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UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549


FORM 10-K




|  |                                                  
|- | -------------------------------------------------
|x | ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31, 2005


OR




|  |                                                      
|- | -----------------------------------------------------
|o | TRANSITION REPORT PURSUANT TO
    SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from

to


COMMISSION FILE NUMBER 1-313


THE LAMSON & SESSIONS CO.


(Exact name of Registrant as specified in its charter)


|                         |  |                                     
|------------------------ |  | ------------------------------------
|Ohio                     |  | 34-0349210                          
|                         |  |                                     
|(State of Incorporation) |  | (I.R.S. Employer Identification No.)

25701 Science Park Drive, Cleveland,
Ohio     44122





(Address of Principal Executive Offices, Zip Code)


216-464-3400





(Registrants telephone number, including area code)


SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE
ACT:


|                                 |  |                                                   
|-------------------------------- |  | --------------------------------------------------
|Title of each class              |  | Name of each exchange on which registered         
|                                 |  |                                                   
|Common Shares, without par value |  | New York Stock Exchange
    Pacific Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE
ACT: NONE


o x


o x


x o


S-K 10-K 10-K. o


12b-2 o x o


12b-2 o x






DOCUMENTS INCORPORATED BY REFERENCE


|                                                                                        |  |                              
|--------------------------------------------------------------------------------------- |  | -----------------------------
|Document                                                                                |  | Parts Into Which Incorporated
|Proxy Statement for the Annual Meeting of
    Shareholders to be held on April 28, 2006 |  | Part III                     









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##### 










THE LAMSON & SESSIONS CO.


INDEX TO


ANNUAL REPORT ON
FORM 10-K


For The Fiscal Year Ended December 31, 2005


|                                                          |  |                                                                                                   
|--------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------
|                                                         
|PART I                                                   
|Item 1.                                                   |  | Business                                                                                          
|Item 1A.                                                  |  | Risk Factors                                                                                      
|Item 1B.                                                  |  | Unresolved Staff Comments                                                                         
|Item 2.                                                   |  | Properties                                                                                        
|Item 3.                                                   |  | Legal Proceedings                                                                                 
|Item 4.                                                   |  | Submission of Matters to a vote of Security
    Holders                                           
|                                                         
|PART II                                                  
|Item 5.                                                   |  | Market for Registrants Common Equity
    and Related Stockholder Matters                         
|Item 6.                                                   |  | Selected Financial Data                                                                           
|Item 7.                                                   |  | Managements Discussion and Analysis
    of Results of Operations and Financial Condition         
|Item 7A.                                                  |  | Quantitative and Qualitative Disclosures
    About Market Risk                                    
|Item 8.                                                   |  | Financial Statements and Supplementary
    Data                                                   
|Item 9.                                                   |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure          
|Item 9A.                                                  |  | Controls and Procedures                                                                           
|Item 9B.                                                  |  | Other Information                                                                                 
|                                                         
|PART III                                                 
|Item 10.                                                  |  | Directors and Executive Officers of the
    Registrant                                            
|Item 11.                                                  |  | Executive Compensation                                                                            
|Item 12.                                                  |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters
|Item 13.                                                  |  | Certain Relationships and Related
    Transactions                                                
|Item 14.                                                  |  | Principal Accountant Fees and Services                                                            
|                                                         
|PART IV                                                  
|Item 15.                                                  |  | Exhibits and Financial Statement
    Schedules                                                    
|EX-21 SUBSIDIARIES OF REGISTRANT                         
|EX-23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
|EX-24 POWERS OF ATTORNEY                                 
|EX-31.1 CERTIFICATION OF CEO                             
|EX-31.2 CERTIFICATION OF CFO                             
|EX-32.1 CERTIFICATION OF CEO                             
|EX-32.2 CERTIFICATION OF CFO                             



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PART I







|        |         
|------- | --------
|Item 1. | BUSINESS



Principal Products and Markets








Carlon  Industrial, Residential, Commercial,
Telecommunications and Utility Construction:


Lamson Home Products  Consumer:


PVC Pipe:




|                       |  |      |         |      |  |      |     |   |  |   |         |  |  |  |     |   |  |   |         |  |  |  |     |  
|---------------------- |  | ---- | ------- | ---- |  | ---- | --- | - |  | - | ------- |  |  |  | --- | - |  | - | ------- |  |  |  | --- | -
|                       |  | 2005 |         | 2004 |  | 2003
|                       |  |      |         |      |  |     
|(Dollars in thousands) |  |      |         |      |  |      |     |   |  |  
|Carlon                 |  | $    | 223,500 |      |  |      | 45  | % |  | $ | 183,800 |  |  |  | 48  | % |  | $ | 154,090 |  |  |  | 45  | %
|Lamson Home Products   |  |      | 105,039 |      |  |      | 21  | % |  |   | 86,510  |  |  |  | 22  | % |  |   | 81,514  |  |  |  | 24  | %
|PVC Pipe               |  |      | 165,656 |      |  |      | 34  | % |  |   | 116,829 |  |  |  | 30  | % |  |   | 104,883 |  |  |  | 31  | %
|                       |  |      |         |      |  |      |     |   |  |   |         |  |  |  |     |   |  |   |         |  |  |  |     |  
|                       |  | $    | 494,195 |      |  |      | 100 | % |  | $ | 387,139 |  |  |  | 100 | % |  | $ | 340,487 |  |  |  | 100 | %
|                       |  |      |         |      |  |      |     |   |  |   |         |  |  |  |     |   |  |   |         |  |  |  |     |  



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Competition




Distribution




Raw Materials




Patents and Trademarks




Seasonal Factors




Major Customers




Backlog


order-to


Research and Development




4



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Environmental Regulations




Associates




Foreign Operations




10-K, 10-Q, 8-K, 1-800-SEC-0330, http://www.sec.gov http://www.lamson-sessions.com.





Item 1A. RISK FACTORS






Profitability of the PVC Pipe segment is dependent on the
spread between selling price and cost per pound.




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We are dependent on limited suppliers, and our ability to
produce products or otherwise meet customer needs could be
adversely impacted if these suppliers were unable to meet our
requirements in a timely manner.








Because we experience seasonal fluctuations in our sales, our
quarterly results will fluctuate, and our annual performance
will be affected by those fluctuations.




The demand for our products is dependent on the strength of
construction and telecommunications industries, which have been
cyclical industries.




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Loss of a significant facility or operating problems in our
business may materially adversely affect our financial condition
and results of operations.








We are dependent on key customers.






|  |                                                                                                                 
|- | ----------------------------------------------------------------------------------------------------------------
| | the loss of a key customer, in whole or in part;                                                                
| 
| | the insolvency or bankruptcy of any key customer;                                                               
| 
| | a declining market in which customers reduce order or demand
    reduced prices; or                             
| 
| | a strike or work stoppage at a key customer facility, which
    could affect both their suppliers and customers.



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We may encounter difficulties in expanding our business
through strategic alliances and targeted acquisitions.









|         |                          
|-------- | -------------------------
|Item 1B. | UNRESOLVED STAFF COMMENTS








|        |           
|------- | ----------
|Item 2. | PROPERTIES



|                             |  |             |         | 
|---------------------------- |  | ----------- | ------- | 
|                             |  | Approximate
|Manufacturing Facilities     |  | Square Feet
|                             |  |            
|Woodland, California(O)      |  |             | 71,000  | 
|High Springs, Florida(O)     |  |             | 110,000 | 
|Tennille, Georgia(O)         |  |             | 41,000  | 
|Clinton, Iowa(O)             |  |             | 159,000 | 
|Mountain Grove, Missouri(O)  |  |             | 36,000  | 
|Bowling Green, Ohio(O)       |  |             | 67,000  | 
|Oklahoma City, Oklahoma(O)   |  |             | 172,000 | 
|Nazareth, Pennsylvania(O)    |  |             | 61,000  | 
|Erie, Pennsylvania(L)        |  |             | 56,000  | 
|Cranesville, Pennsylvania(L) |  |             | 10,000  | 
|Distribution Centers         |  |             |         | 
|Columbia, South Carolina(L)  |  |             | 350,000 | 
|Woodland, California(L)      |  |             | 127,000 | 
|Fort Myers, Florida(O)       |  |             | 4,000   | 








|        |                  
|------- | -----------------
|Item 3. | LEGAL PROCEEDINGS








|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



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Executive Officers of the Registrant


JOHN B. SCHULZE






JAMES J. ABEL






NORMAN E. AMOS






ALBERT J. CATANI, II






EILEEN E. CLANCY






DONALD A. GUTIERREZ






CHARLES W. HENNON






LORI L. SPENCER






NORMAN P. SUTTERER









PART II







|        |                                                                          
|------- | -------------------------------------------------------------------------
|Item 5. | MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED
    STOCKHOLDER MATTERS



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|        |                        
|------- | -----------------------
|Item 6. | SELECTED FINANCIAL DATA

FIVE-YEAR CONSOLIDATED FINANCIAL SUMMARY


|                                             |                                                                                                                          |                                                                              |   |         |   |      |   |         |     |      |   |         |        |   |   |         |         |   |   |         |   | 
|-------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------- | - | ------- | - | ---- | - | ------- | --- | ---- | - | ------- | ------ | - | - | ------- | ------- | - | - | ------- | - | 
|                                             |                                                                                                                          | Fiscal Years Ended                                                          
|                                             |                                                                                                                          |                                                                             
|(Dollars in thousands except per share data, |                                                                                                                          | 2005                                                                         |   | 2004    |   | 2003 |   | 2002    |     | 2001
|associates and percentages)                  |                                                                                                                          |                                                                              |   |         |   |      |   |         |     |     
|                                            
|Operations:                                  |                                                                                                                          |                                                                              |   |         |   |      |   |         |     |      |   |         |        |   |   |         |         |   |   |        
|                                             | Net sales                                                                                                                |                                                                              | $ | 494,195 |   |      | $ | 387,139 |     |      | $ | 340,487 |        |   | $ | 312,429 |         |   | $ | 350,914 |  
|                                             | Operating
    Income(1)                                                                                                  |                                                                              |   | 50,607  |   |      |   | 17,669  |     |      |   | 14,658  |        |   |   | 18,509  |         |   |   | 6,183   |  
|                                             | Income (Loss) From Continuing Operations Before Income
    Taxes and Cumulative Effect of Change in Accounting Principle |                                                                              |   | 43,699  |   |      |   | 9,744   |     |      |   | 6,131   |        |   |   | 8,926   |         |   |   | (5,443  | )
|                                             | Income (Loss) From Continuing Operations Before
    Cumulative Effect of Change in Accounting Principle                  |                                                                              |   | 27,395  |   |      |   | 6,148   |     |      |   | 3,740   |        |   |   | 5,026   |         |   |   | (3,843  | )
|                                             |                                                                                                                          | Income (loss) from discontinued operations, net of income taxes              |   |         |  |      |   |         | 401 |      |   |         | (2,738 | ) |   |         |        |   |   |         |  | 
|                                             |                                                                                                                          | Cumulative effect of change in accounting principle, net of
    income taxes |   |         |  |      |   |         |    |      |   |         |       |   |   |         | (46,250 | ) |   |         |  | 
|                                             |                                                                                                                          |                                                                              |   |         |   |      |   |         |     |      |   |         |        |   |   |         |         |   |   |        
|                                             | Net Income (Loss)                                                                                                        |                                                                              | $ | 27,395  |   |      | $ | 6,549   |     |      | $ | 1,002   |        |   | $ | (41,224 | )       |   | $ | (3,843  | )
|                                             |                                                                                                                          |                                                                              |   |         |   |      |   |         |     |      |   |         |        |   |   |         |         |   |   |        
|                                            
|Basic Earnings (Loss) Per Common Share:      |                                                                                                                          |                                                                              |   |         |   |      |   |         |     |      |   |         |        |   |   |         |         |   |   |        
|                                             | Earnings (Loss) from continuing operations before change in
    accounting principle                                     |                                                                              | $ | 1.91    |   |      | $ | 0.45    |     |      | $ | 0.27    |        |   | $ | 0.36    |         |   | $ | (0.28   | )
|                                             | Earnings (Loss) from discontinued operations, net of tax                                                                 |                                                                              | $ |        |   |      | $ | 0.03    |     |      | $ | (0.20   | )      |   | $ |        |         |   | $ |        |  
|                                             | Cumulative effect of change in accounting principle, net of tax                                                          |                                                                              | $ |        |   |      | $ |        |     |      | $ |        |        |   | $ | (3.36   | )       |   | $ |        |  
|                                             |                                                                                                                          |                                                                              |   |         |   |      |   |         |     |      |   |         |        |   |   |         |         |   |   |        
|                                             | Net Earnings (Loss)                                                                                                      |                                                                              | $ | 1.91    |   |      | $ | 0.47*   |     |      | $ | 0.07    |        |   | $ | (2.99   | )*      |   | $ | (0.28   | )
|Diluted Earnings (Loss) Per Common Share:    |                                                                                                                          |                                                                              |   |         |   |      |   |         |     |      |   |         |        |   |   |         |         |   |   |        
|                                             | Earnings (Loss) from continuing operations before change in
    accounting principle                                     |                                                                              | $ | 1.82    |   |      | $ | 0.43    |     |      | $ | 0.27    |        |   | $ | 0.36    |         |   | $ | (0.28   | )
|                                             | Earnings (Loss) from discontinued operations, net of tax                                                                 |                                                                              | $ |        |   |      | $ | 0.03    |     |      | $ | (0.20   | )      |   | $ |        |         |   | $ |        |  
|                                             | Cumulative effect of change in accounting principle, net of tax                                                          |                                                                              | $ |        |   |      | $ |        |     |      | $ |        |        |   | $ | (3.36   | )       |   | $ |        |  
|                                             |                                                                                                                          |                                                                              |   |         |   |      |   |         |     |      |   |         |        |   |   |         |         |   |   |        
|                                             | Net Earnings (Loss)                                                                                                      |                                                                              | $ | 1.82    |   |      | $ | 0.46    |     |      | $ | 0.07    |        |   | $ | (2.99   | )*      |   | $ | (0.28   | )
|                                            
|Year-End Financial Position:                 |                                                                                                                          |                                                                              |   |         |   |      |   |         |     |      |   |         |        |   |   |         |         |   |   |        
|                                             | Current Assets                                                                                                           |                                                                              | $ | 129,197 |   |      | $ | 100,745 |     |      | $ | 81,377  |        |   | $ | 84,764  |         |   | $ | 94,085  |  
|                                             | Total Assets                                                                                                             |                                                                              |   | 240,007 |   |      |   | 218,502 |     |      |   | 208,313 |        |   |   | 213,705 |         |   |   | 273,821 |  
|                                             | Current
    Liabilities(2)                                                                                               |                                                                              |   | 71,978  |   |      |   | 131,112 |     |      |   | 57,026  |        |   |   | 64,112  |         |   |   | 62,890  |  
|                                             | Long-Term
    Debt(2)                                                                                                    |                                                                              |   | 55,026  |   |      |   | 11,876  |     |      |   | 82,990  |        |   |   | 84,350  |         |   |   | 104,266 |  
|                                             | Other Long-Term Liabilities                                                                                              |                                                                              |   | 22,704  |   |      |   | 30,138  |     |      |   | 29,782  |        |   |   | 29,067  |         |   |   | 25,441  |  
|                                             | Shareholders Equity                                                                                                     |                                                                              |   | 90,299  |   |      |   | 45,376  |     |      |   | 38,515  |        |   |   | 36,176  |         |   |   | 81,224  |  
|                                            
|Statistical Information:                     |                                                                                                                          |                                                                              |   |         |   |      |   |         |     |      |   |         |        |   |   |         |         |   |   |        
|                                             | Number of associates                                                                                                     |                                                                              |   | 1,263   |   |      |   | 1,189   |     |      |   | 1,122   |        |   |   | 1,116   |         |   |   | 1,115   |  
|                                             | Market price per share                                                                                                   |                                                                              | $ | 25.02   |   |      | $ | 9.10    |     |      | $ | 5.50    |        |   | $ | 3.40    |         |   | $ | 5.24    |  
|                                             | Market capitalization                                                                                                    |                                                                              | $ | 377,295 |   |      | $ | 126,371 |     |      | $ | 75,829  |        |   | $ | 46,844  |         |   | $ | 72,195  |  
|                                             | Gross profit as a % of net sales                                                                                         |                                                                              |   | 20.6    | % |      |   | 16.4    | %   |      |   | 15.9    | %      |   |   | 19.2    | %       |   |   | 17.0    | %
|                                             | Total operating expenses as a % of net sales                                                                             |                                                                              |   | 10.4    | % |      |   | 11.4    | %   |      |   | 11.6    | %      |   |   | 13.3    | %       |   |   | 14.6    | %
|                                             | Operating income as a % of net sales                                                                                     |                                                                              |   | 10.2    | % |      |   | 4.5     | %   |      |   | 4.3     | %      |   |   | 5.9     | %       |   |   | 1.8     | %






