Park Ohio Industries 10-Q/A 2011 Q2 Quarterly report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q/A

(Amendment No. 1)

(Mark One)

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

For the quarterly period ended June 30, 2011

or

¨ 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 333-43005-01

Park-Ohio Industries, Inc.

(Exact name of registrant as specified in its charter)

Ohio	34-6520107
(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)	(Zip Code)

440/947-2000

(Registrant’s telephone number, including area code)

Pursuant to a corporate reorganization effective June 15, 1998,

Park-Ohio Industries, Inc. became a wholly-owned subsidiary of Park-Ohio Holdings Corp.

The registrant meets the conditions set forth in general instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form in reduced disclosure format.

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  ¨    No  x

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

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

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

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

All of the outstanding capital stock of the registrant is held by Park-Ohio Holdings Corp. As of April 30, 2011, 100 shares of the registrant’s common stock, $1 par value, were outstanding.

The Exhibit Index is located on page 28.

This Amendment No. 1 (this “Form 10-Q/A”) amends the Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 of Park-Ohio Industries, Inc. (the “Company”). The Unaudited Condensed Consolidated Financial Statements of the Company previously reported on Form 10-Q for the quarter ended June 30, 2011 have been amended and restated in order to reflect certain adjustments to the Company’s Unaudited Condensed Consolidated Financial Statements as of June 30, 2011, December 31, 2010 and June 30, 2010, relating to the impact of the allocation of the share-based compensation expense to the Company from its parent company, Park-Ohio Holdings Corp. The impact of the restatement is more fully described in Note A1 to the Unaudited Condensed Consolidated Financial Statements contained in this Form 10-Q/A. Please refer to Note A1 to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC on March 30, 2012 for additional discussion on the nature of the restatement adjustments. The restatements to the affected financial statements were non-cash in nature. All referenced amounts in this Form 10-Q/A for prior periods and prior-period comparisons reflect the balances and amounts on a restated basis, as applicable.

This Form 10-Q/A amends and restates in their entireties Items 1, 2 and 4 of Part I and Item 6 of Part II of the Company’s original Quarterly Report on Form 10-Q, filed with the SEC on August 5, 2011, and no other information in that report is amended hereby. This Form 10-Q/A continues to speak as of the date of the filing of that original Quarterly Report on Form 10-Q, and the Company has not updated the disclosures contained herein to reflect any events that occurred at a later date.

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PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements		4
	Condensed consolidated balance sheets — June 30, 2011 and December 31, 2010		4
	Condensed consolidated statements of operations — Three and six months ended June 30, 2011 and 2010		5
	Condensed consolidated statement of shareholder’s equity — Six months ended June 30, 2011		6
	Condensed consolidated statements of cash flows — Six months ended June 30, 2011 and 2010		7
	Notes to unaudited condensed consolidated financial statements — June 30, 2011		8
	Report of independent registered public accounting firm		19
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 4.	Controls and Procedures		25
PART II. OTHER INFORMATION
Item 6.	Exhibits		26
SIGNATURES			27
EXHIBIT INDEX			28

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PART I. Financial Information

ITEM 1. Financial Statements

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	June 30. 2011 Restated			December 31, 2010 Restated
	(Dollars in thousands)
ASSETS
Current Assets
Cash and cash equivalents	$	51,280		$	35,075
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		12,193			12,797
Total Current Assets		444,582			390,070
Property, Plant and Equipment		258,795			256,053
Less accumulated depreciation		189,409			184,284
		69,386			71,769
Other Assets
Goodwill		9,891			9,100
Other		89,779			84,340
	$	613,638		$	555,279
LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities
Trade accounts payable	$	116,483		$	95,690
Payable to affiliates		1,688			11,879
Accrued expenses		64,905			59,200
Current portion of long-term debt		1,291			13,756
Current portion of other postretirement benefits		2,178			2,178
Total Current Liabilities		186,545			182,703
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		22,754			22,863
		377,923			335,041
Shareholder’s Equity
Common Stock, par value $1 per share		-0-			-0-
Additional paid-in capital		58,701			58,531
Retained deficit		(15,587	)		(23,404	)
Accumulated other comprehensive income		6,056			2,408
		49,170			37,535
	$	613,638		$	555,279

Note: The balance sheet at December 31, 2010 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.

