| [X] | QUARTERLY      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 |
|----------------------|-----------------------------------------------------------------------------------------------------|

|                                                                | Delaware                                  |   | 54-1272589 |   |
|---------------------------------------------------------------------|-------------------------------------------|--------|------------|--------|
| (State      or other jurisdiction of incorporation or organization) | (I.R.S.      Employer Identification No.) |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                 |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                June 28, |    |   | December      31, |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |              2008                 |    |   |     2007 |   |
| ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                 |    |   |   |   |
| Current      assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                 |    |   |   |   |
| Cash                                                                                                                                                          |   | $                                                                    | 33,894  |   |   | $ | 31,648 |   |
| Accounts receivable, less      allowances of $1,915 and $1,482                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                 | 25,917  |   |   |   | 25,393 |   |
| Inventories:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                                 |    |   |   |   |   |   |
| Finished      goods                                                                                                                                                |   |                                                                 | 39,929  |   |   |   | 46,250 |   |
| Work-in-process                                                                                                                                                    |   |                                                                 | 4,534   |   |   |   | 4,432 |   |
| Raw      materials                                                                                                                                                 |   |                                                                 | 6,653   |   |   |   | 7,404 |   |
| Total      inventories                                                                                                                                                  |   |                                                                 | 51,116  |   |   |   | 58,086 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                 |    |   |   |   |   |   |
| Prepaid      expenses and other current      assets                                                                                            |   |                                                                 | 1,380   |   |   |   | 1,767 |   |
| Deferred      income      taxes                                                                                                                |   |                                                                 | 3,426   |   |   |   | 3,381 |   |
| Total current      assets                                                                                                                                |   |                                                                 | 115,733 |   |   |   | 120,275 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                 |    |   |   |   |   |   |
| Property,      plant and equipment,      net                                                                                                   |   |                                                                 | 41,637  |   |   |   | 43,898 |   |
| Goodwill                                                                                                                                       |   |                                                                 | 9,072   |   |   |   | 9,072 |   |
| Other      assets                                                                                                                              |   |                                                                 | 1,520   |   |   |   | 486 |   |
| Total      assets                                                                                                                                        |   | $                                                                    | 167,962 |   |   | $ | 173,731 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                 |    |   |   |   |   |   |
| LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                                 |    |   |   |   |   |   |
| Current      liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                 |    |   |   |   |   |   |
| Current maturities of long-term      debt                                                                                                                     |   | $                                                                    | 1,429   |   |   | $ | 1,428 |   |
| Accounts      payable                                                                                                                                         |   |                                                                 | 12,431  |   |   |   | 16,106 |   |
| Accrued salaries, wages and      benefits                                                                                                                     |   |                                                                 | 9,687   |   |   |   | 7,108 |   |
| Other accrued      expenses                                                                                                                                   |   |                                                                 | 2,419   |   |   |   | 3,781 |   |
| Total current      liabilities                                                                                                                                     |   |                                                                 | 25,966  |   |   |   | 28,423 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                 |    |   |   |   |   |   |
| Long-term      debt, exclusive of current      maturities                                                                                      |   |                                                                 | 27,857  |   |   |   | 29,286 |   |
| Deferred      income      taxes                                                                                                                |   |                                                                 | 3,646   |   |   |   | 4,824 |   |
| Other      long-term      liabilities                                                                                                          |   |                                                                 | 8,283   |   |   |   | 8,347 |   |
| Total      liabilities                                                                                                                                             |   |                                                                 | 65,752  |   |   |   | 70,880 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                 |    |   |   |   |   |   |
| STOCKHOLDERS’      EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                 |    |   |   |   |   |   |
| Common      stock, $.02 par value, 25,000,000 shares authorized and 10,332,179 shares      issued and outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                 | 207     |   |   |   | 207 |   |
| Capital      in excess of par      value                                                                                                       |   |                                                                 | 959     |   |   |   | 591 |   |
| Retained      earnings                                                                                                                         |   |                                                                 | 101,913 |   |   |   | 102,999 |   |
| Accumulated      other comprehensive      loss                                                                                                 |   |                                                                 | (869    | ) |   |   | (946 | ) |
| Total stockholders’      equity                                                                                                                         |   |                                                                 | 102,210 |   |   |   | 102,851 |   |
| Total liabilities and      stockholders’      equity                                                                                                         |   | $                                                                    | 167,962 |   |   | $ | 173,731 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                 |    |   |   |   |   |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | Three      Months                                                                   |   |   | Six      Months                                                         |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                   Ended |   |   |                 Ended |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |              June 28,                            |   |   |                June 30,    |   |   |            June 28, |   |   |              June 30, |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |            2008                                            |   |   |               2007              |   |   |         2008 |   |   |             2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                |   |   |                                                                    |   |   |   |   |   |   |   |
| Net      sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                                                                                   | 59,148 |   |                                                                    | $      | 67,722 |   |   | $ | 121,682 |   |   | $ | 142,830 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                |   |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Cost      of sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                | 49,187 |   |                                                                    |   | 54,082 |   |   |   | 100,901 |   |   |   | 115,696 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                |   |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                | 9,961  |   |                                                                    |   | 13,640 |   |   |   | 20,781 |   |   |   | 27,134 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                |   |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                | 8,982  |   |                                                                    |   | 10,093 |   |   |   | 17,752 |   |   |   | 20,508 |   |
