UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2007March 31, 2008

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 1-13894

PROLIANCE INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware			34-1807383
(State or other jurisdiction of incorporation or organization)			34-1807383 (I.R.S. Employer Identification No.)

100 Gando Drive, New Haven, Connecticut 06513

(Address of principal executive offices, including zip code)

(203) 401-6450

(Registrant’s telephone number, including area code)

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

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

Large Accelerated Fileraccelerated filer   Accelerated Filerfiler                   Non-Accelerated FilerNon-accelerated filer   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   

The number of shares of common stock, $.01 par value, outstanding as of NovemberMay 1, 20072008 was 16,017,126.

Exhibit Index is on page 27 of this report.15,794,281.

INDEX

						Page
PART I.			FINANCIAL INFORMATION
Item 1.			Financial Statements
			Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30,March 31, 2008 and 2007 and 2006(unaudited)					3
			Condensed Consolidated Balance Sheets at September 30, 2007March 31, 2008 (unaudited) and December 31, 20062007					4
			Condensed Consolidated Statements of Cash Flows for the NineThree Months Ended September 30,March 31, 2008 and 2007 and 2006(unaudited)					5
			Notes to Condensed Consolidated Financial Statements					6
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations					1716
Item 3.			Quantitative and Qualitative Disclosures About Market Risk					2526
Item 4T.4.			Controls and Procedures					26
PART II.			OTHER INFORMATION
Item 4.			Submission of Matters to a Vote of Security Holders					27
Item 5.			Other Information					27
Item 6.			Exhibits					2728
			Signatures					2829

PART I. FINANCIAL INFORMATION

Item 1.    FINANCIAL STATEMENTS

PROLIANCE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)			Three Months Ended September 30,												Nine Months Ended September 30,												Three Months Ended March 31,
(in thousands, except per share amounts)			2007						2006						2007						2006						2008						2007
Net sales				$	115,333					$	120,734					$	309,685					$	324,180					$	76,540					$	91,938
Cost of sales					88,115						90,327						243,857						243,789						65,458						74,580
Gross margin					27,218						30,407						65,828						80,391						11,082						17,358
Selling, general and administrative expenses					19,107						23,923						59,602						71,231						12,831						20,589
Arbitration earn-out decision					—						—						3,174						—
Restructuring charges					1,864						837						3,192						1,491						172						275
Operating income (loss)					6,247						5,647						(140	)					7,669
Operating loss from operations																													(1,921	)					(3,506	)
Interest expense					4,556						3,634						10,159						8,578						3,736						2,681
Debt extinguishment costs					891						—						891						—						576						—
Income (loss) before taxes					800						2,013						(11,190	)					(909	)
Income tax provision					671						754						1,247						1,849
Net income (loss)				$	129					$	1,259					$	(12,437	)				$	(2,758	)
Basic income (loss) per common share				$	0.01					$	0.08					$	(0.89	)				$	(0.18	)
Diluted income (loss) per common share				$	0.01					$	0.08					$	(0.89	)				$	(0.18	)
Weighted average common shares – basic					15,269						15,256						15,265						15,256
Weighted average common shares – diluted					17,454						15,803						15,265						15,256
Loss from operations before taxes																													(6,233	)					(6,187	)
Income tax (benefit) provision																													(57	)					145
Net loss																												$	(6,176	)				$	(6,332	)
Basic and diluted net loss per common share																												$	(0.40	)				$	(0.42	)
Weighted average common shares – basic and diluted																													15,730						15,259

The accompanying notes are an integral part of these statements.

PROLIANCE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

			September 30, 2007						December 31, 2006						March 31, 2008						December 31, 2007
(in thousands, except share data)			(unaudited)												(unaudited)
ASSETS
Current assets:
Cash and cash equivalents				$	1,043					$	3,135					$	3,198					$	476
Accounts receivable (less allowances of $4,372 and $5,543)					70,555						58,209
Accounts receivable (less allowances of $4,428 and $4,601)																	60,303						60,153
Inventories					111,155						118,912						87,756						106,756
Other current assets					7,416						7,498						27,283						7,645
Total current assets					190,169						187,754						178,540						175,030
Property, plant and equipment					49,237						47,697						47,850						50,165
Accumulated depreciation and amortization					(27,858	)					(23,821	)					(27,613	)					(29,001	)
Net property, plant and equipment					21,379						23,876						20,237						21,164
Other assets					13,011						12,732						18,927						12,699
Total assets				$	224,559					$	224,362					$	217,704					$	208,893
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt				$	20,706					$	53,545					$	68,885					$	67,242
Accounts payable					55,478						58,114						58,848						48,412
Accrued liabilities					27,613						28,355						23,245						24,649
Total current liabilities					103,797						140,014						150,978						140,303
Long-term liabilities:
Long-term debt					50,350						1,657						87						211
Other long-term liabilities					5,430						8,218						5,283						5,353
Total long-term liabilities					55,780						9,875						5,370						5,564
Commitments and contingent liabilities
Stockholders’ equity:
Preferred stock, $.01 par value: authorized 2,500,000 shares; issued and outstanding as follows:
Series A junior participating preferred stock, $.01 par value: authorized 200,000 shares; issued and outstanding – none at September 30, 2007 and December 31, 2006					—						—
Series B convertible preferred stock, $.01 par value: authorized 30,000 shares; issued and outstanding; – 12,781 shares at September 30, 2007 and December 31, 2006 (liquidation preference $4,453 at September 30, 2007 and $1,278 at December 31, 2006)					—						—
Common Stock, $.01 par value: authorized 47,500,000 shares; 15,599,991 shares issued at September 30, 2007; 15,339,892 shares issued at December 31, 2006; 15,558,055 shares outstanding at September 30, 2007; 15,297,956 shares outstanding at December 31, 2006					156						153
Preferred stock, $.01 par value: Authorized 2,500,000 shares; issued and outstanding as follows:
Series A junior participating preferred stock, $.01 par value: authorized 200,000 shares; issued and outstanding – none at March 31, 2008 and December 31, 2007																	—						—
Series B convertible preferred stock, $.01 par value: authorized 30,000 shares; issued and outstanding; – 9,913 shares at March 31, 2008 and December 31, 2007 (liquidation preference $3,453)																	—						—
Common stock, $.01 par value: authorized 47,500,000 shares; issued 15,836,217 and 15,838,962 shares, outstanding 15,794,281 and 15,797,026 shares at March 31, 2008 and December 31, 2007, respectively																	158						158
Paid-in capital					109,084						105,772						112,239						109,145
Accumulated deficit					(43,627	)					(29,967	)					(54,258	)					(48,039	)
Accumulated other comprehensive loss					(616	)					(1,470	)
Treasury stock, at cost, 41,936 shares at September 30, 2007 and December 31, 2006					(15	)					(15	)
Accumulated other comprehensive income																	3,232						1,777
Treasury stock, at cost, 41,936 shares at March 31, 2008 and December 31, 2007																	(15	)					(15	)
Total stockholders’ equity					64,982						74,473						61,356						63,026
Total liabilities and stockholders’ equity				$	224,559					$	224,362					$	217,704					$	208,893

The accompanying notes are an integral part of these statements.