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PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended June 30,					Six Months Ended June 30,
	2011			2010		2011		2010
	Restated			Restated		Restated		Restated
	(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		28,643			22,164		54,295		43,082
Operating income		16,537			11,134		32,820		19,554
Interest expense		14,231			6,187		20,113		11,642
Income before income taxes		2,306			4,947		12,707		7,912
Income taxes		3,212			1,379		4,890		2,247
Net (loss) income	$	(906	)	$	3,568	$	7,817	$	5,665

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

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PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDER’S EQUITY (UNAUDITED)

	Common Stock		Additional Paid-In Capital			Retained Deficit			Accumulated Other Comprehensive Income		Total
	(Dollars in thousands)
Balance at January 1, 2011, as restated	$	-0-	$	58,531		$	(23,404	)	$	2,408	$	37,535
Comprehensive income:
Net income							7,817					7,817
Foreign currency translation adjustment										3,436		3,436
Pension and post retirement benefit adjustments, net of tax										212		212
Comprehensive income												11,465
Share-based compensation				920								920
Distribution of capital to shareholder				(750	)							(750	)
Balance at June 30, 2011, as restated	$	-0-	$	58,701		$	(15,587	)	$	6,056	$	49,170

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

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PARK-OHIO INDUSTRIES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended June 30,
	2011			2010
	Restated			Restated
	(Dollars in thousands)
OPERATING ACTIVITIES
Net income	$	7,817		$	5,665
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		8,229			8,433
Debt extinguishment costs		7,335			-0-
Share-based compensation		920			840
Changes in operating assets and liabilities:
Accounts receivable		(20,896	)		(15,235	)
Inventories and other current assets		(27,602	)		28,425
Accounts payable and accrued expenses		26,516			15,958
Other		(24	)		(9,151	)
Net Cash Provided by Operating Activities		2,295			34,935
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net		(4,036	)		(1,999	)
Net Cash Used by Investing Activities		(4,036	)		(1,999	)
FINANCING ACTIVITIES
Payments on term loans and other debt		(35,939	)		(2,017	)
Proceeds from (Payments on) 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	)
Distribution of capital to shareholder		(750	)		(750	)
Capital contribution from parent		-0-			(6,762	)
Net Cash Provided (Used) by Financing Activities		17,946			(27,776	)
Increase in Cash and Cash Equivalents		16,205			5,160
Cash and Cash Equivalents at Beginning of Period		35,075			21,976
Cash and Cash Equivalents at End of Period	$	51,280		$	27,136
Taxes paid	$	1,769		$	945
Interest paid (includes $5,720 of senior subordinated notes redemption costs)	$	15,389		$	11,268

See accompanying notes to these condensed consolidated financial statements. The accompanying notes

are an integral part of these unaudited condensed consolidated financial statements.

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PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(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 Industries, Inc. and its subsidiaries (collectively, the “Company”). All significant intercompany transactions have been eliminated in consolidation. Park-Ohio Industries, Inc. is a wholly-owned subsidiary of Park-Ohio Holdings Corp.

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 to Form 10-Q and Article 10 of Regulation 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 ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Note A1 – Restatement of Prior Financial Statements

Park-Ohio Holdings Corp. (“Holdings”), the parent of the Company, grants share-based compensation awards to the Company’s employees. In accordance with ASC 718, “Compensation” – Stock Compensation (“ASC 718”), such costs should have been allocated to the Company. As a result, the Company is restating its previously issued unaudited condensed consolidated financial statements for the six-month and three-month periods ended June 30, 2011 and 2010 to properly allocate share-based compensation expense to the Company. Holdings had previously recognized compensation expense for all share-based payments to employees based on their fair values. These costs were not previously allocated to the Company, which resulted in overstatement of net income and understatement of retained deficit and additional paid-in-capital.