| Pension      plan termination      charge                                                                            |   |                                                                                |   |   |                                                                    |   | 6,605 |   |   |   |   |   |   |   | 6,605 |   |
| Operating income      (loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                | 979    |   |                                                                    |   | (3,058 | ) |   |   | 3,029 |   |   |   | 21 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                |   |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Other      income, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                                | 165    |   |                                                                    |   | 176 |   |   |   | 237 |   |   |   | 108 |   |
| Interest      income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                | 153    |   |                                                                    |   | 159 |   |   |   | 357 |   |   |   | 186 |   |
| Interest      expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                                                                | 930    |   |                                                                    |   | 827 |   |   |   | 1,849 |   |   |   | 1,344 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                |   |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) before income      taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                                | 367    |   |                                                                    |   | (3,550 | ) |   |   | 1,774 |   |   |   | (1,029 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                |   |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Income      tax expense (benefit)                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                | 435    |   |                                                                    |   | (1,174 | ) |   |   | 794 |   |   |   | (329 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                |   |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Net income(loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $                                                                                   | (68    | )      |                                                                    | $      | (2,376 | ) |   | $ | 980 |   |   | $ | (700 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                |   |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      per share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                |   |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                |   |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $                                                                                   | (.01   | )      |                                                                    | $      | (.23 | ) |   | $ | .09 |   |   | $ | (.07 | ) |
| Diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $                                                                                   | (.01   | )      |                                                                    | $      | (.23 | ) |   | $ | .09 |   |   | $ | (.07 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                |   |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding:                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                |   |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                |   |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                                                                | 10,332 |   |                                                                    |   | 10,483 |   |   |   | 10,332 |   |   |   | 10,626 |   |
| Diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                | 10,332 |   |                                                                    |   | 10,483 |   |   |   | 10,334 |   |   |   | 10,626 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                |   |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Cash      dividend declared and paid per common share                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $                                                                                   | .10    |   |                                                                    | $      | .10 |   |   | $ | .20 |   |   | $ | .20 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                |   |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |       Six Months      Ended |     |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|----------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |      June      28,               |     |   |     June      30, |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 2008                                                 |     |   | 2007 |   |
| Cash      flows from operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                 |     |   |   |   |
| Cash      received from      customers                                                                                                       |   | $                                                    | 121,163  |   |   | $ | 143,963 |   |
| Cash      paid to suppliers and      employees                                                                                               |   |                                                 | (110,287 | ) |   |   | (136,616 | ) |
| Interest      paid,      net                                                                                                                 |   |                                                 | (2,291   | ) |   |   | (1,618 | ) |
| Income      taxes paid,      net                                                                                                             |   |                                                 | (3,810   | ) |   |   | (3,162 | ) |
| Net cash provided by operating      activities                                                                                                                   |   |                                                 | 4,775    |   |   |   | 2,567 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                 |     |   |   |   |   |   |
| Cash      flows from investing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                 |     |   |   |   |   |   |
| Capital      expenditures                                                                                                                    |   |                                                 | (584     | ) |   |   | (1,947 | ) |
| Purchase      of other      assets                                                                                                           |   |                                                 |     |   |   |   | (8 | ) |
| Net cash used by investing      activities                                                                                                                       |   |                                                 | (584     | ) |   |   | (1,955 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                 |     |   |   |   |   |   |
| Cash      flows from financing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                 |     |   |   |   |   |   |
| Issuance      of senior      notes                                                                                                           |   |                                                 |     |   |   |   | 25,000 |   |
| Repayment      of senior      notes                                                                                                          |   |                                                 | (1,429   | ) |   |   | (1,428 | ) |
| Purchase      and retirement of common      stock                                                                                            |   |                                                 |     |   |   |   | (11,308 | ) |
| Proceeds      from insurance policy      loans                                                                                               |   |                                                 | 1,550    |   |   |   | 1,386 |   |
| Dividends      paid                                                                                                                          |   |                                                 | (2,066   | ) |   |   | (2,131 | ) |
| Proceeds      from exercised stock      options                                                                                              |   |                                                 |     |   |   |   | 112 |   |
| Tax      benefit from exercise of stock      options                                                                                         |   |                                                 |     |   |   |   | 30 |   |
| Net cash provided (used) by      financing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                 | (1,945   | ) |   |   | 11,661 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                 |     |   |   |   |   |   |
| Net      increase in      cash                                                                                                               |   |                                                 | 2,246    |   |   |   | 12,273 |   |
| Cash      at beginning of      period                                                                                                        |   |                                                 | 31,648   |   |   |   | 6,269 |   |
| Cash at end of      period                                                                                                                                       |   | $                                                    | 33,894   |   |   | $ | 18,542 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                 |     |   |   |   |   |   |