|    |                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In 2002, the Company adopted SFAS No. 142,
    Goodwill and Other Intangible Assets,which
    eliminated the amortization of goodwill. Operating expenses in
    2001 include $4,605 in goodwill amortization.
|   
|(2) | In 2004, the Companys Credit Facility of $75,000 was
    classified as current as it had a maturity date of August 2005.
    (See Note C to the Consolidated Financial Statements.)                            



| |   |                                                         
| | - | --------------------------------------------------------
| | * | Earnings per share do not sum to total, due to rounding.

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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF
    OPERATIONS AND FINANCIAL CONDITION



Executive Overview


Fiber-to












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Results of Continuing Operations




|                         |                                                       |      |         |         |  |      |        |       |  |   |         |        |  |  |        |       |  |   |         |        |  |  |        |       | 
|------------------------ | ----------------------------------------------------- | ---- | ------- | ------- |  | ---- | ------ | ----- |  | - | ------- | ------ |  |  | ------ | ----- |  | - | ------- | ------ |  |  | ------ | ----- | 
|                         |                                                       | 2005 |         | 2004    |  | 2003
|                         |                                                       |      |         |         |  |     
|(Dollars in thousands)   |                                                       |      |         |         |  |      |        |       |  |  
|Net Sales                |                                                       | $    | 494,195 |         |  |      | 100.0% |       |  | $ | 387,139 |        |  |  | 100.0% |       |  | $ | 340,487 |        |  |  | 100.0% |      
|Cost of products sold    |                                                       |      | 392,580 |         |  |      | 79.4%  |       |  |   | 323,455 |        |  |  | 83.6%  |       |  |   | 286,300 |        |  |  | 84.1%  |      
|                         |                                                       |      |         |         |  |      |        |       |  |   |         |        |  |  |        |       |  |   |         |        |  |  |        |      
|                         | Gross profit                                          |      |         | 101,615 |  |      |        | 20.6% |  |   |         | 63,684 |  |  |        | 16.4% |  |   |         | 54,187 |  |  |        | 15.9% | 
|Total operating expenses |                                                       |      | 51,008  |         |  |      | 10.4%  |       |  |   | 44,074  |        |  |  | 11.4%  |       |  |   | 39,529  |        |  |  | 11.6%  |      
|Litigation settlement    |                                                       |      |        |         |  |      | 0.0%   |       |  |   | 1,728   |        |  |  | 0.4%   |       |  |   |        |        |  |  | 0.0%   |      
|Other expense            |                                                       |      |        |         |  |      | 0.0%   |       |  |   | 213     |        |  |  | 0.1%   |       |  |   |        |        |  |  | 0.0%   |      
|                         |                                                       |      |         |         |  |      |        |       |  |   |         |        |  |  |        |       |  |   |         |        |  |  |        |      
|                         | Operating income                                      |      |         | 50,607  |  |      |        | 10.2% |  |   |         | 17,669 |  |  |        | 4.5%  |  |   |         | 14,658 |  |  |        | 4.3%  | 
|Interest expense, net    |                                                       |      | 6,908   |         |  |      | 1.4%   |       |  |   | 7,925   |        |  |  | 2.0%   |       |  |   | 8,527   |        |  |  | 2.5%   |      
|                         |                                                       |      |         |         |  |      |        |       |  |   |         |        |  |  |        |       |  |   |         |        |  |  |        |      
|                         | Income from continuing operations before income taxes |      |         | 43,699  |  |      |        | 8.8%  |  |   |         | 9,744  |  |  |        | 2.5%  |  |   |         | 6,131  |  |  |        | 1.8%  | 
|Income tax provision     |                                                       |      | 16,304  |         |  |      | 3.3%   |       |  |   | 3,596   |        |  |  | 0.9%   |       |  |   | 2,391   |        |  |  | 0.7%   |      
|                         |                                                       |      |         |         |  |      |        |       |  |   |         |        |  |  |        |       |  |   |         |        |  |  |        |      
|                         | Income from continuing operations                     |      | $       | 27,395  |  |      |        | 5.5%  |  |   | $       | 6,148  |  |  |        | 1.6%  |  |   | $       | 3,740  |  |  |        | 1.1%  | 
|                         |                                                       |      |         |         |  |      |        |       |  |   |         |        |  |  |        |       |  |   |         |        |  |  |        |      



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Business Segments


Carlon


Fiber-to


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Fiber-to










Lamson Home Products






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PVC Pipe












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Liquidity and Capital Resources


















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Outlook for 2006


Fiber-to Fiber-to


5-month










Critical Accounting Policies




Accounts Receivable Allowances




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Inventory Valuation






Pension and Other Post-Retirement Benefit Plans






Environmental and Legal Obligations




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Deferred Tax Assets




Goodwill Valuation




Off-Balance Sheet Arrangements




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Contractual Obligations




|                            |  |                       |        |      |  |              |        |              |  |       |        |  |  |   |        |  |  |   |       | 
|--------------------------- |  | --------------------- | ------ | ---- |  | ------------ | ------ | ------------ |  | ----- | ------ |  |  | - | ------ |  |  | - | ----- | 
|                            |  | Payment due by period
|                            |  |                      
|(Dollars in thousands)      |  | Total                 |        | 2006 |  | 2007 to 2008 |        | 2009 to 2010 |  | After
|                            |  |                       |        |      |  |              |        |              |  |      
|Contractual Obligations:    |  |                       |        |      |  |              |        |              |  |       |        |  |  |   |        |  |  |   |       | 
|Long-Term Debt Obligations  |  | $                     | 60,801 |      |  | $            | 5,775  |              |  | $     | 11,480 |  |  | $ | 38,300 |  |  | $ | 5,246 | 
|Capital Lease Obligations   |  |                       |       |      |  |              |        |              |  |       |       |  |  |   |       |  |  |   |      | 
|Operating Lease Obligations |  |                       | 16,416 |      |  |              | 4,571  |              |  |       | 7,107  |  |  |   | 4,011  |  |  |   | 727   | 
|Purchase Obligations        |  |                       | 5,000  |      |  |              | 5,000  |              |  |       |       |  |  |   |       |  |  |   |      | 
|Other Long-Term Liabilities |  |                       |       |      |  |              |       |              |  |       |       |  |  |   |       |  |  |   |      | 
|                            |  |                       |        |      |  |              |        |              |  |       |        |  |  |   |        |  |  |   |       | 
|Total                       |  | $                     | 82,217 |      |  | $            | 15,346 |              |  | $     | 18,587 |  |  | $ | 42,311 |  |  | $ | 5,973 | 
|                            |  |                       |        |      |  |              |        |              |  |       |        |  |  |   |        |  |  |   |       | 



Forward-Looking Statements









|         |                                                           
|-------- | ----------------------------------------------------------
|Item 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK







10-K


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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


AND FINANCIAL STATEMENT SCHEDULE







|        |                                            
|------- | -------------------------------------------
|Item 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

|                                                                                                |  |  |    | 
|----------------------------------------------------------------------------------------------- |  |  | -- | 
|Financial Statements:                                                                           |  |  |    | 
|Report of Independent Registered Public
    Accounting Firm                                     |  |  | 22 | 
|Consolidated Statements of Income for
    Fiscal Years Ended 2005, 2004, 2003                   |  |  | 23 | 
|Consolidated Statements of Cash Flows for
    Fiscal Years Ended 2005, 2004, 2003               |  |  | 24 | 
|Consolidated Balance Sheets at
    December 31, 2005 and January 1, 2005                        |  |  | 25 | 
|Consolidated Statements of
    Shareholders Equity for Fiscal Years Ended 2005, 2004,
    2003 |  |  | 27 | 
|Notes to Consolidated Financial
    Statements                                                  |  |  | 28 | 
|                                                                                               
|Financial Statement Schedule:                                                                   |  |  |    | 
|Schedule II  Valuation and
    Qualifying Accounts and Reserves                                |  |  | 43 | 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors and Shareholders


The Lamson & Sessions Co.












| |                      
| | ---------------------
| | /s/ Ernst & Young LLP





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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF INCOME


|                                                                                                                         |  |              |         |      |  |      |         |   |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------ |  | ------------ | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                                                                                                         |  | Fiscal Years
|                                                                                                                         |  |             
|                                                                                                                         |  | 2005         |         | 2004 |  | 2003
|(Dollars in thousands, except per share data)                                                                            |  |              |         |      |  |     
|NET SALES                                                                                                                |  | $            | 494,195 |      |  | $    | 387,139 |   |  | $ | 340,487 |  
|Cost of products sold                                                                                                    |  |              | 392,580 |      |  |      | 323,455 |   |  |   | 286,300 |  
|                                                                                                                         |  |              |         |      |  |      |         |   |  |   |         |  
|GROSS PROFIT                                                                                                             |  |              | 101,615 |      |  |      | 63,684  |   |  |   | 54,187  |  
|Selling and marketing expenses                                                                                           |  |              | 30,523  |      |  |      | 26,527  |   |  |   | 23,787  |  
|General and administrative expenses                                                                                      |  |              | 18,549  |      |  |      | 15,349  |   |  |   | 13,831  |  
|Research and development expenses                                                                                        |  |              | 1,936   |      |  |      | 2,198   |   |  |   | 1,911   |  
|                                                                                                                         |  |              |         |      |  |      |         |   |  |   |         |  
|TOTAL OPERATING EXPENSES                                                                                                 |  |              | 51,008  |      |  |      | 44,074  |   |  |   | 39,529  |  
|Litigation settlement                                                                                                    |  |              |        |      |  |      | 1,728   |   |  |   |        |  
|Other expense, net                                                                                                       |  |              |        |      |  |      | 213     |   |  |   |        |  
|                                                                                                                         |  |              |         |      |  |      |         |   |  |   |         |  
|OPERATING INCOME                                                                                                         |  |              | 50,607  |      |  |      | 17,669  |   |  |   | 14,658  |  
|Interest expense, net                                                                                                    |  |              | 6,908   |      |  |      | 7,925   |   |  |   | 8,527   |  
|                                                                                                                         |  |              |         |      |  |      |         |   |  |   |         |  
|INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES                                                                    |  |              | 43,699  |      |  |      | 9,744   |   |  |   | 6,131   |  
|Income tax provision                                                                                                     |  |              | 16,304  |      |  |      | 3,596   |   |  |   | 2,391   |  
|                                                                                                                         |  |              |         |      |  |      |         |   |  |   |         |  
|INCOME FROM CONTINUING OPERATIONS                                                                                        |  |              | 27,395  |      |  |      | 6,148   |   |  |   | 3,740   |  
|Income (loss) from discontinued operations, net of income tax of
    $256 in 2004 and benefit of $1,750 in 2003 (Note G) |  |              |        |      |  |      | 401     |   |  |   | (2,738  | )
|                                                                                                                         |  |              |         |      |  |      |         |   |  |   |         |  
|Net Income                                                                                                               |  | $            | 27,395  |      |  | $    | 6,549   |   |  | $ | 1,002   |  
|                                                                                                                         |  |              |         |      |  |      |         |   |  |   |         |  
|BASIC EARNINGS PER COMMON SHARE:                                                                                         |  |              |         |      |  |      |         |   |  |   |         |  
|Earnings from continuing operations                                                                                      |  | $            | 1.91    |      |  | $    | 0.45    |   |  | $ | 0.27    |  
|Earnings (loss) from discontinued operations, net of tax                                                                 |  |              |        |      |  |      | 0.03    |   |  |   | (0.20   | )
|                                                                                                                         |  |              |         |      |  |      |         |   |  |   |         |  
|NET EARNINGS                                                                                                             |  | $            | 1.91    |      |  | $    | 0.47    | * |  | $ | 0.07    |  
|                                                                                                                         |  |              |         |      |  |      |         |   |  |   |         |  
|DILUTED EARNINGS PER COMMON SHARE:                                                                                       |  |              |         |      |  |      |         |   |  |   |         |  
|Earnings from continuing operations                                                                                      |  | $            | 1.82    |      |  | $    | 0.43    |   |  | $ | 0.27    |  
|Earnings (loss) from discontinued operations, net of tax                                                                 |  |              |        |      |  |      | 0.03    |   |  |   | (0.20   | )
|                                                                                                                         |  |              |         |      |  |      |         |   |  |   |         |  
|NET EARNINGS                                                                                                             |  | $            | 1.82    |      |  | $    | 0.46    |   |  | $ | 0.07    |  
|                                                                                                                         |  |              |         |      |  |      |         |   |  |   |         |  






|  |                                                         
|- | --------------------------------------------------------
|* | Earnings per share do not sum to total, due to rounding.



