UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

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

For the quarterly period ended ~~September 27, 2008~~April 4, 2009

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

~~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 1-3834

CONTINENTAL MATERIALS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		36-2274391
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

200 South Wacker Drive, Suite 4000, Chicago, Illinois		60606
(Address of principal executive offices)		(Zip Code)

(312) 541-7200

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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 x No o

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

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

Large Accelerated Filer o		Accelerated Filer o

Non-Accelerated Filer x		Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 or the Exchange Act).

Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~Common Stock, $0.25 par value, shares outstanding at November 5, 2008 1,599,070~~
Common Stock, $0.25 par value, shares outstanding at May 8, 2009		1,598,278

PART I –- FINANCIAL INFORMATION

Item 1. Financial Statements

CONTINENTAL MATERIALS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

~~SEPTEMBER 27, 2008 and DECEMBER 29, 2007~~APRIL 4, 2009 AND JANUARY 3, 2009

(Unaudited)

(000’s omitted except share data)

	SEPTEMBER 27,			DECEMBER 29,			APRIL 4,			JANUARY 3,
	2008			2007			2009			2009
*ASSETS*
Current assets:
Cash and cash equivalents	$	1,920		$	3,326		$	1,272		$	1,097
Receivables, net	25,398			22,652			25,639			22,062
Receivable for insured losses	2,479			1,548			1,503			1,604
Inventories:
Finished goods	10,803			7,940			9,373			9,421
Work in process	1,369			1,372			1,418			1,477
Raw materials and supplies	12,965			9,915			12,096			12,528
Prepaid expenses	5,393			5,508			4,814			4,254
Total current assets	60,327			52,261			56,115			52,443

Property, plant and equipment, net	31,658			34,917			30,525			30,956

Goodwill	7,829			7,829			7,829			7,829
Amortizable intangible assets, net	972			1,198			799			872
Other assets	1,582			2,305			1,590			1,566

	$	102,368		$	98,510		$	96,858		$	93,666

*LIABILITIES*
Current liabilities:
Revolving bank loan payable	$	10,700		$	7,900
Current portion of long-term debt	1,657			2,400			$	1,357		$	1,164
Accounts payable and accrued expenses	20,840			17,912			18,864			17,132
Liability for unpaid claims covered by insurance	2,479			1,548			1,503			1,604
Income taxes	—			19			490			148
Total current liabilities	35,676			28,879			22,214			20,048

Revolving bank loan payable							8,700			6,400
Long-term debt	9,529			10,400			9,000			9,607
Deferred income taxes	3,848			3,848			3,340			3,414
Other long-term liabilities	1,695			1,796			1,466			1,569

*SHAREHOLDERS’ EQUITY*
Common shares, $0.25 par value; authorized 3,000,000 shares; issued 2,574,264 shares	643			643			643			643
Capital in excess of par value	1,830			1,830			1,830			1,830
Retained earnings	65,762			66,810			66,280			66,770
Treasury shares, 975,986 and 972,170, at cost	(16,615		)	(16,596		)
Treasury shares, 975,986, at cost							(16,615		)	(16,615		)
	51,620			52,687			52,138			52,628

	$	102,368		$	98,510		$	96,858		$	93,666

See accompanying notes

CONTINENTAL MATERIALS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

FOR THE THREE MONTHS ENDED ~~SEPTEMBER 27,~~APRIL 4, 2009 AND MARCH 29, 2008 ~~AND SEPTEMBER 29, 2007~~

(Unaudited)

(000’s omitted except per-share amounts)

	SEPTEMBER 27,			SEPTEMBER 29,
	2008			2007			APRIL 4, 2009			MARCH 29, 2008

Sales	$	41,454		$	42,288		$	32,731		$	34,512

Costs and expenses:
Cost of sales (exclusive of depreciation, depletion and amortization)	35,192			36,701			26,853			29,800
Depreciation, depletion and amortization	1,267			1,309			1,275			1,335
Selling and administrative	4,187			4,396			5,152			5,200

Gain on disposition of property and equipment	8			53			57			344
	40,638			42,353			33,223			35,991

Operating income (loss)	816			(65		)
Operating loss							(492		)	(1,479		)

Interest expense	(353		)	(341		)
Interest expense, net							(181		)	(330		)
Other income, net	15			27			18			28

Income (loss) before income taxes	478			(379		)
Loss before income taxes							(655		)	(1,781		)

Provision (benefit) for income taxes	128			(389		)
Benefit from income taxes							(165		)	(650		)

Net income	350			10
Net loss							(490		)	(1,131		)

Retained earnings, beginning of period	65,412			68,231			66,770			66,810

Retained earnings, end of period	$	65,762		$	68,241		$	66,280		$	65,679

Basic and diluted earnings per share	$	.22		$	.01
Basic and diluted loss per share							$	(.31	)	$	(.71	)

Average shares outstanding	1,599			1,603			1,598			1,599

See accompanying notes

CONTINENTAL MATERIALS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS AND RETAINED EARNINGS~~CASH FLOWS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER 27,~~APRIL 4, 2009 AND MARCH 29, 2008 ~~AND SEPTEMBER 29, 2007~~

(Unaudited)

(000’s ~~omitted except per-share amounts)~~omitted)

SEPTEMBER 27,

SEPTEMBER 29,

2008

2007

Sales

$
117,727

$
128,018

Costs and expenses:

Cost of sales (exclusive of depreciation, depletion and amortization)

100,246

107,748

Depreciation, depletion and amortization

3,920

3,946

Selling and administrative

14,489

14,965

Gain on disposition of property and equipment

392

86

118,263

126,573

Operating (loss) income

(536
)
1,445

Interest expense

(971
)
(922
)
Other income, net

14

306

(Loss) income before income taxes

(1,493
)
829

Benefit for income taxes

(445
)
(39
)

Net (loss) income

(1,048
)
868

Retained earnings, beginning of period

66,810

67,373

Retained earnings, end of period

$
65,762

$
68,241

Basic and diluted (loss) earnings per share

$
(.66
)
$
.54

Average shares outstanding

1,600

1,603

	APRIL 4, 2009			MARCH 29, 2008

Net cash (used in) operating activities	$	(889	)	$	(1,874	)

Investing activities:
Capital expenditures	(879		)	(176		)
Proceeds from sale of property and equipment	57			520
Net cash (used in) provided by investing activities	(822		)	344

Financing activities:
Borrowings under revolving credit facility	2,300			1,100
Repayment of long term debt	(414		)	(600		)
Net cash provided by financing activities	1,886			500

Net increase (decrease) in cash and cash equivalents	175			(1,030		)
Cash and cash equivalents:
Beginning of period	1,097			3,326

End of period	$	1,272		$	2,296

Supplemental disclosures of cash flow items:
Cash paid (received) during the three months for:
Interest, net	$	177		$	384
Income taxes refund	(414		)	—

Supplemental disclosures of noncash investing activities:
Capital expenditures purchased on account	$	60		$	—
Cash receivable as partial consideration on asset sale ($115) and buyer’s assumption of liabilities ($88)	—			203

See accompanying notes

~~CONTINENTAL MATERIALS CORPORATION~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~FOR THE NINE MONTHS ENDED SEPTEMBER 27, 2008 AND SEPTEMBER 29, 2007~~

~~(Unaudited)~~

~~(000’s omitted)~~

SEPTEMBER 27,
2008

SEPTEMBER 29,
2007

Net cash (used in) provided by operating activities

$
(2,444
)
$
418

Investing activities:

Capital expenditures

(815
)
(6,996
)
Proceeds from sale of assets

686

370

Net cash used in investing activities

(129
)
(6,626
)

Financing activities:

Borrowings under revolving credit facility, net

2,800

8,700

Repayment of long-term debt

(1,614
)
(2,099
)
Payment to acquire treasury stock

(19
)
(70
)
Other

—

91

Net cash provided by financing activities

1,167

6,622

Net (decrease) increase in cash and cash equivalents

(1,406
)
414

Cash and cash equivalents:

Beginning of period

3,326

2,770

End of period

$
1,920

$
3,184

Supplemental disclosures of cash flow items:

Cash paid (refunded) during the nine months for:

Interest

$
1,098

$
1,061

Income taxes

(21
)
545

Supplemental disclosures of noncash investing and financing activities

Capital expenditures purchased on account

$
—

$
45

Buyer’s assumption of liabilities

85

—

~~See accompanying notes~~

CONTINENTAL MATERIALS CORPORATION

SECURITIES AND EXCHANGE COMMISSION FORM 10-Q

NOTES TO THE QUARTERLY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

QUARTER ENDED ~~SEPTEMBER 27, 2008~~APRIL 4, 2009

(Unaudited)

1. The unaudited interim condensed consolidated financial statements included herein are prepared pursuant to the Securities and Exchange Commission rules and regulations for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures normally accompanying the annual consolidated financial statements have been omitted. The interim condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s latest annual report on Form 10-K. In the opinion of management, the condensed consolidated financial statements include all adjustments (none of which were other than normal recurring ~~adjustments~~adjustments) necessary for a fair statement of the results for the interim periods.

2. Income taxes are reported consistent with FASB Statement No. 109, “Accounting for Income Taxes.” Income taxes are accounted for under the asset and liability method that requires deferred income taxes to reflect the future tax consequences attributable to differences between the tax and financial reporting bases of assets and liabilities. Deferred tax assets and liabilities recognized are based on the tax rates in effect in the year in which differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, based on available positive and negative evidence, it is “more likely than not” (greater than a 50% likelihood) that some or all of the net deferred tax assets will not be realized.