| Net      income      (loss)                                                                                          |   | $      | 980    |   |   | $      | (700   | )      |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Depreciation and      amortization                                                                                                       |   |   | 2,869  |   |   |   | 3,025  |   |
| Pension      termination                                                                                                                 |   |   |   |   |   |   | 5,002  |   |
| Deferred income      taxes                                                                                                               |   |   | (1,223 | )      |   |   | (2,303 | )      |
| Tax benefit from exercise of      stock      options                                                                                     |   |   |   |   |   |   | (30    | )      |
| Stock-based      compensation                                                                                                            |   |   | 368    |   |   |   | 378    |   |
| Other,      net                                                                                                                          |   |   |   |   |   |   | 194    |   |
| Changes in assets and      liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |
| Accounts      receivable                                                                                                                                |   |   | (524   | )      |   |   | 1,236  |   |
| Inventories                                                                                                                                             |   |   | 6,970  |   |   |   | (3,509 | )      |
| Prepaid expenses and other      current      assets                                                                                                     |   |   | (1,437 | )      |   |   | (429   | )      |
| Accounts      payable                                                                                                                                   |   |   | (3,675 | )      |   |   | 572    |   |
| Accrued salaries, wages and      benefits                                                                                                               |   |   | 2,705  |   |   |   | (1,033 | )      |
| Other accrued      expenses                                                                                                                             |   |   | (1,394 | )      |   |   | 508    |   |
| Other      assets                                                                                                                                       |   |   | (784   | )      |   |   | (707   | )      |
| Other long-term      liabilities                                                                                                                        |   |   | (80    | )      |   |   | 363    |   |
| Net cash provided by operating      activities                                                                                                                                   |   | $      | 4,775  |   |   | $      | 2,567  |   |

