %
Aluminum Products 72.5 74.2 (1.7 ) (2 )%
Manufactured Products 167.2 124.4 42.8 34 %

Consolidated Net Sales $ 488.4 $ 390.0 $ 98.4 25 %

   Three Months
Ended March 31,    Change Percent
Change
   2012    2011
   (Dollars in millions)
Supply Technologies
   $ 134.4       $ 123.2       $ 11.2    9 %
Aluminum Products
   36.2       39.0       (2.8 ) (7 )%
Manufactured Products
   92.5       79.4       13.1    16 %






Consolidated Net Sales
   $ 263.1       $ 241.6       $ 21.5    9 %






Net sales increased ~~$98.4~~$21.5 million to ~~$488.4~~$263.1 million in the first ~~six~~three months of ~~2011~~2012, compared to ~~$390.0~~$241.6 million in the same period in ~~2010~~2011, as the Company experienced volume increases in ~~the~~its Supply Technologies and Manufactured Products ~~segments.~~segments offset by a decline in the Aluminum products segment. Supply Technologies sales increased ~~30%~~9% primarily due to volume increases in the heavy-duty truck, electrical, ~~industrial equipment, auto,~~ power sports, ~~HVAC,~~ agricultural and construction equipment industries offset primarily by declines in the semi-conductor, HVAC and instruments ~~consumer electronics, medical and plumbing~~ industries. ~~In addition, there were $25.7 million of incremental sales resulting from the acquisition of the ACS business.~~ Aluminum Products sales decreased ~~2%, resulting~~7% primarily from ~~the completion of certain automotive supply contracts~~reductions in volume, which was partially offset by incremental sales of ~~$9.5~~$5.5 million resulting from the acquisition of ~~the Rome business.~~FRS. Manufactured Products sales increased ~~34%~~16% primarily due to the increased business in the capital equipment, forged and ~~machined products~~machine and rubber products business units. ~~In addition, there were $7.5 million of incremental sales resulting from the acquisition of Pillar.~~

16
Cost of Products Sold & Gross Profit:

Six Months

Ended

June 30, Percent

2011 2010 Change Change
(Dollars in millions)

Consolidated cost of products sold $ 401.3 $ 327.4 $ 73.9 23 %

Consolidated gross profit $ 87.1 $ 62.6 $ 24.5 39 %

Gross Margin 17.8 % 16.1 %
   Three Months
Ended March 31, Change    Percent
Change
   2012 2011
   (Dollars in millions)
Consolidated cost of products sold
   $ 214.2    $ 199.7    $ 14.5       7 %



Consolidated gross profit
   $ 48.9    $ 41.9    $ 7.0       17 %



Gross margin
   18.6 % 17.3 %
Cost of products sold increased ~~$73.9~~$14.5 million to $214.2 million in the first ~~six~~three months of ~~2011 to $401.3 million~~2012, compared to ~~$327.4~~$199.7 million in the same period in ~~2010,~~2011, while gross margin increased to ~~17.8%~~18.6% in the first ~~six~~three months of ~~2011 from 16.1%~~2012 compared to 17.3% in the same period in ~~2010.~~
2011. The increase in cost of products sold was due primarily to higher sales levels and higher commodity prices offset by higher production levels, which contributed to improved absorption of fixed costs in the Manufactured Products segment. Gross margin increased in the Supply Technologies and Manufactured Products business units resulting primarily from volume increases while gross margin ~~increased due to volume increases. Gross margin~~decreased in the Aluminum Products ~~segment remained level primarily~~business unit resulting from ~~reduced sales volume.~~
volume declines.
Selling, General & Administrative ~~(SG&A)~~(“SG&A”) Expenses:

Six Months

Ended

June 30, Percent

2011 2010 Change Change
(Dollars in millions)

Consolidated SG&A expenses $ 54.5 $ 43.3 $ 11.2 26 %
SG&A percent 11.2 % 11.1 %
   Three Months
Ended March 31, Change    Percent
Change
   2012 2011
   (Dollars in millions)
Consolidated SG&A expenses
   $ 28.7    $ 25.7    $ 3.0       12 %
SG&A percent
   10.9 % 10.6 %
Consolidated SG&A expenses increased ~~26%~~12% in the first ~~six~~three months of ~~2011~~2012 compared to the same period in ~~2010,~~2011, representing a 1030 basis point increase in SG&A expenses as a percent of sales. SG&A expenses increased in the first ~~six~~three months of ~~2011~~2012 compared to the same period in ~~2010~~2011 primarily due to increases in payroll and payroll related expenses and ~~to $3.9 million~~a reduction in pension income of ~~incremental expenses resulting from the acquisitions of ACS, Rome and Pillar.~~
$.8 million.
Interest Expense:

Six Months

Ended

June 30, Percent

2011 2010 Change Change
(Dollars in millions)

Interest expense $ 20.1 $ 11.6 $8.5 73 %
Debt extinguishment costs included in interest expense $ 7.3
Amortization of deferred financing costs and bank service charges $ 1.7 $ 1.2
Average outstanding borrowings $ 325.8 $ 328.3 $(2.5) (1 )%
Average borrowing rate 6.81 % 6.33 % 48 basis points
   Three Months
Ended
March 31, Change    Percent
Change
   2012 2011
   (Dollars in millions)
Interest expense
   $ 6.7    $ 5.9    $.8       14 %
Debt extinguishment costs included in interest expense
   $ 0.3    -0-    .3
Amortization of deferred financing costs and bank service charges
   $ 0.6    $ 0.7    .1       (14 )%
Average outstanding borrowings
   $ 358.6    $ 308.7    $49.9       16 %
Average borrowing rate
   7.51 % 7.04 % 47 basis points
Interest expense increased ~~$8.5~~$.8 million in the first ~~six~~three months of ~~2011~~2012 compared to the same period of ~~2010,~~2011, primarily due to debt extinguishment costs of $7.3 million related to premiums and other transaction costs associated with the tender and early redemption and write off of deferred financing costs associated with the 8.375% senior subordinated notes due 2014 and to increases in amortization of deferred financing costs and bank service charges. Excluding these costs, interest increased due primarily to a higher average borrowing rate during the first ~~six~~three months of ~~2011 partially offset by lower average outstanding borrowings.~~2012. Average borrowings in the first ~~six~~three months of ~~2011~~2012 were ~~lower~~higher when compared to the same period in ~~2010.~~2011 due to the Company’s sale of $250 million in aggregate principal amount of the Notes offset by the purchase of all of its outstanding 8.375% senior subordinated notes due 2014 and additional borrowings to fund the acquisition of FRS. The higher average borrowing rate in the first ~~six~~three months of ~~2011~~2012 was due primarily to the interest rate mix of our revolving credit facility and the ~~Senior~~ Notes when compared to the mix in the same period in ~~2010.~~