Our income tax returns are subject to audit by the Internal Revenue Service (IRS) and state tax authorities. The amounts recorded for income taxes reflect our tax positions based on research and interpretations of complex laws and regulations. We accrue liabilities related to uncertain tax positions taken or expected to be taken in a tax return in accordance with FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109” (FIN 48).

Our effective income tax rate is based on expected income, statutory tax rates and tax positions taken in the various jurisdictions in which we operate. For this interim financial ~~reporting, we estimate~~period, the ~~annual~~ effective tax rate based onupon the projected taxable income for the full year ~~and record~~does not yield a ~~quarterly income~~ tax ~~provision~~benefit that would be meaningful to the Company’s interim financial statements based on the first quarter’s loss. As a result, in accordance with ~~the anticipated annual rate.~~FASB Interpretation No. 18: “Accounting for Income Taxes in Interim Periods,” this rate is 25.2%. As the year progresses, we refine the estimates of the year’s taxable income as new information becomes available, including year-to-date financial results. This continual estimation process often results in a change to our expected effective income tax rate for the year. When this occurs, we adjust the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected annual income tax rate. For the nine months ended September 27, 2008, we utilized the effective rate based upon projected operating results for the full year and recorded an income tax provision for the third quarter such that the nine month year-to-date rate reflected the estimated annual income tax rate. Significant judgment is required in determining our effective income tax rate and in evaluating our tax positions.

On December 31, 2006, the first day of the 2007 fiscal year, we adopted the provisions of Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109” (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with Statement of Financial Accounting Standards (SFAS) No. 109, “Accounting for Income Taxes,” by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Under FIN 48, the financial statement effects of a tax position should initially be recognized when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. A tax position that meets the more-likely-than-not recognition threshold should initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon effective settlement with a taxing authority.

There was no cumulative adjustment to retained earnings required as a result of the implementation of FIN 48. The gross amount of unrecognized tax benefits at December 29, 2007 was $328,000 of which $74,000 would affect the effective tax rate. The gross amount of unrecognized tax benefits at September 27, 2008 was $326,000 of which $52,000 would affect the effective tax rate.

We ~~classify interest and penalties recognized on the liability for unrecognized tax benefits as~~file income tax ~~expense. Accrued interest and penalties included~~returns in ~~our total liability for unrecognized tax benefits were approximately $101,000 as of September 27, 2008 and $69,000 as of December 29, 2007.~~

~~The~~the United States Federal and various state ~~statutes~~jurisdictions. The Internal Revenue Service has completed examinations for periods through 2004. Federal tax years 2005 through 2007 are either currently under examination or remain subject to examination. Various state income tax returns also remain subject to examination. None of ~~limitations expire during~~ the ~~third and fourth quarters of 2008 for our 2004~~unrecognized tax ~~year. There~~benefits at April 4, 2009 are ~~no amounts included in the balance at September 27, 2008 that are related to tax positions~~ expected to be resolved within 12 months of this reporting date.

We file income tax returns in the United States federal and various state jurisdictions. Generally, we are not subject to changes in income taxes by any taxing jurisdiction for the years prior to 2003.

3. Effective December 30, 2007, the Company adopted ~~SFAS~~FASB Statement No. 157, “Fair Value Measurements,” which ~~provides~~establishes a framework for measuring fair value under accounting principles generally accepted in the United States of ~~America.~~America (GAAP). The adoption of ~~this statement~~No. 157 had an immaterial impact on our consolidated financial statements. The Company also adopted the deferral provisions of ~~the Financial Accounting Standards Board~~FASB Staff Position ~~FAS~~No. 157-2, “Effective Date of FASB Statement No. 157,” which ~~delays~~delayed the effective date of ~~SFAS~~ No. 157 for all nonrecurring fair value measurements of non-financial assets and liabilities until the Company’s 2009 fiscal ~~years beginning after November 15, 2008.~~year. The Company’s adoption of this statement had no impact on its consolidated financial position, results of operations or cash flows.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ~~SFAS~~ No. 157 also expands disclosures about instruments measured at fair value and establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1 – Quoted prices for identical assets and liabilities in active markets;

Level 2 – 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; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The Company designates ~~the~~ cash equivalents as Level 1, as they are money market accounts backed by U. S. Treasury Bills. As of ~~September 27, 2008,~~April 4, 2009 and ~~December 29, 2007,~~January 3, 2009, the Company did not have any cash equivalents, therefore there were no assets measured at fair value.

4. Operating results for the first ~~nine~~three months of ~~2008~~2009 are not necessarily indicative of performance for the entire year. Historically, sales of the Evaporative Cooling segment are higher in the first and second quarters, sales of the Concrete, Aggregates and Construction Supplies segment are higher in the second and third quarters and sales of the Heating and Cooling segment are higher in the third and fourth quarters. ~~Sales~~The sales of the Door segment ~~have not shown strong seasonal fluctuations in recent years.~~are more evenly spread throughout the year.

5. There is no difference in the calculation of basic and diluted earnings per share (EPS) for the ~~three-month or nine-month periods~~three months ended ~~September 27, 2008~~April 4, 2009 and ~~September~~March 29, ~~2007.~~2008.

6. The Company operates primarily in ~~four~~two industry groups, HVAC and Construction Products. Within these two industry groups, the Company has identified two reportable segments ~~within its~~in each of the two ~~principal~~ industry ~~groups;~~groups: the Heating and Cooling segment and the Evaporative Cooling segment in the ~~Heating, Ventilation and Air Conditioning (HVAC)~~HVAC industry group and the Concrete, Aggregates and Construction Supplies segment and the Door segment in the Construction Products industry group.

The Heating and Cooling segment produces and sells gas-fired wall furnaces, console heaters and fan coils from the Company’s wholly-owned subsidiary, Williams Furnace Co. of Colton, California. The Evaporative Cooling segment produces and sells evaporative coolers from the Company’s wholly-owned subsidiary, Phoenix Manufacturing, Inc. of Phoenix, Arizona. Sales of these two segments are nationwide, but are concentrated in the southwestern United States. Concrete, Aggregates and Construction Supplies are offered from numerous locations along the Front Range of Colorado operated by the Company’s wholly-owned subsidiaries ~~Castle Concrete Company and~~collectively referred to as Transit Mix Concrete Co. ~~(TMC), of Colorado Springs, Transit Mix of Pueblo, Inc. of Pueblo~~ and Rocky Mountain Ready Mix Concrete, Inc. of Denver. Doors are fabricated and sold along with the related hardware from ~~locations in Pueblo and~~ Colorado Springs byand Pueblo through the Company’s wholly-owned subsidiary, McKinney Door and Hardware, Inc. ~~(MDHI)~~ of Pueblo, Colorado. Sales of these two segments are highly concentrated in the Front Range area in Colorado although door sales are also made throughout the United States.

The Company evaluates the performance of its segments and allocates resources to them based on a number of criteria including operating income, return on investment and other strategic objectives. Operating income is determined by deducting operating expenses from all revenues. In computing operating income, none of the following has been added or deducted: unallocated corporate expenses, interest, other income or loss or income taxes.

In addition to the above reporting segments, an “Unallocated Corporate” classification is used to report the unallocated expenses of the corporate office which provides treasury, insurance and tax services as well as strategic business planning and general management services and an “Other” classification is used to report a real estate operation. Expenses related to the corporate information technology group are allocated to all locations, including the corporate office.

7The Company evaluates the performance of its segments and allocates resources to them based on a number of criteria including operating income, return on investment and other strategic objectives. Operating income is determined by deducting operating expenses from all revenues. In computing operating income, none of the following has been added or deducted: unallocated corporate expenses, interest, other income or loss or income taxes.

The following table presents information about reported segments for the ~~three-month~~three months ended April 4, 2009 and ~~nine-month periods ended September 27,~~March 29, 2008 ~~and September 29, 2007~~ along with the items necessary to reconcile the segment information to the totals reported in the financial statements (amounts in thousands):

	Construction Products						HVAC Products																	Construction Products								HVAC Products
	Concrete, Aggregates & Construction Supplies		Doors		Combined Construction Products		Heating and Cooling			Evaporative Cooling			Combined HVAC Products			Unallocated Corporate			Other		Total			Concrete,
2008
Nine Months ended September 27, 2008
Quarter ended April 4, 2009																								Aggregates & Construction Supplies			Doors		Combined Construction Products			Heating and Cooling		Evaporative Cooling		Combined HVAC Products		Unallocated Corporate			Other		Total

Revenues from external customers	$	58,026	$	12,187	$	70,213	$	29,134		$	18,109		$	47,243		$	13		$	258	$	117,727		$	10,709		$	4,723	$	15,432		$	9,898	$	7,309	$	17,207	$	6		$	86	$	32,731
Depreciation, depletion and amortization	3,012		100		3,112		338			413			751			57			—		3,920			994			42		1,036			95		125		220		19			—		1,275
Operating income (loss)	462		1,434		1,896		(1,017		)	459			(558		)	(1,955		)	81		(536		)	(1,846		)	610		(1,236		)	437		1,035		1,472		(755		)	27		(492		)
Segment assets	53,000		7,308		60,308		26,630			12,162			38,792			3,205			63		102,368			45,802			6,904		52,706			20,253		21,691		41,944		2,180			28		96,858
Capital expenditures	550		112		662		51			97			148			6			—		816
Quarter ended September 27, 2008
Revenues from external customers	$	23,362	$	4,562	$	27,924	$	9,530		$	3,910		$	13,440		$	4		$	86	$	41,454
Depreciation, depletion and amortization	962		35		997		113			138			251			19			—		1,267
Operating income (loss)	1,190		648		1,838		(595		)	(71		)	(666		)	(383		)	27		816
Segment assets	53,000		7,308		60,308		26,630			12,162			38,792			3,205			63		102,368
Capital expenditures	359		12		371		—			29			29			1			—		401
Capital expenditures (a)																								688			0		688			0		57		57		29			—		774