To correct the overstatement of net income, the Company recorded additional selling, general and administrative expenses of $492 and $378 for the three months ended June 30, 2011 and 2010, respectively, and $920 and $840 for the six months ended June 30, 2011 and 2010, respectively. The Company has also increased additional paid-in-capital and retained deficit as of January 1, 2010, representing the cumulative effect of the error for all periods prior to January 1, 2011. The correction of the error had no impact on cash flows, current assets, total assets or total shareholder’s equity. Accordingly, the restatement corrects the following line items in the Company’s 2011 and 2010 condensed consolidated financial statements:

	As Previously Reported			As Restated
For the six months ended June 30, 2011
Selling, general, and administrative expenses	$	53,375		$	54,295
Operating income		33,740			32,820
Income before income taxes		13,627			12,707
Net income		8,737			7,817
Statement of Cash Flows-Share-based compensation		-0-			920
For the three months ended June 30, 2011
Selling, general, and administrative expenses	$	28,151		$	28,643
Operating income		17,029			16,537
Income before income taxes		2,798			2,306
Net income		(414	)		(906	)
As of June 30, 2011
Retained deficit	$	(3,986	)	$	(15,587	)
Additional paid-in capital		47,100			58,701

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	As Previously Reported			As Restated
For the six months ended June 30, 2010
Selling, general, and administrative expenses	$	42,242		$	43,082
Operating income		20,394			19,554
Income before income taxes		8,752			7,912
Net income		6,505			5,665
Statement of Cash Flows-Share-based compensation		-0-			840
For the three months ended June 30, 2010
Selling, general, and administrative expenses	$	21,786		$	22,164
Operating income		11,512			11,134
Income before income taxes		5,325			4,947
Net income		3,946			3,568
As of December 31, 2010
Retained deficit	$	(12,723	)	$	(23,404	)
Additional paid-in capital		47,850			58,531

NOTE B — Segments

The Company operates through three segments: Supply Technologies, Aluminum Products and Manufactured Products. Supply Technologies provides our customers with Total Supply Management^™ services for a broad range of high-volume, specialty production components. Total Supply Management^™ 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 and point-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 June 30,						Six Months Ended 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, restated:
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		(4,519	)		(4,073	)		(8,729	)		(7,005	)
Interest expense		(14,231	)		(6,187	)		(20,113	)		(11,642	)
Income before income taxes	$	2,306		$	4,947		$	12,707		$	7,912

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	June 30, 2011		December 31, 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		110,403		83,128
	$	613,638	$	555,279

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 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.

NOTE D — Inventories

The components of inventory consisted of the following:

	June 30, 2011		December 31, 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

NOTE E — Pension Plans and Other Postretirement Benefits

The components of net periodic benefit cost recognized during interim periods was as follows:

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

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NOTE F — Comprehensive Income

Total comprehensive income (loss) was as follows:

	Three Months Ended						Six Months Ended
	June 30, Restated						June 30, Restated
	2011			2010			2011		2010
Net income (loss)	$	(906	)	$	3,568		$	7,817	$	5,665
Foreign currency translation		812			(3,863	)		3,436		(5,890	)
Pension and post retirement benefit adjustments, net of tax		107			195			212		390
Total comprehensive income (loss)	$	13		$	(100	)	$	11,465	$	165

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

	June 30, 2011			December 31, 2010
Foreign currency translation adjustment	$	9,645		$	6,209
Pension and postretirement benefit adjustments, net of tax		(3,589	)		(3,801	)
	$	6,056		$	2,408

NOTE G — 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

NOTE H — 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.

The reported effective tax rate for full-year 2011 including discrete items is estimated to be approximately 32% and is lower than the 35% U.S. 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 38.5% and 28.4%, 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 22.0% and 28.4%, 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 I — 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.

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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 based on a third party’s bid price.

NOTE J — Financing Arrangement

Long-term debt consists of the following:

	June 30, 2011		December 31, 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 in the 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 K — Accounts Receivable

During the first six months of 2011 and 2010, the Company sold approximately $27,467 and $12,825, respectively, of accounts receivable to mitigate accounts receivable concentration risk and to provide additional financing capacity and recorded a loss in the amount of $122 and $42, respectively in the Condensed Consolidated Statements of Operations. These losses represented implicit interest on the transactions.