17
2011.
Income Tax:
The provision for income taxes was ~~$4.9~~$4.4 million in the first ~~half~~three months of ~~2011 and the reported~~2012, a 33.2% effective income tax rate, ~~for the first six months was 39% and the underlying effective tax rate on operations was 23%,~~ compared to ~~a provision for~~ income taxes of ~~$2.2~~$1.7 million ~~and reported effective tax rate and underlying effective tax rate on operations of 29%~~provided in the corresponding period of ~~2010. The variance between the reported rate and the underlying rate in the first six months of~~ 2011, ~~was primarily due to the~~a 16.1% effective income tax ~~impact resulting from the retirement of our senior subordinated notes due 2014 that were held by a foreign affiliate.~~rate. We estimate that ~~our reported~~the effective tax rate for full-year ~~2011~~2012 will be approximately ~~32%~~33%.
~~Second Quarter 2011 versus Second Quarter 2010~~
~~Net Sales by Segment:~~

Three Months

Ended

June 30, Percent

2011 2010 Change Change
(Dollars in millions)

Supply Technologies $ 125.5 $ 97.2 $ 28.3 29 %
Aluminum Products 33.5 37.6 (4.1 ) (11 )%
Manufactured Products 87.8 63.5 24.3 38 %

Consolidated Net Sales $ 246.8 $ 198.3 $ 48.5 24 %

Consolidated net sales increased $48.5 million in the second quarter of 2011 to $246.8 compared to $198.3 million in the same quarter of 2010 as the Company experienced volume increases in the Supply Technologies and Manufactured Products segments. Supply Technologies sales increased 29% primarily due to volume increases in the heavy-duty truck, electrical, industrial equipment, power sports, HVAC, agricultural and construction equipment industries offset by declines in the consumer electronics, semi-conductor, instruments, medical and plumbing industries. In addition there were $11.7 of incremental sales resulting from the acquisition of the ACS business. Aluminum Products sales decreased 11% resulting primarily from the completion of certain automotive contracts offset by sales of $1.4 million resulting from the acquisition of Rome. Manufactured Products sales increased 38% primarily due to increased business in the capital equipment and forged and machined products business units offset by a decline in the rubber products business unit. In addition, there were $1.8 million of incremental sales resulting from the acquisition of Pillar.
~~Cost of Products Sold & Gross Profit:~~

Three Months

Ended

June 30, Percent

2011 2010 Change Change
(Dollars in millions)

Consolidated cost of products sold $ 201.6 $ 165.0 $ 36.6 22 %

Consolidated gross profit $ 45.2 $ 33.3 $ 11.9 36 %

Gross Margin 18.3 % 16.8 %
Cost of products sold increased $36.6 million to $201.6 million in the second quarter of 2011 compared to $165.0 million for the same quarter of 2010, while gross margin increased to 18.3% in the second quarter of 2011 from 16.8% in the same quarter of 2010.
~~Supply Technologies and Manufactured Products gross margin increased due to volume increases. Gross margin in the Aluminum Products segment decreased primarily from a lower sales volume.~~

18
~~SG&A Expenses:~~

Three Months

Ended

June 30, Percent
2011 2010 Change Change
(Dollars in millions)

Consolidated SG&A expenses $ 28.8 $ 22.3 $ 6.5 29 %
SG&A percent 11.7 % 11.2 %
Consolidated SG&A expenses increased 29% in the second quarter of 2011 compared to the same quarter in 2010, representing an increase in SG&A expenses as a percent of sales of 50 basis points from 11.2% to 11.7%. SG&A expenses increased in the second quarter of 2011 compared to the same quarter in 2010 on a percentage basis primarily due to increases in payroll and payroll related expenses, travel expenses associated with the sale of the 8.125% Senior Notes and to $1.7 million of incremental expenses resulting from the acquisitions of ACS, Rome and Pillar.
~~Interest Expense:~~

Three Months

Ended

June 30, Percent

2011 2010 Change Change
(Dollars in millions)

Interest expense $ 14.2 $ 6.2 $8.0 129 %
Debt extinguishment costs included in interest expense $ 7.3
Amortization of deferred financing costs and bank service charges $ .9 $ .6
Average outstanding borrowings $ 336.7 $ 325.9 $10.8 3 %
Average borrowing rate 7.12 % 6.87 % 25 basis points
Interest expense increased $8.0 million in the second quarter of 2011 compared to the same period of 2010, primarily due to debt extinguishment costs of $7.3 million related to premiums and other transaction costs associated with the tender and early redemption and write off of deferred financing costs associated with the 8.375% senior subordinated notes due 2014 and to increases in amortization of deferred financing costs and bank service charges. Excluding these costs, interest increased due primarily to higher average outstanding borrowings and a higher average borrowing rate. The higher average borrowing rate was due primarily to the interest rate mix of our revolving credit facility and the Senior Notes when compared to the mix in the same period in 2010.
~~Income Tax:~~
The provision for income taxes was $3.2 million in the second quarter of 2011 and the reported effective tax rate was 153% and the underlying effective tax rate on operations was 54%, compared to a provision for income taxes of $1.4 million and a reported effective tax rate and underlying effective tax rate on operations of 29% in the corresponding period of 2010. The variance between the reported rate and the underlying rate in the second quarter of 2011 was primarily due to the tax impact resulting from the retirement of our senior subordinated notes due 2014 that were held by a foreign affiliate. We estimate that our reported effective tax rate for full-year 2011 will be approximately 32%.
Liquidity and Sources of Capital
As of ~~June 30, 2011,~~March 31, 2012, the Company had ~~$90.5~~$116.6 million outstanding under ~~the~~its revolving credit facility, and approximately ~~$74.8~~$80.9 million of unused borrowing availability.
Our liquidity needs are primarily for working capital and capital expenditures. Our primary sources of liquidity have been funds provided by operations and funds available from existing bank credit arrangements and the sale of our debt securities. On April 7, 2011, the Company completed the sale of ~~$250,000~~$250.0 million aggregate principal amount of Notes. The Notes bear an interest rate of 8.125% per annum and will be payable semi-annually in arrears on April 1 and October 1 of each year ~~commencing~~beginning on April 1, 2011. The Notes mature on April 1, 2021. ~~In connection~~
The Company is a party to the Credit Agreement, with a group of banks, under which it may borrow or issue standby letters of credit or commercial letters of credit. On March 23, 2012, the ~~sale of the Notes, the Company also entered into a fourth~~Credit Agreement was amended and restated ~~credit agreement (the “Amended~~