Construction Products

HVAC Products

Concrete,
Aggregates &
Construction
Supplies

Doors

Combined
Construction
Products

Heating
and
Cooling

Evaporative
Cooling

Combined
HVAC
Products

Unallocated
Corporate

Other

Total

2007

Nine Months ended September 29, 2007

Revenues from external customers

$
71,110

$
13,733

$
84,843

$
24,297

$
18,607

$
42,904

$
13

$
258

$
128,018

Depreciation, depletion and amortization

3,047

79

3,126

315

450

765

55

—

3,946

Operating income (loss)

3,656

1,627

5,283

(1,503
)
(366
)
(1,869
)
(2,050
)
81

1,445

Segment assets (a)

53,002

7,398

60,400

22,810

13,101

35,911

2,140

59

98,510

Capital expenditures (b)

4,301

1,509

5,810

627

567

1,194

37

—

7,041

Quarter ended September 29, 2007

Revenues from external customers

$
25,585

$
4,284

$
29,869

$
8,121

$
4,208

$
12,329

$
4

$
86

$
42,288

Depreciation, depletion and amortization

1,018

18

1,036

104

150

254

19

—

1,309

Operating income (loss)

1,338

460

1,798

(824
)
(493
)
(1,317
)
(573
)
27

(65
)
Segment assets (a)

53,002

7,398

60,400

22,810

13,101

35,911

2,140

59

98,510

Capital expenditures (b)

495

1,300

1,795

395

89

484

6

—

2,285

	Construction Products								HVAC Products
	Concrete,
Quarter ended March 29, 2008	Aggregates & Construction Supplies			Doors		Combined Construction Products			Heating and Cooling		Evaporative Cooling		Combined HVAC Products		Unallocated Corporate			Other		Total

Revenues from external customers	$	13,789		$	3,760	$	17,549		$	11,523	$	5,349	$	16,872	$	5		$	86	$	34,512
Depreciation, depletion and amortization	1,037			33		1,070			108		138		246		19			—		1,335
Operating income (loss)	(1,884		)	418		(1,466		)	357		382		739		(779		)	27		(1,479		)
Segment assets (b)	46,410			6,276		52,686			23,521		14,241		37,762		3,195			23		93,666
Capital expenditures (a)	4			86		90			30		51		81		5			—		176

(a)Capital expenditures are presented on the accrual basis of accounting.

(b) Segment assets are as of ~~December 29, 2007.~~

~~(b)Capital expenditures for the Evaporative Cooling segment include $45 of additions purchased on account.~~January 3, 2009.

There are no differences in the basis of segmentation or in the basis of measurement of segment profit or loss from the last ~~Annual Report on Form 10-K.~~annual report.

7. Identifiable amortizable intangible assets as of ~~September 27, 2008~~April,4, 2009 include five non-compete agreements, a restrictive land covenant and customer relations. Collectively, these assets were carried at ~~$972,000,~~$799,000, net of ~~$1,638,000~~$1,561,000 accumulated amortization. The pre-tax amortization expense for intangible assets during the quarter ended ~~September 27, 2008~~April 4, 2009 was ~~$76,000~~$73,000 compared to ~~$78,000~~$76,000 for the quarter ended ~~September~~March 29, ~~2007 and $226,000 and $243,000 for~~2008.

Identifiable intangible assets consist of the ~~nine months ended September 27, 2008 and September 29, 2007, respectively.~~ following (amounts in thousands):

	April 4, 2009				January 3, 2009
	Gross				Gross
	carrying		Accumulated		carrying		Accumulated
	amount		amortization		amount		amortization
Amortized intangible assets:
Non-compete agreements	$	1,640	$	1,298	$	1,640	$	1,247
Restrictive land covenant	350		96		350		87
Customer relationships	370		167		370		154
	$	2,360	$	1,561	$	2,360	$	1,488

Based upon the intangible assets recorded on the balance sheet at ~~September 27, 2008,~~April 4, 2009 and January 3, 2009, amortization expense for the next five years is estimated to be as follows: ~~2008 – $300,000,~~ 2009 – ~~$294,000,~~$266,000; 2010 – ~~$262,000,~~$233,000; 2011 – ~~$101,000 and~~$101,000; 2012 – ~~$65,000.~~$65,000 and 2013 – $65,000

8. ~~On August 12, 2008,~~The outstanding revolving credit and term loan as of April 4, 2009 was made available by two banks under the ~~Company entered into~~terms of a ~~First Amendment to Amended and Restated~~secured Revolving Credit and Term Loan Agreement ~~(First Amendment)~~dated as of September 5, 2003, as amended (Amended Credit Agreement). ~~The First Amendment adjusted~~Under the ~~quarterly repayment amounts of~~Amended Credit Agreement, the Term Loan ($11,600,000 at the time of the signing) to $414,286 with final payment of all outstanding Term Loan indebtedness on March 31, 2011. The First Amendment also extended the $18,000,000 available under themaximum revolving credit facility ~~to December 31, 2008 at which time~~during the ~~amount is decreased to $15,000,000 through the termination date~~first quarter of June 30, 2009. The revolving credit line is used for seasonal or short-term cash needs and stand-by letter of credit. At September 27, 2008, the Company had outstanding stand-by letters of credit to insurance carriers totaling approximately $4,510,000 that collateralize the self-insured amountsfiscal 2009 was $15,000,000. Borrowings under the ~~Company’s risk management program. There was $10,700,000 of outstanding borrowings under the revolving credit line at~~

9.~~September 27, 2008. The amounts outstanding under the First Amendment are collateralized~~Amended Credit Agreement were secured by the Company’s accounts receivable, ~~inventories,~~inventory, machinery, equipment and ~~equipment (excluding licensed vehicles) and other assets (excluding real estate).~~ vehicles. At April 4, 2009 the Company was in compliance with the terms of the Amended Credit Agreement.

The ~~First Amendment established certain financial covenants similar in nature to those existing under the predecessor loan agreement. At~~Amended Credit Agreement provided that, at the Company’s option, the term loan and revolving credit facility ~~will~~would bear interest at prime or a performance-based LIBOR rate. Based on the terms of the ~~First Amendment~~Amended Credit Agreement and the Company’s performance for the twelve months ended ~~September 27, 2008,~~April 4, 2009, the performance based rate ~~will~~would be LIBOR plus ~~3% or Prime plus 1%~~3.00% for both the ~~Term Loan~~term loan and borrowings under the revolving credit facility.The Amended Credit Agreement also required the Company to maintain certain levels of EBITDA (earnings before interest, income taxes, depreciation and amortization) or debt service coverage, consolidated tangible net worth and to maintain certain ratios including consolidated debt to cash flow (as defined). Additional borrowings, acquisition of stock of other companies, purchase of treasury shares and payment of cash dividends were either limited or required prior approval by the lenders. Payment of accrued interest was due and paid quarterly by the Company. Principal payments under the term loan were due quarterly with a final payment of all remaining unpaid principal due March 31, 2011. The revolving credit line was used for seasonal or short-term cash needs and stand-by letters of credit. At April 4, 2009 the Company had outstanding stand-by letters of credit of $4,510,000 of which $4,490,000 was issued to an insurance company to collateralize the self-insured amounts under the Company’s risk management program. There was $8,700,000 of outstanding borrowings under the revolving credit line at April 4, 2009. The banks’ commitment to provide revolving credit loans was scheduled to expire on July 31, 2009. The Company was in compliance with the ~~new~~loan covenants as of ~~September 27, 2008~~the quarter ended April 4, 2009 as defined by the Amended Credit Agreement.

On April 16, 2009 the Company replaced and ~~expects~~repaid the Amended Credit Agreement with a new secured new credit agreement (New Credit Agreement) whereby the new bank lender provided a total credit facility of $30,000,000 consisting of a $20,000,000 revolving credit facility (reduced by letters of credit that may be issued by the lender on the Company’s behalf) and a $10,000,000 term loan facility. Borrowings under the New Credit Agreement are secured by the Company’s accounts receivable, inventories, machinery, equipment, vehicles and certain real estate. Borrowings under the revolving credit facility are limited to ~~remain in compliance~~80% of eligible accounts receivable and 50% of eligible inventories. Inventory borrowings are limited to a maximum of $10,000,000. Borrowings under the New Credit Agreement bear interest based on a performance based LIBOR or prime rate option. The base LIBOR rate will not be less than 2% and the base prime rate will not be less 4%. At inception of the New Credit Agreement the effective interest rate under the LIBOR option was 5% and 4.75% under the prime rate option. The Company also paid certain underwriting and arrangement fees at the time of closing.The New Credit Agreement requires the Company to maintain certain levels of tangible net worth, EBITDA (earnings before interest, income taxes, depreciation and amortization), debt service coverage and to maintain certain ratios of consolidated debt to cash flow (as defined). The covenants are calculated on a quarterly basis beginning at July 4, 2009, the end of the Company’s second fiscal quarter. Additional borrowings, acquisition of stock of other companies, purchase of treasury shares and payment of cash dividends are either limited or require prior approval by the lender. Payment of accrued interest is due monthly or at the end of the applicable LIBOR period on revolving credit borrowings and the term debt borrowings. Principal payments under the term loan are due quarterly with a final payment of all remaining unpaid principal due April 16, 2012. The Company is required to, but has not yet entered into an interest rate swap agreement to hedge the interest rate on a minimum amount of $5,000,000 of term debt.