PROLIANCE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)			Nine Months Ended September 30,
(in thousands)			2007						2006
Cash flows from operating activities:
Net loss				$	(12,437	)				$	(2,758	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization					6,197						4,386
(Benefit from) provision for uncollectible accounts receivable					(65	)					1,872
Non-cash debt extinguishment costs					576						—
Non-cash stock compensation costs					117						140
Non-cash arbitration earn-out decision charge					3,174						—
Non-cash restructuring charges					—						189
Gain on sale of buildings					(942	)					(207	)
Deferred income tax					136						—
Changes in operating assets and liabilities:
Accounts receivable					(11,873	)					(17,783	)
Inventories					8,210						(15,988	)
Accounts payable					892						13,279
Accrued expenses					(1,639	)					1,359
Other					(2,994	)					2,657
Net cash used in operating activities					(10,648	)					(12,854	)
Cash flows from investing activities:
Capital expenditures, net of sales and retirements					(1,004	)					(3,688	)
Cash expenditures for restructuring costs on Modine Aftermarket acquisition balance sheet					(195	)					(980	)
Cash expenditures for merger transaction costs					—						(952	)
Net cash used in investing activities					(1,199	)					(5,620	)
Cash flows from financing activities:
Dividends paid					(1,183	)					(48	)
Net borrowings under Silver Point revolving credit facility					14,175						—
Net (repayments) borrowings under Wachovia revolving credit facility					(52,672	)					21,270
Net borrowings of short-term foreign debt					6,001						—
Borrowings under Wachovia term loan					8,000						—
Borrowings under Silver Point term loan					50,000						—
Repayments of Wachovia term loan and capital lease obligations					(9,650	)					(683	)
Deferred debt issue costs					(4,964	)					(136	)
Proceeds from stock option exercise					25						—
Net cash provided by financing activities					9,732						20,403
Effect of exchange rate changes on cash					23						(264	)
(Decrease) increase in cash and cash equivalents					(2,092	)					1,665
Cash and cash equivalents at beginning of period					3,135						4,566
Cash and cash equivalents at end of period				$	1,043					$	6,231

(Unaudited)			Three Months Ended March 31,
(in thousands)			2008						2007
Cash flows from operating activities:
Net loss				$	(6,176	)				$	(6,332	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization					2,501						1,822
Provision for uncollectible accounts receivable					52						157
Non-cash stock compensation costs					55						39
Gain on disposal of fixed assets					(3,164	)					(68	)
Changes in operating assets and liabilities:
Accounts receivable					627						285
Inventories					20,100						5,067
Accounts payable					9,850						(2,725	)
Accrued expenses					(1,731	)					(2,371	)
Other					(20,586	)					(1,078	)
Net cash provided by (used in) operating activities					1,528						(5,204	)
Cash flows from investing activities:
Capital expenditures, net of normal sales and retirements					(1,437	)					(330	)
Proceeds from sale of building					1,538						—
Insurance proceeds from damaged fixed assets					2,674						—
Cash expenditures for restructuring costs on Modine Aftermarket acquisition balance sheet					(62	)					(4	)
Net cash provided by (used in) investing activities					2,713						(334	)
Cash flows from financing activities:
Dividends paid					(44	)					(16	)
Net borrowings (repayments) under revolving credit facility					4,314						(4,728	)
Borrowings of short-term foreign debt					3,528						4,475
Borrowings under term loan					—						8,000
Repayments of term loan and capitalized lease obligations					(6,323	)					(228	)
Deferred debt issuance costs					(3,074	)					(507	)
Proceeds from stock option exercise					—						25
Net cash (used in) provided by financing activities					(1,599	)					7,021
Effect of exchange rate changes on cash					80						(35	)
Increase in cash and cash equivalents					2,722						1,448
Cash and cash equivalents at beginning of period					476						3,135
Cash and cash equivalents at end of period				$	3,198					$	4,583

The accompanying notes are an integral part of these statements.

PROLIANCE INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Interim Financial Statements

The condensed consolidated financial information should be read in conjunction with the Proliance International, Inc. (the ‘‘Company’’) Annual Report on Form 10-K for the year ended December 31, 20062007 including the audited financial statements and notes thereto included therein.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America 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 of America for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of consolidated financial position, consolidated results of operations and consolidated cash flows have been included in the accompanying unaudited condensed consolidated financial statements. All such adjustments are of a normal recurring nature. Results for the three and nine monthsquarter ended September 30, 2007March 31, 2008 are not necessarily indicative of results for the full year. The balance sheet information as of Decemb er 31, 2007 was derived from the audited financial statements contained in the Company’s Form 10-K.

Prior period amounts have been reclassified to conform to current year classifications.