----

| 1. | Preparation of Interim      Unaudited Consolidated Financial  Statements |
|----|--------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                    June 28,                                                  |                         December 31,                                                                                                    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                               2008              |                            2007               |
| Land      and      buildings                                                                                                  | $      41,874                                                                                                                                                                                                                            | $      41,874                                                                                                                                                                                                                |
| Machinery      and      equipment                                                                                             | 80,875                                                                                                                                                                                                                                   | 80,589                                                                                                                                                                                                                       |
| Office      furniture and      equipment                                                                                      | 1,377                                                                                                                                                                                                                                    |     1,377                                                                                                                                                                                                |
| Construction      in      process                                                                                             |        358                                                                                                                                                                                            |           61                                                                                                                                                               |
| Property, plant and equipment,      at      cost                                                                                             | 124,484                                                                                                                                                                                                                                  | 123,901                                                                                                                                                                                                                      |
| Less      accumulated      depreciation                                                                                       |    82,847                                                                                                                                                                                                                 |    80,003                                                                                                                                                                                                     |
| Property, plant and equipment,      net                                                                                                      | $ 41,637                                                                                                                                                                                                                                 | $43,898                                                                                                                                                                                                                      |

| 3. | Debt |
|----|------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                           June 28,                                                                           |                        December  31,                                                                                          |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                           2008              |                            2007               |
| 6.94%      senior notes due through May 3,      2011                                                                                      | $   4,286                                                                                                                                                                                         | $   5,714                                                                                                                                                                                                     |
| 6.73%      senior notes due through May 3,      2017                                                                                      |    25,000                                                                                                                                                                                         |    25,000                                                                                                                                                                                                     |
|     Total                                                                                                                            | 29,286                                                                                                                                                                                                           | 30,714                                                                                                                                                                                                                       |
| Less      current      maturities                                                                                                         |      1,429                                                                                                                                                                              |      1,428                                                                                                                                                                                          |
| Long-term debt, exclusive of      current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | $ 27,857                                                                                                                                                                                                         | $29,286                                                                                                                                                                                                                      |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Three      Months                                                                  |                                                                                     | Six      Months                                                                                                                                                                                                                                                                                                                                       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |    Ended                                                            |                                                                                     |                                  Ended                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |         June 28,                                                         |         June 30,                                                               |                                                                                                                                                                                                                                                                                                                                                  |             June 28, |             June 30, |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                   2008 |                    2007 |                                                                                                                                                                                                                                                                                                                                                  |                     2008 |                     2007 |
| Service      cost                                                                                                          | $  22                                                                    | $21                                                                                      |                                                                                                                                                                                                                                                                                                                                                  | $   44 | $   42 |
| Interest      cost                                                                                                         | 72                                                                                 | 39                                                                                       |                                                                                                                                                                                                                                                                                                                                                  | 143 | 79 |
| Amortization      of transition      obligation                                                                            | 33                                                                                 | 33                                                                                       |                                                                                                                                                                                                                                                                                                                                                  | 65 | 65 |
| Amortization      of prior service      cost                                                                               | (2)                                                                                | (2)                                                                                      |                                                                                                                                                                                                                                                                                                                                                  | (4)) | (4)) |
| Amortization      of accumulated      loss                                                                                 |       8                                              |    5                                                                      |                                                                                                                                                                                                                                                                                                                                                  |     16 |     11 |
| Net periodic postretirement      benefit cost                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | $133                                                                               | $96                                                                                      |                                                                                                                                                                                                                                                                                                                                                  | $264 | $193 |

| 5. | Stockholders’      Equity |
|----|---------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | Three      Months                                                                                                                                                                    |   |   | Six      Months                                                                                                   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                    Ended |   |   |                        Ended |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | June      28,                                                                                                                                                                        |   |   | June      30,                                                                                                     |   |   | June      28, |   |   | June      30, |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |               2008                                                                                                                           |   |   |                2007                                                  |   |   |               2008 |   |   |                2007 |   |
| Weighted      average shares outstandingfor basic      calculation                                                                                    |   |                                                                                                                                                                                 | 10,332 |   |                                                                                                              |   | 10,483 |   |   |   | 10,332 |   |   |   | 10,626 |   |
| Add:      Effect of dilutive stock options (1)                                                                                         |   |                                                                                                                                                                                 |   |   |                                                                                                              |   |   |   |   |   |  2 |   |   |   |   |   |
| Weighted      average shares outstandingAdjusted for diluted      calculation                                                                         |   |                                                                                                                                                                                 | 10,332 |   |                                                                                                              |   | 10,483 |   |   |   | 10,334 |   |   |   | 10,626 |   |