As of April 16, 2009, the Company deposited $4,840,000 with the ~~new covenants~~Company’s casualty insurance company in ~~future quarters.~~lieu of a letter of credit to secure the Company’s self-insured casualty claims. Revolving credit borrowings were used to fund the cash collateral account with the Company’s insurer.

After giving effect to the New Credit Agreement, the total term loan payments due during the next twelve months are $1,357,000. This amount includes $357,000 paid on April 16, 2009 to pay off the balance of the term loan portion of the Amended Credit Agreement not repaid by the $10,000,000 term loan provided by the New Credit Agreement.

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

Company Overview

The Company operates in four reportable segments within its two principal industry groups; the Heating and Cooling segment and the Evaporative Cooling segment in the HVAC industry group and the Concrete, Aggregates and Construction Supplies segment and the Door segment in the Construction Products industry group.

The Heating and Cooling segment produces and sells gas-fired wall furnaces, console heaters and fan coils from the Company’s wholly-owned subsidiary, Williams Furnace Co. of Colton, California. The Evaporative Cooling segment produces and sells evaporative coolers from the Company’s wholly-owned subsidiary, Phoenix Manufacturing, Inc. of Phoenix, Arizona. Concrete, Aggregates and Construction Supplies are offered from numerous locations along the Front Range of Colorado operated by the Company’s wholly-owned subsidiaries Castle Concrete Company and Transit Mix Concrete Co., of Colorado Springs, Transit Mix of Pueblo, Inc. of Pueblo and Rocky Mountain Ready Mix Concrete, Inc. of Denver. Doors are fabricated and sold along with the related hardware from Colorado Springs and Pueblo through the Company’s wholly-owned subsidiary, McKinney Door and Hardware, Inc. of Pueblo, Colorado.

Financial Condition, Liquidity and Capital Resources

Sales of the Company’s HVAC products ~~other than fan coils,~~ are seasonal and weather ~~sensitive.~~sensitive except for fan coils. Revenues in the Company’s Concrete, Aggregates and Construction Supplies segment are influenced by the level of construction activity and weather conditions along the Front Range of Colorado. Sales for the Door segment are not ~~generally~~as seasonal nor are they much affected ~~significantly~~ by weather conditions. Historically, the Company has experienced operating losses during the first quarter except when construction activity is strong along the Front Range of Colorado and the weather is mild. Operating results typically improve in the second and third quarters reflecting more favorable weather conditions in Colorado and the seasonal sales of the Evaporative Cooling ~~segment.~~ segment however; the Company expects construction activity along the Front Range will remain weak for the balance of 2009.

Fourth quarter results can vary based on weather conditions in Colorado as well as in the principal markets for the Company’s heating equipment. The Company typically experiences operating cash flow deficits during the first half of the year reflecting operating results, the use of sales dating programs (extended payment terms) related to the Evaporative Cooling segment and payments of the prior year’s accrued incentive bonuses and Company profit-sharing contributions. As a result, the Company’s borrowings against its revolving credit facility tend to peak during the second quarter and then decline over the remainder of the year. ~~Neither the results of the 2007 year nor the first nine months of 2008 have followed the historical trend.~~This trend has continued thus far in 2009.

~~The~~As expected, the Company’s cash flow from operations ~~used $2,444,000 of cash~~ during the first ~~nine months of 2008 compared to providing $418,000 of cash during the first nine months of fiscal 2007. The increased use of cash in 2008~~quarter was negative due to the ~~decline in operating income~~seasonality of sales, production schedules and ~~higher working capital levels. Receivables increased due~~the sales dating programs related to ~~slower paying customers who are extending payments during this slower economic time. Inventories increased due to higher costs~~the evaporative cooler product line. Operations for the first three months of ~~raw materials the longer lead time required for imported raw materials and some timing of purchases.~~

~~During the nine months ended September 27, 2008, investing activities~~2009 used ~~$129,000~~$889,000 of cash compared to ~~using $6,626,000~~$1,874,000 during the first three months of 2008. The reduced cash requirement was primarily the result of a decrease in inventory levels during the first quarter of 2009 compared to an increase in inventory levels during the first quarter of 2008 which resulted in just over $3,000,000 less cash used. Inventory, largely raw materials and finished goods had been increased during the latter part of 2008 in the ~~first nine months~~Evaporative Cooling segment in anticipation of added sales resulting from the departure of a large competitor from the United States market. Inventory in the Heating and Cooling segment was also higher at the end of the 2008 fiscal ~~2007.~~ year due to reduced furnace sales related to a very mild winter in many of the markets served. Offsetting approximately $2,275,000 of this improvement was an increase in receivables primarily related to the increase in sales of the Evaporative Cooling segment, many of which were under our sales dating programs.

As more fully discussed in Note 8 above, on April 16, 2009, the Company entered into a secured New Credit Agreement whereby the new bank lender will provide a total credit facility of $30,000,000 consisting of a $20,000,000 revolving credit facility for a three year period and a $10,000,000 term loan facility. The increase in the total credit facility is to provide additional liquidity during the Company’s peak seasonal credit need. The Company was in compliance with the loan covenants as of the quarter ended April 4, 2009 under the Amended Credit Agreement which the New Credit Agreement replaced.

The New Credit Agreement extends the revolving credit facility until April 16, 2012 and accordingly, the outstanding revolving credit balances at April 4, 2009 and January 3, 2009 were classified as long-term obligations.

Capital expenditures ~~were~~are expected to be held to a minimum during 2009; however, approximately $540,000 was expended on the completion of the slurry wall at the new mining site at Pueblo East during first ~~nine months~~quarter of ~~2008~~2009. The decrease in proceeds from the sale of property and equipment was due to the ~~decline in sales~~inclusion of $520,000 of cash received on the sale of a small aggregates operation during the first quarter of 2008.

Scheduled debt repayments were made during the first quarter of both 2009 and ~~were primarily for routine replacements~~2008. As expected, the Company borrowed against its revolving credit facility during the first quarter of ~~equipment~~2009. The highest amount of Company borrowings outstanding under the revolving credit agreement during the first quarter of 2009 was $9,450,000 and the ~~completion~~average amount outstanding during the first quarter was $7,757,000.

The Company has prepared a projection of ~~improvements to the building purchased~~cash sources and uses for the ~~Door segment~~next 12 months. Under this projection, the Company believes that its existing cash balance, anticipated cash flow from operations and borrowings available under the New Credit Agreement will be sufficient to cover expected cash needs, including servicing debt and planned capital expenditures for the next twelve months. The Company expects to be in compliance with all debt covenants during ~~2007.~~ this period.

Results of Operations - Comparison of Quarter Ended April 4, 2009 to Quarter Ended March 29, 2008

Consolidated sales during the first quarter of 2009 were $32,731,000 resulting in a $492,000 operating loss. In the first quarter of 2008 sales were $34,512,000 with an operating loss of $1,479,000. Historically, the Company has experienced operating losses during the first quarter except when the construction activity is strong and the weather is mild along the Front Range in Colorado.

The Concrete, Aggregates and Construction ~~Materials~~Supplies segment ~~sold~~and the ~~assets~~Heating and Cooling segment reported decreased sales partially offset by increases in the Door and Evaporative Cooling segments. The declines in sales of the two segments were due to reduced construction levels and a relatively mild winter in the furnace market areas. As reported in the Company’s 2008 Annual Report on Form 10-K, the Company continues to evaluate potential alternative operating and strategic plans related to RMRM. The Door segment sales were strong despite the slow construction largely due to this segments products being installed near the completion of a construction job. The Door segment’s backlog declined throughout the first quarter. Sales of evaporative coolers were strong primarily due to new customers that were gained when a major competitor exited the United States market at the end of 2008. Overall cost of sales as a percentage of sales improved from 86.5 to 82.0% as materials costs declined over the first quarter, primarily steel, copper and fuel, and product mix changed to products with better margins. Selling and administrative costs decreased $48,000 but increased as a percentage of sales. The first quarter of 2008 also included the sale of a small aggregate operation (Table Mountain), during the ~~first~~2008 quarter ~~of 2008 for approximately $720,000 (including the buyer’s assumption of just over $85,000 of liabilities associated with the property)~~ resulting in a pre-tax gain of ~~about $344,000.~~

approximately $338,000 for the Concrete, Aggregates and Construction Materials segment. Table Mountain did not provide aggregates to the Company’s ready-mix operations and management did not consider it to be a strategic part of its business. The proceeds from the sale of assets for 2007 included $230,000 received from the June sale of stock received from the demutualization of an insurance company that provides life insurance benefits to our employees.

Financing activities provided $1,167,000 during the first nine months of 2008 compared to $6,622,000 provided during the first nine months of 2007. Although the Company repaid $300,000 of the borrowings under the revolving credit facility during the third quarter of 2008, for the nine months ended September 27, 2008 the Company borrowed $2,800,000 compared to the $8,700,000 borrowed against the revolving credit facility during the first nine months of 2007. All scheduled debt repayments were made during the first nine months of both 2008 and 2007. During the first nine months of 2008, the highest amount of Company borrowings outstanding under the revolving credit agreement was $13,100,000 and the average amount outstanding was $9,873,000.