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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                  |                                                     |                                               |                                                |         |        |         |        |        |        |         |        |        |        |        |  
|--------------------------------------------------------------------------------- | --------------------------------------------------- | --------------------------------------------- | ---------------------------------------------- | ------- | ------ | ------- | ------ | ------ | ------ | ------- | ------ | ------ | ------ | ------ | -
|                                                                                  |                                                     | Fiscal Years                                 
|                                                                                  |                                                     |                                              
|                                                                                  |                                                     | 2005                                          |                                                | 2004    |        | 2003   
|(Dollars in thousands)                                                            |                                                     |                                               |                                                |         |        |        
|OPERATING ACTIVITIES                                                              |                                                     |                                               |                                                |         |        |         |        |        |        |         |        |       
|                                                                                 
|Net income                                                                        |                                                     | $                                             | 27,395                                         |         |        | $       | 6,549  |        |        | $       | 1,002  |       
|Adjustments to reconcile net income to cash provided by
    operating activities: |                                                     |                                               |                                                |         |        |         |        |        |        |         |        |       
|                                                                                  |                                                     | Loss from discontinued operations             |                                                |         |       |         |        |        |       |         |        |        | 2,738  |       
|                                                                                  |                                                     | Depreciation                                  |                                                |         | 8,911  |         |        |        | 9,140  |         |        |        | 9,195  |       
|                                                                                  |                                                     | Amortization                                  |                                                |         | 1,260  |         |        |        | 1,599  |         |        |        | 1,599  |       
|                                                                                  |                                                     | Gain on sale of property, plant and equipment |                                                |         |       |         |        |        | (933   | )       |        |        |       |       
|                                                                                  |                                                     | Deferred income taxes                         |                                                |         | 8,394  |         |        |        | 3,646  |         |        |        | 2,280  |       
|                                                                                  |                                                     | Change in operating assets and liabilities:   |                                                |         |        |         |        |        |        |         |        |        |        |       
|                                                                                  |                                                     |                                               | Accounts receivable                            |         |        | (20,116 | )      |        |        | (10,195 | )      |        |        | (1,510 | )
|                                                                                  |                                                     |                                               | Inventories                                    |         |        | (7,127  | )      |        |        | (6,717  | )      |        |        | 2,087  |  
|                                                                                  |                                                     |                                               | Prepaid expenses and other                     |         |        | 1,441   |        |        |        | 313     |        |        |        | (689   | )
|                                                                                  |                                                     |                                               | Accounts payable                               |         |        | 6,730   |        |        |        | 7,285   |        |        |        | (4,281 | )
|                                                                                  |                                                     |                                               | Accrued expenses and other current liabilities |         |        | 2,128   |        |        |        | 767     |        |        |        | (2,041 | )
|                                                                                  |                                                     | Tax benefit from exercise of stock options    |                                                |         | 6,221  |         |        |        | 159    |         |        |        |       |       
|                                                                                  |                                                     | Pension plan contributions                    |                                                |         | (5,827 | )       |        |        | (1,866 | )       |        |        | (1,126 | )     
|                                                                                  |                                                     | Other long-term items                         |                                                |         | 309    |         |        |        | 2,088  |         |        |        | 457    |       
|                                                                                  |                                                     |                                               |                                                |         |        |         |        |        |        |         |        |       
|CASH PROVIDED BY OPERATING ACTIVITIES                                             |                                                     |                                               | 29,719                                         |         |        |         | 11,835 |        |        |         | 9,711  |       
|INVESTING ACTIVITIES                                                              |                                                     |                                               |                                                |         |        |         |        |        |        |         |        |       
|                                                                                  | Net additions to property, plant and equipment      |                                               |                                                | (9,783  | )      |         |        | (6,370 | )      |         |        | (8,562 | )     
|                                                                                  | Proceeds from sale of property, plant and equipment |                                               |                                                |        |        |         |        | 1,595  |        |         |        |       |       
|                                                                                  | Acquisitions and related items                      |                                               |                                                | (187    | )      |         |        | (250   | )      |         |        | (813   | )     
|                                                                                  |                                                     |                                               |                                                |         |        |         |        |        |        |         |        |       
|CASH USED IN INVESTING ACTIVITIES                                                 |                                                     |                                               | (9,970                                         | )       |        |         | (5,025 | )      |        |         | (9,375 | )     
|FINANCING ACTIVITIES                                                              |                                                     |                                               |                                                |         |        |         |        |        |        |         |        |       
|                                                                                  | Net payments under secured credit agreement         |                                               |                                                | (26,100 | )      |         |        | (6,400 | )      |         |        | (600   | )     
|                                                                                  | Payments on other long-term borrowings              |                                               |                                                | (850    | )      |         |        | (599   | )      |         |        | (772   | )     
|                                                                                  | Purchase and retirement of treasury stock           |                                               |                                                |        |        |         |        | (205   | )      |         |        |       |       
|                                                                                  | Exercise of stock options                           |                                               |                                                | 7,728   |        |         |        | 609    |        |         |        | 8      |       
|                                                                                  |                                                     |                                               |                                                |         |        |         |        |        |        |         |        |       
|CASH USED IN FINANCING ACTIVITIES                                                 |                                                     |                                               | (19,222                                        | )       |        |         | (6,595 | )      |        |         | (1,364 | )     
|                                                                                  |                                                     |                                               |                                                |         |        |         |        |        |        |         |        |       
|INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                  |                                                     |                                               | 527                                            |         |        |         | 215    |        |        |         | (1,028 | )     
|Cash and cash equivalents at beginning of year                                    |                                                     |                                               | 683                                            |         |        |         | 468    |        |        |         | 1,496  |       
|                                                                                  |                                                     |                                               |                                                |         |        |         |        |        |        |         |        |       
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                          |                                                     | $                                             | 1,210                                          |         |        | $       | 683    |        |        | $       | 468    |       
|                                                                                  |                                                     |                                               |                                                |         |        |         |        |        |        |         |        |       



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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS




|                                        |                                                                               |                 |         |         |        |   |         |         |        | 
|--------------------------------------- | ----------------------------------------------------------------------------- | --------------- | ------- | ------- | ------ | - | ------- | ------- | ------ | 
|                                        |                                                                               | 2005            |         | 2004   
|(Dollars in thousands)                  |                                                                               |                 |         |        
|ASSETS                                  |                                                                               |                 |         |         |        |   |         |        
|CURRENT ASSETS                          |                                                                               |                 |         |         |        |   |         |        
|                                        | Cash and cash equivalents                                                     |                 | $       | 1,210   |        |   | $       | 683     |       
|                                        | Accounts receivable, net of allowances of $1,827 and $1,522,
    respectively |                 |         | 68,507  |        |   |         | 48,391  |       
|                                        | Inventories, net                                                              |                 |         |         |        |   |         |         |       
|                                        |                                                                               | Raw materials   |         |         | 5,721  |   |         |         | 3,504  | 
|                                        |                                                                               | Work-in-process |         |         | 6,221  |   |         |         | 5,160  | 
|                                        |                                                                               | Finished goods  |         |         | 32,045 |   |         |         | 28,196 | 
|                                        |                                                                               |                 |         |         |        |   |         |        
|                                        |                                                                               |                 | 43,987  |         |        |   | 36,860  |        
|                                        | Deferred tax assets                                                           |                 |         | 11,806  |        |   |         | 9,683   |       
|                                        | Prepaid expenses and other                                                    |                 |         | 3,687   |        |   |         | 5,128   |       
|                                        |                                                                               |                 |         |         |        |   |         |        
|TOTAL CURRENT ASSETS                    |                                                                               |                 | 129,197 |         |        |   | 100,745 |        
|PROPERTY, PLANT AND EQUIPMENT           |                                                                               |                 |         |         |        |   |         |        
|                                        | Land                                                                          |                 |         | 3,320   |        |   |         | 3,320   |       
|                                        | Buildings                                                                     |                 |         | 25,533  |        |   |         | 25,130  |       
|                                        | Machinery and equipment                                                       |                 |         | 128,280 |        |   |         | 119,622 |       
|                                        |                                                                               |                 |         |         |        |   |         |        
|                                        |                                                                               |                 | 157,133 |         |        |   | 148,072 |        
|                                        | Less allowances for depreciation and amortization                             |                 |         | 108,300 |        |   |         | 100,111 |       
|                                        |                                                                               |                 |         |         |        |   |         |        
|                                       
|Total Net Property, Plant and Equipment |                                                                               |                 | 48,833  |         |        |   | 47,961  |        
|                                       
|GOODWILL                                |                                                                               |                 | 21,441  |         |        |   | 21,480  |        
|                                       
|PENSION ASSETS                          |                                                                               |                 | 34,369  |         |        |   | 30,513  |        
|                                       
|DEFERRED TAX ASSETS                     |                                                                               |                 | 2,274   |         |        |   | 12,255  |        
|                                       
|OTHER ASSETS                            |                                                                               |                 | 3,893   |         |        |   | 5,548   |        
|                                        |                                                                               |                 |         |         |        |   |         |        
|TOTAL ASSETS                            |                                                                               | $               | 240,007 |         |        | $ | 218,502 |        
|                                        |                                                                               |                 |         |         |        |   |         |        



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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS




|                                              |                                                                                                                                                                               |      |         |        |   |   |         |         |  
|--------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ------- | ------ | - | - | ------- | ------- | -
|                                              |                                                                                                                                                                               | 2005 |         | 2004  
|(Dollars in thousands, except per share data) |                                                                                                                                                                               |      |         |       
|LIABILITIES AND SHAREHOLDERS EQUITY          |                                                                                                                                                                               |      |         |        |   |   |         |        
|                                             
|CURRENT LIABILITIES                           |                                                                                                                                                                               |      |         |        |   |   |         |        
|                                              | Accounts payable                                                                                                                                                              |      | $       | 30,943 |   |   | $       | 24,213  |  
|                                              | Accrued compensation and benefits                                                                                                                                             |      |         | 15,327 |   |   |         | 12,595  |  
|                                              | Customer volume & promotional accrued expenses                                                                                                                                |      |         | 7,719  |   |   |         | 6,648   |  
|                                              | Other accrued expenses                                                                                                                                                        |      |         | 7,787  |   |   |         | 8,509   |  
|                                              | Taxes                                                                                                                                                                         |      |         | 4,427  |   |   |         | 3,272   |  
|                                              | Secured Credit Agreement  current                                                                                                                                            |      |         | 5,000  |   |   |         | 75,000  |  
|                                              | Current maturities of long-term debt                                                                                                                                          |      |         | 775    |   |   |         | 875     |  
|                                              |                                                                                                                                                                               |      |         |        |   |   |         |        
|TOTAL CURRENT LIABILITIES                     |                                                                                                                                                                               |      | 71,978  |        |   |   | 131,112 |        
|                                             
|LONG-TERM DEBT                                |                                                                                                                                                                               |      | 55,026  |        |   |   | 11,876  |        
|                                             
|POST-RETIREMENT BENEFITS AND OTHER            |                                                                                                                                                                               |      |         |        |   |   |         |        
|                                              | LONG-TERM LIABILITIES                                                                                                                                                         |      |         | 22,704 |   |   |         | 30,138  |  
|                                             
|SHAREHOLDERS EQUITY                          |                                                                                                                                                                               |      |         |        |   |   |         |        
|                                              | Common shares, without par value, stated value of $0.10 per
    share, authorized 20,000,000 shares; outstanding,
    15,079,723 shares in 2005 and 13,886,963 shares in 2004 |      |         | 1,508  |   |   |         | 1,389   |  
|                                              | Other capital                                                                                                                                                                 |      |         | 90,056 |   |   |         | 76,130  |  
|                                              | Retained earnings (deficit)                                                                                                                                                   |      |         | 115    |   |   |         | (27,280 | )
|                                              | Accumulated other comprehensive loss                                                                                                                                          |      |         | (1,380 | ) |   |         | (4,863  | )
|                                              |                                                                                                                                                                               |      |         |        |   |   |         |        
|Total Shareholders Equity                    |                                                                                                                                                                               |      | 90,299  |        |   |   | 45,376  |        
|                                              |                                                                                                                                                                               |      |         |        |   |   |         |        
|TOTAL LIABILITIES & SHAREHOLDERS EQUITY      |                                                                                                                                                                               | $    | 240,007 |        |   | $ | 218,502 |        
|                                              |                                                                                                                                                                               |      |         |        |   |   |         |        