Note 2 — Southaven Event and Related Liquidity Issues

On February 5, 2008, the Company’s central distribution facility in Southaven, Mississippi sustained significant damage as a result of strong storms and tornadoes (the ‘‘Southaven Casualty Event’’). During the storm, a significant portion of the Company’s automotive and light truck heat exchange inventory was also destroyed. While the Company does have insurance covering damage to the facility and its contents, as well as any business interruption losses, up to $80 million, this incident has had a significant impact on the Company’s short term cash flow as the Company’s lenders would not give credit to the insurance proceeds in the Borrowing Base, as such term is defined in the Credit and Guaranty Agreement (the ‘‘Credit Agreement’’) by and among the Company and certain domestic subsidiaries of the Company, as guarantors, the lenders party thereto from time to time (collective ly, ‘‘the Lenders’’), Silver Point Finance, LLC (‘‘Silver Point’’), as administrative agent for the Lenders, collateral agent and as lead arranger, and Wachovia Capital Finance Corporation (New England) (‘‘Wachovia’’), as borrowing base agent. Under the Credit Agreement, the damage to the inventory and fixed assets resulted in a significant reduction in the Borrowing Base, as such term is defined in the Credit Agreement, because the Borrowing Base definition excludes the damaged assets without giving effect to the related insurance proceeds. In order to provide access to funds to rebuild and purchase inventory damaged by the Southaven Casualty Event, the Company entered into a Second Amendment of the Credit Agreement on March 12, 2008 (see Note 4). Pursuant to the Second Amendment, and upon the terms and subject to the conditions thereof, the Lenders have agreed to temporarily increase the aggregate principal amount of Revolvin g B Commitments available to the Company from $25 million to $40 million. Pursuant to the Second Amendment, the Lenders have agreed to permit the Company to borrow funds in excess of the available amounts under the Borrowing Base definition in an amount not to exceed $26 million. The Company is required to reduce this ‘‘Borrowing Base Overadvance Amount’’, as defined in the Credit Agreement, to zero by May 31, 2008. The Borrowing Base Overadvance Amount of $26 million was reduced to $24.2 million in the Third Amendment of the Credit Agreement (see Note 4), which was signed on March 26, 2008. The Company believes that it will be able to achieve the Borrowing Base Overadvance reduction by the May 31, 2008 date through a plan which utilizes a combination of (i) operating results, (ii) working capital management and (iii) insurance proceeds, although there can be no assurance that the Company will be able to reduce the Borrowing Base Overadvance Amount as required by the Credit Agreement. The Company is working with its insurance company through the claims process and received a $10 million preliminary advance during the first quarter of 2008, which was used to reduce

obligations under the Company’s credit facility and a second preliminary advance of $11 million in April 2008 (see Note 14). The Company’s insurance policy covers losses of property and from business interruption up to $80 million, which the Company believes, should provide more than sufficient coverage with respect to the damages arising from the Southaven Casualty Event. The Company is also continuing to work toward raising a combination of $30 million or more in debt and/or equity to reduce or possibly replace its current Credit Agreement and to provide additional working capital. The Company believes that any such financing will not occur until after May 31, 2008. Jefferies & Company, Inc. has been hired to assist the Company in obtaining new debt or equity capital. There can be no assurance that the Company will be able to obtain such additional funds from the plans noted above or that further Lender accommodations would be available, on acceptable terms or at all, if the Company fails to reduce the Borrowing Base Overadvance Amount to zero by May 31, 2008.

If the Company is unable to reduce the Borrowing Base Overadvance Amount to zero by May 31, 2008, the Company will be in violation of a covenant in the Credit Agreement and will be required to negotiate a waiver to cure the default. If the Company were unable to successfully resolve the default with the Lenders, the entire amount of any indebtedness under the Credit Agreement at that time could become due and payable at the Lender’s discretion. This results in uncertainties concerning the Company’s ability to retire the debt. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

As a result of the uncertainty concerning the Company’s ability to reduce the Borrowing Base Overadvance Amount to zero by May 31, 2008, the auditor’s opinion for the year ended December 31, 2007 included an explanatory paragraph concerning the Company’s ability to continue as a going concern.

At March 31, 2008, the insurance claim receivable, net of amounts received, of $20.8 million included $25.6 million which represents the estimated recovery on inventory damaged in the Southaven Casualty Event, $2.7 million which represents the estimated recovery on damaged fixed assets and $2.5 million of incremental costs for travel, product procurement and reclamation and other items resulting from the tornado. The Company believes these amounts are reimbursable under the terms of its insurance coverage. The Company received a $10.0 million advance from the insurance company during the quarter ended March 31, 2008 against its insurance claim, which proceeds were used to pay down borrowings under the Credit Facility. The insurance claim receivable is classified as other current assets in the accompanying consolidated balance sheet. See Note 14 for a discussion of the second preliminary insurance advance in the amount of $11.0 million which was received on April 11, 2008. The Company continues to work with the insurance company through the claims process and expects to receive additional advances in the future. The current insurance receivable balance for the most part, does not include any recovery of claims for business interruption and certain Southaven Casualty Event related expenses that are currently still under review by the insurance company. The Company’s insurance policy covers losses of property and from business interruption up to $80 million, which the Company believes, should provide more than sufficient coverage with respect to the damages arising from the Southaven Casualty Event.

Included in selling, general and administrative expenses in the condensed consolidated statement of operations for the three months ended March 31, 2008, is a $2.1 million credit resulting from the Southaven Casualty Event reflecting a gain on the disposal of racking of $1.6 million, as the insurance recovery was in excess of the damaged assets net book value and a $1.1 million gain resulting from the recovery of margin on a portion of the destroyed inventory, which was offset in part by expenses of $0.6 million incurred as a result of the tornadoes which will not be reclassified to the insurance receivable until it is assured that they are recoverable. The Company has not yet recorded any recovery under the business interruption coverage of the insurance policy or other claims still under review by the insurance company as those amounts are not yet determinable.

Note 3 — Inventory

Inventory consists of the following:

(in thousands)			September 30, 2007						December 31, 2006						March 31,  2008						December 31, 2007
Raw material and component parts				$	21,629					$	22,730					$	21,998					$	23,055
Work in progress					3,677						3,858						4,194						4,044
Finished goods					85,849						92,324						61,564						79,657
Total inventory				$	111,155					$	118,912					$	87,756					$	106,756

Note 34 — Debt

Short-term debt and current portion of long-term debt consists of the following:

(in thousands)			September 30, 2007						December 31, 2006						March 31,  2008						December 31, 2007
Short-term foreign debt				$	6,001					$	—					$	3,528					$	—
Silver Point revolving credit facility					14,175						—
Wachovia revolving credit facility					—						52,672
Term loan																	43,858						49,625
Revolving credit facility																	21,391						17,078
Current portion of long-term debt					530						873						108						539
Total short-term debt and current portion of long-term debt				$	20,706					$	53,545					$	68,885					$	67,242

Short-term foreign debt, at September 30, 2007,March 31, 2008, represents borrowings by the Company’s NRF subsidiary in The Netherlands under its available credit facility. At September 30, 2007, $6.0As of March 31, 2008, $2.2 million was borrowed at a Euro equivalent at an annual interest rate of 5.414%5.3% and $1.3 million was borrowed at 5.2%.

New Credit Agreement

Effective July 19, 2007,At March 31, 2008 under the Company entered into aCompany’s Credit and Guaranty Agreement (the ‘‘Credit Agreement’’) by and among the Company and certain domestic subsidiaries of the Company, as guarantors, the lenders party thereto from time to time (collectively, ‘‘the Lenders’’), Silver Point Finance, LLC (‘‘Silver Point’’), as administrative agent for the Lenders, collateral agent and as lead arranger, and Wachovia Capital Finance Corporation (New England) (‘‘Wachovia’’), as borrowing base agent.