The Company believes that anticipated cash flow from operations during the fourth quarter will be sufficient to accommodate the reduction in the revolving credit facility at December 31, 2008. In addition, the Company believes that anticipated cash flow from operations, supplemented by seasonal borrowings against the revolving line of credit, (of which $10,700,000 was outstanding at September 27, 2008) will be sufficient to cover expected cash needs, including servicing debt and planned capital expenditures for at least the next twelve months. Our existing revolving line of credit expires June 30, 2009, however we expect to be able to renew or extend the line either with our current lenders or with other financing sources beyond June 30, 2009.

~~Operations – Comparison of Quarter Ended September 27, 2008 to Quarter Ended September 29, 2007~~

Historically, the Company has experienced improved operating results during the third quarter as sales in the Concrete, Aggregates and Construction Supplies segment increase due to weather more conducive to construction activity. The 2008 operating results were consistent with this trend.

Consolidated sales during the third quarter of 2008 were $41,454,000 compared to $42,288,000 in the third quarter of 2007. The Heating and Cooling and the Door segments both reported increased sales for the quarter while the Concrete, Aggregates and Construction Supplies segment and the Evaporative Cooling segment reported declines.

Cost of sales as a percentage of sales decreased from 86.8% to 84.9% largely due higher margins in the Heating and Cooling segment and the Evaporative Cooling segment although the margins of all of the segments improved. Selling and administrative costs decreased $209,000 while also declining as a percentage of sales from 10.4% to 10.1%. The decrease for the 2008 quarter as compared to the third quarter of 2007 was due to reductions made to compensation accruals. Incentive compensation accruals were reduced as operating results deteriorated in conjunction with the slowing economy. The reduction in the cost of sales as a percentage of sales was the result of a lower level of workers’ compensation claims and other cost reductions. Operating results thus improved from a loss of $65,000 in 2007 to income of $816,000 reported for the third quarter of 2008.

Interest expense ~~increased only slightly from $341,000 for~~declined to $181,000 in the ~~third~~first quarter of ~~2007 to $353,000 in the 2008 quarter despite higher average borrowings, due to lower interest rates.~~

~~A discussion of operations by segment follows.~~

~~Construction Products~~

The table below presents a summary of operating information for the two reportable segments within the Construction Products group for the quarters ended September 27, 2008 and September 29, 2007 (dollar amounts in thousands):

Concrete,
Aggregates and
Construction
Supplies

Doors

Quarter ended September 27, 2008

Revenues from external customers

$
23,362

$
4,562

Segment operating income

1,190

648

Operating income as a percent of sales

5.1
%
14.2
%
Segment assets as of September 27, 2008

$
53,000

$
7,308

Return on assets

2.2
%
8.9
%

Quarter ended September 29, 2007

Revenues from external customers

$
25,585

$
4,284

Segment operating income

1,338

460

Operating income as a percent of sales

5.2
%
10.7
%
Segment assets as of September 29, 2007

$
58,280

$
7,128

Return on assets

2.3
%
6.5
%

~~Concrete, Aggregates and Construction Supplies Segment~~

~~Sales in the Concrete, Aggregates and Construction Supplies segment for the third quarter of 2008 declined 8.7%~~2009 from the prior year’s comparable quarter. All three product lines of this segment reported lower sales volumes for the quarter ended September 27, 2008 compared to the third quarter of 2007 due to the reduced construction activity along the Front Range of Colorado, especially housing construction. Profit margins for the segment improved slightly primarily due to a reduction in workers’ compensation claims. Selling prices declined slightly due to competitive pressures created by the reduced construction activity.

Selling and administrative costs declined in line with the decrease in sales; however they increased slightly as a percentage of sales between the two quarters due to the fixed nature of some of the costs. Operating income for the third quarter of 2008 was $1,190,000 compared to $1,338,000 for the comparable 2007 quarter primarily due to the reduced sales. Despite the reduction in sales, both operating income as a percent of sales and the return on assets declined only slightly due to the improved margins in the third quarter of 2008 compared to the third quarter of 2007. Segment assets declined $5,280,000 from September 29, 2007 to September 27, 2008 as depreciation outpaced capital expenditures.

~~Door Segment~~

Door segment sales increased $278,000, or 6.5%, during the third quarter of 2008 from the comparable 2007 quarter. Sales during a specific quarter can be heavily influenced by customer requests to either accelerate or delay shipments of jobs to better coincide with their own construction schedules. Sales are also influenced by the level of construction activity but the effect is generally slower to appear as the products supplied by this segment, when sold for new construction, are some of the last items installed on a project. The increase in sales during the third quarter of 2008, therefore, is more reflective of the timing of shipments as 2008 year-to-date sales are below the level achieved during the first nine months of 2007. In addition, bidding activity has slowed and the backlog has declined approximately 27% from the level at the end of the third quarter of 2007 as result of the decline in new construction over the past two years. Margins improved principally due to the increased sales volume and slightly lower material costs.

Selling and administrative costs decreased approximately 3% during the 2008 quarter due to reduced compensation accruals. Operating income increased from $460,000 during the third quarter of 2007 to $648,000 for the 2008 quarter due to the higher sales volume and lower material costs. As a result, both operating income as a percent of sales and return on assets increased in the third quarter of 2008 from the prior year’s quarter.

~~HVAC Products~~

The table below presents a summary of operating information for the two reportable segments within the HVAC products group for the quarters ended September 27, 2008 and September 29, 2007 (dollar amounts in thousands):

Heating and
Cooling

Evaporative
Cooling

Quarter ended September 27, 2008

Revenues from external customers

$
9,530

$
3,910

Segment operating loss

(595
)
(71
)
Operating loss as a percent of sales

(6.2
)%
(1.8
)%
Segment assets as of September 27, 2008

$
26,630

$
12,162

Return on assets

(2.2
)%
(.6
)%

Quarter ended September 29, 2007

Revenues from external customers

$
8,121

$
4,208

Segment operating loss

(824
)
(493
)
Operating loss as a percent of sales

(10.0
)%
(11.7
)%
Segment assets as of September 29, 2007

$
23,379

$
11,222

Return on assets

(3.5
)%
(4.4
)%

~~Heating and Cooling Segment~~

Sales in the Heating and Cooling segment were $9,530,000 for the third quarter of 2008, an increase of $1,409,000, or 17.4%, from the comparable 2007 quarter. Fan coil volume accounted for almost all of the increase with sales rising nearly 37.7% from the prior year’s quarter. This increase was the result of the continuing beneficial effect of the restructured sales representative network which was completed in late 2005 and the introduction of configuration software which aids customers in the design and selection of fan coils. Furnace volume declined slightly although sales dollars were higher due to increased prices in response to the rise in commodity prices, notably steel. Cost of sales as a percentage of sales decreased during the third quarter of 2008 to 90.8% from 93.6% for the comparable quarter of 2007 as pricing increases began to catch up with the rise in commodity prices experienced over the course of this year.

Selling and administrative expenses were higher primarily due to increased legal costs and commission expenses related to the fan coil line partially offset by a reduction in incentive compensation accruals during the quarter. Despite the increase in selling and administrative expenses, the operating loss for the 2008 quarter was reduced from $824,000 during the third quarter of 2007 to $595,000. As a result of the reduced loss, both operating loss as a percent of sales and return on assets improved in the 2008 quarter from the prior year’s quarter.

~~Evaporative Cooling Segment~~

Sales in the Evaporative Cooling segment declined to $3,910,000, or 7.1%, during the third quarter of 2008 from the comparable 2007 quarter. Unit sales for the 2008 quarter were lower by approximately 3.9% compared to the 2007 quarter in what is usually a slow quarter. Cost of sales as a percentage of sales decreased during the third quarter of 2008 to 86.8% from 96.9% as an increase in average selling prices combined with a reduction of some factory overhead costs, including workers compensation claims.

Selling and administrative costs declined in the third quarter of 2008 as compared to the 2007 third quarter due to the lower sales and reductions to incentive compensation accruals during the 2008 quarter. The operating loss was reduced to $71,000 compared to the $493,000 loss for the third quarter of 2007 largely due to the improvement in cost of sales. As a result, both operating income as a percent of sales and return on assets improved in the 2008 quarter from the prior year’s quarter.

~~Operations - Comparison of Nine Months Ended September 27, 2008 to Nine Months Ended September 29, 2007~~

Consolidated sales during the first nine months of 2008 were $117,727,000 compared to $128,018,000 during the first nine months of 2007. The decline was largely due to the decrease in the Concrete, Aggregates and Construction Supplies segment although the Door and Evaporative Cooling segments also experienced lower sales. The Heating and Cooling segment reported increased sales for the nine months ended September 27, 2008 compared to the nine months ended September 29, 2007. Cost of sales as a percentage of sales increased slightly from 84.2% for the first nine months of 2007 to 85.2% during the first nine months of 2008. The increased cost of sales ratio was largely due to lower volume in the Concrete, Aggregates and Construction

Supplies segment and the recovery of $725,000 from an insurance claim during the second quarter of 2007 from our insurance carrier as settlement of flood claims that occurred during the third quarter of 2006. All expenses incurred to repair the damage and resume production had been recognized in cost of sales as incurred. No recovery was anticipated or recorded prior to receipt of the settlement during the second quarter of 2007. Selling and administrative costs decreased $476,000 during the nine months ended September 27, 2008 primarily related to reductions to compensation accruals at all segments. The above factors resulted in an operating loss of $536,000 for the first nine months of 2008 compared to operating income of $1,445,000 reported for the first nine months of 2007. Other income for the first nine months of 2008 includes a pre-tax gain of $344,000 related to the sale of the assets of a small aggregate operation (Table Mountain),$330,000 during the first quarter of ~~2008. Table Mountain did not provide aggregates~~2008 due to ~~the Company’s ready-mix operations~~lower interest rates and management did not consider it to be a strategic part of its business. Other income during 2007 included $230,000 received from the June sale of stock received from the demutualization of an insurance company that provides life insurance benefits to our employees.slightly lower average debt outstanding.