19
~~Credit Agreement”). The Amended Credit Agreement,~~to, among other things, provides an increased credit facility up to $200,000, extends the maturity date of the facility to April 7, 2016 and amends fee and pricing terms. Furthermore, the Company has the option, pursuant to the Amended Credit Agreement, to increase the ~~availability~~revolving loan commitment from $200 million to $220 million,
and provide a term loan for $25 million that is secured by certain real estate and machinery and equipment. Amounts borrowed under the revolving credit facility ~~by $50,000.~~may be borrowed at either (i) LIBOR plus 1.75% to 2.75% or (ii) the bank’s prime lending rate minus .25% to 1.00%, at the Company’s election. The ~~Company also purchased all of its outstanding $183,835~~LIBOR-based interest rate is dependent on the Company’s debt service coverage ratio, as defined in the ~~aggregate principal amount~~Credit Agreement. Under the Credit Agreement, a detailed borrowing base formula provides borrowing availability to the Company based on percentages of ~~8.375% senior subordinated notes due 2014 that were not held by its affiliates, repaid all of~~eligible accounts receivable and inventory. Interest on the term loan ~~A and~~is at either (i) LIBOR plus 2.75% or (ii) the bank’s prime lending rate plus .25%, at the Company’s election. The term loan ~~B outstanding under its then existing credit facility and retired~~is amortized based on a seven-year schedule with the ~~8.375% senior subordinated notes~~balance due ~~2014 that were held by its affiliates.~~
at maturity.
Current financial resources ~~(cash, working~~(working capital and available bank borrowing arrangements) and anticipated funds from operations are expected to be adequate to meet current cash requirements for at least the next twelve months. The future availability of bank borrowings under the revolving credit facility provided by the Credit Agreement is based on the Company’s ability to meet a debt service ratio covenant, which could be materially impacted by negative economic trends. Failure to meet the debt service ratio could materially impact the availability and interest rate of future borrowings.
The Company had cash and cash equivalents held by foreign subsidiaries of $32.2 million at March 31, 2012 and $61.2 million at December 31, 2011. For each of its foreign subsidiaries, the Company makes a determination regarding the amount of earnings intended for permanent reinvestment, with the balance, if any, available to be repatriated to the United States. The cash held by foreign subsidiaries for permanent reinvestment is generally used to finance the foreign subsidiaries’ operational activities and/or future foreign investments. At ~~June 30,~~March 31, 2012, management believed that sufficient liquidity was available in the United States, and it is our current intention to permanently reinvest undistributed earnings of our foreign subsidiaries outside of the United States. Although we have no intention to repatriate the approximately $80.8 million of undistributed earnings of our foreign subsidiaries, as of December 31, 2011, if we were to repatriate these earnings, there would potentially be an adverse tax impact.
At March 31, 2012, the Company’s debt service coverage ratio was ~~2.4,~~2.7, and, therefore, it was in compliance with the debt service coverage ratio covenant contained in the revolving credit facility. The Company was also in compliance with the other covenants contained in the revolving credit facility as of ~~June 30, 2011.~~March 31, 2012. The debt service coverage ratio is calculated at the end of each fiscal quarter and is based on the most recently ended four fiscal quarters of consolidated EBITDA minus cash taxes paid, minus unfunded capital expenditures, plus cash tax refunds to consolidated debt charges ~~which~~that are consolidated cash interest expense plus scheduled principal payments on indebtedness plus scheduled reductions in our term debt as defined in the ~~revolving credit facility. If the Company’s aggregate availability under its revolving credit facility is less than $25,000, the~~Credit Agreement. The debt service coverage ratio must be greater than 1.0 and not less than 1.1 for any two consecutive fiscal quarters. While we expect to remain in compliance throughout ~~2011,~~2012, declines in sales volumes in ~~2011~~2012 could adversely impact our ability to remain in compliance with certain of these financial covenants. Additionally, to the extent our customers are adversely affected by declines in the economy in general, they may not be able to pay their accounts payable to us on a timely basis or at all, which would make the accounts receivable ineligible for purposes of the revolving credit facility and could reduce our borrowing base and our ability to borrow under such facility.
The ratio of current assets to current liabilities was ~~2.45~~2.09 at ~~June 30, 2011~~March 31, 2012, versus ~~2.28~~2.65 at December 31, ~~2010.~~2011. Working capital ~~increased~~decreased by ~~$49.0~~$26.8 million to ~~$268.2~~$264.7 million at ~~June 30, 2011~~March 31, 2012, from ~~$219.2~~$291.5 million at December 31, ~~2010.~~2011. Accounts receivable increased ~~$20.9~~$51.2 million to ~~$147.3~~$191.1 million at ~~June 30,~~March 31, 2012, from $139.9 million at December 31, 2011, ~~from $126.4 million in 2010~~ primarily resulting from the acquisition of FRS and its $28.4 million of accounts receivable and sales volume increases. Inventory increased by ~~$13.2~~$20.6 million at ~~June 30, 2011~~March 31, 2012, to ~~$205.8~~$222.6 million from ~~$192.5~~$202.0 million at December 31, ~~2010~~2011, primarily resulting from planned increases due to sales volume ~~increases.~~increases and $11.3 million of increases associated with the acquisition of FRS. Accrued expenses increased by ~~$5.7~~$28.6 million to ~~$65.2~~$102.3 million at ~~June 30, 2011~~March 31, 2012, from ~~$59.5~~$73.7 million at December 31, ~~2010~~2011, primarily resulting from the terms of the payments of interest due on the ~~Company’s 8.125% Senior Notes.~~Notes and accrued liabilities of FRS of $17.0 million. Accounts payable increased ~~$20.8~~$35.2 million to ~~$116.5~~$134.8 million at ~~June 30, 2011~~March 31, 2012, from ~~$95.7~~$99.6 million at December 31, ~~2010.~~
2011, primarily as a result of acquiring the accounts payable of FRS of $17.3 million and the timing of payments at March 31, 2012.
During the first ~~six~~three months of ~~2011,~~2012, the Company provided ~~$11.6~~$17.1 million from operating activities compared to ~~$26.4~~$13.0 million in the same period of ~~2010.~~2011. The ~~decrease~~increase in the operating cash provision of ~~$14.9~~ $4.1
million in ~~2011~~2012 compared to ~~2010~~2011 was primarily the result of a decrease ofin operating assets and liabilities offset by an increase in net income. In the first ~~six~~three months of ~~2011,~~2012, the Company used cash of ~~$5.3~~$2.8 million for capital ~~expenditures.~~expenditures and $94.6 million for the acquisition of FRS. These activities, plus cash interest and tax payments of ~~$17.2~~$2.0 million, ~~a net~~an increase in borrowings of ~~$25.5~~$48.2 million and purchase of treasury stock of ~~$.2~~$.7 million resulted in ~~an increase~~a decrease in cash of ~~$24.8~~$33.4 million in the first ~~six~~three months of ~~2011.~~
2012.
We do not have off-balance sheet arrangements, financing or other relationships with unconsolidated entities or other persons. There are occasions whereupon we enter into forward contracts on foreign currencies, purely for the purpose of hedging exposure to changes in the value of accounts receivable in those currencies against the U.S. dollar. At ~~June 30, 2011,~~March 31, 2012, none were outstanding. We currently have no other derivative instruments.

Seasonality; Variability of Operating Results
The timing of orders placed by our customers has varied with, among other factors, orders for customers’ finished goods, customer production schedules, competitive conditions and general economic conditions. The

20
variability of the level and timing of orders has, from time to time, resulted in significant periodic and quarterly fluctuations in the operations of our business units. Such variability is particularly evident at the capital equipment businesses, included in the Manufactured Products segment, which typically ship a few large systems per year.