During the quarter ended March 31, 2008, as required by the Credit Agreement, the term loan was reduced by $4.6 million from the receipt of insurance proceeds associated with the Southaven Casualty Event, by $0.1 million from the receipt of Extraordinary Receipts, as defined in the Credit Agreement, and by $1.0 million from the receipt of proceeds from the sale of an unused facility in Emporia, Kansas. As a result of the term loan reduction from the receipt of the insurance proceeds, the Company incurred a prepayment premium, as required by the Credit Agreement, of $0.4 million, which amount is included in debt extinguishment costs. In addition, due to the prepayment of the term loan, $0.2 million of the deferred debt costs have also been expensed as debt extinguishment costs in the condensed consolidated statement of operations for the three months ended March 31, 2008.

On March 12, 2008, the Second Amendment of the Credit Agreement (the ‘‘Second Amendment’’) was signed. Pursuant to the Agreement,Second Amendment, and upon the terms and subject to the conditions thereof, the Lenders have agreed to extend certain credit facilities (the ‘‘Facilities’’) totemporarily increase the Company in an aggregate principal amount not to exceed $100 million, consisting of (a) $50 million aggregate principal amount of Tranche A Term Loans, (b) up to $25 million aggregate principal amount of Revolving A Commitments (including a $7.5 million letter of credit subfacility), and (c) up to $25 million aggregate principal amount of Revolving B Commitments. Availability under the Revolving Commitments is determined by referenceavailable to a borrowing base formula. The Tranche A Term Loans and any Revolving Loans are due and the commitments terminate on the five-year anniversary of the closing. Subject to customary exceptions and limitations, the Company may elect to borrow at a per annum Base Rate (as defined in the Agreement) plus 375 basis point s or a per annum LIBOR Rate (as defined in the Agreement) plus 475 basis points. The proceeds from the borrowings under the Agreement at closing on July 19, 2007 were used to repay all Company indebtedness under the Company’s Amended and Restated Loan and Security Agreement, dated February 28, 2007 (the ‘‘Wachovia Agreement’’), with Wachovia Capital Finance Corporation (New England), formerly known as Congress Financial Corporation (New England), as agent, and fees and expenses related thereto. The Facilities are available on an ongoing basis for general working capital needs. As with the prior Wachovia Agreement, all borrowings under the new loans are secured by substantially all of the assets of the Company (including a pledge of 65% of the shares of the Company’s NRF and Mexican subsidiaries). The Agreement provides call protection to the Lenders (subject to certain exceptions) by way of the lesser of a make-whole amount and prepayment premium rangin g from 5% to 3% to 1%, respectively, of outstanding loans prepaid over years 2, 3, and 4. Mandatory prepayments in year 1 are subject to such make-whole amount (subject to certain exceptions). Voluntary prepayments of Revolving Loans are first applied to the Revolving A Loans outstanding. While voluntary prepayments of the Tranche A Term Loan are permitted after year 1, resulting availability must be at least $5 million. The Agreement requires mandatory prepayments of the loans with the proceeds of issuances of debt and equity of the Company or its subsidiaries, as well as an annual 75% excess cash flow sweep (subject to availability minimums) (in each of the foregoing cases, the proceeds of which are applied first, to the Tranche A Term Loans, second, to the Revolving A Loans and third, to the Revolving B Loans) and in respect of asset sales and following the incurrence of debt from the Lenders at its NRF subsidiary. Generally, mandatory prepayment with proceeds of inventory or accounts are applied fir st to the Revolving A Loans, second, to the Revolving B Loans and third, to the Tranche A Term Loan, and mandatory prepayments with proceeds of other collateral are applied first, to the Tranche A Term Loans second, to the Revolving A Loans and third, to the Revolving B Loans. Holders of Tranche A Term Loans may waive their mandatory prepayment right, in which case such proceeds will be applied pro rata to the remaining holders of the Tranche A Term Loans.

Borrowings under the Agreement as of September 30, 2007 included a $14.2 million revolving credit obligation at an interest rate of 10.11% per annum and a term loan of $50.0 million at an interest rate of 10.125% per annum. The term loan is payable in full on July 19, 2012.

The Agreement contains customary representations, warranties, affirmative covenants for financing transactions of this nature (including, without limitation, covenants in respect of financial and other reporting and a covenant to hedge interest in respect of up to $25 million principal of the Tranche A Term Loan for up to two years), negative covenants (including limitation on debt, liens, restricted payments, investments, sale-leaseback transactions), fundamental changes (including an annual $10 million limit on asset sales), affiliate transactions (including prohibition on transfers of assets to subsidiaries of the Company that are not guarantors of the Facilities) and events of default (including any pledge of assets of NRF or its subsidiaries or any change of control).

The Agreement also has quarterly and annual financial covenants relating to leverage, capital expenditures, EBITDA and a fixed charge coverage ratio. Certain of these financial covenants are tested on a consolidated basis, as well as in respect of the Company’s domestic subsidiaries and a Mexican subsidiary and in respect of its European operations on a stand alone basis. At September 30, 2007, the Company was in violation of the consolidated senior leverage and NRF total debt covenants contained in the Agreement. The Company has obtained waivers for these violations.$40 million. This additional

liquidity allowed the Company to restore its operations in Southaven, Mississippi that were severely damaged by two tornadoes on February 5, 2008 (the ‘‘Southaven Casualty Event’’). The Company believes it has adequate insurance for the Southaven Casualty Event, including coverage for all inventory and fixed assets that were damaged. Under the Credit Agreement, provides customary taxthe damage to the inventory and fixed assets resulted in a dramatic reduction in the Borrowing Base, as such term is defined in the Credit Agreement, because the Borrowing Base definition excludes the damaged assets without giving effect to the related insurance proceeds. Pursuant to the Second Amendment, the Lenders agreed to permit the Company to borrow funds in excess of the available amounts under the Borrowing Base definition in an amount not to exceed $26 million. The Company is required to reduce this ‘‘Borrowing Base Overadvance Amount’’, as defined in the Credit Agreement, to zero by May 31, 2008 and intends to do so, in part as it receives insurance proceeds relating to the Southaven Casualty Event, in accordance with the Second Amendment. In addition, pursuant to the Second Amendment, the Company is working to strengthen its capital structure by raising additional capital which it now believes will not occur until after May 31, 2008. The Company has hired Jefferies & Company, Inc. to assist it in obtaining such capital.