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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY


|                                                                                                      |                                              |                                      |       |         |   |           |        |          |   |             |         |           |   |               |        |     |     |   |      |     |   |   |        |        |   |   |        |        |     | 
|----------------------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------------------ | ----- | ------- | - | --------- | ------ | -------- | - | ----------- | ------- | --------- | - | ------------- | ------ | --- | --- | - | ---- | --- | - | - | ------ | ------ | - | - | ------ | ------ | --- | 
|                                                                                                      |                                              |                                      |       |         |   | Retained  |        | Interest |   | Foreign     |         | Minimum   |   | Total        
|                                                                                                      |                                              | Common                               |       | Other   |   | Earnings  |        | Rate     |   | Currency    |         | Pension   |   | Shareholders
|                                                                                                      |                                              | Shares                               |       | Capital |   | (Deficit) |        | Swaps    |   | Translation |         | Liability |   | Equity       
|                                                                                                      |                                              |                                      |       |         |   |           |        |          |   |             |         |           |   |              
|Balance at December 29, 2002                                                                          |                                              | $                                    | 1,378 |         |   | $         | 75,499 |          |   | $           | (34,831 | )         |   | $             | (1,550 | )   |     | $ | (614 | )   |   | $ | (3,706 | )      |   | $ | 36,176 |       
|Net income                                                                                            |                                              |                                      |      |         |   |           |       |          |   |             | 1,002   |           |   |               |       |     |     |   |     |     |   |   |       |        |   |   | 1,002  |       
|Other comprehensive income:                                                                           |                                              |                                      |       |         |   |           |        |          |   |             |         |           |   |               |        |     |     |   |      |     |   |   |        |        |   |   |        |       
|                                                                                                      | Foreign currency translation                 |                                      |       |        |   |           |        |         |   |             |         |          |   |               |        |    |     |   |      | 173 |   |   |        |       |   |   |        | 173    |    
|                                                                                                      | Minimum pension liability net of $266 tax    |                                      |       |        |   |           |        |         |   |             |         |          |   |               |        |    |     |   |      |    |   |   |        | 417    |   |   |        | 417    |    
|                                                                                                      | Interest rate swaps, net of $454 tax         |                                      |       |        |   |           |        |         |   |             |         |          |   |               |        | 711 |     |   |      |    |   |   |        |       |   |   |        | 711    |    
|                                                                                                      |                                              |                                      |       |         |   |           |        |          |   |             |         |           |   |               |        |     |     |   |      |     |   |   |        |        |   |   |        |       
|Total comprehensive income                                                                            |                                              |                                      |       |         |   |           |        |          |   |             |         |           |   |               |        |     |     |   |      |     |   |   |        |        |   |   | 2,303  |       
|Insurance of 9,537 shares under employee benefit plans                                                |                                              |                                      | 1     |         |   |           | 35     |          |   |             |        |           |   |               |       |     |     |   |     |     |   |   |       |        |   |   | 36     |       
|                                                                                                      |                                              |                                      |       |         |   |           |        |          |   |             |         |           |   |               |        |     |     |   |      |     |   |   |        |        |   |   |        |       
|Balance at January 3, 2004                                                                            |                                              | $                                    | 1,379 |         |   | $         | 75,534 |          |   | $           | (33,829 | )         |   | $             | (839   | )   |     | $ | (441 | )   |   | $ | (3,289 | )      |   | $ | 38,515 |       
|                                                                                                     
|Net income                                                                                            |                                              |                                      |      |         |   |           |       |          |   |             | 6,549   |           |   |               |       |     |     |   |     |     |   |   |       |        |   |   | 6,549  |       
|Other comprehensive income (loss):                                                                    |                                              |                                      |       |         |   |           |        |          |   |             |         |           |   |               |        |     |     |   |      |     |   |   |        |        |   |   |        |       
|                                                                                                      | Foreign currency translation                 |                                      |       |        |   |           |        |         |   |             |         |          |   |               |        |    |     |   |      | 70  |   |   |        |       |   |   |        | 70     |    
|                                                                                                      | Minimum pension liability, net of $661 tax   |                                      |       |        |   |           |        |         |   |             |         |          |   |               |        |    |     |   |      |    |   |   |        | (1,034 | ) |   |        | (1,034 | )  
|                                                                                                      |                                              | Interest rate swaps, net of $429 tax |       |         |  |           |        |          |  |             |         |           |  |               |        |     | 670 |   |      |     |  |   |        |        |  |   |        |        | 670 | 
|                                                                                                      |                                              |                                      |       |         |   |           |        |          |   |             |         |           |   |               |        |     |     |   |      |     |   |   |        |        |   |   |        |       
|Total comprehensive income                                                                            |                                              |                                      |       |         |   |           |        |          |   |             |         |           |   |               |        |     |     |   |      |     |   |   |        |        |   |   | 6,255  |       
|Issuance of 125,897 shares under employee benefit plans                                               |                                              |                                      | 12    |         |   |           | 799    |          |   |             |        |           |   |               |       |     |     |   |     |     |   |   |       |        |   |   | 811    |       
|Purchase and retirement of 26,079 shares of treasury stock                                            |                                              |                                      | (2    | )       |   |           | (203   | )        |   |             |        |           |   |               |       |     |     |   |     |     |   |   |       |        |   |   | (205   | )     
|                                                                                                      |                                              |                                      |       |         |   |           |        |          |   |             |         |           |   |               |        |     |     |   |      |     |   |   |        |        |   |   |        |       
|Balance at January 1, 2005                                                                            |                                              | $                                    | 1,389 |         |   | $         | 76,130 |          |   | $           | (27,280 | )         |   | $             | (169   | )   |     | $ | (371 | )   |   | $ | (4,323 | )      |   | $ | 45,376 |       
|                                                                                                     
|Net income                                                                                            |                                              |                                      |       |         |   |           |        |          |   |             | 27,395  |           |   |               |        |     |     |   |      |     |   |   |        |        |   |   | 27,395 |       
|Other comprehensive income:                                                                           |                                              |                                      |       |         |   |           |        |          |   |             |         |           |   |               |        |     |     |   |      |     |   |   |        |        |   |   |        |       
|                                                                                                      | Foreign currency translation                 |                                      |       |        |   |           |        |         |   |             |         |          |   |               |        |    |     |   |      | 87  |   |   |        |       |   |   |        | 87     |    
|                                                                                                      | Minimum pension liability, net of $2,063 tax |                                      |       |         |   |           |        |          |   |             |         |           |   |               |        |     |     |   |      |     |   |   |        | 3,227  |   |   |        | 3,227  |    
|                                                                                                      | Interest rate swaps, net of $107 tax         |                                      |       |        |   |           |        |         |   |             |         |          |   |               |        | 169 |     |   |      |    |   |   |        |       |   |   |        | 169    |    
|                                                                                                      |                                              |                                      |       |         |   |           |        |          |   |             |         |           |   |               |        |     |     |   |      |     |   |   |        |        |   |   |        |       
|Total comprehensive income                                                                            |                                              |                                      |       |         |   |           |        |          |   |             |         |           |   |               |        |     |     |   |      |     |   |   |        |        |   |   | 30,878 |       
|Issuance of 1,192,760 shares under employee benefit plans
    (includes income tax benefit of $6,221) |                                              |                                      | 119   |         |   |           | 13,926 |          |   |             |        |           |   |               |       |     |     |   |     |     |   |   |       |        |   |   | 14,045 |       
|Balance at December 31, 2005                                                                          |                                              | $                                    | 1,508 |         |   | $         | 90,056 |          |   | $           | 115     |           |   | $             |       |     |     | $ | (284 | )   |   | $ | (1,096 | )      |   | $ | 90,299 |       
|                                                                                                      |                                              |                                      |       |         |   |           |        |          |   |             |         |           |   |               |        |     |     |   |      |     |   |   |        |        |   |   |        |       



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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS






|         |                    
|-------- | -------------------
|NOTE A  | ACCOUNTING POLICIES

Fiscal Year


Principles of Consolidation and Presentation


Use of Estimates


Cash and Cash Equivalents


Inventories first-in,


Financial Instruments


Property and Depreciation


Impairment of Long-Lived Assets Accounting for the Impairment
or Disposal of Long-Lived Assets


Goodwill


Stock Compensation Plans Accounting for Stock Issued to
Employees, Accounting for Stock-Based Compensation 
Transition and Disclosure,


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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                                  
|-------- | ---------------------------------
|NOTE A  | ACCOUNTING POLICIES  (Continued)

Accounting for
Stock-Based Compensation,


|                                                    |  |      |             |              |  |      |        |   |  |   |       |   |  |   |       |  
|--------------------------------------------------- |  | ---- | ----------- | ------------ |  | ---- | ------ | - |  | - | ----- | - |  | - | ----- | -
|                                                    |  |      |             | Fiscal Years
|                                                    |  |      |             |             
|                                                    |  | 2005 |             | 2004         |  | 2003
|(Dollars in thousands, except per share data)       |  |      |             |              |  |     
|Net income                                          |  |      | As reported |              |  | $    | 27,395 |   |  | $ | 6,549 |   |  | $ | 1,002 |  
|Total stock-based employee compensation, net of tax |  |      |             |              |  |      | (553   | ) |  |   | (504  | ) |  |   | (646  | )
|                                                    |  |      |             |              |  |      |        |   |  |   |       |   |  |   |       |  
|Net income                                          |  |      | Pro forma   |              |  | $    | 26,842 |   |  | $ | 6,045 |   |  | $ | 356   |  
|                                                    |  |      |             |              |  |      |        |   |  |   |       |   |  |   |       |  
|Basic earnings per share                            |  |      | As reported |              |  | $    | 1.91   |   |  | $ | 0.47  |   |  | $ | 0.07  |  
|                                                    |  |      | Pro forma   |              |  |      | 1.88   |   |  |   | 0.44  |   |  |   | 0.03  |  
|Diluted earnings per share                          |  |      | As reported |              |  | $    | 1.82   |   |  | $ | 0.46  |   |  | $ | 0.07  |  
|                                                    |  |      | Pro forma   |              |  |      | 1.79   |   |  |   | 0.43  |   |  |   | 0.03  |  



|                         |  |      |          |      |  |      |          |   |  |  |          |  
|------------------------ |  | ---- | -------- | ---- |  | ---- | -------- | - |  |  | -------- | -
|                         |  | 2005 |          | 2004 |  | 2003
|                         |  |      |          |      |  |     
|Expected volatility      |  |      | 55.5     | %    |  |      | 57.2     | % |  |  | 58.6     | %
|Risk-free interest rates |  |      | 3.84     | %    |  |      | 3.79     | % |  |  | 2.98     | %
|Average expected life    |  |      | 5  years |      |  |      | 5  years |   |  |  | 5  years |  

Accounting for Stock-Based
Compensation, Accounting for Stock Issued to
Employees, Statement of Cash Flows. requires




Revenue Recognition


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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                                  
|-------- | ---------------------------------
|NOTE A  | ACCOUNTING POLICIES  (Continued)



Shipping and Handling Costs


Advertising 01-9


Research and Development Costs


Income Taxes Accounting
for Income Taxes.


NOTE B  GOODWILL AND INTANGIBLE ASSETS


Goodwill
and Other Intangible Assets,






|                         |           |             |        |         |  |       |        |     |  |   |        |       | 
|------------------------ | --------- | ----------- | ------ | ------- |  | ----- | ------ | --- |  | - | ------ | ----- | 
|                         |           | Non-Compete |        |         |  |      
|(Dollars in thousands)   |           | Agreements  |        | Patents |  | Total
|                         |           |             |        |         |  |      
|December 31, 2005        |           |             |        |         |  |       |        |     |  |   |        |      
|Gross                    |           | $           | 6,500  |         |  | $     | 2,358  |     |  | $ | 8,858  |      
|Accumulated amortization |           |             | (6,500 | )       |  |       | (1,998 | )   |  |   | (8,498 | )    
|                         |           |             |        |         |  |       |        |     |  |   |        |      
|                         | Net value |             | $      |        |  |       | $      | 360 |  |   | $      | 360   | 
|                         |           |             |        |         |  |       |        |     |  |   |        |      
|January 1, 2005          |           |             |        |         |  |       |        |     |  |   |        |      
|Gross                    |           | $           | 6,500  |         |  | $     | 2,358  |     |  | $ | 8,858  |      
|Accumulated amortization |           |             | (5,552 | )       |  |       | (1,686 | )   |  |   | (7,238 | )    
|                         |           |             |        |         |  |       |        |     |  |   |        |      
|                         | Net value |             | $      | 948     |  |       | $      | 672 |  |   | $      | 1,620 | 
|                         |           |             |        |         |  |       |        |     |  |   |        |      

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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




NOTE B  GOODWILL AND INTANGIBLE
ASSETS  Continued








NOTE C  LONG-TERM DEBT AND COMMITMENTS




|                                   |          |              |        |        |  |   |        |        | 
|---------------------------------- | -------- | ------------ | ------ | ------ |  | - | ------ | ------ | 
|                                   |          | Fiscal Years
|                                   |          |             
|                                   |          | 2005         |        | 2004  
|(Dollars in thousands)             |          |              |        |       
|Secured Credit Agreement:          |          |              |        |        |  |   |        |       
|                                   | Term     |              | $      | 37,500 |  |   | $      | 1,705  | 
|                                   | Revolver |              |        | 11,400 |  |   |        | 73,295 | 
|                                   |          |              |        |        |  |   |        |       
|                                   |          |              | 48,900 |        |  |   | 75,000 |       
|Industrial Revenue Bonds           |          |              | 7,775  |        |  |   | 8,685  |       
|Mortgage & Other                   |          |              | 4,126  |        |  |   | 4,066  |       
|                                   |          |              |        |        |  |   |        |       
|                                   |          |              | 60,801 |        |  |   | 87,751 |       
|Less amounts classified as current |          |              | 5,775  |        |  |   | 75,875 |       
|                                   |          |              |        |        |  |   |        |       
|                                   |          | $            | 55,026 |        |  | $ | 11,876 |       
|                                   |          |              |        |        |  |   |        |       





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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