Forward-Looking Statements
This Quarterly Report on Form 10-Q contains certain statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. The words “believes”, “anticipates”, “plans”, “expects”, “intends”, “estimates” and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to, the following: our substantial indebtedness; continuation of the current negative global economic environment; general business conditions and competitive factors, including pricing pressures and product innovation; demand for our products and services; raw material availability and pricing; component part availability and pricing; changes in our relationships with customers and suppliers; the financial condition of our customers, including the impact of any bankruptcies; our ability to successfully integrate FRS and achieve the expected results of the acquisition; our ability to retain FRS’s relationship with customers and suppliers; our ability to successfully integrate recent and future acquisitions into existing operations; changes in general domestic economic conditions such as inflation rates, interest rates, tax rates, unemployment rates, higher labor and healthcare costs, recessions and changing government policies, laws and regulations, including the uncertainties related to the current global financial crisis; adverse impacts to us, our suppliers and customers from acts of terrorism or hostilities; our ability to meet various covenants, including financial covenants, contained in the agreements governing our indebtedness; disruptions, uncertainties or volatility in the credit markets that may limit our access to capital; increasingly stringent domestic and foreign governmental regulations, including those affecting the environment; inherent uncertainties involved in assessing our potential liability for environmental remediation-related activities; the outcome of pending and future litigation and other ~~claims;~~claims and disputes with customers; our dependence on the automotive and heavy-duty truck industries, which are highly cyclical; the dependence of the automotive industry on consumer spending, which could be lower due to the effects of the current financial crisis; our ability to negotiate contracts with labor unions; our dependence on key management; our dependence on information systems; and the other factors we describe under ~~the~~ “Item 1A. Risk Factors” included in the Company’s ~~annual report~~Annual Report onForm 10-K for the year ended December 31, ~~2010.~~2011. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. In light of these and other uncertainties, the inclusion of a forward-looking statement herein should not be regarded as a representation by us that our plans and objectives will be achieved.

Review By Independent Registered Public Accounting Firm
The condensed consolidated financial statements at ~~June 30, 2011,~~March 31, 2012, and for the three-month ~~and six-month~~ periods ended ~~June 30,~~March 31, 2012 and 2011, ~~and 2010,~~ have been reviewed, prior to filing, by Ernst & Young LLP, our independent registered public accounting ~~firm,~~firm.
Item 3.    Quantitative and ~~their report is included herein.~~
~~Item 3.~~ ~~Quantitative and Qualitative Disclosure About Market Risk~~
Qualitative Disclosure About Market Risk
We are exposed to market risk including changes in interest rates. We are subject to interest rate risk on borrowings under ~~our~~the floating rate revolving credit ~~agreement,~~facility provided by our Credit Agreement, which consisted of borrowings of ~~$90.5~~$116.6 million at ~~June 30, 2011.~~March 31, 2012. A 100 basis point increase in the interest rate would have resulted in an increase in interest expense of approximately ~~$.5~~$.3 million during the ~~six-month~~three-month period ended ~~June 30, 2011.~~
March 31, 2012.
Our foreign subsidiaries generally conduct business in local currencies. During the first ~~six months~~quarter of ~~2011,~~2012, we recorded a favorable foreign currency translation adjustment of ~~$3.4~~$1.2 million related to net assets located outside the United States. This foreign currency translation adjustment resulted primarily from the weakening of the U.S. dollar. Our foreign operations are also subject to other customary risks of operating in a global environment, such as unstable political situations, the effect of local laws and taxes, tariff increases and regulations and requirements for export licenses, the potential imposition of trade or foreign exchange restrictions and transportation delays.

21
The Company periodically enters into forward contracts on foreign currencies, primarily the euro and the British ~~Pound Sterling,~~pound sterling, purely for the purpose of hedging exposure to changes in the value of accounts receivable in those currencies against the U.S. dollar. The Company currently uses no other derivative instruments. At ~~June 30, 2011,~~March 31, 2012, there were no such currency hedge contracts outstanding.
~~Item 4.~~ ~~Controls and Procedures~~
Item 4.    Controls and Procedures
Under the supervision of and with the participation of our management, including our chief executive officer and chief financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined inRules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this ~~quarterly report.~~
Quarterly Report.
Based on that evaluation, our chief executive officer and chief financial officer have concluded that, as of the end of the period covered by this ~~quarterly report,~~Quarterly Report, our disclosure controls and procedures were effective.
There have been no changes in our internal control over financial reporting that occurred during the first ~~six months~~quarter of ~~2011~~2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

22
PART II

OTHER INFORMATION
Item 1.
~~Item 1.~~ ~~Legal Proceedings~~
    Legal Proceedings
We are subject to various pending and threatened lawsuits in which claims for monetary damages are asserted in the ordinary course of business. While any litigation involves an element of uncertainty, in the opinion of management, liabilities, if any, arising from currently pending or threatened litigation are not expected to have a material adverse effect on our financial condition, liquidity or results of operations.
~~At June 30, 2011,~~
In addition to the routine lawsuits and asserted claims noted above, we were a party to the lawsuits and legal proceedings described below at March 31, 2012.
We were a co-defendant in approximately ~~300~~225 cases asserting claims on behalf of approximately ~~1,240~~760 plaintiffs alleging personal injury as a result of exposure to asbestos. These asbestos cases generally relate to production and sale of asbestos-containing products and allege various theories of liability, including negligence, gross negligence and strict liability, and seek compensatory and, in some cases, punitive damages.
In every asbestos case in which we are named as a party, the complaints are filed against multiple named defendants. In substantially all of the asbestos cases, the plaintiffs either claim damages in excess of a specified amount, typically a minimum amount sufficient to establish jurisdiction of the court in which the case was filed (jurisdictional minimums generally range from $25,000 to $75,000), or do not specify the monetary damages sought. To the extent that any specific amount of damages is sought, the amount applies to claims against all named defendants.
There are only ~~six~~seven asbestos cases, involving 2725 plaintiffs, that plead specified damages. In each of the ~~six~~seven cases, the plaintiff is seeking compensatory and punitive damages based on a variety of potentially alternative causes of action. In three cases, the plaintiff has alleged compensatory damages in the amount of $3.0 million for four separate causes of action and $1.0 million for another cause of action and punitive damages in the amount of $10.0 million. In the fourth case, the plaintiff has alleged against each named defendant, compensatory and punitive damages, each in the amount of $10.0 million, for seven separate causes of action. In the fifth case, the plaintiff has alleged compensatory damages in the amount of $20.0 million for three separate causes of action and $5.0 million for another cause of action and punitive damages in the amount of $20.0 million. In the ~~sixth case,~~remaining two cases, the ~~plaintiff has~~plaintiffs have each alleged against each named defendant compensatory and punitive damages, each in the amount of ~~$10.0~~$50.0 million, for ~~six~~four separate causes of ~~action and $5.0 million for the seventh cause of~~ action.
Historically, we have been dismissed from asbestos cases on the basis that the plaintiff incorrectly sued one of our subsidiaries or because the plaintiff failed to identify any asbestos-containing product manufactured or sold by us or our subsidiaries. We intend to vigorously defend these asbestos cases, and believe we will continue to be successful in being dismissed from such cases. However, it is not possible to predict the ultimate outcome of asbestos-related lawsuits, claims and proceedings due to the unpredictable nature of personal injury litigation. Despite this uncertainty, and although our results of operations and cash flows for a particular period could be adversely affected by asbestos-related lawsuits, claims and proceedings, management believes that the ultimate resolution of these matters will not have a material adverse effect on our financial condition, liquidity or results of operations. Among the factors management considered in reaching this conclusion were: (a) our historical success in being dismissed from these types of lawsuits on the bases mentioned above; (b) many cases have been improperly filed against one of our subsidiaries; (c) in many cases the plaintiffs have been unable to establish any causal relationship to us or our products or premises; (d) in many cases, the plaintiffs have been unable to demonstrate that they have suffered any identifiable injury or compensable loss at all or that any injuries that they have incurred did in fact result from alleged exposure to asbestos; and (e) the complaints assert claims against multiple defendants and, in most cases, the damages alleged are not attributed to individual defendants. Additionally, we do not believe that the amounts claimed in any of the asbestos cases are meaningful indicators of our potential exposure because the amounts claimed typically bear no relation to the extent of the plaintiff’s injury, if any.
Our cost of defending these lawsuits has not been material to date and, based upon available information, our management does not expect its future costs for asbestos-related lawsuits to have a material adverse effect on our results of operations, liquidity or financial position.