A discussion of operations by segment follows.

Construction Products

The table below presents a summary of operating information for the two reportable segments within the Construction Products industry group for the ~~nine months~~quarters ended ~~September 27,~~April 4, 2009 and March 29, 2008 ~~and September 29, 2007~~ (dollar amounts in thousands):

Concrete,
Aggregates and
Construction
Supplies

Doors

Nine Months ended September 27, 2008

Revenues from external customers

$
58,026

$
12,187

Segment operating income

462

1,434

Operating income as a percent of sales

.8
%
11.8
%
Segment assets as of September 27, 2008

$
53,000

$
7,308

Return on assets

.9
%
19.6
%

Nine Months ended September 29, 2007

Revenues from external customers

$
71,110

$
13,733

Segment operating income

3,656

1,627

Operating income as a percent of sales

5.1
%
11.8
%
Segment assets as of September 29, 2007

$
58,280

$
7,128

Return on assets

6.3
%
22.8
%

	Concrete, Aggregates and Construction Supplies			Doors
Quarter ended April 4, 2009
Revenues from external customers	$	10,709		$	4,760
Segment operating (loss) income	(1,846		)	610
Operating (loss) income as a percent of sales	(17.2		)%	12.8		%
Segment assets as of April 4, 2009	$	45,802		$	6,904
Return on assets	(4.0		)%	8.8		%

Quarter ended March 29, 2008
Revenues from external customers	$	13,789		$	3,760
Segment operating (loss) income	(1,884		)	418
Operating (loss) income as a percent of sales	(13.7		)%	11.1		%
Segment assets as of March 29, 2008	$	50,265		$	6,847
Return on assets	(3.7		)%	6.1		%

Concrete, Aggregates and Construction Supplies Segment

Sales in the Concrete, Aggregates and Construction Supplies segment for the first ~~nine months~~quarter of ~~2008~~2009 decreased ~~18.4%~~22.3% from the prior year’s comparable ~~2007 period. As with the third~~ quarter ~~all three product lines~~as a result of ~~this segment reported~~ lower ~~sales for the first nine months of 2008 compared to the comparable 2007 period for the reasons noted in the discussion~~concrete and aggregate volumes, a direct result of the ~~third quarter’s results above. Similar to~~continuing decline in construction activity along the ~~results~~Front Range of ~~the third quarter,~~Colorado, especially housing construction. Both concrete and aggregate margins ~~declined~~were negative largely due to the ~~decreased~~lower volume and the fixed nature of ~~some~~many of the costs in this ~~segment.~~

~~For~~segment, most notably batching and delivery costs. The only positive results were achieved by the Pueblo operation which benefitted from two large commercial concrete jobs, one of which will continue into the second quarter. Also exacerbating the lower sales volume was the shutdown of the Pikeview Quarry due to a landslide that occurred in December 2008. The Pikeview Quarry will remain shut down until the Company develops a new mining and reclamation plan. Such plan will be subject to the approval of the Colorado Division of Reclamation, Mining and Safety (DRMS). The Company and its consultants are working on a new mining and reclamation plan. The DRMS has given the Company until May 13, 2010 to submit the new plan. In the meantime, the Company has ramped up production in the Black Canyon Quarry which is expected to begin production early in the second quarter. The costs involved in purchasing rock from third parties for our own concrete needs during the first ~~nine months~~quarter of ~~2008, selling and administrative~~2009 as well as some start-up expenses ~~were reduced by approximately 7.3% but increased as a percent of sales. Operating income~~at the Black Canyon Quarry further suppressed margins. Construction supplies volume also declined in the 2009 first quarter compared to ~~$462,000 during~~ the 2008 ~~period from $3,656,000 during the comparable 2007 period. The decline was~~quarter due to the reduced ~~sales volume and~~construction activity in Colorado Springs although margins ~~for~~were maintained. A final factor affecting the ~~concrete and aggregates lines. In addition,~~comparative results of the ~~2007 nine months’ results were aided by~~two quarters was the ~~recovery~~inclusion of ~~$725,000~~a $338,000 profit from ~~our insurance carrier as settlement~~the sale of ~~flood claims that occurred~~a small aggregate operation (Table Mountain), during the ~~third~~2008 quarter.

The operating loss in the 2009 first quarter was approximately the same as the 2008 first quarter loss in spite of much lower volumes, the loss of aggregate production from the Pikeview Quarry and the aforementioned gain on the sale of a small aggregates operation during the first quarter of ~~2006~~2008. Selling and administrative costs were reduced during the first quarter of 2009; however they increased as ~~discussed above.~~a percentage of sales from 11.0% to 12.8% due to the lower sales volume. As a result, both the operating ~~results~~loss as a percent of sales and the negative return on assets ~~declined for~~increased in the ~~nine months ended September 27, 2008~~2009 first quarter compared to the ~~nine months ended September 28, 2007.~~prior year’s first quarter.

Door Segment

Sales during the first quarter of 2009 in the Door segment ~~for the first nine months of 2008 decreased $1,546,000~~increased $1,000,000 or 26.6% from the comparable ~~2007 period~~2008 quarter due primarily to ~~the lower construction activity~~a strong backlog and the timing of shipments. Sales during a specific quarter can be heavily influenced by customer requests to either accelerate or delay shipments of jobs to better coincide with their own construction schedules. The backlog shrank during the first quarter of 2009 compared to the 2008 year-end by approximately $1,600,000 as ~~described~~a result of the decline in ~~the above discussion for the current quarter.~~construction on a nationwide basis.

Operating income ~~also declined~~increased from ~~$1,627,000 during the first nine months of 2007 to $1,434,000~~$418,000 for the ~~first nine months~~2008 quarter to $610,000 for the 2009 quarter as a result of ~~2008~~the increased sales. However, the Door segment is beginning to experience a tightening of gross profit margins as more competitive pricing is being encountered in the slower economy. Selling and administrative costs declined modestly; however, these costs decreased as a percentage of sales from 15.6% to 11.7% due to ~~lower~~the increased sales volume. ~~Lower material costs were offset by expenses associated with the consolidation of the Colorado Springs operations into the new facility and increased compensation costs.~~ As a result, operating income as a percent of sales ~~remained virtually identical for~~increased in the ~~nine months ended September 27, 2008~~2009 first quarter compared to the ~~nine months ended September 29, 2007 while the~~prior year’s quarter. The return on assets ~~declined.~~for the 2009 first quarter increased at a higher rate due to the comparable asset base for both quarters.

HVAC Products

The table below presents a summary of operating information for the two reportable segments within the HVAC products industry group for the ~~nine months~~quarters ended ~~September 27,~~April 4, 2009 and March 29, 2008 ~~and September 29, 2007~~ (dollar amounts in thousands):

Heating and
Cooling

Evaporative
Cooling

Nine Months ended September 27, 2008

Revenues from external customers

$
29,134

$
18,109

Segment operating (loss) income

(1,017
)
459

Operating (loss) income as a percent of sales

(3.5
)%
2.5
%
Segment assets as of September 27, 2008

$
26,630

$
12,162

Return on assets

(3.8
)%
3.8
%

Nine Months ended September 29, 2007

Revenues from external customers

$
24,297

$
18,607

Segment operating loss

(1,503
)
(366
)
Operating loss as a percent of sales

(6.2
)%
(2.0
)%
Segment assets as of September 29, 2007

$
23,379

$
11,222

Return on assets

(6.4
)%
(3.3
)%

	Heating and Cooling			Evaporative Cooling
Quarter ended April 4, 2009
Revenues from external customers	$	9,898		$	7,309
Segment operating income	437			1,035
Operating income as a percent of sales	4.4		%	14.2		%
Segment assets as of April 4, 2009	$	20,253		$	21,691
Return on assets	2.2		%	4.8		%

Quarter ended March 29, 2008
Revenues from external customers	$	11,523		$	5,349
Segment operating income	357			382
Operating income as a percent of sales	3.1		%	7.1		%
Segment assets as of March 29, 2008	$	23,222		$	16,966
Return on assets	1.5		%	2.3		%

Heating and Cooling Segment

Sales in the Heating and Cooling segment ~~increased $4,837,000,~~declined $1,625,000, or ~~19.9%~~14.1%, during the first nine months of 2008 over the comparable 2007 period. As with the quarter’s results above, fan coil volume was responsible for the increase as furnace volume for the nine months trailed the 2007 period by approximately 3.9% due to milder weather during the first quarter of ~~2008. Cost~~2009 from the comparable 2008 quarter. Furnace sales dollars and volume during the first quarter of 2009 declined from the 2008 results due to milder weather while fan coil sales declined due to a decline in commercial construction. Also during 2008, WFC provided fan coils for a large new hotel in Las Vegas. Overall, pricing for this segment showed mixed results due to competitive pressures partially offset by lower materials prices, primarily steel and copper.