NOTE L — Acquisition

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”). Pillar provides complete turnkey automated induction power systems and aftermarket parts and service to a worldwide market.

12

The assets of Pillar have been integrated into the Company’s Manufactured Products segment. 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 net tangible assets and intangible assets acquired and liabilities assumed based on their estimated fair values as of December 31, 2010, 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

The purchase price allocation was finalized during March 2011 and reflects the working capital adjustment as of December 31, 2010. There were no significant direct transaction costs included in selling, general and administrative expenses during the first six 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”). 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 as if the acquisitions had occurred on January 1, 2010. 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 been completed at the date indicated above.

	Three Months Ended		Six Months Ended
	June 30, 2011 Restated		June 30, 2010 Restated
Pro forma revenues	$	221,571	$	434,324
Pro forma net income	$	3,024	$	5,180

NOTE M — Supplemental Guarantor Information

Each of the material domestic direct and indirect wholly-owned subsidiaries of the Company (collectively, the “Guarantor Subsidiaries”) has fully and unconditionally guaranteed, on a joint and several basis, to pay principal, premium and interest with respect to the Notes. Each of the Guarantor Subsidiaries is “100% owned,” as defined by Rule 3-10(h)(1) of Regulation S-X.

The following supplemental condensed consolidating financial statements present condensed consolidating balance sheets as of June 30, 2011 and December 31, 2010, condensed consolidating statements of operations for the three months and six months ended June 30, 2011 and 2010, condensed consolidating statements of cash flows for the six months ended June 30, 2011 and 2010 and reclassification and elimination entries necessary to consolidate the Parent and all of its subsidiaries. The “Parent” reflected in the accompanying supplemental guarantor information is Park-Ohio Industries, Inc.

Certain comparative amounts in the accompanying supplemental condensed consolidated financial statements as of December 31, 2010 and for the three-month and six-month periods ended June 30, 2010 have been reclassified to conform to the current year presentation and to properly present the Parent’s investment and earnings in subsidiaries. These classification adjustments did not affect the Company’s previously reported interim or annual consolidated balance sheets, consolidated statements of income, consolidated statements of stockholder’s equity or consolidated statements of cash flows.

13

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

June 30, 2011 (Restated)

	Parent			Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Reclassifications/ Eliminations			Consolidated
	(In thousands)
ASSETS
Current Assets:
Cash and cash equivalents	$	-0-		$	917		$	50,363		$	-0-		$	51,280
Accounts receivable, net		-0-			107,054			40,251			-0-			147,305
Inventories		-0-			167,924			37,828			-0-			205,752
Other current assets		562			16,031			13,156			-0-			29,749
Deferred tax assets		(6,430	)		16,459			467			-0-			10,496
Total Current Assets		(5,868	)		308,385			142,065			-0-			444,582
Investment in subsidiaries		322,801			102,119			-0-			(424,920	)		-0-
Inter-company advances		56,945			46,507			46,147			(149,599	)		-0-
Property, Plant and Equipment, net		5,360			57,287			6,739			-0-			69,386
Other Assets:
Goodwill		-0-			7,071			2,820			-0-			9,891
Other		70,002			17,576			2,201			-0-			89,779
Total Assets	$	449,240		$	538,945		$	199,972		$	(574,519	)	$	613,638
LIABILITIES AND SHAREHOLDER’S (DEFICIT) EQUITY
Current Liabilities:
Trade accounts payable	$	3,369		$	96,935		$	16,179		$	-0-		$	116,483
Payable to affiliates		1,688			-0-			-0-			-0-			1,688
Accrued expenses		9,539			36,014			19,352			-0-			64,905
Current portion of long-term liabilities		3,456			13			-0-			-0-			3,469
Total Current Liabilities		18,052			132,962			35,531			-0-			186,545
Long-Term Liabilities, less current portion
8.125% senior notes due 2021		250,000			-0-			-0-			-0-			250,000
Revolving credit		90,500			-0-			-0-			-0-			90,500
Other long-term debt		-0-			4,948			-0-			-0-			4,948
Deferred tax liability		11,267			(1,238	)		(308	)		-0-			9,721
Other postretirement benefits and other long-term liabilities		18,524			3,619			611			-0-			22,754
Total Long-Term Liabilities		370,291			7,329			303			-0-			377,923
Inter-company advances		11,727			75,853			62,019			(149,599	)		-0-
Shareholder’s (Deficit) Equity		49,170			322,801			102,119			(424,920	)		49,170
Total Liabilities and Shareholder’s (Deficit) Equity	$	449,240		$	538,945		$	199,972		$	(574,519	)	$	613,638