As previously reported, a number of Events of Default, as defined in the Credit Agreement, had occurred and were continuing relating to, among other indemnitiesthings, the Southaven Casualty Event. Pursuant to the Second Amendment, the Lenders waived such Events of Default including a waiver of the 2007 covenant violations, effective as of the Second Amendment date, resulting in the elimination of the 2% default interest, which had been charged effective November 30, 2007. During the quarter ended March 31, 2008, $0.3 million of default interest was included in interest expense in the condensed consolidated statement of operations. Consistent with current market conditions for similar borrowings, the Second Amendment increased the interest rate the Company must pay on its outstanding indebtedness to the Lenders to the greater of (i) the Adjusted LIBOR Rate, as welldefined in the Second Amendment, plus 8%, or (ii) 12%, for LIBOR borrowings, or the great er of (x) the Adjusted Base Rate, as a guaranty of all obligations ofdefined in the Second Amendment, plus 7%, or (y) 14%, for Base Rate borrowings.

The Second Amendment required the Company and its subsidiaries that are partiesthe Lenders to work together during the credit documents, such guaranty provided jointly and severally by each domestic subsidiaryten business days following the date of the Company.Second Amendment to reset the financial covenants in the Credit Agreement. In July 2007,addition, the Company also entered into a pledge and security agreement with one of its significant vendors, pursuant to which it pledged substantially all its assets to the vendor as security with respectSecond Amendment provided for certain adjustments to the Company’s outstanding payablesfinancial performance relating to, that vendor. The vendor’s security interest is subordinatedfor example, the Southaven Casualty Event, for purposes of evaluating the Company’s compliance with certain financial covenants. In addition, during such ten business day period, the Company agreed to negotiate with Silver Point regarding the security interestissuance of warrants to Silver Point to purchase up to 9.99% of the Company’s capital stock on a fully diluted basis. In connection with the Second Amendment, the Company paid the Lenders undera fee of $3.0 million, which has been deferred and is being amortized over the Agreement.remaining term of the outstanding obligations.

As of September 30, 2007,contemplated by the Company had $17.2 million available for future borrowings under the Agreement.

Previous Credit Agreement

On January 3, 2007, the Company amended its then existing Loan and Security Agreement (the ‘‘Credit Facility’’) with Wachovia Capital Finance Corporation (New England) pursuant to a SixteenthSecond Amendment, to the Loan and Security Agreement (the ‘‘Amendment’’). The Amendment, which was effective as of December 19, 2006, revised the inventory loan limit to reflect the Company’s continued progress in reducing its inventory levels. The Inventory Loan Limit was previously $43.0 million from December 1, 2006 through December 31, 2006 and $40.0 million from and after January 4, 2007. The revised limits were $43.0 million from December 19, 2006 through January 4, 2007, $42.8 million from January 5, 2007 through January 11, 2007, $42.5 million from January 12, 2007 through January 18, 2007, $4 2.3 million from January 19, 2007 through January 25, 2007, $42.0 million from January 25, 2007 through February 1, 2007, $41.8 million from February 2, 2007 through February 8, 2007, $41.5 million from February 9, 2007 through February 15, 2007, $41.3 million from February 16, 2007 through February 22, 2007 and $41.0 million from and after February 23, 2007.

On January 19, 2007, the Company amended the Credit Facility pursuant to a Seventeenth Amendment to the Loan and Security Agreement (the ‘‘Seventeenth Amendment’’). The Seventeenth Amendment, which was effective as of January 19, 2007, reduced the amount of Minimum Excess Availability which the Company was required to maintain from $5.0 million to $2.5 million from and after January 19, 2007.

On February 28, 2007, the Company entered into an Amended and Restated Loan and Securitythe Third Amendment to the Credit Agreement with Wachovia Capital Finance Corporation (New England) (the ‘‘Wachovia Agreement’Third Amendment’’). on March 26, 2008. The Wachovia Agreement amended and restatedThird Amendment reset the Company’s then existing Credit Facility to reflect an additional Term B loan2008 financial covenants contained in the amountCredit Agreement. Among other financial covenants, the Third Amendment adjusted financial covenants relating to leverage, capital expenditures, consolidated EBITDA, and the Company’s fixed charge coverage ratio. These covenant adjustments reset the covenants under the Credit Agreement in light of, $8.0 million. This additional indebtedness was secured by substantially all ofamong other things, the assets ofSouthaven Casualty Event.

Since the Company, including its owned real property locations across the United States. The maturity date of the Term B loan was July 2009. The Term B loan was to be repaid in twenty-two consecutive monthly installments of $167 thousand commencing on October 1, 2007 with the remaining balance paid on July 21, 2009. The Wachovia Agreement reset certain financial covenants including (i) EBITDA forSecond Amendment, the Company forhas continued to work to restore its operations in Southaven, determine the twelve months ended December 31, 2006-($1.0 million); three mo nths ended March 31, 2007-($1.0 million), adjusted for anyfull extent of the damage there, and prepare the Southaven Casualty Event-related insurance claim. As a result of these efforts, the Company has determined that a small portion of the inventory revaluation, butin Southaven was not less than ($2.6 million); six months ended June 30, 2007-$7.5 million; nine months ended September 30, 2007-$17.5 milliondamaged by the tornadoes, and twelve months ended December 31, 2007-$20.0 million; (ii) capital expenditures in 2007 were capped at $8.0 million and (iii)could be returned to the Fixed Charge Ratio was amendedCompany’s inventory (and, consequently, to .50 to 1.00 for the six months ended June 30, 2007; .85 to 1.00 forBorrowing Base). As a result of this recharacterization, the nine months ended September 30, 2007, the twelve months ended December 31, 2007,Company and the twelve months ended March 31, 2008; .90Lenders have agreed in the Third Amendment to 1.00 forreduce the twelve months ended June 30, 2008; .95maximum Borrowing Base Overadvance Amount to 1.00 for the twelve months ended September 30, 2008; and 1.00 to 1.00 for the twelve months ended December 31, 2008. The Wachovia Agreement also established minimum EBITDA for the Company’s NRF subsidiary, unless there was excess availability of $15.0 mi llion, for the following twelve-month periods: December 31, 2006-$4.5 million; March 31, 2007-$4.9 million; June 30, 2007-$5.2 million; September 30, 2007-$5.2 million and December 31, 2007-$5.5$24.2 million. The WachoviaCompany intends to reduce this ‘‘Borrowing Base Overadvance Amount’’, as defined in the Credit Agreement, did not affect the amountto zero by May 31, 2008 through a plan which utilizes a combination of minimum excess availability that the Company was required to maintain. The Company was not in compliance with the EBITDA and fixed charge ratio covenants as of June 30, 2007; however, these were cured when the outstanding debt under the Wachovia Agreement was paid in full on July 19, 2007. The pay-off of the indebtedness under the Wachovia Agreement resulted in(i) operating results, (ii) working capital

management and (iii) insurance proceeds, although there can be no assurance that the Company recording $0.9will be able to reduce the Borrowing Base Overadvance Amount as required by the Credit Agreement.