NOTE C  LONG-TERM DEBT AND
COMMITMENTS  Continued














NOTE D  PENSION AND OTHER POST-RETIREMENT
BENEFIT PLANS






|                                         |  |                  |        |                |  |      |        |      |  |   |        |   |  |   |        |  
|---------------------------------------- |  | ---------------- | ------ | -------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                         |  | Pension Benefits |        | Other Benefits
|                                         |  |                  |        |               
|                                         |  | 2005             |        | 2004           |  | 2005 |        | 2004
|(Dollars in thousands)                   |  |                  |        |                |  |      |        |     
|Change in Benefit Obligation             |  |                  |        |                |  |      |        |      |  |   |        |   |  |   |        |  
|Obligation at beginning of year          |  | $                | 88,310 |                |  | $    | 81,242 |      |  | $ | 16,204 |   |  | $ | 18,800 |  
|Service cost                             |  |                  | 1,496  |                |  |      | 1,192  |      |  |   | 1      |   |  |   | 7      |  
|Interest cost                            |  |                  | 4,849  |                |  |      | 4,874  |      |  |   | 694    |   |  |   | 917    |  
|Plan participants contribution          |  |                  |       |                |  |      |       |      |  |   | 858    |   |  |   | 613    |  
|Plan amendment                           |  |                  |       |                |  |      |       |      |  |   | (1,316 | ) |  |   | (3,174 | )
|Actuarial loss (gain)                    |  |                  | 6,657  |                |  |      | 7,451  |      |  |   | 545    |   |  |   | (1,604 | )
|Assumption of YSDI benefits (see Note G) |  |                  |       |                |  |      |       |      |  |   |       |   |  |   | 3,521  |  
|Benefits paid                            |  |                  | (6,357 | )              |  |      | (6,449 | )    |  |   | (2,763 | ) |  |   | (2,876 | )
|                                         |  |                  |        |                |  |      |        |      |  |   |        |   |  |   |        |  
|Obligation at end of year                |  | $                | 94,955 |                |  | $    | 88,310 |      |  | $ | 14,223 |   |  | $ | 16,204 |  
|                                         |  |                  |        |                |  |      |        |      |  |   |        |   |  |   |        |  



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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                                                                
|-------- | ---------------------------------------------------------------
|NOTE D  | PENSION AND OTHER POST-RETIREMENT BENEFIT
    PLANS  Continued





Accounting and Disclosure Requirements
Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003,


|                                               |  |                  |        |                |  |      |        |      |  |   |        |   |  |   |        |  
|---------------------------------------------- |  | ---------------- | ------ | -------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                               |  | Pension Benefits |        | Other Benefits
|                                               |  |                  |        |               
|                                               |  | 2005             |        | 2004           |  | 2005 |        | 2004
|(Dollars in thousands)                         |  |                  |        |                |  |      |        |     
|Change in Plan Assets                          |  |                  |        |                |  |      |        |      |  |   |        |   |  |   |        |  
|Fair value of plan assets at beginning of year |  | $                | 75,790 |                |  | $    | 72,362 |      |  | $ |       |   |  | $ |       |  
|Actual return on plan assets                   |  |                  | 16,179 |                |  |      | 8,011  |      |  |   |       |   |  |   |       |  
|Employer contributions                         |  |                  | 5,827  |                |  |      | 1,866  |      |  |   | 1,905  |   |  |   | 2,263  |  
|Plan participants contributions               |  |                  |       |                |  |      |       |      |  |   | 858    |   |  |   | 613    |  
|Benefits paid                                  |  |                  | (6,357 | )              |  |      | (6,449 | )    |  |   | (2,763 | ) |  |   | (2,876 | )
|                                               |  |                  |        |                |  |      |        |      |  |   |        |   |  |   |        |  
|Fair value of plan assets at end of year       |  | $                | 91,439 |                |  | $    | 75,790 |      |  | $ |       |   |  | $ |       |  
|                                               |  |                  |        |                |  |      |        |      |  |   |        |   |  |   |        |  





|                  |  |        |       |             |  |      |       |   |  |  |       |  
|----------------- |  | ------ | ----- | ----------- |  | ---- | ----- | - |  |  | ----- | -
|                  |  |        |       | Plan Assets
|                  |  | Target |       |            
|Asset Category    |  | 2006   |       | 2005        |  | 2004
|                  |  |        |       |             |  |     
|Equity securities |  |        | 70.0  | %           |  |      | 80.0  | % |  |  | 72.3  | %
|Debt securities   |  |        | 28.0  | %           |  |      | 14.6  | % |  |  | 26.8  | %
|Other             |  |        | 2.0   | %           |  |      | 5.4   | % |  |  | 0.9   | %
|                  |  |        |       |             |  |      |       |   |  |  |       |  
|                  |  |        | 100.0 | %           |  |      | 100.0 | % |  |  | 100.0 | %
|                  |  |        |       |             |  |      |       |   |  |  |       |  







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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                                                                
|-------- | ---------------------------------------------------------------
|NOTE D  | PENSION AND OTHER POST-RETIREMENT BENEFIT
    PLANS  Continued







|                       |  |         |        |          |  |   |       | 
|---------------------- |  | ------- | ------ | -------- |  | - | ----- | 
|                       |  | Pension |        | Other   
|                       |  | Plans   |        | Benefits
|(Dollars in thousands) |  |         |        |         
|2006                   |  | $       | 6,555  |          |  | $ | 1,803 | 
|2007                   |  |         | 6,970  |          |  |   | 1,786 | 
|2008                   |  |         | 6,389  |          |  |   | 1,760 | 
|2009                   |  |         | 6,517  |          |  |   | 1,714 | 
|2010                   |  |         | 6,396  |          |  |   | 1,648 | 
|2011 through 2015      |  |         | 33,187 |          |  |   | 4,329 | 

Part-D


|                                       |  |                  |        |                |  |      |         |      |  |   |         |   |  |   |         |  
|-------------------------------------- |  | ---------------- | ------ | -------------- |  | ---- | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                       |  | Pension Benefits |        | Other Benefits
|                                       |  |                  |        |               
|                                       |  | 2005             |        | 2004           |  | 2005 |         | 2004
|(Dollars in thousands)                 |  |                  |        |                |  |      |         |     
|Funded Status                          |  |                  |        |                |  |      |         |      |  |   |         |   |  |   |         |  
|Fund status at end of year             |  | $                | (3,516 | )              |  | $    | (12,520 | )    |  | $ | (14,223 | ) |  | $ | (16,204 | )
|Unrecognized actuarial loss            |  |                  | 31,504 |                |  |      | 36,739  |      |  |   | 3,666   |   |  |   | 3,257   |  
|Unrecognized transition (asset)        |  |                  | (812   | )              |  |      | (900    | )    |  |   |        |   |  |   |        |  
|Unrecognized prior service cost (gain) |  |                  | 294    |                |  |      | 330     |      |  |   | (3,954  | ) |  |   | (3,237  | )
|                                       |  |                  |        |                |  |      |         |      |  |   |         |   |  |   |         |  
|Net amount recognized at end of year   |  | $                | 27,470 |                |  | $    | 23,649  |      |  | $ | (14,511 | ) |  | $ | (16,184 | )
|                                       |  |                  |        |                |  |      |         |      |  |   |         |   |  |   |         |  





|                                                   |  |                  |        |                |  |      |         |      |  |   |         |   |  |   |         |  
|-------------------------------------------------- |  | ---------------- | ------ | -------------- |  | ---- | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                   |  | Pension Benefits |        | Other Benefits
|                                                   |  |                  |        |               
|                                                   |  | 2005             |        | 2004           |  | 2005 |         | 2004
|(Dollars in thousands)                             |  |                  |        |                |  |      |         |     
|Prepaid benefit cost                               |  | $                | 34,369 |                |  | $    | 30,513  |      |  | $ |        |   |  | $ |        |  
|Accrued benefit liability                          |  |                  | (8,696 | )              |  |      | (14,111 | )    |  |   | (14,511 | ) |  |   | (16,184 | )
|Intangible asset                                   |  |                  |       |                |  |      | 160     |      |  |   |        |   |  |   |        |  
|Accumulated other comprehensive income, before tax |  |                  | 1,797  |                |  |      | 7,087   |      |  |   |        |   |  |   |        |  
|                                                   |  |                  |        |                |  |      |         |      |  |   |         |   |  |   |         |  
|                                                   |  | $                | 27,470 |                |  | $    | 23,649  |      |  | $ | (14,511 | ) |  | $ | (16,184 | )
|                                                   |  |                  |        |                |  |      |         |      |  |   |         |   |  |   |         |  

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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                                                                
|-------- | ---------------------------------------------------------------
|NOTE D  | PENSION AND OTHER POST-RETIREMENT BENEFIT
    PLANS  Continued







|                               |  |                  |      |                |  |      |      |      |  |  |      |   |  |  |      |  
|------------------------------ |  | ---------------- | ---- | -------------- |  | ---- | ---- | ---- |  |  | ---- | - |  |  | ---- | -
|                               |  | Pension Benefits |      | Other Benefits
|                               |  |                  |      |               
|                               |  | 2005             |      | 2004           |  | 2005 |      | 2004
|                               |  |                  |      |                |  |      |      |     
|Discount rate                  |  |                  | 5.70 | %              |  |      | 5.70 | %    |  |  | 5.50 | % |  |  | 5.40 | %
|Expected return on plan assets |  |                  | 8.5  | %              |  |      | 8.5  | %    |  |  |     |   |  |  |     |  
|Rate of salary increase        |  |                  | 4.0  | %              |  |      | 4.0  | %    |  |  |     |   |  |  |     |  





|                                               |  |             |     |             |  |   |      |  
|---------------------------------------------- |  | ----------- | --- | ----------- |  | - | ---- | -
|                                               |  | 1% Increase |     | 1% Decrease
|(Dollars in thousands)                         |  |             |     |            
|Net periodic benefit cost                      |  | $           | 38  |             |  | $ | (33  | )
|Accumulated post-retirement benefit obligation |  | $           | 897 |             |  | $ | (794 | )



|                              |  |                  |        |                |  |      |        |      |  |      |        |      |  |   |      |   |  |   |      |   |  |   |       | 
|----------------------------- |  | ---------------- | ------ | -------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | - | ---- | - |  | - | ---- | - |  | - | ----- | 
|                              |  | Pension Benefits |        | Other Benefits
|                              |  |                  |        |               
|                              |  | 2005             |        | 2004           |  | 2003 |        | 2005 |  | 2004 |        | 2003
|(Dollars in thousands)        |  |                  |        |                |  |      |        |      |  |      |        |     
|Service cost                  |  | $                | 1,496  |                |  | $    | 1,192  |      |  | $    | 1,069  |      |  | $ | 1    |   |  | $ | 7    |   |  | $ | 9     | 
|Interest cost                 |  |                  | 4,849  |                |  |      | 4,874  |      |  |      | 5,044  |      |  |   | 694  |   |  |   | 917  |   |  |   | 1,168 | 
|Expected return on assets     |  |                  | (6,251 | )              |  |      | (5,945 | )    |  |      | (5,402 | )    |  |   |     |   |  |   |     |   |  |   |      | 
|Net amortization and deferral |  |                  | 1,912  |                |  |      | 1,555  |      |  |      | 2,412  |      |  |   | (463 | ) |  |   | (297 | ) |  |   | 186   | 
|Defined contribution plan     |  |                  | 1,045  |                |  |      | 1,080  |      |  |      | 938    |      |  |   |     |   |  |   |     |   |  |   |      | 
|                              |  |                  |        |                |  |      |        |      |  |      |        |      |  |   |      |   |  |   |      |   |  |   |       | 
|                              |  | $                | 3,051  |                |  | $    | 2,756  |      |  | $    | 4,061  |      |  | $ | 232  |   |  | $ | 627  |   |  | $ | 1,363 | 
|                              |  |                  |        |                |  |      |        |      |  |      |        |      |  |   |      |   |  |   |      |   |  |   |       | 



NOTE E  LITIGATION






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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


NOTE F  ENVIRONMENTAL






NOTE G  DISCONTINUED OPERATIONS




NOTE H  COMMON, PREFERRED, PREFERENCE STOCK






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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




NOTE H  COMMON, PREFERRED, PREFERENCE
STOCK  Continued








NOTE I  STOCK COMPENSATION PLANS










|                                                               |  |        |        |                |  |        |      |                |  |        |       |                |  |   |      |  |  |  |       |   |  |   |      | 
|-------------------------------------------------------------- |  | ------ | ------ | -------------- |  | ------ | ---- | -------------- |  | ------ | ----- | -------------- |  | - | ---- |  |  |  | ----- | - |  | - | ---- | 
|                                                               |  | 2005   |        | 2004           |  | 2003  
|                                                               |  |        |        |                |  |       
|                                                               |  |        |        | Weighted-      |  |        |      | Weighted-      |  |        |       | Weighted-     
|                                                               |  |        |        | Average        |  |        |      | Average        |  |        |       | Average       
|                                                               |  | Shares |        | Exercise Price |  | Shares |      | Exercise Price |  | Shares |       | Exercise Price
|(Shares in thousands)                                          |  |        |        |                |  |        |      |                |  |        |       |               
|Outstanding at beginning of year                               |  |        | 2,670  |                |  | $      | 6.26 |                |  |        | 2,613 |                |  | $ | 6.21 |  |  |  | 2,359 |   |  | $ | 6.68 | 
|Granted                                                        |  |        | 310    |                |  |        | 9.69 |                |  |        | 322   |                |  |   | 6.48 |  |  |  | 417   |   |  |   | 3.47 | 
|Exercised                                                      |  |        | (1,184 | )              |  |        | 6.53 |                |  |        | (121  | )              |  |   | 5.06 |  |  |  | (2    | ) |  |   | 4.63 | 
|Forfeited                                                      |  |        | (10    | )              |  |        | 8.57 |                |  |        | (144  | )              |  |   | 6.87 |  |  |  | (161  | ) |  |   | 6.00 | 
|                                                               |  |        |        |                |  |        |      |                |  |        |       |                |  |   |      |  |  |  |       |   |  |   |      | 
|Outstanding at end of year                                     |  |        | 1,786  |                |  | $      | 6.67 |                |  |        | 2,670 |                |  | $ | 6.26 |  |  |  | 2,613 |   |  | $ | 6.21 | 
|                                                               |  |        |        |                |  |        |      |                |  |        |       |                |  |   |      |  |  |  |       |   |  |   |      | 
|Options exercisable at year-end                                |  |        | 1,204  |                |  | $      | 6.14 |                |  |        | 2,028 |                |  | $ | 6.64 |  |  |  | 1,904 |   |  | $ | 6.93 | 
|Weighted-average fair value of options granted during the year |  |        |        |                |  | $      | 5.01 |                |  |        |       |                |  | $ | 3.40 |  |  |  |       |   |  | $ | 1.83 | 



|                |      |                     |  |                        |         |                  |  |             |      |                  |  |   |      |  |  |  |         |  |  |   |      | 
|--------------- | ---- | ------------------- |  | ---------------------- | ------- | ---------------- |  | ----------- | ---- | ---------------- |  | - | ---- |  |  |  | ------- |  |  | - | ---- | 
|                |      | Options Outstanding |  | Options Exercisable   
|                |      |                     |  |                       
|                |      |                     |  | Weighted-Average       |         |                  |  |            
|Range of        |      | Shares              |  | Remaining              |         | Weighted-Average |  | Shares      |      | Weighted-Average
|Exercise Prices |      | at 12/31/05         |  | Contractual Life (Yrs) |         | Exercise Price   |  | at 12/31/05 |      | Exercise Price  
|                |      |                     |  |                        |         |                  |  |             |      |                 
|$               | 3-5  |                     |  |                        | 617,091 |                  |  |             | 5.89 |                  |  | $ | 4.03 |  |  |  | 533,427 |  |  | $ | 4.12 | 
|                | 5-8  |                     |  |                        | 631,583 |                  |  |             | 5.56 |                  |  | $ | 6.67 |  |  |  | 442,749 |  |  | $ | 6.76 | 
|                | 8-11 |                     |  |                        | 537,500 |                  |  |             | 7.25 |                  |  | $ | 9.68 |  |  |  | 227,500 |  |  | $ | 9.67 | 