23
One of our subsidiaries, Ajax Tocco Magnethermic (“ATM”), is a party to a binding arbitration proceeding pending in South Africa with its customer Evraz Highveld Steel and Vanadium (“Evraz”). The arbitration involves a dispute over the design and installation of a melting furnace. Evraz sought binding arbitration in September 2011 for breach of contract and seeks compensatory damages in the amount of $37.0 million, as well as fees and expenses related to the arbitration. ATM intends to counterclaim arbitration, alleging breach of contract for non-payment in the amount of $2.7 million as well as fees and expenses related to the arbitration. We believe we have meritorious defenses to these claims and intend to vigorously defend such allegations.
Item 1A.    Risk Factors
~~Item 1A.~~ ~~Risk Factors~~
There have been no material changes in the risk factors previously disclosed in the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, ~~2010.~~
~~Item 2.~~ ~~Unregistered Sales of Equity Securities and Use of Proceeds~~
2011.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
Set forth below is information regarding the Company’s repurchases of its common stock during the ~~second~~ quarter ended ~~June 30, 2011.~~

Total Number

Total
of Shares
Maximum Number of

Number
Average
Purchased as
Shares That May Yet Be

of Shares
Price Paid
Part of Publicly
Purchased Under the

Period Purchased Per Share Announced Plans(1) Plans or Program

April 1 — April 30, 2011 -0- $ -0- -0- 340,920
May 1 — May 31, 2011 -0- -0- -0- 340,920
June 1 — June 30, 2011 672 (2) 21.09 -0- 340,920

672 $ 21.09 -0- 340,920

March 31, 2012.
Period
   Total
Number
of Shares
Purchased Average
Price Paid
Per Share    Total Number
of Shares
Purchased as
Part of Publicly
Announced Plans(1)    Maximum Number of
Shares That May Yet Be
Purchased Under the
Plans or Program
January 1 — January 31, 2012
   2,066 (2) $ 17.84       -0-       340,920
February 1 — February 29, 2012
   -0-    -0-       -0-       340,920
March 1 — March 31, 2012
   30,225 (2) 20.59       -0-       340,920






Total
   32,291    $ 20.41       -0-       340,920






(1) In
On September 27, 2006, the Company announced a share repurchase program whereby the Company may repurchase up to 1.0 million shares of its common stock. During the ~~second~~first quarter of ~~2011,~~2012, no shares were purchased as part of this program.
(2)
Consist of shares of common stock the Company acquired from recipients of restricted stock awards at the time of vesting of such awards in order to settle recipient withholding tax liabilities.

24
Item 6.    Exhibits
~~Item 6.~~ ~~Exhibits~~
The following exhibits are included herein:

4 .1 Indenture, dated April 7, 2011, among Park-Ohio Industries, Inc., the Guarantors (as defined therein) and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.1 to the Form 8-K ofPark-Ohio-Holdings Corp. filed on April 13, 2011, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
4 .2 Fifth Supplemental Indenture, dated April 7, 2011, among Park-Ohio Industries, Inc. the Guarantors (as defined therein) and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.2 to the Form 8-K of Park-Ohio Holdings Corp. filed on April 13, 2011, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
4 .3 Fourth Amended and Restated Credit Agreement, dated April 7, 2011, among Park-Ohio Industries, Inc., the other Loan Parties (as defined therein), the Lenders (as defined therein) JP Morgan Chase Bank, N.A., as administrative agent, JP Morgan Chase Bank, N.A.,Toronto Branch, as Canadian agent, and J.P. Morgan Securities Inc., as sole lead arranger and bookrunning manager. (filed as Exhibit 4.3 to the Form 8-K of Park-Ohio Holdings Corp. filed on April 13, 2011, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
10 .1 Registration Rights Agreement, dated April 7, 2011, among Park-Ohio Industries, Inc., the Guarantors (as defined therein) and the initial purchasers that are a party thereto. (filed as Exhibit 10.1 to the Form 8-K of Park-Ohio Holdings Corp. filed on April 13, 2011, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
10 .2 Park-Ohio Industries, Inc. Annual Cash Bonus Plan (filed as Exhibit 10.1 to the Form 8-K of Park-Ohio Holdings Corp. filed on June 1, 2011, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
15 Letter re: unaudited interim financial information
31 .1 Principal Executive Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31 .2 Principal Financial Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification requirement under Section 906 of the Sarbanes-Oxley Act of 2002
101 .INS XBRL Instance Document
101 .SCH XBRL Taxonomy Extension Schema Document
101 .CAL XBRL Taxonomy Extension Calculation Linkbase Document
101 .LAB XBRL Taxonomy Extension Label Linkbase Document
101 .PRE XBRL Taxonomy Extension Presentation Linkbase Document

25
2.1*
Agreement and Plan of Merger by and among Fluid Routing Solutions Holding Corp., FRS Group, LP, Automotive Holding Acquisition Corp and Park-Ohio Industries, Inc., dated as of March 5, 2012
4.1
Fifth Amended and Restated Credit Agreement, dated March 23, 2012, among Park-Ohio Industries, Inc., the other Loan Parties (as defined therein), the Lenders (as defined therein), JP Morgan Chase Bank, N.A., as Administrative Agent, JP Morgan Chase Bank, N.A., Toronto Branch, as Canadian Agent, RBS Business Capital, as Syndication Agent, KeyBank National Association and First National Bank of Pennsylvania, as Co-Documentation Agent, U.S. Bank National Association, as Co-Documentation Agent and Joint Bookrunner, PNC Bank, National Association, as Joint Bookrunner and J.P. Morgan Securities Inc., as Sole Lead Arranger and Bookrunning Manager (filed as Exhibit 4.1 to the Form 8-K of Park-Ohio Holdings Corp., filed on March 27, 2012, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
31.1 Principal Executive Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Principal Financial Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification requirement under Section 906 of the Sarbanes-Oxley Act of 2002
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
*
The exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K and will be provided to the Securities and Exchange Commission upon request.
SIGNATURES