14

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2010 (Restated)

	Parent			Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Reclassifications/ Eliminations			Consolidated
	(In thousands)
ASSETS
Current Assets:
Cash and cash equivalents	$	1,339		$	-0-		$	33,736		$	-0-		$	35,075
Accounts receivable, net		-0-			101,268			25,141			-0-			126,409
Inventories		-0-			159,962			32,580			-0-			192,542
Other current assets		1,947			9,110			14,491			-0-			25,548
Deferred tax assets		(6,430	)		16,459			467			-0-			10,496
Total Current Assets		(3,144	)		286,799			106,415			-0-			390,070
Investment in subsidiaries		289,007			80,059			-0-			(369,066	)		-0-
Inter-company advances		80,416			-0-			36,926			(117,342	)		-0-
Property, Plant and Equipment, net		5,505			60,782			5,482			-0-			71,769
Other Assets:
Goodwill		-0-			6,503			2,597			-0-			9,100
Other		63,536			19,974			14,466			(13,636	)		84,340
Total Assets	$	435,320		$	454,117		$	165,886		$	(500,044	)	$	555,279
LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities:
Trade accounts payable	$	9,726		$	69,108		$	16,856		$	-0-		$	95,690
Payable to affiliates		11,879			-0-			-0-			-0-			11,879
Accrued expenses		3,496			39,464			16,240			-0-			59,200
Current portion of long-term liabilities		13,378			1,327			1,229			-0-			15,934
Total Current Liabilities		38,479			109,899			34,325			-0-			182,703
Long-Term Liabilities, less current portion
8.375% senior subordinated notes due 2014		210,000			-0-			-0-			(26,165	)		183,835
Revolving credit		113,300			-0-			-0-			-0-			113,300
Other long-term debt		-0-			5,322			-0-			-0-			5,322
Deferred tax liability		11,267			(1,238	)		(308	)		-0-			9,721
Other postretirement benefits and other long-term liabilities		21,017			1,630			216			-0-			22,863
Total Long-Term Liabilities		355,584			5,714			(92	)		(26,165	)		335,041
Inter-company advances		16,251			49,497			51,594			(117,342	)		-0-
Shareholder’s Equity		25,006			289,007			80,059			(356,537	)		37,535
Total Liabilities and Shareholder’s Equity	$	435,320		$	454,117		$	165,886		$	(500,044	)	$	555,279

15

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2011 (Restated)

	Parent		Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Net sales	$	-0-	$	404,846		$	83,590		$	-0-		$	488,436
Cost of sales		-0-		337,257			64,064			-0-			401,321
Gross profit		-0-		67,589			19,526			-0-			87,115
Selling, general and administrative expenses		6,826		34,444			13,025			-0-			54,295
Income (loss) from subsidiaries		34,744		12,123			-0-			(46,867	)		-0-
Operating income		27,918		45,268			6,501			(46,867	)		32,820
Gain on bond redemption		-0-		-0-			(12,656	)		12,656			-0-
Interest expense		20,101		(282	)		294			-0-			20,113
Income (loss) before income taxes		7,817		45,550			18,863			(59,523	)		12,707
Income taxes		-0-		250			6,740			(2,100	)		4,890
Net income (loss)	$	7,817	$	45,300		$	12,123		$	(57,423	)	$	7,817