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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




NOTE I  STOCK COMPENSATION
PLANS  Continued)






Accounting for Deferred Compensation
Arrangements Where Amounts Earned Are Held in a Rabbi Trust and
Invested,


NOTE J  EARNINGS PER SHARE CALCULATION




|                                                         |                                                          |              |   |        |  |      |   |        |  |  |   |        | 
|-------------------------------------------------------- | -------------------------------------------------------- | ------------ | - | ------ |  | ---- | - | ------ |  |  | - | ------ | 
|                                                         |                                                          | Fiscal Years
|                                                         |                                                          |             
|                                                         |                                                          | 2005         |   | 2004   |  | 2003
|(Dollars and shares in thousands, except per share data) |                                                          |              |   |        |  |     
|Basic Earnings Per Share Computation                     |                                                          |              |   |        |  |      |   |        |  |  |   |       
|                                                         | Net Income                                               |              | $ | 27,395 |  |      | $ | 6,549  |  |  | $ | 1,002  | 
|                                                         |                                                          |              |   |        |  |      |   |        |  |  |   |       
|                                                         | Average Common Shares Outstanding                        |              |   | 14,311 |  |      |   | 13,815 |  |  |   | 13,785 | 
|                                                         |                                                          |              |   |        |  |      |   |        |  |  |   |       
|                                                         | Basic Earnings Per Share                                 |              | $ | 1.91   |  |      | $ | 0.47   |  |  | $ | 0.07   | 
|                                                         |                                                          |              |   |        |  |      |   |        |  |  |   |       
|Diluted Earnings Per Share Computation                   |                                                          |              |   |        |  |      |   |        |  |  |   |       
|                                                         | Net Income                                               |              | $ | 27,395 |  |      | $ | 6,549  |  |  | $ | 1,002  | 
|                                                         |                                                          |              |   |        |  |      |   |        |  |  |   |       
|                                                         | Basic Shares Outstanding                                 |              |   | 14,311 |  |      |   | 13,815 |  |  |   | 13,785 | 
|                                                         | Stock Options Calculated Under the Treasury Stock Method |              |   | 723    |  |      |   | 349    |  |  |   | 109    | 
|                                                         |                                                          |              |   |        |  |      |   |        |  |  |   |       
|                                                         | Total Shares                                             |              |   | 15,034 |  |      |   | 14,164 |  |  |   | 13,894 | 
|                                                         |                                                          |              |   |        |  |      |   |        |  |  |   |       
|                                                         | Diluted Earnings Per Share                               |              | $ | 1.82   |  |      | $ | 0.46   |  |  | $ | 0.07   | 
|                                                         |                                                          |              |   |        |  |      |   |        |  |  |   |       



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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


NOTE K  INCOME TAXES




|                       |                 |              |        |       |  |      |       |       |   |   |       |       | 
|---------------------- | --------------- | ------------ | ------ | ----- |  | ---- | ----- | ----- | - | - | ----- | ----- | 
|                       |                 | Fiscal Years
|                       |                 |             
|                       |                 | 2005         |        | 2004  |  | 2003
|(Dollars in thousands) |                 |              |        |       |  |     
|Current:               |                 |              |        |       |  |      |       |       |   |   |       |      
|                       | Federal         |              | $      | 6,711 |  |      | $     | 92    |   |   | $     | 22    | 
|                       | State and local |              |        | 1,199 |  |      |       | (142  | ) |   |       | 89    | 
|                       |                 |              |        |       |  |      |       |       |   |   |       |      
|                       |                 |              | 7,910  |       |  |      | (50   | )     |   |   | 111   |      
|Deferred:              |                 |              |        |       |  |      |       |       |   |   |       |      
|                       | Federal         |              |        | 7,709 |  |      |       | 3,233 |   |   |       | 1,988 | 
|                       | State and local |              |        | 685   |  |      |       | 413   |   |   |       | 292   | 
|                       |                 |              |        |       |  |      |       |       |   |   |       |      
|                       |                 |              | 8,394  |       |  |      | 3,646 |       |   |   | 2,280 |      
|                       |                 |              |        |       |  |      |       |       |   |   |       |      
|Total                  |                 | $            | 16,304 |       |  | $    | 3,596 |       |   | $ | 2,391 |      
|                       |                 |              |        |       |  |      |       |       |   |   |       |      







|                              |                                                      |              |        |        |  |   |        |        | 
|----------------------------- | ---------------------------------------------------- | ------------ | ------ | ------ |  | - | ------ | ------ | 
|                              |                                                      | Fiscal Years
|                              |                                                      |             
|                              |                                                      | 2005         |        | 2004  
|(Dollars in thousands)        |                                                      |              |        |       
|Deferred tax assets:          |                                                      |              |        |        |  |   |        |       
|                              | Net operating loss carryforwards (Federal & State)   |              | $      | 2,570  |  |   | $      | 9,710  | 
|                              | Goodwill                                             |              |        | 8,493  |  |   |        | 9,788  | 
|                              | Other accruals, credits and reserves                 |              |        | 6,418  |  |   |        | 7,265  | 
|                              | General business and alternative minimum tax credits |              |        | 5,755  |  |   |        | 2,267  | 
|                              | Post-retirement benefits other than pensions         |              |        | 5,079  |  |   |        | 5,664  | 
|                              |                                                      |              |        |        |  |   |        |       
|Total deferred tax assets     |                                                      |              | 28,315 |        |  |   | 34,694 |       
|Less valuation allowance      |                                                      |              |       |        |  |   | (370   | )     
|                              |                                                      |              |        |        |  |   |        |       
|Total deferred tax assets     |                                                      |              | 28,315 |        |  |   | 34,324 |       
|Deferred tax liabilities:     |                                                      |              |        |        |  |   |        |       
|                              | Tax in excess of book depreciation                   |              |        | 5,275  |  |   |        | 6,579  | 
|                              | Pensions                                             |              |        | 8,960  |  |   |        | 5,807  | 
|                              |                                                      |              |        |        |  |   |        |       
|                              | Total deferred tax liabilities                       |              |        | 14,235 |  |   |        | 12,386 | 
|                              |                                                      |              |        |        |  |   |        |       
|Total net deferred tax assets |                                                      | $            | 14,080 |        |  | $ | 21,938 |       
|                              |                                                      |              |        |        |  |   |        |       



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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




NOTE K  INCOME TAXES  Continued










|                               |                               |              |        |      |   |      |       |     |   |   |       |     | 
|------------------------------ | ----------------------------- | ------------ | ------ | ---- | - | ---- | ----- | --- | - | - | ----- | --- | 
|                               |                               | Fiscal Years
|                               |                               |             
|                               |                               | 2005         |        | 2004 |   | 2003
|(Dollars in thousands)         |                               |              |        |      |   |     
|Tax expense at statutory rates |                               | $            | 15,295 |      |   | $    | 3,410 |     |   | $ | 2,146 |    
|Adjustment due to:             |                               |              |        |      |   |      |       |     |   |   |       |    
|                               | Change in valuation allowance |              |        | (199 | ) |      |       |    |   |   |       |    | 
|                               | State and local income taxes  |              |        | 779  |   |      |       | (92 | ) |   |       | 58  | 
|                               | Other                         |              |        | 429  |   |      |       | 278 |   |   |       | 187 | 
|                               |                               |              |        |      |   |      |       |     |   |   |       |    
|                               |                               | $            | 16,304 |      |   | $    | 3,596 |     |   | $ | 2,391 |    
|                               |                               |              |        |      |   |      |       |     |   |   |       |    



NOTE L  BUSINESS SEGMENTS




Carlon  Industrial, Residential, Commercial,
Telecommunications and Utility Construction:


Lamson Home Products  Consumer:


PVC Pipe:


40



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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




NOTE L  BUSINESS
SEGMENTS  Continued






|                                                              |  |      |         |      |  |      |         |   |  |   |         |  
|------------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                                              |  | 2005 |         | 2004 |  | 2003
|(Dollars in thousands)                                        |  |      |         |      |  |     
|Net Sales                                                     |  |      |         |      |  |      |         |   |  |   |         |  
|Carlon                                                        |  | $    | 223,500 |      |  | $    | 183,800 |   |  | $ | 154,090 |  
|Lamson Home Products                                          |  |      | 105,039 |      |  |      | 86,510  |   |  |   | 81,514  |  
|PVC Pipe                                                      |  |      | 165,656 |      |  |      | 116,829 |   |  |   | 104,883 |  
|                                                              |  |      |         |      |  |      |         |   |  |   |         |  
|                                                              |  | $    | 494,195 |      |  | $    | 387,139 |   |  | $ | 340,487 |  
|                                                              |  |      |         |      |  |      |         |   |  |   |         |  
|Operating Income (Loss)                                       |  |      |         |      |  |      |         |   |  |   |         |  
|Carlon                                                        |  | $    | 26,980  |      |  | $    | 16,836  |   |  | $ | 11,840  |  
|Lamson Home Products                                          |  |      | 15,021  |      |  |      | 8,776   |   |  |   | 13,766  |  
|PVC Pipe                                                      |  |      | 17,475  |      |  |      | (1,502  | ) |  |   | (5,119  | )
|Corporate Office                                              |  |      | (8,869  | )    |  |      | (6,228  | ) |  |   | (5,829  | )
|Other Expense, Net (see Note M)                               |  |      |        |      |  |      | (213    | ) |  |   |        |  
|                                                              |  |      |         |      |  |      |         |   |  |   |         |  
|                                                              |  | $    | 50,607  |      |  | $    | 17,669  |   |  | $ | 14,658  |  
|                                                              |  |      |         |      |  |      |         |   |  |   |         |  
|Depreciation and Amortization                                 |  |      |         |      |  |      |         |   |  |   |         |  
|Carlon                                                        |  | $    | 4,596   |      |  | $    | 5,342   |   |  | $ | 6,801   |  
|Lamson Home Products                                          |  |      | 1,842   |      |  |      | 1,881   |   |  |   | 1,722   |  
|PVC Pipe                                                      |  |      | 3,733   |      |  |      | 3,516   |   |  |   | 2,271   |  
|                                                              |  |      |         |      |  |      |         |   |  |   |         |  
|                                                              |  | $    | 10,171  |      |  | $    | 10,739  |   |  | $ | 10,794  |  
|                                                              |  |      |         |      |  |      |         |   |  |   |         |  
|Identifiable Assets                                           |  |      |         |      |  |      |         |   |  |   |         |  
|Carlon                                                        |  | $    | 86,858  |      |  | $    | 77,473  |   |  | $ | 79,900  |  
|Lamson Home Products                                          |  |      | 38,286  |      |  |      | 34,190  |   |  |   | 30,065  |  
|PVC Pipe                                                      |  |      | 57,985  |      |  |      | 44,650  |   |  |   | 34,232  |  
|Corporate Office (includes deferred taxes and pension assets) |  |      | 56,878  |      |  |      | 62,189  |   |  |   | 64,116  |  
|                                                              |  |      |         |      |  |      |         |   |  |   |         |  
|                                                              |  | $    | 240,007 |      |  | $    | 218,502 |   |  | $ | 208,313 |  
|                                                              |  |      |         |      |  |      |         |   |  |   |         |  





NOTE M  SALE OF ASSETS




41



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THE LAMSON & SESSIONS CO. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




NOTE M  SALE OF
ASSETS  Continued








|                             |  |           |      |                  |  |       |      |   |  |   |       |  
|---------------------------- |  | --------- | ---- | ---------------- |  | ----- | ---- | - |  | - | ----- | -
|                             |  |           |      | Training, Moving |  |      
|                             |  | Severance |      | and Other Costs  |  | Total
|(Dollars in thousands)       |  |           |      |                  |  |      
|2004 charges                 |  | $         | 587  |                  |  | $     | 550  |   |  | $ | 1,137 |  
|Payments in 2004             |  |           | (151 | )                |  |       | (550 | ) |  |   | (701  | )
|                             |  |           |      |                  |  |       |      |   |  |   |       |  
|Balance at January 1, 2005   |  | $         | 436  |                  |  | $     |     |   |  | $ | 436   |  
|Payments in 2005             |  |           | (436 | )                |  |       |     |   |  |   | (436  | )
|                             |  |           |      |                  |  |       |      |   |  |   |       |  
|Balance at December 31, 2005 |  | $         |     |                  |  | $     |     |   |  | $ |      |  
|                             |  |           |      |                  |  |       |      |   |  |   |       |  