~~SIGNATURE~~
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PARK-OHIO HOLDINGS CORP.
(Registrant)
BY
/s/    PATRICK W. FOGARTY
Name:
Patrick W. Fogarty
Title:
Interim Chief Financial Officer,
Director of Corporate Development
(Principal Financial and Accounting Officer)
Date: May 10, 2012
EXHIBIT INDEX
QUARTERLY REPORT ON FORM 10-Q
PARK-OHIO HOLDINGS CORP.
~~(Registrant)~~
AND SUBSIDIARIES
FOR THE QUARTER ENDED MARCH 31, 2012
By
2.1
~~/s/~~  ~~Jeffrey L. Rutherford~~
Agreement and Plan of Merger by and among Fluid Routing Solutions Holding Corp., FRS Group, LP, Automotive Holding Acquisition Corp and Park-Ohio Industries, Inc., dated as of March 5, 2012
~~Name:     Jeffrey L. Rutherford~~
4.1 ~~Title:~~   ~~Vice President~~
Fifth Amended and ~~Chief~~Restated Credit Agreement, dated March 23, 2012, among Park-Ohio Industries, Inc., the other Loan Parties (as defined therein), the Lenders (as defined therein), JP Morgan Chase Bank, N.A., as Administrative Agent, JP Morgan Chase Bank, N.A., Toronto Branch, as Canadian Agent, RBS Business Capital, as Syndication Agent, KeyBank National Association and First National Bank of Pennsylvania, as Co-Documentation Agent, U.S. Bank National Association, as Co-Documentation Agent and Joint Bookrunner, PNC Bank, National Association, as Joint Bookrunner and J.P. Morgan Securities Inc., as Sole Lead Arranger and Bookrunning Manager (filed as Exhibit 4.1 to the Form 8-K of Park-Ohio Holdings Corp., filed on March 27, 2012, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
31.1 Principal Executive Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Principal Financial ~~Officer~~Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification requirement under Section 906 of the Sarbanes-Oxley Act of 2002
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
~~(Principal Financial and Accounting Officer)~~
~~Date: August 5, 2011~~

26
~~EXHIBIT INDEX~~
~~QUARTERLY REPORT ONFORM 10-Q~~
~~PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES~~
~~FOR THE QUARTER ENDED JUNE 30, 2011~~

Exhibit

4 .1 Indenture, dated April 7, 2011, among Park-Ohio Industries, Inc., the Guarantors (as defined therein) and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.1 to the Form 8-K ofPark-Ohio-Holdings Corp. filed on April 13, 2011, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
4 .2 Fifth Supplemental Indenture, dated April 7, 2011, among Park-Ohio Industries, Inc. the Guarantors (as defined therein) and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.2 to the Form 8-K of Park-Ohio Holdings Corp. filed on April 13, 2011, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
4 .3 Fourth Amended and Restated Credit Agreement, dated April 7, 2011, among Park-Ohio Industries, Inc., the other Loan Parties (as defined therein), the Lenders (as defined therein) JP Morgan Chase Bank, N.A., as administrative agent, JP Morgan Chase Bank, N.A.,Toronto Branch, as Canadian agent, and J.P. Morgan Securities Inc., as sole lead arranger and bookrunning manager. (filed as Exhibit 4.3 to the Form 8-K of Park-Ohio Holdings Corp. filed on April 13, 2011, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
10 .1 Registration Rights Agreement, dated April 7, 2011, among Park-Ohio Industries, Inc., the Guarantors (as defined therein) and the initial purchasers that are a party thereto. (filed as Exhibit 10.1 to the Form 8-K of Park-Ohio Holdings Corp. filed on April 13, 2011, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
10 .2 Park-Ohio Industries, Inc. Annual Cash Bonus Plan (filed as Exhibit 10.1 to the Form 8-K of Park-Ohio Holdings Corp. filed on June 1, 2011, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
15 Letter re: unaudited interim financial information
31 .1 Principal Executive Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31 .2 Principal Financial Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification requirement under Section 906 of the Sarbanes-Oxley Act of 2002
101 .INS XBRL Instance Document
101 .SCH XBRL Taxonomy Extension Schema Document
101 .CAL XBRL Taxonomy Extension Calculation Linkbase Document
101 .LAB XBRL Taxonomy Extension Label Linkbase Document
101 .PRE XBRL Taxonomy Extension Presentation Linkbase Document

27


	(Unaudited)
	June 30,			December 31,
	2011			2010
	(Dollars in thousands)

ASSETS
Current Assets
Cash and cash equivalents	$	60,094		$	35,311
Accounts receivable, less allowances for doubtful accounts of $5,594 at June 30, 2011 and $6,011 at December 31, 2010		147,305			126,409
Inventories		205,752			192,542
Deferred tax assets		10,496			10,496
Unbilled contract revenue		17,556			12,751
Other current assets		12,156			12,800

Total Current Assets		453,359			390,309
Property, Plant and Equipment		257,047			253,077
Less accumulated depreciation		189,474			184,294

		67,573			68,783
Other Assets
Goodwill		9,891			9,100
Other		90,511			84,340

	$	621,334		$	552,532


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Trade accounts payable	$	116,494		$	95,695
Accrued expenses		65,206			59,487
Current portion of long-term debt		1,291			13,756
Current portion of other postretirement benefits		2,178			2,178

Total Current Liabilities		185,169			171,116
Long-Term Liabilities, less current portion
Senior Notes		250,000			183,835
Revolving credit facility		90,500			113,300
Other long-term debt		4,948			5,322
Deferred tax liability		9,721			9,721
Other postretirement benefits and other long-term liabilities		22,660			22,863

		377,829			335,041
Shareholders’ Equity
Capital stock, par value $1 a share:
Serial Preferred Stock		-0-			-0-
Common Stock		13,539			13,397
Additional paid-in capital		68,871			68,085
Retained deficit		(11,421	)		(19,043	)
Treasury stock, at cost		(18,740	)		(18,502	)
Accumulated other comprehensive income		6,087			2,438

		58,336			46,375

	$	621,334		$	552,532


	(Unaudited) March 31, 2012			December 31, 2011
	(Dollars in thousands)
ASSETS
Current Assets
Cash and cash equivalents	$	44,588		$	78,001
Accounts receivable, less allowances for doubtful accounts of $5,469 at March 31, 2012 and $5,483 at December 31, 2011		191,062			139,941
Inventories, net		222,643			202,039
Deferred tax assets		22,544			20,561
Unbilled contract revenue		15,102			18,778
Other current assets		12,572			8,790

Total Current Assets		508,511			468,110
Property, plant and equipment:
Land and land improvements		6,471			3,654
Buildings		51,524			47,594
Machinery and equipment		226,392			208,727

		284,387			259,975
Less accumulated depreciation		201,377			198,165

		83,010			61,810
Other Assets:
Goodwill and other intangible assets		104,282			20,187
Other		64,578			63,833

	$	760,381		$	613,940

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Trade accounts payable	$	134,774		$	99,588
Accrued expenses		102,308			73,651
Current portion of long-term debt		4,730			1,415
Current portion of other postretirement benefits		2,002			2,002

Total Current Liabilities		243,814			176,656
Long-Term Liabilities, less current portion
Senior Notes		250,000			250,000
Credit facility		138,029			93,000
Other long-term debt		3,051			3,165
Deferred tax liability		24,321			1,392
Other postretirement benefits and other long-term liabilities		25,159			24,285

		440,560			371,842
Shareholders’ Equity
Capital stock, par value $1 a share:
Serial preferred stock:
Authorized — 632,470 shares: Issued and outstanding — none		-0-			-0-
Common stock:
Authorized — 40,000,000 shares: Issued – 13,831,274 shares in 2012 and 13,813,774 in 2011		13,831			13,814
Additional paid-in capital		71,116			70,248
Retained earnings		19,348			10,392
Treasury stock, at cost, 1,706,217 shares in 2012 and 1,673,926 shares in 2011		(21,266	)		(20,607	)
Accumulated other comprehensive (loss)		(7,022	)		(8,405	)

		76,007			65,442

	$	760,381		$	613,940


Note:		The balance sheet at December 31, ~~2010~~2011 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.


