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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-Q

(MARK ONE)


|  |  |                                                                                                                                                         
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
    QUARTERLY PERIOD ENDED JUNE 30, 2004, 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 no. 333-43005

PARK-OHIO INDUSTRIES, INC.

(Exact name of registrant as specified in its
charter)


|                                                                   |  |                                     
|------------------------------------------------------------------ |  | ------------------------------------
|Ohio                                                               |  | 34-6520107                          
|                                                                   |  |                                     
|(State or other jurisdiction of incorporation
    or organization) |  | (I.R.S. Employer Identification No.)
|                                                                  
|23000 Euclid Avenue, Cleveland, Ohio                               |  | 44117                               
|                                                                   |  |                                     
|(Address of principal executive offices)                           |  | (Zip Code)                          

Registrants telephone number, including area code:
216/692-7200

Pursuant to a corporate reorganization effective
June 15, 1998, Park-Ohio Industries, Inc.

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


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

Indicate by check mark whether the registrant:



|    |                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Has filed all reports required to be filed by Section 13 or
    15(d) of the Securities Exchange Act of 1934 during the
    preceding twelve months (or for such shorter period that the
    registrant was required to file such reports) and
|   
|(2) | Has been subject to such filing requirements for the past
    90 days.                                                                                                                                                                        

YES xNO o

Indicate by check mark whether the registrant is an accelerated
filer (as defined in Exchange Act Rule 12b-2).

YES oNO x

All of the outstanding capital stock of the registrant is held
by Park-Ohio Holdings Corp. As of August 6, 2004,
100 shares of the registrants common stock, $1 par
value, were outstanding.

The Exhibit Index is located on page 22.



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PARK-OHIO INDUSTRIES, INC. AND
SUBSIDIARIES

INDEX

|                                   |  |                                                                                                  |  | 
|---------------------------------- |  | ------------------------------------------------------------------------------------------------ |  | 
|PART I.                            |  | FINANCIAL INFORMATION                                                                            |  | 
|Item 1                             |  | Financial Statements (Unaudited)                                                                 |  | 
|                                   |  | Consolidated balance sheets 
    June 30, 2004 and December 31, 2003                            |  | 
|                                   |  | Consolidated statements of income 
    Three months and six months ended June 30, 2004 and 2003 |  | 
|                                   |  | Consolidated statement of shareholders
    equity  Six months ended June 30, 2004              |  | 
|                                   |  | Consolidated statements of cash flows 
    Six months ended June 30, 2004 and 2003              |  | 
|                                   |  | Notes to consolidated financial
    statements  June 30, 2004                                   |  | 
|                                   |  | Report of Independent Registered Public
    Accounting Firm                                      |  | 
|Item 2                             |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations        |  | 
|Item 4                             |  | Controls and Procedures                                                                          |  | 
|PART II.                           |  | OTHER INFORMATION                                                                                |  | 
|Item 6                             |  | Exhibits and Reports on Form 8-K                                                                 |  | 
|SIGNATURE                          |  |                                                                                                 
|EXHIBIT INDEX                      |  |                                                                                                 
|EX-31.1 302 Certifications for CEO
|EX-31.2 302 Certifications for CFO
|EX-32 906 Certification           



2



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PART I

FINANCIAL INFORMATION

3



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PARK-OHIO INDUSTRIES, INC. AND
SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