| (1)   | The      dilutive effect of stock options is not recognized in periods in which a      net loss has occurred. |
|-----------------|---------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                         |   |   |                                                             |   |   |     |   |   | Accumulated         |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|--------|--------|------------------------------------------------------------------|--------|--------|----------|--------|--------|---------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                         |   |   |               Capital in |   |   |     |   |   | Other               |   |
|                                                                                                                                                                                                                                                                                                                                                                                             |   |               Common |   |   |               Excess of  |   |   | Retained |   |   |  Comprehensive |   |
|                                                                                                                                                                                                                                                                                                                                                                                             |   |              Stock        |   |   |    Par Value                                           |   |   | Earnings |   |   |   Loss         |   |
| Balance,      December 31,      2007                                                           |   | $                                                            | 207    |   |                                                             | $      | 591    |     |   | $      | 102,999             |   |   | $ | (946 | ) |
| Net      income                                                                                               |   |                                                         |   |   |                                                             |   |   |     |   |   | 980                 |   |   |   |   |   |
| Stock-based      compensation                                                                                 |   |                                                         |   |   |                                                             |   | 368    |     |   |   |                |   |   |   |   |   |
| Cash dividends paid, $.20 per      share                                                                                                                                                                                                                                                                                                                                                         |   |                                                         |   |   |                                                             |   |   |     |   |   | (2,066              | )      |   |   |   |   |
| Adjustment to net periodic benefit      cost                                                                                                                                                                                                                                                                                                                                                     |   |                                                         |   |   |                                                             |   |   |     |   |   |                |   |   |   |  77 |   |
| Balance,      June 28,      2008                                                               |   | $                                                            | 207    |   |                                                             | $      | 959    |     |   | $      | 101,913             |   |   | $ | (869 | ) |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Three      Months                                                                                           |   |   | Six      Months                                                                                                         |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                       Ended |   |   |                         Ended |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |         June 28,                                                                                  |   |   |         June 30,                                                                                              |   |   |           June 28, |   |   |           June 30, |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                2008                                            |   |   |                   2007                                      |   |   |                  2008 |   |   |                    2007 |   |
| Net      sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                                                                                        | 100.0  | %      |                                                                                                                    |   | 100.0 | % |   |   | 100.0 | % |   |   | 100.0 | % |
| Cost      of      sales                                                                                                                     |   |                                                                                                        | 83.2   |   |                                                                                                                    |   | 79.9 |   |   |   | 82.9 |   |   |   | 81.0 |   |
| Gross      profit                                                                                                                                     |   |                                                                                                        | 16.8   |   |                                                                                                                    |   | 20.1 |   |   |   | 17.1 |   |   |   | 19.0 |   |
| Selling,      general and administrative      expenses                                                                                      |   |                                                                                                        | 15.2   |   |                                                                                                                    |   | 14.9 |   |   |   | 14.6 |   |   |   | 14.4 |   |
| Pension      plan termination      charge                                                                                                   |   |                                                                                                        |   |   |                                                                                                                    |   | 9.7 |   |   |   |   |   |   |   | 4.6 |   |
| Operating income      (loss)                                                                                                                          |   |                                                                                                        | 1.6    |   |                                                                                                                    |   | (4.5 | ) |   |   | 2.5 |   |   |   |   |   |
| Other      income,      net                                                                                                                 |   |                                                                                                        | .3     |   |                                                                                                                    |   | .3 |   |   |   | .2 |   |   |   | .1 |   |
| Interest      income                                                                                                                        |   |                                                                                                        | .3     |   |                                                                                                                    |   | .2 |   |   |   | .3 |   |   |   | .1 |   |
| Interest      expense                                                                                                                       |   |                                                                                                        | 1.6    |   |                                                                                                                    |   | 1.2 |   |   |   | 1.5 |   |   |   | .9 |   |
| Income (loss) before income      taxes                                                                                                                |   |                                                                                                        | 0.6    |   |                                                                                                                    |   | (5.2 | ) |   |   | 1.5 |   |   |   | (.7 | ) |
| Income      taxes                                                                                                                           |   |                                                                                                        | (0.7   | )      |                                                                                                                    |   | (1.7 | ) |   |   | (0.7 | ) |   |   | (.2 | ) |
| Net income      (loss)                                                                                                                                |   |                                                                                                        | (0.1   | )      |                                                                                                                    |   | (3.5 | ) |   |   | .8 |   |   |   | (.5 | ) |