The Third Amendment also provided the Company with a waiver for the default resulting from the explanatory paragraph in the audit opinion for the year ended December 31, 2007 concerning the Company’s ability to continue as a going concern.

In addition, as contemplated by the Second Amendment, on March 26, 2008 the Company issued warrants to purchase up to the aggregate amount of 1,988,072 shares of Company common stock (representing 9.99% of the Company’s common stock on a fully-diluted basis) to two affiliates of Silver Point (collectively, the ‘‘Warrants’’). Warrants to purchase 993,040 shares are subject to cancellation if the Company raises $30 million asof debt extinguishment costs duringor equity capital pursuant to documents in form and substance satisfactory to Silver Point on or prior to May 31, 2008. While the third quarterCompany continues to work toward raising a combination of 2007. This reflected the write-off of$30 million or more in debt and/or equity, it now believes that any such financing will not occur until after May 31, 2008. The Warrants were sold in a portionprivate placement pursuant to Section 4(2) of the Securities Act of 1933, as amended, to two accredited investors. To reflect the iss uance of the Warrants, the Company recorded additional paid-in capital and deferred debt costs associated withof $3.0 million. This represents the Wachovia Agreement which had been capitalized and were being amortized over the lifeestimated fair value of the Wachovia Agreement. The remaining portionWarrants, based upon the terms and conditions of the Wachovia AgreementWarrants and the Company’s common stock market value. The increase in deferred debt costs ($1.0 million) will be amortized over the liferemaining term of the newoutstanding obligations under the Credit Agreement.

The Warrants have a term of seven years from the date of grant and have an exercise price equal to 85% of the lowest average dollar volume weighted average price of the Company’s common stock for any 30 consecutive trading day period prior to exercise commencing 90 trading days prior to March 12, 2008 and ending 180 trading days after March 12, 2008. The Warrants contain a ‘‘full ratchet’’ anti-dilution provision providing for adjustment of the exercise price and number of shares underlying the Warrants in the event of certain share issuances below the exercise price of the Warrants; provided that the number of shares issuable pursuant to the Warrants is subject to limitations under applicable American Stock Exchange rules (the ‘‘20% Issuance Cap’’). If the anti-dilution provisions would require the issuance of shares above the 20% Issuance Cap, the Company would provide a cash payment in lieu of the shares in excess of the 20% Issuance Cap. The Warrants also contain a cashless exercise provision. In the event of a change of control or similar transaction (i) the Company has the right to redeem the Warrants for cash at a price based upon a formula set forth in the Warrants and (ii) under certain circumstances, the Warrant holders have a right to require the Company to purchase the Warrants for cash during the 90 day period following the change of control at a price based upon a formula set forth in the Warrants.

In connection with the issuance of the Warrants, the Company entered into a Warrantholder Rights Agreement dated March 26, 2008 (the ‘‘Warrantholder Rights Agreement’’) containing customary representations and warranties. The Warrantholder Rights Agreement also provides the Warrant holders with a preemptive right to purchase any preferred stock the Company may issue prior to December 31, 2008 that is not convertible into common stock. The Company also entered into a Registration Rights Agreement dated March 26, 2008 (the ‘‘Registration Rights Agreement’’), pursuant to which it agreed to register for resale pursuant to the Securities Act of 1933, as Wachoviaamended, 130% the shares of common stock initially issuable pursuant to the Warrants. On April 21, 2008, a Form S-3 was filed with the Securities and Exchange Commission with respect to the resale of 2,584,494 shares of common stoc k issuable upon exercise of the Warrants. The Registration Rights Agreement also requires payments to be made by the Company under specified circumstances if (i) a registration statement was not filed on or before April 25, 2008, (ii) the registration statement is not declared effective on or prior to June 24, 2008, (iii) after its effective date, such registration statement ceases to remain continuously effective and available to the holders subject to certain grace periods, or (iv) the Company fails to satisfy the current public information requirement under Rule 144 under the Securities Act of 1933, as amended. If any of the foregoing provisions are breached, the Company would be obligated to pay a participant.penalty in cash equal to one and one-half percent (1.5%) of the product of (x) the market price (as such term is defined in the Warrants) of such holder’s registrable securities

and (y) the number of such holder’s registrable securities, on the date of the applicable breach and on every thirtieth day (pro rated for periods totaling less than thirty (30) days) thereafter until cured.

As a result of the $3.0 million fee paid at the time of the Second Amendment, the $3.0 million fair value of the Warrants, and other legal and professional costs associated with the Second and Third Amendments, the deferred debt costs, included in other assets in the condensed consolidated balance sheet, increased to $10.3 million at March 31, 2008, compared to $4.5 million at December 31, 2007. This amount is being amortized over the remaining term of the outstanding obligations under the Credit Agreement.

Note 45 — Comprehensive Income (Loss)Loss

Total comprehensive income (loss)loss and its components are as follows:

			Three Months Ended September 30,												Nine Months Ended September 30,
(in thousands)			2007						2006						2007						2006
Net income (loss)				$	129					$	1,259					$	(12,437	)				$	(2,758	)
Minimum pension liability					—						—						—						—
Foreign currency translation					281						476						854						2,216
Comprehensive income (loss)				$	410					$	1,735					$	(11,583	)				$	(542	)

			Three Months Ended March 31,
(in thousands)			2008						2007
Net loss				$	(6,176	)				$	(6,332	)
Minimum pension liability					—						—
Foreign currency translation adjustment					1,454						(185	)
Comprehensive loss				$	(4,722	)				$	(6,517	)

Effective December 31, 2006, the Company adopted FASB Statement No. 158, ‘‘Employer’s Accounting for Defined Benefit Pension and Other Postretirement Plans’’ (‘‘FASB 158’’). As a result, the Company included $(0.9) million in accumulated other comprehensive loss (‘‘AOCL’’). This adjustment was shown in the Consolidated Statement of Changes in Shareholders’ Equity as a component of comprehensive loss for 2006 instead of as an adjustment of the ending balance of AOCL. The amount of comprehensive loss for 2006 will be corrected in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

Note 56 — Stock Compensation Plans

Stock Options:

An analysis of the stock plan option activity in the Company’s Stock Plan, Directors Plan and Equity Incentive Plan for the ninethree months ended September 30, 2007March 31, 2008 is as follows:

			Number of Options
Stock Plan
Outstanding at December 31, 2006					460,026
Exercised					(10,000	)
Cancelled					(45,249	)
Outstanding at September 30, 2007					404,777
Directors Plan
Outstanding at December 31, 2006					36,800
Cancelled					(6,000	)
Outstanding at September 30, 2007					30,800
Equity Incentive Plan
Outstanding at December 31, 2006					179,958
Granted					25,000
Cancelled					(22,501	)
Outstanding at September 30, 2007					182,457

									Option Price Range
			Number of Options						Low						Weighted Average						High
Stock Plan
Outstanding at December 31, 2007					339,777					$	2.56					$	3.99					$	5.25
Cancelled					—						—				—						—
Outstanding at March 31, 2008					339,777					$	2.56					$	3.99					$	5.25
Directors Plan
Outstanding at December 31, 2007					30,800					$	2.70					$	4.61					$	5.50
Cancelled					—						—						—						—
Outstanding at March 31, 2008					30,800					$	2.70					$	4.61					$	5.50
Equity Incentive Plan
Outstanding at December 31, 2007					177,500					$	2.90					$	6.34					$	11.75
Granted					216,000						2.80						2.80						2.80
Cancelled					(6,865	)					5.27						5.27						5.27
Outstanding at March 31, 2008					386,635					$	2.80					$	4.38					$	11.75

The Company adoptedOn February 15, 2008, the provisionsCompensation Committee of SFAS No.123(R), ‘‘Share-Based Payment’’ effective January 1, 2006. SFAS No. 123(R) established standards for accounting for transactions in whichthe Board of Directors authorized the grant of options to purchase 216,000 shares under the Equity Incentive Plan at an entity exchanges its equity instruments for goods or services that are basedexercise price of $2.80 per share, representing the closing price on the fair valuedate of the grant. None of these options were granted to officers or directors. Over the four year vesting period of the options, $333 thousand of compensation expense will be recorded, subject to adjustment for any cancellations of unvested options. The stock compensation expense amount was calculated using the Black Scholes model and the following assumptions: 52.90% expected volatility; 4.39% risk free interest rate; 6 year expected life and no dividends.

entity’s equity instruments, focusing primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS No. 123(R) requires entities to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognize the cost as a charge to operating results over the period during which an employee is required to provide service in exchange for the award, with the offset being additional paid-in capital. In adopting SFAS No. 123(R), the Company was required to recognize the unrecorded compensation expense related to unvested stock options issued prior to January 1, 2006. Results for the three and nine months ended September 30, 2006 included $0 thousand and $2 thousand, respectively, of compensation expense and additional paid-in capital relating to these options. In addition, during the three and nine months ended September 30, 2006 , the Company recorded $19 thousand and $53 thousand, respectively, of compensation expense related to stock options granted on March 2, 2006. During the three and nine months ended September 30, 2007, the Company recorded $2 thousand and $41 thousand, respectively, ofStock compensation expense associated with outstanding options outstanding underduring the quarter ended March 2, 2006 grant.

On June 4,31, 2008 and 2007 the Company granted options to purchase 25,000 shares of common stock under the Equity Incentive Plan. The options were granted at an exercise price of $2.90, which represents the closing price of the Company’s stock on the date of grant. The fair value of the grant was calculated at $1.59 per share, using an assumption of expected volatility of 51.21%, a risk free interest rate of 5.09% and an expected life of six years. The Company will record $40 thousand of compensation expense over the four year vesting period of the options. Results for the three and nine months ended September 30, 2007 included $2$23 thousand and $3$22 thousand, respectively, of compensation expense related to this stock option grant.respectively.

Restricted Stock:

At September 30, 2007 and December 31, 2006, there were 41,189 and 49,426 shares ofNon-vested restricted stock outstanding, respectively, under the Equity Incentive Plan, which had been granted on March 2, 2006. Duringactivity during the quarter ended March 31, 2007, 12,357 outstanding restricted shares vested. The remaining shares outstanding at September 30, 2007 are unvested. During the three and nine months ended September 30, 2007, $3 thousand and $32 thousand, respectively, of2008 was as follows:

									Grant Date Fair Value
			Number of Shares						Low						Weighted Average						High
Outstanding at December 31, 2007					69,330					$	2.35					$	4.26					$	5.27
Vested					(8,697	)					5.27						5.27						5.27
Cancelled					(2,745	)					5.27						5.27						5.27
Outstanding at March 31, 2008					57,888					$	2.35					$	4.06					$	5.27

Stock compensation expense was recorded. During the three and nine months ended September 30, 2006, $16 thousand and $39 thousand, respectively, of compensation expense was recorded. Theon restricted stock is treated as issuedduring the quarters ended March 31, 2008 and outstanding on the date of grant; however, it is excluded from the calculation of basic income (loss) per share until the shares are vested.

On March 26, 2007 the Company granted 17,689 shares of restricted stock to its Chief Executive Officer in conjunction with an agreement to reduce his calendar year 2007 base salary. Based upon the market price of the common stock on the date of grant, $4.24 per share, total compensation cost of $75 thousand will be recorded over the two-year vesting period of the shares. During the three and nine months ended September 30, 2007, the Company recorded $9 thousand and $19 thousand, respectively, of compensation expense related to these restricted shares.

On May 3, 2007, the Company granted 11,868 shares of restricted stock to four members of its Board of Directors who had each agreed to receive $10 thousand of their annual retainer in the form of restricted stock. Based upon the market price of the common stock on the date of grant, $3.37 per share, total compensation cost of $40 thousand will be recorded over the one-year vesting period of the shares. During the three and nine months ended September 30, 2007, the Company recorded $10was $31 thousand and $17 thousand, respectively, of compensation expense related to these shares.

On June 4, 2007, the Company granted 5,000 shares of restricted stock. Based upon the market price of the common stock on the date of grant, $2.90 per share, total compensation cost of $15 thousand will be recorded over the three-year vesting period of the shares. During the three and nine months ended September 30, 2007, the Company recorded compensation expense of $1 thousand and $2 thousand, respectively, related to these shares.

On August 9, 2007, the Company granted 5,934 shares of restricted stock to two members of its Board of Directors who had each agreed to receive $10 thousand of their annual retainer in the form

of restricted stock. Based upon the market price of the common stock on the date of grant, $2.35 per share, total compensation cost of $14 thousand will be recorded over the 9 month vesting period of the shares. During the three and nine months ended September 30, 2007, the Company recorded $3 thousand of compensation expense related to these shares.respectively.