	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2011			2010		2011		2010
	(Amounts in thousands, except per share data)

Net sales	$	246,808		$	198,303	$	488,436	$	390,004
Cost of products sold		201,628			165,005		401,321		327,368

Gross profit		45,180			33,298		87,115		62,636
Selling, general and administrative expenses		28,846			22,337		54,511		43,305

Operating income		16,334			10,961		32,604		19,331
Interest expense		14,229			6,167		20,092		11,603

Income before income taxes		2,105			4,794		12,512		7,728
Income taxes		3,212			1,379		4,890		2,247

Net income (loss)	$	(1,107	)	$	3,415	$	7,622	$	5,481

Amounts per common share:
Basic	$	(.10	)	$	.30	$	.66	$	.49
Diluted	$	(.10	)	$	.29	$	.64	$	.47
Common shares used in the computation:
Basic		11,545			11,475		11,503		11,229

Diluted		11,545			11,956		12,000		11,747


	Three Months Ended March 31,
	2012		2011
	(Amounts in thousands, except per share data)
Net sales	$	263,056	$	241,628
Cost of products sold		214,177		199,693

Gross profit		48,879		41,935
Selling, general and administrative expenses		28,745		25,665

Operating income		20,134		16,270
Interest expense		6,735		5,863

Income before income taxes		13,399		10,407
Income taxes		4,443		1,678

Net income	$	8,956	$	8,729

Amounts per common share:
Basic	$	.76	$	.76
Diluted	$	.74	$	.73
Common shares used in the computation:
Basic		11,787		11,460

Diluted		12,041		11,987


												Accumulated
			Additional									Other
	Common		Paid-In			Retained			Treasury			Comprehensive
	Stock		Capital			Deficit			Stock			Income		Total
						(Dollars in thousands)

Balance at January 1, 2011	$	13,397	$	68,085		$	(19,043	)	$	(18,502	)	$	2,438	$	46,375
Comprehensive income:
Net income							7,622								7,622
Foreign currency translation adjustment													3,436		3,436
Pension and post retirement benefit adjustments, net of tax													213		213

Comprehensive income															11,271
Amortization of restricted stock				840											840
Restricted stock awards		140		(140	)										-0-
Purchase of treasury stock (12,130 shares)										(238	)				(238	)
Exercise of stock options (2,500 shares)		2		6											8
Share-based compensation				80											80

Balance at June 30, 2011	$	13,539	$	68,871		$	(11,421	)	$	(18,740	)	$	6,087	$	58,336


	Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive (Loss)			Total
	(Dollars in thousands)
Balance at January 1, 2012	$	13,814	$	70,248	$	10,392	$	(20,607	)	$	(8,405	)	$	65,442
Other comprehensive income						8,956					1,383			10,339
Amortization of restricted stock				617										617
Purchase of treasury stock (32,291 shares)								(659	)					(659	)
Exercise of stock options (17,500 shares)		17		244										261
Share-based compensation				7										7

Balance at March 31, 2012	$	13,831	$	71,116	$	19,348	$	(21,266	)	$	(7,022	)	$	76,007


	March 31, 2012		December 31, 2011
Identifiable assets:
Supply Technologies	$	236,324	$	228,629
Aluminum Products		216,988		61,002
Manufactured Products		220,168		203,782
General corporate		86,901		120,527

	$	760,381	$	613,940


	March 31, 2012		December 31, 2011
Finished goods	$	121,445	$	122,010
Work in process		28,702		20,660
Raw materials and supplies		72,496		59,369

	$	222,643	$	202,039


	Pension Benefits												Postretirement Benefits
	Three Months						Six Months						Three Months						Six Months
	Ended June 30,						Ended June 30,						Ended June 30,						Ended June 30,
	2011			2010			2011			2010			2011			2010			2011			2010

Service costs	$	604		$	81		$	713		$	162		$	12		$	9		$	24		$	18
Interest costs		596			643			1,192			1,286			228			248			456			496
Expected return on plan assets		(2,239	)		(1,984	)		(4,468	)		(3,968	)		-0-			-0-			-0-			-0-
Transition obligation		(10	)		(10	)		(20	)		(20	)		-0-			-0-			-0-			-0-
Amortization of prior service cost		11			15			22			30			(24	)		(24	)		(48	)		(48	)
Recognized net actuarial loss		-0-			82			-0-			164			129			107			258			214

Benefit (income) costs	$	(1,038	)	$	(1,173	)	$	(2,561	)	$	(2,346	)	$	345		$	340		$	690		$	680


	Three Months Ended March 31,
	Pension Benefits						Postretirement Benefits
	2012			2011			2012			2011
Service costs	$	542		$	109		$	15		$	12
Interest costs		565			596			201			228
Expected return on plan assets		(2,059	)		(2,229	)		-0-			-0-
Transition obligation		(10	)		(10	)		-0-			-0-
Amortization of prior service cost		11			11			(24	)		(24	)
Recognized net actuarial loss		241			-0-			186			129

(Income) benefit costs	$	(710	)	$	(1,523	)	$	378		$	345


	2011			2010

Balance at January 1	$	4,046		$	2,760
Claims paid during the year		(313	)		(541	)
Additional warranties issued during the first six months		371			907

Balance at June 30	$	4,104		$	3,126


	March 31, 2012		December 31, 2011
8.125% senior notes due 2021	$	250,000	$	250,000
Revolving credit		116,600		93,000
Term loan		25,000		-0-
Other		4,210		4,580

		395,810		347,580
Less current maturities		4,730		1,415

Total	$	391,080	$	346,165


Accounts receivable	$	3,164
Inventories		2,782
Prepaid expenses and other current assets		178
Property, plant and equipment		447
Customer relationships		3,480
Technological know how		1,890
Trade name and other intangible assets		710
Accounts payable		(1,202	)
Accrued expenses		(2,133	)
Goodwill		990

Total purchase price	$	10,306


Cash and cash equivalents	$	2,809
Accounts receivable		30,920
Inventories		11,617
Prepaid expenses and other current assets		3,626
Property, plant and equipment		21,143
Customer relationships		30,000
Trademarks and trade name		10,900
Other assets		213
Accounts payable		(17,814	)
Accrued expenses		(15,622	)
Deferred tax liability		(22,912	)
Other long-term liabilities		(776	)
Goodwill		43,348