| ITEM      3. |   Quantitative and      Qualitative Disclosures about MarketRisk |
|--------------|----------------------------------------------------------------------------|

----

| ITEM      4. | Controls and      Procedures |
|--------------|------------------------------|

| (a) | Evaluation      of disclosure controls and procedures.  Under the supervision      and with the participation of our management, including our principal      executive officer and principal financial officer, we conducted an      evaluation of our disclosure controls and procedures, as such term is      defined under Rule 13a-15(e) promulgated under the Securities Exchange Act      of 1934, as amended (the Exchange Act).  Based on this      evaluation, our principal executive officer and our principal financial      officer concluded that our disclosure controls and procedures were      effective as of the end of the period covered by this quarterly      report. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Changes      in internal controls over financial reporting.  There were no      changes in our internal control over financial reporting that occurred      during the second quarter that have materially affected, or are reasonably      likely to materially affect, our internal control over financial      reporting. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (c.) | The      stockholders of the Company elected two directors for a three-year term      expiring at the annual meeting of stockholders to be held in      2011.  The election was approved by the following      vote: |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      stockholders of the Company approved the Stanley Furniture Company, Inc.      2008 Incentive Compensation Plan by the following    vote: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| Item      6. | Exhibits |
|--------------|----------|

| 3.1    | Restated      Certificate of Incorporation of the Registrant as amended (incorporated by      reference to Exhibit 3.1 to the Registrant’s Form 10-Q (Commission File      No. 0-14938) for the quarter ended July 2, 2005). |   |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |                                                                                                                                                                                                                               |   |
| 3.2    | By-laws      of the Registrant as amended (incorporated by reference to Exhibit 3 to      the Registrant’s Form 8-K (Commission File No. 0-14938) filed December 7,      2007).                                              |   |
|   |                                                                                                                                                                                                                               |   |
|   |                                                                                                                                                                                                                               |   |
| 31.1   | Certification      by Jeffrey R. Scheffer, our Chief Executive Officer, pursuant to 18 U.S.C.      Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act      of 2002.(1)                                     |   |
|   |                                                                                                                                                                                                                               |   |
| 31.2   | Certification      by Douglas I. Payne, our Chief Financial Officer, pursuant to 18 U.S.C.      Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act      of 2002. (1)                                       |   |
|   |                                                                                                                                                                                                                               |   |
| 32.1   | Certification      of Jeffrey R. Scheffer, our Chief Executive Officer, pursuant to 18 U. S.      C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley      Act of 2002. (1)                                  |   |
|   |                                                                                                                                                                                                                               |   |
| 32.2   | Certification      of Douglas I. Payne, our Chief Financial Officer, pursuant to 18 U. S. C.      Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act      of 2002. (1)                                     |   |

----

| Date:      July 15, 2008 |   | STANLEY      FURNITURE COMPANY, INC.                                       |
|--------------------------|--------|----------------------------------------------------------------------------|
|                     |   | By:      /s/ Douglas I.  Payne                                             |
|                     |   | Douglas      I. Payne                                                      |
|                     |   | Executive      V.P. – Finance & AdministrationAnd      Secretary |
|                     |   | (Principal      Financial and Accounting Officer)                          |

----