NOTE N  SUMMARY OF QUARTERLY RESULTS OF OPERATIONS
(UNAUDITED)


(Dollars in thousands, except per share data)


|             |                       |           |         |         |  |             |         |        |  |                       |        |                         |  |              |        |        |  |           |       |      |  |   |       |      |  |   |       |      |  |   |       |      |  |  |   |       |  |  |   |       | 
|------------ | --------------------- | --------- | ------- | ------- |  | ----------- | ------- | ------ |  | --------------------- | ------ | ----------------------- |  | ------------ | ------ | ------ |  | --------- | ----- | ---- |  | - | ----- | ---- |  | - | ----- | ---- |  | - | ----- | ---- |  |  | - | ----- |  |  | - | ----- | 
|             |                       |           |         |         |  |             |         |        |  | Basic Earnings (Loss) |        | Diluted Earnings (Loss) |  |             
|             |                       |           |         |         |  |             |         |        |  | Per Common Share      |        | Per Common Share        |  | Closing     
|             |                       |           |         |         |  |             |         |        |  |                       |        |                         |  | Market Price
|             |                       |           |         |         |  | Income From |         |        |  | Income From           |        |                         |  | Income From  |        | Net    |  | Per Share
|             |                       | Net       |         | Gross   |  | Continuing  |         | Net    |  | Continuing            |        | Net                     |  | Continuing   |        | Income |  |          
|             |                       | Sales (1) |         | Profit  |  | Operations  |         | Income |  | Operations            |        | Income                  |  | Operations   |        | (Loss) |  | High      |       | Low 
|             |                       |           |         |         |  |             |         |        |  |                       |        |                         |  |              |        |        |  |           |       |     
|Fiscal 2005: |                       |           |         |         |  |             |         |        |  |                       |        |                         |  |              |        |        |  |           |       |      |  |   |       |      |  |   |       |      |  |   |       |      |  |  |   |       |  |  |   |      
|             | First
    quarter(2)  |           | $       | 98,792  |  |             | $       | 16,977 |  |                       | $      | 2,204                   |  |              | $      | 2,204  |  |           | $     | 0.16 |  |   | $     | 0.16 |  |   | $     | 0.15 |  |   | $     | 0.15 |  |  | $ | 10.17 |  |  | $ | 8.75  | 
|             | Second quarter        |           |         | 124,010 |  |             |         | 23,015 |  |                       |        | 5,227                   |  |              |        | 5,227  |  |           |       | 0.37 |  |   |       | 0.37 |  |   |       | 0.35 |  |   |       | 0.35 |  |  |   | 12.07 |  |  |   | 9.15  | 
|             | Third quarter         |           |         | 128,052 |  |             |         | 22,908 |  |                       |        | 5,353                   |  |              |        | 5,353  |  |           |       | 0.37 |  |   |       | 0.37 |  |   |       | 0.35 |  |   |       | 0.35 |  |  |   | 18.32 |  |  |   | 12.40 | 
|             | Fourth
    quarter(3) |           |         | 143,341 |  |             |         | 38,715 |  |                       |        | 14,611                  |  |              |        | 14,611 |  |           |       | 0.99 |  |   |       | 0.99 |  |   |       | 0.93 |  |   |       | 0.93 |  |  |   | 30.80 |  |  |   | 17.30 | 
|             |                       |           |         |         |  |             |         |        |  |                       |        |                         |  |              |        |        |  |           |       |      |  |   |       |      |  |   |       |      |  |   |       |      |  |  |   |       |  |  |   |      
|Total        |                       | $         | 494,195 |         |  | $           | 101,615 |        |  | $                     | 27,395 |                         |  | $            | 27,395 |        |  | $         | 1.91* |      |  | $ | 1.91* |      |  | $ | 1.82* |      |  | $ | 1.82* |      |  |  |   |       |  |  |   |      
|Fiscal 2004: |                       |           |         |         |  |             |         |        |  |                       |        |                         |  |              |        |        |  |           |       |      |  |   |       |      |  |   |       |      |  |   |       |      |  |  |   |       |  |  |   |      
|             | First
    quarter(2)  |           | $       | 82,995  |  |             | $       | 13,318 |  |                       | $      | 1,299                   |  |              | $      | 1,700  |  |           | $     | 0.09 |  |   | $     | 0.12 |  |   | $     | 0.09 |  |   | $     | 0.12 |  |  | $ | 5.93  |  |  | $ | 4.91  | 
|             | Second quarter        |           |         | 102,148 |  |             |         | 18,278 |  |                       |        | 2,745                   |  |              |        | 2,745  |  |           |       | 0.20 |  |   |       | 0.20 |  |   |       | 0.19 |  |   |       | 0.19 |  |  |   | 8.30  |  |  |   | 5.95  | 
|             | Third quarter         |           |         | 104,919 |  |             |         | 17,099 |  |                       |        | 833                     |  |              |        | 833    |  |           |       | 0.06 |  |   |       | 0.06 |  |   |       | 0.06 |  |   |       | 0.06 |  |  |   | 9.59  |  |  |   | 6.80  | 
|             | Fourth
    quarter(3) |           |         | 97,077  |  |             |         | 14,989 |  |                       |        | 1,271                   |  |              |        | 1,271  |  |           |       | 0.09 |  |   |       | 0.09 |  |   |       | 0.09 |  |   |       | 0.09 |  |  |   | 10.48 |  |  |   | 8.68  | 
|             |                       |           |         |         |  |             |         |        |  |                       |        |                         |  |              |        |        |  |           |       |      |  |   |       |      |  |   |       |      |  |   |       |      |  |  |   |       |  |  |   |      
|Total        |                       | $         | 387,139 |         |  | $           | 63,684  |        |  | $                     | 6,148  |                         |  | $            | 6,549  |        |  | $         | 0.45* |      |  | $ | 0.47  |      |  | $ | 0.43  |      |  | $ | 0.46  |      |  |  |   |       |  |  |   |      






|  |                                                                                                                                                                                                                                                                                                                              
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Earnings per share were computed on a stand-alone quarterly
    basis for each respective quarter. Therefore, the sum of the
    Basic and Diluted Earnings Per Common Share in 2005 and Basic
    Earnings Per Common Share From Continuing Operations in 2004 do
    not equal the respective years total due to rounding.



|    |                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In the fourth quarter of 2004, the Company reclassified certain
    co-operative advertising and service commission arrangements
    reducing net sales and gross profit with no impact on income
    from continuing operations. All previous quarters have been
    restated to reflect this reclassification. (see Note A).
|   
|(2) | The Company recorded income from discontinued operations of
    $401, net of tax, during the first quarter of 2004 (see
    Note G).                                                                                                                                                                                          
|   
|(3) | Net income in the fourth quarter of 2004 was increased by
    $0.4 million due to certain year-end adjustments affecting
    selling and marketing and general and administrative expenses.                                                                                                                                   

42



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##### Table of Contents






SCHEDULE II  VALUATION AND QUALIFYING
ACCOUNTS AND RESERVES


|                                                                             |                                    |              |       |            |  |            |      |            |   |  |     |       |      |  |       |       | 
|---------------------------------------------------------------------------- | ---------------------------------- | ------------ | ----- | ---------- |  | ---------- | ---- | ---------- | - |  | --- | ----- | ---- |  | ----- | ----- | 
|(Dollars in thousands)                                                      
|                                                                            
|                                                                             |                                    | Balance at   |       | Charged to |  | Deductions |      | Balance at
|                                                                             |                                    | Beginning of |       | Costs and  |  | and        |      | End of    
|Description                                                                  |                                    | Period       |       | Expenses   |  | Other      |      | Period    
|                                                                            
|                                                                            
|Year Ended December 31, 2005                                                 |                                    |              |       |            |  |            |      |            |   |  |     |       |      |  |       |      
|Allowances deducted from assets:                                             |                                    |              |       |            |  |            |      |            |   |  |     |       |      |  |       |      
|                                                                             | Trade receivable allowances        |              | $     | 1,522      |  |            | $    | 8,794      |   |  | $   | 8,489 | (A)  |  | $     | 1,827 | 
|                                                                             | Inventory obsolescence reserve     |              |       | 748        |  |            |      | 883        |   |  |     | 851   | (B)  |  |       | 780   | 
|                                                                             | Other current and long-term assets |              |       | 450        |  |            |      |           |   |  |     |      |      |  |       | 450   | 
|Accounts and loss reserves included in current and long-term
    liabilities |                                    |              | 4,330 |            |  |            | 208  |            |   |  | 983 | (C)   |      |  | 3,555 |      
|                                                                            
|Year Ended January 1, 2005                                                   |                                    |              |       |            |  |            |      |            |   |  |     |       |      |  |       |      
|Allowances deducted from assets:                                             |                                    |              |       |            |  |            |      |            |   |  |     |       |      |  |       |      
|                                                                             | Trade receivable allowances        |              | $     | 1,532      |  |            | $    | 6,493      | * |  | $   | 6,503 | *(A) |  | $     | 1,522 | 
|                                                                             | Inventory obsolescence reserve     |              |       | 582        |  |            |      | 1,063      |   |  |     | 897   | (B)  |  |       | 748   | 
|                                                                             | Other current and long-term assets |              |       | 520        |  |            |      |           |   |  |     | 70    |      |  |       | 450   | 
|Accounts and loss reserves included in current and long-term
    liabilities |                                    |              | 4,747 |            |  |            | (200 | )          |   |  | 217 | (C)   |      |  | 4,330 |      
|                                                                            
|Year Ended January 3, 2004                                                   |                                    |              |       |            |  |            |      |            |   |  |     |       |      |  |       |      
|Allowances deducted from assets:                                             |                                    |              |       |            |  |            |      |            |   |  |     |       |      |  |       |      
|                                                                             | Trade receivable allowances        |              | $     | 1,924      |  |            | $    | 6,143      | * |  | $   | 6,535 | *(A) |  | $     | 1,532 | 
|                                                                             | Inventory obsolescence reserve     |              |       | 747        |  |            |      | 596        |   |  |     | 761   | (B)  |  |       | 582   | 
|                                                                             | Other current and long-term assets |              |       | 466        |  |            |      |           |   |  |     | (54   | )    |  |       | 520   | 
|Accounts and loss reserves included in current and long-term
    liabilities |                                    |              | 4,962 |            |  |            |     |            |   |  | 215 | (C)   |      |  | 4,747 |      
|                                                                            














|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
    AND FINANCIAL DISCLOSURE








|         |                        
|-------- | -----------------------
|Item 9A. | CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures




43



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##### Table of Contents



Managements
Report on Internal Control over Financial Reporting


13a-15(f) 15d-15(f).






| |                                                                                 
| | --------------------------------------------------------------------------------
| | /s/ John B. Schulze                                                             
| |                                                                                 
| | John B. Schulze                                                                 
| | Chairman of the Board, President and Chief Executive
    Officer                
|
| | /s/ James J. Abel                                                               
| |                                                                                 
| | James J. Abel                                                                   
| | Executive Vice President, Secretary, Treasurer and 
     Chief Financial Officer
|
| | /s/ Lori L. Spencer                                                             
| |                                                                                 
| | Lori L. Spencer                                                                 
| | Vice President and Controller                                                   

Changes in Internal
Control over Financial Reporting




44



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##### Table of Contents



Report Of Independent
Registered Public Accounting Firm


Board of Directors and Shareholders


The Lamson & Sessions Co.
















| |                          
| | -------------------------
| | /s/ Ernst & Young
    LLP

Cleveland, Ohio


February 15, 2005


45



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##### Table of Contents








|         |                  
|-------- | -----------------
|Item 9B. | OTHER INFORMATION






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT



| |     |                                                                                                                                                                                                                                                                                                                                                                             
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | Directors. 
     The information set forth under the caption Election of
    Directors, Audit Committee Financial Expert
    and Standing Committees of the Board of
    Directors  The Audit Committee in the
    Companys definitive Proxy Statement for its Annual Meeting
    of Shareholders to be held April 28, 2006 is hereby
    incorporated by reference.
|
| | (b) | Executive Officers  See Part I.                                                                                                                                                                                                                                                                                                                                            
|
| | (c) | Compliance with Section 16(a) of the Exchange Act. 
     The information set forth under the caption
    Section 16(a) Beneficial Ownership Reporting
    Compliance in the Companys definitive Proxy
    Statement for its Annual Meeting of Shareholders to be held
    April 28, 2006 is hereby incorporated by reference.                                            
|
| | (d) | Code of Ethics. 
     The information set forth under the caption Code of
    Ethics in the Companys definitive Proxy Statement
    for its Annual Meeting of Shareholders to be held April 28,
    2006 is hereby incorporated by reference.                                                                                                                            






|         |                       
|-------- | ----------------------
|Item 11. | EXECUTIVE COMPENSATION








|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
    MANAGEMENT AND RELATED STOCKHOLDER MATTERS








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS








|         |                                       
|-------- | --------------------------------------
|Item 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES



46



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##### Table of Contents






PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES



| |     |                                                                                                                                                                                               
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | The following documents are filed as part of this report: 
     Consolidated financial statements of The Lamson &
    Sessions Co. and Subsidiaries are included in Item 8 of
    this report:



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | Financial Statements 
     Consolidated Statements of Income for Fiscal Years Ended 2005,
    2004 and 2003. 
     Consolidated Statements of Cash Flows for Fiscal Years Ended
    2005, 2004 and 2003. 
     Consolidated Balance Sheets at December 31, 2005 and
    January 1, 2005. 
     Consolidated Statements of Shareholders Equity for Fiscal
    Years Ended 2005, 2004 and 2003. 
     Notes to Consolidated Financial Statements.
|
| | 2. | Financial Statement Schedule 
     Schedule II  Valuation and Qualifying Accounts
    and Reserves. 
     All other schedules for which provision is made in the
    applicable accounting regulations of the Securities and Exchange
    Commission are not required under the related instructions or
    are inapplicable and, therefore, have been omitted.                                                                                
|
| | 3. | The exhibits listed in the accompanying Exhibit Index and
    required by Item 601 of
    Regulation S-K
    (numbered in accordance with Item 601 of
    Regulation S-K)
    are filed or incorporated by reference as part of this Report.                                                                                                                                                                                                    