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2010 (Restated)

	Parent		Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(In thousands)
Net sales	$	-0-	$	320,925	$	69,079	$	-0-		$	390,004
Cost of sales		-0-		275,138		52,230		-0-			327,368
Gross profit		-0-		45,787		16,849		-0-			62,636
Selling, general and administrative expenses		6,297		28,397		8,388		-0-			43,082
Income (loss) from subsidiaries		22,822		5,996		-0-		(28,818	)		-0-
Operating income		16,525		23,386		8,461		(28,818	)		19,554
Interest expense		10,860		324		458		-0-			11,642
Income before income taxes		5,665		23,062		8,003		(28,818	)		7,912
Income taxes		-0-		240		2,007		-0-			2,247
Net income	$	5,665	$	22,822	$	5,996	$	(28,818	)	$	5,665

16

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended June 30, 2011 (Restated)

	Parent			Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Net sales	$	-0-		$	201,820		$	44,988		$	-0-		$	246,808
Cost of sales		-0-			167,792			33,836			-0-			201,628
Gross profit		-0-			34,028			11,152			-0-			45,180
Selling, general and administrative expenses		3,155			18,281			7,207			-0-			28,643
Income (loss) from subsidiaries		16,723			11,267			-0-			(27,990	)		-0-
Operating income		13,568			27,014			3,945			(27,990	)		16,537
Gain on bond redemption		-0-			-0-			(12,656	)		12,656			-0-
Interest expense		14,474			(390	)		147			-0-			14,231
Income (loss) before income taxes		(906	)		27,404			16,454			(40,646	)		2,306
Income taxes		-0-			125			5,187			(2,100	)		3,212
Net income (loss)	$	(906	)	$	27,279		$	11,267		$	(38,546	)	$	(906	)

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended June 30, 2010 (Restated)

	Parent		Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(In thousands)
Net sales	$	-0-	$	162,981	$	35,322	$	-0-		$	198,303
Cost of sales		-0-		138,477		26,528		-0-			165,005
Gross profit		-0-		24,504		8,794		-0-			33,298
Selling, general and administrative expenses		3,448		14,868		3,848		-0-			22,164
Income (loss) from subsidiaries		12,974		3,571		-0-		(16,545	)		-0-
Operating income		9,526		13,207		4,946		(16,545	)		11,134
Interest expense		5,958		93		136		0			6,187
Income before income taxes		3,538		13,114		4,810		(16,545	)		4,947
Income taxes		0		140		1,239		-0-			1,379
Net income	$	3,568	$	12,974	$	3,571	$	(16,545	)	$	3,568

17

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Six Months Ended June 30, 2011

	Parent			Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Net cash (used) provided by operations	$	(33,009	)	$	46,102		$	(17,713	)	$	6,915		$	2,295
Cash flows from investing activities:
Purchases of property, plant and equipment, net		(22	)		(2,277	)		(1,737	)		-0-			(4,036	)
Proceeds from bond redemption		-0-			-0-			26,165			(26,165	)		-0-
Net cash used provided in investing activities		(22	)		(2,277	)		24,428			(26,165	)		(4,036	)
Cash flows from financing activities:
Bank debt issue cost		(1,080	)		-0-			-0-			-0-			(1,080	)
Intercompany account change		37,368			(41,594	)		11,141			(6,915	)		-0-
Issuance of 8.125% senior notes net of deferred financing costs		244,970			-0-			-0-			-0-			244,970
Redemption of 8.375% senior subordinated notes due 2014		(215,720	)		-0-			-0-			26,165			(189,555	)
Distribution of capital to shareholder		(750	)		-0-			-0-			-0-			(750	)
Proceeds from revolving credit facility		300			-0-			-0-			-0-			300
Payments on term loans and other debt		(33,396	)		(1,314	)		(1,229	)		-0-			(35,939	)
Net cash provided (used) by financing activities		31,692			(42,908	)		9,912			19,250			17,946
(Decrease) increase in cash and cash equivalents		(1,339	)		917			16,627			-0-			16,205
Cash and cash equivalents at beginning of period		1,339			-0-			33,736			-0-			35,075
Cash and cash equivalents at end of period	$	-0-		$	917		$	50,363		$	-0-		$	51,280