Operating income improved from $357,000 during the first quarter of 2008 to $437,000 for the 2009 quarter despite the decline in sales as a result of lower material costs and a shift in business to smaller, higher margin jobs. As noted above, a significant portion of the fan coil volume during 2008 was due to the job in Las Vegas which carried lower margins. Largely the result of lower material prices, cost of sales as a percent of sales declined from 85.5% for the first quarter of 2008 to 78.2% for the comparable 2009 quarter. Selling and administrative expenses were reduced by $43,000 but increased as a percentage of sales ~~decreased slightly during the nine months of 2008 to 86.8% from 86.5% for the comparable period of 2007~~by 1.9% largely due to the ~~reasons noted in the quarter’s discussion above.~~

~~Selling and administrative costs increased due to the reasons noted in the quarter’s discussion above. The~~lower sales. Both operating ~~loss narrowed from $1,503,000 during the first nine months of 2007 to a loss of $1,017,000 for the 2008 period. As a result of the improved sales volume and related margins, both operating loss~~income as a percent of sales and ~~the~~ return on assets improved ~~for~~due to the increased margins that resulted from reduced materials costs during the first ~~nine months~~quarter of ~~2008 compared to~~2009 from the level of the prior year’s ~~period.~~quarter.

Evaporative Cooling Segment

Sales in the Evaporative Cooling segment ~~declined $498,000,~~increased $1,960,000, or ~~2.7%~~36.6%, during the first ~~nine months~~quarter of ~~2008~~2009 from the comparable ~~2007 period.~~2008 quarter. The ~~decrease~~increase in sales was due to lower third quarter sales and slow sales during March and April resulting from milder weather during 2008 compared to 2007. Hotter, less humid weather arrived in May and June but it was too late to reach last year’s sales level. Cost of sales as a percentage of sales decreased during the nine months ended September 27, 2008 to 84.1% from 88.1% for the 2007 periodalmost entirely due to the ~~reasons noted~~initial stocking orders from new customers, including a major national retailer, as the result of a major competitor exiting the United States market. Continuation of the increased demand is now largely dependent upon the existence of hot, dry weather in the ~~quarter’s discussion above as well as improved labor efficiencies. Increased steel prices partially offset these gains.~~Southwest during the second and third quarters.

Selling and administrative expenses declined during the first nine months of 2008 both in dollars and as a percentage of sales compared to the comparable 2007 period largely due to lower advertising and compensation costs. The segment reported operating income of ~~$459,000~~$1,035,000 for the 2009 first ~~nine months of 2008~~quarter compared to ~~a loss of $366,000~~$382,000 for the ~~comparable 2007 period.~~2008 first quarter. The improved operating results were the ~~result of~~due to the increased sales and improved ~~cost~~margins based in part on lower material prices, notably steel. Margins also benefitted from increased production levels and efficiencies. Selling and administrative expenses increased $191,000 during the 2009 first quarter largely due to volume incentives, commissions, co-op advertising and other expenses directly related to the increase in sales. However, these costs declined as a percentage of sales ~~and~~from 12.5% for the ~~lower selling and administrative costs.~~2008 first quarter to 11.8% for the 2009 quarter. As a result, both operating results as a percent of sales and return on assets increased in the 2009 first ~~nine months of 2008~~quarter from the prior year’s ~~period.~~quarter.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States which require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of ~~September 27, 2008~~April 4, 2009 and ~~December 29, 2007~~January 3, 2009 and affect the reported amounts of revenues and expenses for the periods reported. Actual results could differ from those estimates.

Information with respect to the Company’s critical accounting policies which the Company believes could have the most significant effect on the Company’s reported results and require subjective or complex judgments by management is contained in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the Company’s Annual Report on Form 10-K for the fiscal year ended ~~December 29, 2007.~~January 3, 2009.

OUTLOOK

~~The~~ Concrete ~~Aggregates~~ and ~~Construction Supplies segment continues~~aggregate volumes are expected to ~~be adversely affected by~~remain at comparatively low levels for the ~~on-going decline in~~near term until construction activity along the Front Range of Colorado. New residential construction which has dropped sharply is likely to remain weak throughout 2009. Historically, pricing competition has escalated in times of diminished demand which would further adversely affect this segment. Although fuel costs have recently declined, future prices remain unpredictable. TheColorado improves. While the sales volume ~~and pricing in~~of the Door segment ~~is also beginning~~was quite strong during the first quarter of 2009, the backlog has diminished and we may see some erosion in margins in order to ~~feel the effects of~~maintain sales volume in a declining market if the construction slow-down ~~with both the backlog and bidding activity declining in recent months.~~continues.

~~Financial challenges faced by a leading manufacturer~~Sales of ~~evaporative coolers may present some opportunities for increased sales in~~ the Evaporative Cooling segment are expected to grow significantly with the departure of a major competitor from the United States market, but as always, volume will remain weather sensitive. Sales of fan coil products in the Heating and Cooling segment are expected to remain somewhat depressed due to the decline in commercial construction activity nationwide; however, furnace sales could improve if the weather returns to a more normal pattern during the ~~forthcoming year. Weather will continue to be a significant factor. Increased steel prices have negatively impacted margins; however, recently there have been modest decreases in steel prices.~~next heating season.

RECENTLY ISSUED ACCOUNTING STANDARDS

In ~~September 2006,~~April 2008, the Financial Accounting Standards Board ~~(“FASB”)~~(FASB) issued SFAS No. 157, Fair Value Measurements. This statement defines fair value in generally accepted accounting principles and expands disclosures about fair value measurements that are required or permitted under other accounting pronouncements. This statement was effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The Company’s adoption of this statement had an immaterial impact on its consolidated financial position, results of operations and cash flows. The Company also adopted the deferral provisions of FASB Staff Position (FSP) FAS 157-2, which delayed the effective date of SFAS No. 157 for all nonrecurring fair value measurements of non-financial assets and liabilities until fiscal years beginning after November 15, 2008.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. This statement was effective as of the beginning of the first fiscal year beginning after November 15, 2007. Upon the Company’s adoption of SFAS No. 159 it did not elect the fair value option for any assets or liabilities. Therefore this statement had no impact on the Company’s consolidated financial position, results of operations and cash flows.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133,” which requires enhanced disclosures for derivative and hedging activities. SFAS No. 161 becomes effective in the first quarter of 2009 and is not expected to have any impact on the Company’s consolidated financial statements.

~~In April 2008, the FASB issued FSP FAS~~ 142-3, “Determination of the Useful Life of Intangible ~~Assets.” This FSP~~Assets” (FSP 142-3) which amends the list of factors ~~that~~an entity should ~~be considered~~consider in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under ~~SFAS~~Statement of Financial Accounting Standard (SFAS) No. 142, “Goodwill and Other Intangible~~Assets.” The intent~~ Assets” (SFAS No. 142). FSP 142-3 applies to intangible assets that are acquired individually or with a group of ~~this~~asset and intangible assets acquired in both business combinations and asset acquisitions. FSP ~~is to improve~~142-3 removes the ~~consistency between the useful life of a recognized intangible asset~~provision under SFAS No. 142 ~~and~~that requires an entity to consider whether the ~~period of expected cash flows used to measure the fair value~~renewal or extension can be accomplished without substantial cost or material modification of the ~~asset under~~existing terms and conditions associated with the asset. Instead, FSP 142-3 requires that an entity consider its own experience in renewing similar arrangements. An entity would consider market participant assumptions regarding renewal if no such relevant experience exits. Upon adoption of FSP 142-3 on January 4, 2009, the first day of fiscal 2009, this statement had no impact on the Company’s consolidated financial position, results of operation and cash flows.

In March 2008, the FASB issued SFAS No. ~~141 (Revised 2007), “Business Combinations”~~161, “Disclosures About Derivative Instruments and ~~other U.S. generally accepted accounting principles (GAAP)~~Hedging Activities — an amendment of FASB Statement No. 133”. ~~This FSP~~The new statement requires expanded disclosure about an entity’s derivative instruments and hedging activities. It is effective ~~for financial statements issued~~ for fiscal years beginning after ~~December~~November 15, 2008, including interim periods within those fiscal years, with early application encouraged. The disclosures are required only for those derivative instruments and related hedged items accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” and its related interpretations (including nonderivative instruments that are designated and qualify as hedging instruments). At April 4, 2009, the Company did not have any derivative or hedging activities that were addressed by this pronouncement.

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations—a replacement of FASB No. 141” (SFAS No. 141(R)). SFAS No. 141(R) requires (a) a company to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at fair value as of the acquisition date; and (b) an acquirer in pre-acquisition periods to expense all acquisition-related costs. SFAS No. 141(R) also requires that any adjustments to an acquired entity’s deferred tax asset, valuation allowance, cash contingency, or deferred tax liability balance that occur after the measurement period be recorded as a component of income tax expense. This accounting treatment is required for business combinations consummated before the effective date of SFAS No. 141(R) (non-prospective); otherwise SFAS No. 141(R) must be applied prospectively. The presentation and disclosure requirements must be applied retrospectively to provide comparability in the financial statements. Early adoption is prohibited. SFAS No. 141(R) is effective for fiscal years, and interim periods within those fiscal ~~years. Early adoption is prohibited.~~years, beginning on or after December 15, 2008. The Company ~~is in~~will be required to comply with the ~~process~~provisions of ~~determining~~this statement for any business combinations subsequent to December 15, 2008. The adoption of this statement had no impact on the ~~impact of adopting this new accounting position on its consolidated~~Company’s first quarter financial ~~position.~~statements since there were no current or recent acquisitions.