47



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##### Table of Contents



SIGNATURES






| |                          
| | -------------------------
| | THE LAMSON & SESSIONS CO.



| |    |                  
| | -- | -----------------
| | By | /s/ James J. Abel

| |                                      
| | -------------------------------------
| |                                      
| | James J. Abel                        
| | Executive Vice President, Secretary, 
| | Treasurer and Chief Financial Officer



|                                                      |  |                                                                                                              |  | 
|----------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | 
|Signature                                             |  | Title                                                                                                       
|                                                      |  |                                                                                                             
|                                                     
|/s/ John B. SchulzeJohn B. Schulze                    |  | Chairman of the Board, President and Chief Executive Officer
    (Principal Executive Officer)              
|                                                     
|/s/ James J. AbelJames J. Abel                        |  | Executive Vice President, Secretary, Treasurer and Chief
    Financial Officer (Principal Financial Officer)
|                                                     
|/s/ Lori L. SpencerLori L. Spencer                    |  | Vice President and Controller (Principal Accounting Officer)                                                
|                                                     
|/s/ James T. Bartlett*James T. Bartlett               |  | Director                                                                                                    
|                                                     
|/s/ Francis H.
    Beam, Jr.*Francis H. Beam, Jr.     |  | Director                                                                                                    
|                                                     
|/s/ Martin J. Cleary*Martin J. Cleary                 |  | Director                                                                                                    
|                                                     
|/s/ William H.
    Coquillette*William H. Coquillette |  | Director                                                                                                    
|                                                     
|/s/ John C.
    Dannemiller*John C. Dannemiller       |  | Director                                                                                                    
|                                                     
|/s/ George R. Hill*George R. Hill                     |  | Director                                                                                                    
|                                                     
|/s/ A. Malachi
    Mixon, III*A. Malachi Mixon, III   |  | Director                                                                                                    
|                                                     
|/s/ D. Van Skilling*D. Van Skilling                   |  | Director                                                                                                    






|  |                                                                                                                                                                                                                                                                                                                                      
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | The undersigned, by signing his name hereto, does sign and
    execute this Annual Report on
    Form 10-K pursuant
    to a Power of Attorney executed on behalf of the above-named
    directors of The Lamson & Sessions Co. and filed
    herewith as Exhibit 24 on behalf of The Lamson &
    Sessions Co. and each such person.



| |    |                  
| | -- | -----------------
| | By | /s/ James J. Abel

| |                 
| | ----------------
| |                 
| | James J. Abel,  
| | Attorney-in-fact

48



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##### Table of Contents



EXHIBIT INDEX


10-K


|            |        |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|----------- | ------ | ----------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |        | Description of Document
|            |        |                        
|           
|            | 3(a)   |                         |  | Amended Articles of Incorporation of the Company (incorporated
    by reference to Exhibit 4(a) to the Companys
    Registration Statement on Form S-8 (Registration
    No. 333-32875) filed with the Securities and Exchange
    Commission on August 5, 1997).                                                                                                                                                                                                                                            
|           
|            | 3(b)   |                         |  | Amended Code of Regulations of the Company (incorporated by
    reference to Exhibit 3(a) to the Companys Quarterly
    Report on Form 10-Q for the quarter ended March 31,
    2001 (the First Quarter 2001 Form 10-Q)).                                                                                                                                                                                                                                                                                  
|           
|            | 4(a)   |                         |  | Form of Rights Certificate (incorporated by reference to
    Exhibit 4.1 to the Companys Registration Statement on
    Form 8-A filed with the Securities and Exchange Commission
    on September 9, 1998).                                                                                                                                                                                                                                                                                                 
|           
|            | 4(b)   |                         |  | Rights Agreement, dated as of September 8, 1998 (the
    Rights Agreement), by and between the Company and
    National City Bank (the Rights Agent) (incorporated
    by reference to Exhibit 4.1 to the Companys
    Registration Statement on Form 8-A filed with the
    Securities and Exchange Commission on September 9, 1998).                                                                                                                                                                   
|           
|            | 4(c)   |                         |  | Amendment No. #1 to Rights Agreement, dated as of
    May 5, 2005, between the Company and the Rights Agent
    (incorporated by reference to Exhibit 4.1 to the
    Companys Registration Statement or Form 8-A/A filed
    with the Securities and Exchange Commission on May 5, 2005).                                                                                                                                                                                                                    
|           
|            | *10(a) |                         |  | Form of Three-Year Executive Change-in-Control Agreement between
    the Company and certain executive officers (incorporated by
    reference to Exhibit 10(b) to the Companys Annual
    Report on Form 10-K for the year ended January 1,
    2000).                                                                                                                                                                                                                                                      
|           
|            | *10(b) |                         |  | Form of Two-Year Executive Change-in-Control Agreement between
    the Company and certain executive officers (incorporated by
    reference to Exhibit 10(c) to the Companys Annual
    Report on Form 10-K for the year ended January 1,
    2000).                                                                                                                                                                                                                                                        
|           
|            | *10(c) |                         |  | Form of Amendment to two-year and three-year Executive
    Change-in-Control Agreements between the Company and certain
    executive officers (incorporated by reference to
    Exhibit 10(c) to the Companys Annual Report on
    Form 10-K for the year ended January 3, 2004).                                                                                                                                                                                                                           
|           
|            | *10(d) |                         |  | Form of One-Year Change-in-Control Agreement between the Company
    and certain key employees (incorporated by reference to
    Exhibit 10(d) to the Companys Annual Report on
    Form 10-K for the year ended January 1, 2005 (the
    2004 Form 10-K)).                                                                                                                                                                                                                                                
|           
|            | *10(e) |                         |  | Form of Amendment to One-Year Change-in-Control Agreement
    between the Company and certain key employees (incorporated by
    reference to Exhibit 10(e) to the 2004 Form 10-K).                                                                                                                                                                                                                                                                                                                           
|           
|            | *10(f) |                         |  | Form of Indemnification Agreement between the Company and each
    of the directors and certain officers (incorporated by reference
    to Exhibit 10(g) to the Companys Annual Report on
    Form 10-K for the year ended December 31, 1994).                                                                                                                                                                                                                                                               
|           
|            | 10(g)  |                         |  | Second Amended and Restated Credit Agreement, dated
    June 29, 2005, by and among the Company, the Companys
    subsidiaries, the lenders party thereto, National City Bank and
    JPMorgan Chase Bank, N.A., as co-syndication agents, LaSalle
    Bank National Association, as documentation agent and Harris
    N.A., as administrative agent (incorporated by reference to
    Exhibit 10 (a) to the Companys Form 8-K,
    filed with the Securities and Exchange Commission on
    July 5, 2005).
|           
|            | *10(h) |                         |  | Form of Amended and restated Supplemental Executive Retirement
    Agreement dated as of March 20, 1990 between the Company
    and certain of its executive officers (incorporated by reference
    to Exhibit 10(e) to the Companys Annual Report on
    Form 10-K for the year ended December 30, 1995).                                                                                                                                                                                                  
|           
|            | *10(i) |                         |  | First Amendment to The Lamson & Sessions Co. Amended
    and Restated Supplemental Retirement Agreement, effective
    January 1, 2000 (incorporated by reference to
    Exhibit 10(ak) to the Companys Annual Report on
    Form 10-K for the year ended January 1, 2000).                                                                                                                                                                                                                                  
|           
|            | *10(j) |                         |  | The Lamson & Sessions Co. Supplemental Pension Plan,
    effective February 23, 2000 (incorporated by reference to
    Exhibit 10(q) to the 2004 Form 10-K).                                                                                                                                                                                                                                                                                                                                                  

49



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##### Table of Contents



|            |         |                         |  |                                                                                                                                                                                                                                                                                                                                   
|----------- | ------- | ----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |         | Description of Document
|            |         |                        
|            | *10(k)  |                         |  | 1988 Incentive Equity Performance Plan (as amended and restated
    as of February 26, 1998) (incorporated by reference to
    Exhibit 4(c) of the Companys Registration Statement
    on Form S-3 (Registration No. 333-65795) filed with
    the Securities and Exchange Commission on October 16, 1998).                      
|           
|            | *10(l)  |                         |  | Amendment No. 3 to The Lamson & Sessions Co. 1988
    Incentive Equity Performance Plan (as amended and restated as of
    February 26, 1998) (incorporated by reference to
    Exhibit 10(am) to the Companys Annual Report on
    Form 10-K for the year ended January 1, 2000).                                               
|           
|            | *10(m)  |                         |  | Amendment No. 4 to The Lamson & Sessions Co. 1988
    Incentive Equity Performance Plan (as amended and restated as of
    February 26, 1998), dated as of October 19, 2000
    (incorporated by reference to Exhibit 10(d) to the First
    Quarter 2001 Form 10-Q).                                                             
|           
|            | *10(n)  |                         |  | Form of two-year non-qualified stock option agreement under the
    Companys 1988 Incentive Equity Performance Plan
    (incorporated by reference to Exhibit 10(e) to the Third
    Quarter 2001 Form 10-Q).                                                                                                                    
|           
|            | *10(o)  |                         |  | Form of three-year non-qualified stock option agreement under
    the Companys 1988 Incentive Equity Performance Plan
    (incorporated by reference to Exhibit 10(f) to the Third
    Quarter 2001 Form 10-Q).                                                                                                                  
|           
|            | *10(p)  |                         |  | 1998 Incentive Equity Plan (as amended and restated as of
    April 30, 2004) (incorporated by reference to Appendix B of
    the Companys Proxy Statement dated March 29, 2004).                                                                                                                                                
|           
|            | *10(q)  |                         |  | Form of two-year non-qualified stock option agreement under the
    Companys 1998 Incentive Equity Plan (incorporated by
    reference to Exhibit 10(c) to the Third Quarter 2001
    Form 10-Q).                                                                                                                                
|           
|            | *10(r)  |                         |  | Form of three-year non-qualified stock option agreement under
    the Companys 1998 Incentive Equity Plan (incorporated by
    reference to Exhibit 10(d) to the Third Quarter 2001
    Form 10-Q).                                                                                                                              
|           
|            | *10(s)  |                         |  | Form of one-year non-qualified stock option agreement for
    non-employee directors under the Companys 1998 Incentive
    Equity Plan (incorporated by reference as Exhibit 10(b) to
    the Companys Quarterly Report on Form 10-Q for the
    quarterly period ended July 3, 2004 (the Second
    Quarter 2004 Form 10-Q)).
|           
|            | *10(t)  |                         |  | Form of restricted stock agreement for non-employee directors
    under the Companys 1998 Incentive Equity Plan
    (incorporated by reference as Exhibit 10(c) to the Second
    Quarter 2004 Form 10-Q).                                                                                                                       
|           
|            | *10(u)  |                         |  | The Companys Long-Term Incentive Plan (incorporated by
    reference to Exhibit 10(h) to the Companys Annual
    Report on Form 10-K for the year ended December 28,
    1996).                                                                                                                                                 
|           
|            | *10(v)  |                         |  | Amendment No. 1 to The Lamson & Sessions Co.
    Long-Term Incentive Plan, effective January 1, 2000
    (incorporated by reference to Exhibit 10(an) to the
    Companys Annual Report on Form 10-K for the year
    ended January 1, 2000).                                                                                    
|           
|            | *10(w)  |                         |  | The Lamson & Sessions Co. Non-Employee Directors Stock
    Option Plan, as amended and restated as of July 19, 2001
    (incorporated by reference to Exhibit 10(g) to the Third
    Quarter 2001 Form 10-Q).                                                                                                                     
|           
|            | *10(x)  |                         |  | Form of non-qualified stock option agreement under the
    Companys Non-Employee Directors Stock Option Plan
    (incorporated by reference to Exhibit 10(h) to the Third
    Quarter 2001 Form 10-Q).                                                                                                                           
|           
|            | *10(y)  |                         |  | The Lamson & Sessions Co. Deferred Compensation Plan
    for Non-Employee Directors, as amended and restated as of
    April 30, 2004 (incorporated by reference to
    Exhibit 10(a) to the Second Quarter 2004 Form 10-Q).                                                                                                      
|           
|            | *10(z)  |                         |  | The Lamson & Sessions Co. Deferred Compensation Plan
    for Executive Officers, as amended and restated as of
    October 18, 2001 (incorporated by reference to
    Exhibit 10(j) to the Third Quarter 2001 Form 10-Q).                                                                                                         
|           
|            | *10(aa) |                         |  | The Lamson & Sessions Co. Outside Directors Benefit
    Program, as amended and restated as of February 19, 2004
    (incorporated by reference to Exhibit 10(hh) to the 2004
    Form 10-K).                                                                                                                                     
|           
|            | 21      |                         |  | Subsidiaries of the Registrant, filed herewith.                                                                                                                                                                                                                                                                                   
|           
|            | 23      |                         |  | Consent of Independent Registered Public Accounting Firm.                                                                                                                                                                                                                                                                         
|           
|            | 24      |                         |  | Powers of Attorney, filed herewith.                                                                                                                                                                                                                                                                                               

50



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##### Table of Contents



|            |      |                         |  |                                                                                                                          
|----------- | ---- | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |      | Description of Document
|            |      |                        
|            | 31.1 |                         |  | Certification of John B. Schulze, Chief Executive Officer,
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|           
|            | 31.2 |                         |  | Certification of James J. Abel, Chief Financial Officer,
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  
|           
|            | 32.1 |                         |  | Certification of John B. Schulze, Chief Executive Officer,
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|           
|            | 32.2 |                         |  | Certification of James J. Abel, Chief Financial Officer,
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  

51