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Six Months Ended June 30, 2010

	Parent			Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
Net cash (used) provided by operations	$	(13,113	)	$	60,978		$	6,258		$	(19,188	)	$	34,935
Cash flows from investing activities:
Purchases of property, plant and equipment, net		(25	)		(7,510	)		5,536			-0-			(1,999	)
Net cash (used) provided in investing activities		(25	)		(7,510	)		5,536			-0-			(1,999	)
Cash flows from financing activities:
Payments on term loans and other debt		(515	)		(1,666	)		164			-0-			(2,017	)
Payments on revolving credit facility		(14,400	)		-0-			-0-			-0-			(14,400	)
Distribution of capital to shareholder		(750	)		-0-			-0-			-0-			(750	)
Capital contributions from parent		(6,762	)		-0-			-0-			-0-			(6,762	)
Intercompany account change		39,275			(51,802	)		(6,661	)		19,188			-0-
Debt issue costs		(3,847	)		-0-			-0-			-0-			(3,847	)
Net cash provided (used) by financing activities		13,001			(53,468	)		(6,497	)		19,188			(27,776	)
(Decrease) increase in cash and cash equivalents		(137	)		-0-			5,297			-0-			5,160
Cash and cash equivalents at beginning of period		137			-0-			21,839			-0-			21,976
Cash and cash equivalents at end of period	$	-0-		$	-0-		$	27,136		$	-0-		$	27,136

NOTE N — Stock-Based Compensation

Total stock compensation expense recorded in the first six months of 2011 and 2010 was $920 and $840, 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 during the six months ended June 30, 2011 and 2010. There were 5,000 shares of restricted stock awarded during the three months and six months ended June 30, 2010. As of June 30, 2011, there was $3,912 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 years.

18

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholder

Park-Ohio Industries, Inc.

We have reviewed the accompanying condensed consolidated balance sheet of Park-Ohio Industries, Inc. and subsidiaries as of June 30, 2011, and the related condensed consolidated statements of operations for the three-month and six-month periods ended June 30, 2011 and 2010, and the condensed consolidated statement of shareholder’s equity for the six-month period ended June 30, 2011 and cash flows for the six-month periods ended June 30, 2011 and 2010. These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards 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, we do not express such an opinion.

Based upon our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Park-Ohio Industries, Inc. and subsidiaries as of December 31, 2010 and the related consolidated statements of operations, shareholders’ equity, and cash flows for 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, 2011,

except for Note A1, as to which the date is

May 14, 2012

19

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 Industries, Inc. and its subsidiaries (collectively, “we” or the “Company”). All significant intercompany transactions have been eliminated in consolidation. Park-Ohio Industries, Inc. is a wholly-owned subsidiary of Park-Ohio Holdings Corp.

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 and point-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, construction, heavy-duty truck and marine 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 B 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 (“ACS”) 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”). 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 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 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 in the aggregate principal amount of $26.2 million that were held by an affiliate. The Company incurred debt extinguishment costs related to premiums and other transaction costs associated with the tender and early redemption and wrote off deferred financing costs totaling $7.3 million and recorded a provision for foreign income taxes of $2.1 million resulting from the retirement of the 8.375% senior subordinated notes due 2014 that were held by an affiliate.

20

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 contained in our 2010 Annual Report on Form 10-K. Any 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 in this Quarterly Report on Form 10-Q for the period ended June 30, 2011. 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. 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 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	%

Net sales increased $98.4 million to $488.4 million in the first six months of 2011 compared to $390.0 million in the same period in 2010 as the Company experienced volume increases in the Supply Technologies and Manufactured Products segments. Supply Technologies sales increased 30% 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 instruments, consumer electronics, medical and plumbing industries. In addition, there were $25.7 million of incremental sales resulting from the acquisition of ACS. Aluminum Products sales decreased 2%, resulting primarily from the completion of certain automotive supply contracts offset by sales of $9.5 million resulting from the acquisition of Rome. Manufactured Products sales increased 34% primarily due to increased business in the capital equipment, forged and machined products and rubber products business units. In addition, there were $7.5 million of incremental sales resulting from the acquisition of Pillar.