The Company discusses other recently issued accounting standards and tax law changes in the Critical Accounting Policies section under Item 7 and in Note 1 to Consolidated Financial Statements in Item 8 of the

Company’s Annual Report on Form 10-K for the fiscal year ~~2007.~~2008. Other than as discussed above, in Note 3 to this Report on Form 10-Q and in those sections of the 2008 Report on Form 10-K, the Company does not currently have any transactions or circumstances that have been addressed by recently issued accounting pronouncements. Therefore, adoption of any of these statements or pronouncements would not have a material impact on the Company’s results of operations, financial position or liquidity.

MATERIAL CHANGES TO CONTRACTUAL ~~OBLIGATIONS~~OBLITATIONS

~~On August 12, 2008, the Company entered into a First Amendment~~There were no material changes to Amended and Restated Revolving Credit and Term Loan Agreement as more fully described in Note 8 above. The First Amendment was filed as Exhibit 10.1 to the report dated August 12, 2008 filed on Form 10-Q forcontractual obligations that occurred during the quarter ended ~~June 28, 2008.~~April 4, 2009.

FORWARD-LOOKING STATEMENTS

The foregoing discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended. Such forward-looking statements are based on the beliefs of the Company’s management as well as on assumptions made by and information available to the Company at the time such statements were made. When used in this Report, words such as “anticipates,” “believes,” “contemplates,” “estimates,” “expects,” “plans,” “projects,” and similar expressions are intended to identify forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements as a result of factors including but not limited to: weather, interest rates, availability ~~and cost~~ of raw materials and their related costs, national and local economic conditions, competitive forces and ~~competitive forces.~~changes in governmental regulations and policies. Some of these factors are discussed in more detail in the Company’s ~~2007~~2008 Annual Report on Form 10-K. Changes in accounting pronouncements could also alter projected results. Forward-looking statements speak only as of the date they were made, and the Company undertakes no obligation to publicly update them.

Item 3. Quantitative And Qualitative Disclosures About Market Risk

There were no material changes in the market risks nor legal proceedings that the Company is exposed to since those discussed in the Company’s ~~2007~~2008 Annual Report on Form 10-K.

Item 4. Controls and Procedures

(a)Evaluation of Disclosure Controls and Procedures.

The Company’s Chief Executive Officer and Chief Financial Officer, with the participation of management, have evaluated the effectiveness of the Company’s ~~“disclosure~~disclosure controls and ~~procedures” (as~~procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as ~~amended)~~amended( Exchange Act) as of ~~September 27, 2008. Based~~April 4, 2009. As noted in Item 9A. in the Company’s 2008 Annual Report on Form 10-K, based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective in that the Company does not have adequate controls over inventory accounting in its Heating and Cooling Segment to ensure that the inventory and related cost of sales of this segment are appropriately ~~recorded.~~accounted for. The lack of adequate controls over inventory accounting is considered a material weakness in internal controls over financial reporting as defined under standards established by the Public Company Accounting Oversight Board (United States). See ~~below~~Item 9A. in the 2008 Form 10-K for additional details regarding this matter which was deemed to be a weakness in internal control over financial reporting.

Item 4T. Controls and Procedures

(b)Changes in Internal Control Over Financial Reporting.

The Company ~~implemented an Enterprise Resource Planning (ERP) system for~~continually reassesses our internal control over financial reporting and makes changes as deemed prudent. As noted above, the ~~Heating and Cooling Segment at the end of the third quarter of 2007. The~~ Company ~~performed a physical inventory for this segment at the end of October 2008 which resulted in~~

an adjustment to decrease the inventory balance and a corresponding charge to cost of sales as of the end of the third quarter of 2008. These adjustments to the Company’s financial statements have been reflected in the Company’s third quarter interim financial statements included in this report on Form 10-Q. The deficiencies in internal controls that lead to the material weakness primarily relate to inaccurate bills of materials associated with the production of the Heating and Cooling Segment’s products and insufficient cycle counting during the interim periods. These deficiencies are considered to beidentified a material weakness in internal control over financial reporting ~~that existed as of the end of~~related to accounting for inventory during the third quarter of Fiscal 2008. ~~The~~During the fourth quarter of Fiscal 2008, the Company ~~performed additional analysis to assure that the Heating and Cooling Segment’s inventory was properly stated as of the end of the third quarter. The Company will also begin~~began a process to remediate this material weakness in internal controls. As part of this process, the Company identified the causes which resulted in the inventory accounting errors and developed an action plan to address each of these causes. As of April 4, 2009, we have implemented certain of these actions and will implement the remaining items during Fiscal 2009. We believe our action plan, once fully implemented, will improve the internal control over financial reporting related to inventory accounting at our Heating and Cooling Segment. The Company intends to complete its assessment of the controls related to inventory accounting during fiscal 2009 and we believe that such measures will appropriately address the ~~fourth quarter of 2008~~material weakness related to ~~address this material weakness. If~~ the ~~process is not completed by year-end, management will perform additional analysis and other post-closing procedures to ensure that~~accounting for inventory accounting in the Heating and Cooling ~~Segment’s inventory is accounted for properly in the Company’s consolidated year-end financial statements.~~ segment.

During the quarter ended ~~September 27, 2008,~~April 4, 2009, there were no other material weaknesses identified in our review of internal control over financial reporting and no significant changes in the Company’s internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

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

The following table presents information with respect to purchases made by the Company of its common stock to become treasury stock for the period ~~June 29, 2008~~January 4, 2009 through ~~September 27, 2008.~~April 4, 2009. No shares were purchased during the current quarter.

Issuer Purchases of Equity Securities

Period

(a) Total
Number of
Shares
Purchased

(b) Average
Price Paid per
Share

(c) Total Number of
Shares Purchased as Part
of Publicly Announced
Plans or Programs

(d) Maximum Dollar
Value of Shares that May
Yet Be Purchased Under
the Plans or Programs

June 29 – July 26, 2008

—

$
—

—

$
1,330,544

July 27 – August 23, 2008

—

—

—

1,330,544

August 24 – September 27, 2008

—

—

—

1,330,544

Total

—

$
—

—

$
1,330,544

Issuer Purchases of Equity Securities

Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Dollar Value of shares that May Yet Be Purchased Under the Plans or Programs
January 4 – January 31, 2009	—	$	—	—	$	1,307,404
February 1 – February 28, 2009	—	—		—	1,307,404
March 1 – April 4, 2009	—	—		—	1,307,404
Total	—	$	—	—	$	1,307,404

On January 19, 1999, the Company initiated purchases under the current open-ended program to repurchase its common stock. Purchases are made on the open market or in block trades at the discretion of management. The dollar amount authorized for the program has been periodically increased by the Board of Directors and approved by the Company’s ~~two banks as required~~lenders under the Company’s prior credit facility. The $1,307,404 in the above table represents the remaining amount authorized by the Company’s Revolving Credit and Term Loan Agreement. The First Amendment dated as of August 12, 2008 (see Note 8 above) continued the provision of the Amended and Restated Revolving Credit And Term Loan Agreement dated as of March 28, 2008 thatBoard. On April 16, 2009, the Company ~~may make purchases of its own stock in an amount not to exceed $1,438,000 if~~entered into a new credit agreement with a bank which contains certain ~~financial conditions are met. Since~~restrictions on the ~~2005 tender offer, management has not actively sought~~Company’s ability to repurchase ~~shares.~~its stock. See further discussion in the Financial Condition, Liquidity and Capital Resources section of Item 2. above.

Item 6. Exhibits

Exhibits

Exhibit No.		Description

10.1		Credit Agreement dated April 16, 2009 among Continental Materials Corporation, as the Company, The Various Financial Institutions Party Hereto, as Lenders, and The PrivateBank and Trust Company, as Administrative Agent and Arranger filed as Exhibit 10f to Form 10-K for the year ended January 3, 2009, incorporated herein by reference)

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) and Rule 13a-14(d)/15d-14(d) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes –— Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) and Rule 13a-14(d)/15d-14(d) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes –— Oxley Act of 2002

32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes –— Oxley Act of 2002

1715

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

					CONTINENTAL MATERIALS CORPORATION


Date:	~~November 17, 2008~~	May 15, 2009	By:	/s/ Joseph J. Sum
					Joseph J. Sum, Vice President
					and Chief Financial Officer

1816

	SEPTEMBER 27, 2008			SEPTEMBER 29, 2007

Net cash (used in) provided by operating activities	$	(2,444	)	$	418

Investing activities:
Capital expenditures	(815		)	(6,996		)
Proceeds from sale of assets	686			370
Net cash used in investing activities	(129		)	(6,626		)

Financing activities:
Borrowings under revolving credit facility, net	2,800			8,700
Repayment of long-term debt	(1,614		)	(2,099		)
Payment to acquire treasury stock	(19		)	(70		)
Other	—			91
Net cash provided by financing activities	1,167			6,622

Net (decrease) increase in cash and cash equivalents	(1,406		)	414
Cash and cash equivalents:
Beginning of period	3,326			2,770

End of period	$	1,920		$	3,184

Supplemental disclosures of cash flow items:
Cash paid (refunded) during the nine months for:
Interest	$	1,098		$	1,061
Income taxes	(21		)	545
Supplemental disclosures of noncash investing and financing activities
Capital expenditures purchased on account	$	—		$	45
Buyer’s assumption of liabilities	85			—