Total purchase price	$	97,452


	Three Months Ended		Six Months Ended
	June 30, 2010		June 30, 2010

Pro forma revenues	$	221,571	$	434,324
Pro forma net income		2,871		4,996
Earnings per share:
Basic		.25		.44
Diluted		.24		.43


	March 31, 2012						December 31, 2011
	Acquisition Costs		Accumulated Amortization		Net		Acquisition Costs		Accumulated Amortization		Net
Non-contractual customer relationships	$	41,670	$	3,451	$	38,219	$	11,670	$	3,320	$	8,350
Other		3,420		1,120		2,300		3,420		1,046		2,374

	$	45,090	$	4,571	$	40,519	$	15,090	$	4,366	$	10,724


Tradenames						10,900						-0-

Goodwill						52,863						9,463

Total					$	104,282					$	20,187


~~Item 2.~~	*~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~*


	Six Months
	Ended
	June 30,							Percent
	2011		2010		Change			Change
	(Dollars in millions)

Supply Technologies	$	248.7	$	191.4	$	57.3			30	%
Aluminum Products		72.5		74.2		(1.7	)		(2	)%
Manufactured Products		167.2		124.4		42.8			34	%

Consolidated Net Sales	$	488.4	$	390.0	$	98.4			25	%


	Three Months Ended March 31,				Change			Percent Change
	2012		2011		Change			Percent Change
	(Dollars in millions)
Supply Technologies	$	134.4	$	123.2	$	11.2			9	%
Aluminum Products		36.2		39.0		(2.8	)		(7	)%
Manufactured Products		92.5		79.4		13.1			16	%

Consolidated Net Sales	$	263.1	$	241.6	$	21.5			9	%


	Three Months Ended March 31,						Change		Percent Change
	2012			2011			Change		Percent Change
	(Dollars in millions)
Interest expense	$	6.7		$	5.9			$.8		14	%
Debt extinguishment costs included in interest expense	$	0.3			-0-			.3
Amortization of deferred financing costs and bank service charges	$	0.6		$	0.7			.1		(14	)%
Average outstanding borrowings	$	358.6		$	308.7			$49.9		16	%
Average borrowing rate		7.51	%		7.04	%		47 basis points


~~Item 3.~~	*~~Quantitative and Qualitative Disclosure About Market Risk~~*


~~Item 2.~~	*~~Unregistered Sales of Equity Securities and Use of Proceeds~~*


						Total Number
	Total					of Shares		Maximum Number of
	Number			Average		Purchased as		Shares That May Yet Be
	of Shares			Price Paid		Part of Publicly		Purchased Under the
Period	Purchased			Per Share		Announced Plans(1)		Plans or Program

April 1 — April 30, 2011		-0-		$	-0-		-0-		340,920
May 1 — May 31, 2011		-0-			-0-		-0-		340,920
June 1 — June 30, 2011		672	(2)		21.09		-0-		340,920

		672		$	21.09		-0-		340,920


Period	Total Number of Shares Purchased			Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans(1)		Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program
January 1 — January 31, 2012		2,066	(2)	$	17.84		-0-		340,920
February 1 — February 29, 2012		-0-			-0-		-0-		340,920
March 1 — March 31, 2012		30,225	(2)		20.59		-0-		340,920

Total		32,291		$	20.41		-0-		340,920


(1)		In On September 27, 2006, the Company announced a share repurchase program whereby the Company may repurchase up to 1.0 million shares of its common stock. During the ~~second~~first quarter of ~~2011,~~2012, no shares were purchased as part of this program.


4	.1	Indenture, dated April 7, 2011, among Park-Ohio Industries, Inc., the Guarantors (as defined therein) and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.1 to the Form 8-K ofPark-Ohio-Holdings Corp. filed on April 13, 2011, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
4	.2	Fifth Supplemental Indenture, dated April 7, 2011, among Park-Ohio Industries, Inc. the Guarantors (as defined therein) and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.2 to the Form 8-K of Park-Ohio Holdings Corp. filed on April 13, 2011, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
4	.3	Fourth Amended and Restated Credit Agreement, dated April 7, 2011, among Park-Ohio Industries, Inc., the other Loan Parties (as defined therein), the Lenders (as defined therein) JP Morgan Chase Bank, N.A., as administrative agent, JP Morgan Chase Bank, N.A.,Toronto Branch, as Canadian agent, and J.P. Morgan Securities Inc., as sole lead arranger and bookrunning manager. (filed as Exhibit 4.3 to the Form 8-K of Park-Ohio Holdings Corp. filed on April 13, 2011, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
10	.1	Registration Rights Agreement, dated April 7, 2011, among Park-Ohio Industries, Inc., the Guarantors (as defined therein) and the initial purchasers that are a party thereto. (filed as Exhibit 10.1 to the Form 8-K of Park-Ohio Holdings Corp. filed on April 13, 2011, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
10	.2	Park-Ohio Industries, Inc. Annual Cash Bonus Plan (filed as Exhibit 10.1 to the Form 8-K of Park-Ohio Holdings Corp. filed on June 1, 2011, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
15		Letter re: unaudited interim financial information
31	.1	Principal Executive Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31	.2	Principal Financial Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32		Certification requirement under Section 906 of the Sarbanes-Oxley Act of 2002
101	.INS	XBRL Instance Document
101	.SCH	XBRL Taxonomy Extension Schema Document
101	.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101	.LAB	XBRL Taxonomy Extension Label Linkbase Document
101	.PRE	XBRL Taxonomy Extension Presentation Linkbase Document



2.1*		Agreement and Plan of Merger by and among Fluid Routing Solutions Holding Corp., FRS Group, LP, Automotive Holding Acquisition Corp and Park-Ohio Industries, Inc., dated as of March 5, 2012

4.1		Fifth Amended and Restated Credit Agreement, dated March 23, 2012, among Park-Ohio Industries, Inc., the other Loan Parties (as defined therein), the Lenders (as defined therein), JP Morgan Chase Bank, N.A., as Administrative Agent, JP Morgan Chase Bank, N.A., Toronto Branch, as Canadian Agent, RBS Business Capital, as Syndication Agent, KeyBank National Association and First National Bank of Pennsylvania, as Co-Documentation Agent, U.S. Bank National Association, as Co-Documentation Agent and Joint Bookrunner, PNC Bank, National Association, as Joint Bookrunner and J.P. Morgan Securities Inc., as Sole Lead Arranger and Bookrunning Manager (filed as Exhibit 4.1 to the Form 8-K of Park-Ohio Holdings Corp., filed on March 27, 2012, SEC File No. 000-03134 and incorporated by reference and made a part hereof)

31.1		Principal Executive Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Principal Financial Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32		Certification requirement under Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document


PARK-OHIO HOLDINGS CORP.
(Registrant)

BY	/s/ PATRICK W. FOGARTY
	Name:	Patrick W. Fogarty
	Title:	Interim Chief Financial Officer, Director of Corporate Development
		(Principal Financial and Accounting Officer)


	By
2.1	~~/s/~~ ~~Jeffrey L. Rutherford~~	Agreement and Plan of Merger by and among Fluid Routing Solutions Holding Corp., FRS Group, LP, Automotive Holding Acquisition Corp and Park-Ohio Industries, Inc., dated as of March 5, 2012