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	%

Cost of products sold increased $73.9 million in the first six months of 2011 to $401.3 million compared to $327.4 million in the same period in 2010, while gross margin increased to 17.8% in the first six months of 2011 from 16.1% in the same period in 2010.

Supply Technologies and Manufactured Products gross margin increased due to volume increases. Gross margin in the Aluminum Products segment remained level primarily from reduced sales volume.

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Selling, General & Administrative (SG&A) Expenses:

	Six Months
	Ended
	June 30,
	Restated								Percent
	2011			2010			Change		Change
	(Dollars in millions)
Consolidated SG&A expenses	$	54.3		$	43.1		$	11.2		26	%
SG&A percent		11.1	%		11.1	%

Consolidated SG&A expenses increased 26% in the first six months of 2011 compared to the same period in 2010. SG&A expenses increased in the first six months of 2011 compared to the same period in 2010 primarily due to increases in payroll related expenses and to $3.9 million of incremental expenses resulting from the acquisitions of ACS, Rome and Pillar.

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

Interest expense increased $8.5 million in the first six months 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 a higher average borrowing rate during the first six months of 2011 partially offset by lower average outstanding borrowings. Average borrowings in the first six months of 2011 were lower when compared to the same period in 2010. The higher average borrowing rate in the first six months of 2011 was due primarily to the interest rate mix of our revolving credit facility and the Notes when compared to the mix in the same period in 2010.

Income Tax:

The provision for income taxes was $4.9 million in the first half of 2011 and the reported effective tax rate for the first six months was 39% and the underlying effective tax rate on operations was 22%, compared to a provision for income taxes of $2.2 million and reported effective tax rate and underlying effective tax rate on operations of 28% 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 tax impact resulting from the retirement of our 8.375% 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%.

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	%

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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.

SG&A Expenses:

	Three Months
	Ended
	June 30,
	Restated								Percent
	2011			2010			Change		Change
	(Dollars in millions)
Consolidated SG&A expenses	$	28.6		$	22.2		$	6.4		29	%
SG&A percent		11.6	%		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 40 basis points from 11.2% to 11.6%. 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.

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Income Tax:

The provision for income taxes was $3.2 million in the second quarter of 2011 and the reported effective tax rate was 139% and the underlying effective tax rate on operations was 48%, 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 8.375% 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%.

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 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 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 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; dependence on information systems; and the other factors we describe under “Item 1A. Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. 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, and for the three-month and six-month periods ended June 30, 2011 and 2010, have been reviewed, prior to filing, by Ernst & Young LLP, our independent registered public accounting firm, and their report is included herein.

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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 in Rules 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.

Based on that evaluation, our chief executive officer and chief financial officer have concluded that the Company did not maintain internal control over financial reporting as a result of the following material weakness:

• The Company did not maintain effective controls over its accounting for the allocation of share-based compensation expense to the Company. Park-Ohio Holdings Corp. grants share-based compensation awards to the Company’s employees. In accordance with ASC 718, such costs should have been allocated to the Company. As a result, the Company is restating its previously issued condensed consolidated financial statements for the three-month and six-month periods ended June 30, 2011 and 2010.

There have been no changes in our internal control over financial reporting that occurred during the first quarter of 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The Company is evaluating appropriate changes in internal controls to address the material weakness described above.

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PART II

OTHER INFORMATION

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 of Park-Ohio-Holdings Corp. filed on April 13, 2011, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
4.2	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)
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

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SIGNATURES

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 INDUSTRIES, INC. (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 14, 2012

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EXHIBIT INDEX

QUARTERLY REPORT ON FORM 10-Q

PARK-OHIO INDUSTRIES, INC. 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 of Park-Ohio-Holdings Corp. filed on April 13, 2011, SEC File No. 000-03134 and incorporated by reference and made a part hereof)
4.2	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)
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

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