Performance Restricted Stock:

On May 3,At March 31, 2008 and December 31, 2007, the Company granted 232,600 shares of performance restricted stock. These shares vest over a three year period but are only earned if pre-determined targets for both net income and cash flow from operations during 2007 are achieved. Based upon the market price of the common stock on the date of grant, $3.37 per share, total compensation cost of $0.8 million would have been recorded over the vesting period of the shares. Results for the three months ended September 30, 2007 include a $44 thousand reduction of compensation expense to reflect the reversal of expense previously recorded in the first and second quarters of 2007, as management has determined that it is likely that the net income and cash flow targets for 2007 will not be achieved.

On June 4, 2007, the Company granted 15,000 shares of performance restricted stock. These shares vest over a three year period but are only earned if the pre-determined targets for both net income and cash flow from operations during 2007, established for the May 3, 2007 performance stock grant, are achieved. Based upon the market price of the common stock on the date of grant, $2.90 per share, total compensation cost of $44 thousand would have been recorded over the vesting period of the shares. Results for the three months ended September 30, 2007 include a $1 thousand reduction of compensation expense to reflect the reversal of expense previously recorded in the second quarter of 2007, as management has determined that it is likely that the net income and cash flow targets for 2007 will not be achieved.

During the fourth quarter of 2006,there were no performance restricted shares issued on March 2, 2006 were forfeited as pre-established goals for net income and cash flow for 2006 were not achieved. Results for the three months ended September 30, 2006 included a $40 thousand reduction ofoutstanding. There was no compensation expense related to reflect the reversal of expense previously recorded in the first and second quarters of 2006, as management had determined that it would not achieve the net income target for 2006. The nine months ended September 30, 2006 included compensation expense of $47 thousand, relating to the outstanding performance restricted shares which had been issued onduring the quarters ended March 2, 2006.31, 2008 or 2007.

Note 67 — Restructuring and Other Special Charges

In the quarter ended March 31, 2008, the Company recorded $0.2 million of restructuring costs. These costs resulted from the closure of ten branch locations offset in part by credits received from the cancellation of vehicle leases associated with previously closed facilities. Headcount was reduced by 34 as a result of the closures. During the first nine monthsquarter of 2007, the Company reported $3.2$0.3 million of restructuring costs primarily associated with changes to the Company’s branch operating structure and headcount reductions in the United States and Mexico.structure. In September 2006, the Company had announced that it would bewas commencing a process to realign its branch structure which would include the relocation, consolidation or closure of some branches and the establishment of expanded relationships with key distribution partners in some areas, as well as the opening of new branches, as appropriate. Actions during 2007 and the first nine monthsquarter of 20072008 have resulted in the reduction of branch and agency locationsloca tions from 94 at December 31, 2006 to 83 prior to the October 2, 2007 reduction described below36 at March 31, 2008 and the establishment of supply agreements with distribution partners in certain areas. TheseIt is anticipated that these actions are designed to streamlinewill improve the Company’s go-to-market approach and improve i ts market position and business performance by achieving better local branch utilization where multiple locations are involved, and by establishing in some cases, relationships with distribution partners to better address geographic market areas that do not justify stand-alone branch locations. The headcount reductions, during the first nine months of 2007, in the United States resultedAnnual savings from the elimination of 67 salaried positions in order to lower operating overhead, while reductions at the Company’s Mexican manufacturing facilities resulted from the elimination of 111 positions, as a result of production cutbacks reflecting the conversion from copper/brass to aluminum construction and the Company’s efforts to lower inventory levels.

On July 25, 2007, in response to soft 2007 second quarter sales and expectations of lower-than-expected results for the full year, due to current market conditions, the Company announced that it was finalizing and acting upon additional strategic actions to right size its

operational and administrative structure going forward. These actions will further reduce the North American workforce and streamline distribution and manufacturing facilities in North America. In addition, these restructuring charges include a number of immediate actions to change the Company’s ‘‘go-to-market’’ strategy through its branch operations, which would further reduce branch operating costs while also enhancing the Company’s capability to more efficiently service its local customers. These actions are expected to increaseexceed the restructuring costs for 2007 by $3 million to $4 million, resulting in total restructuring costs between $5 million and $7 million, which includes the previously announced range of $2 million to $3 million. The Company expects to complete most of the indicated actions by the end of 2007. Restructuring costs incurred during the three months ended September 30, 2007 of $1.9 million were part of these ne w strategic actions.

On October 2, 2007, the Company announced that it would be closing 36 branch locations and establishing supply agreements with distribution partners to service these customers. This results in a reduction of branch and agency locations to 47. These actions will include the sale of selected assets at the branch locations during the fourth quarter of 2007 and are expected to result in the Company incurring between $0.5 million and $0.7 million of net cash restructuring costs, consisting of $0.1 million to $0.2 million of employee related restructuring costs and between $0.4 million and $0.5 million of branch closure restructuring and related costs during the fourth quarter of 2007.incurred.

The remaining restructuring reserve at September 30, 2007March 31, 2008 was classified in other accrued liabilities. A summary of the restructuring charges and payments during the first nine monthsquarter of 20072008 is as follows:

(in thousands)			Workforce Related						Facility Consolidation						Total						Workforce Related						Facility Consolidation						Total
Balance at December 31, 2006				$	674					$	1,389					$	2,063
Balance at December 31, 2007																						$	979					$	702					$	1,681
Charge to operations					2,840						352						3,192						164						8						172
Reversal of accrual no longer required					—						(428	)					(428	)
Cash payments					(2,366	)					(920	)					(3,286	)					(550	)					(364	)					(914	)
Balance at September 30, 2007				$	1,148					$	393					$	1,541
Balance at March 31, 2008																						$	593					$	346					$	939

The remaining accrual for facility consolidation consists primarily of lease obligations and facility exit costs, which are expected to be paid primarily by the end of 2007.2011. Workforce related expenses will be paid by the end of the third quarter2009.

Note 78 — Retirement and Post-Retirement Plans

The components of net periodic benefit costs for domestic and international retirement and post-retirement plans for the three months ended March 31, 2008 and 2007 are as follows:

			Three Months Ended September 30,
			2007						2006						2007						2006
(in thousands)			Retirement Plans												Post-retirement Plans
Service cost				$	251					$	307					$	—					$	1
Interest cost					431						596						(2	)					10
Expected return on plan assets					(435	)					(625	)					—						—
Amortization of net loss					113						189						—						1
Net periodic benefit cost				$	360					$	467					$	(2	)				$	12