|                                            |                                                                                                                               |                           |         |              |         |   |         |         |         | 
|------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- | ------------------------- | ------- | ------------ | ------- | - | ------- | ------- | ------- | 
|                                            |                                                                                                                               | (Unaudited)               |         |             
|                                            |                                                                                                                               | June 30,                  |         | December 31,
|                                            |                                                                                                                               | 2004                      |         | 2003        
|                                            |                                                                                                                               |                           |         |             
|                                            |                                                                                                                               |                          
|                                            |                                                                                                                               | (Dollars in thousands)   
|ASSETS                                      |                                                                                                                               |                           |         |              |         |   |         |        
|                                           
|Current Assets                              |                                                                                                                               |                           |         |              |         |   |         |        
|                                            | Cash and cash equivalents                                                                                                     |                           | $       | 2,160        |         |   | $       | 2,191   |        
|                                            | Accounts receivable, less allowances for doubtful
    accounts of $3,373 at June 30, 2004 and $3,271 at
    December 31, 2003 |                           |         | 142,245      |         |   |         | 100,938 |        
|                                            | Inventories                                                                                                                   |                           |         | 171,803      |         |   |         | 149,075 |        
|                                            | Other current assets                                                                                                          |                           |         | 16,200       |         |   |         | 16,155  |        
|                                            |                                                                                                                               |                           |         |              |         |   |         |        
|                                            |                                                                                                                               | Total Current Assets      |         |              | 332,408 |   |         |         | 268,359 | 
|Property, Plant and Equipment               |                                                                                                                               |                           | 227,866 |              |         |   | 224,710 |        
|                                            | Less accumulated depreciation                                                                                                 |                           |         | 136,047      |         |   |         | 129,434 |        
|                                            |                                                                                                                               |                           |         |              |         |   |         |        
|                                            |                                                                                                                               |                           | 91,819  |              |         |   | 95,276  |        
|Other Assets                                |                                                                                                                               |                           |         |              |         |   |         |        
|                                            | Goodwill                                                                                                                      |                           |         | 82,191       |         |   |         | 82,278  |        
|                                            | Net assets held for sale                                                                                                      |                           |         | 2,113        |         |   |         | 2,321   |        
|                                            | Prepaid pension and other                                                                                                     |                           |         | 62,762       |         |   |         | 61,310  |        
|                                            |                                                                                                                               |                           |         |              |         |   |         |        
|                                            |                                                                                                                               | $                         | 571,293 |              |         | $ | 509,544 |        
|                                            |                                                                                                                               |                           |         |              |         |   |         |        
|LIABILITIES AND SHAREHOLDERS
    EQUITY    |                                                                                                                               |                           |         |              |         |   |         |        
|Current Liabilities                         |                                                                                                                               |                           |         |              |         |   |         |        
|                                            | Trade accounts payable                                                                                                        |                           | $       | 93,254       |         |   | $       | 66,153  |        
|                                            | Accrued expenses                                                                                                              |                           |         | 56,715       |         |   |         | 46,384  |        
|                                            | Current portion of long-term liabilities                                                                                      |                           |         | 2,736        |         |   |         | 2,811   |        
|                                            |                                                                                                                               |                           |         |              |         |   |         |        
|                                            |                                                                                                                               | Total Current Liabilities |         |              | 152,705 |   |         |         | 115,348 | 
|Long-Term Liabilities, less current portion |                                                                                                                               |                           |         |              |         |   |         |        
|                                            | 9.25% Senior Subordinated Notes                                                                                               |                           |         | 199,930      |         |   |         | 199,930 |        
|                                            | Revolving credit maturing on June 30, 2007                                                                                    |                           |         | 112,700      |         |   |         | 101,000 |        
|                                            | Other long-term debt                                                                                                          |                           |         | 8,856        |         |   |         | 8,234   |        
|                                            | Other postretirement benefits and other long-term
    liabilities                                                             |                           |         | 26,044       |         |   |         | 26,671  |        
|                                            |                                                                                                                               |                           |         |              |         |   |         |        
|                                            |                                                                                                                               |                           | 347,530 |              |         |   | 335,835 |        
|Shareholders Equity                        |                                                                                                                               |                           |         |              |         |   |         |        
|                                            | Common Stock                                                                                                                  |                           |         | -0-          |         |   |         | -0-     |        
|                                            | Additional paid-in capital                                                                                                    |                           |         | 64,844       |         |   |         | 64,844  |        
|                                            | Retained earnings                                                                                                             |                           |         | 9,385        |         |   |         | (3,219  | )      
|                                            | Accumulated other comprehensive loss                                                                                          |                           |         | (3,171       | )       |   |         | (3,264  | )      
|                                            |                                                                                                                               |                           |         |              |         |   |         |        
|                                            |                                                                                                                               |                           | 71,058  |              |         |   | 58,361  |        
|                                            |                                                                                                                               |                           |         |              |         |   |         |        
|                                            |                                                                                                                               | $                         | 571,293 |              |         | $ | 509,544 |        
|                                            |                                                                                                                               |                           |         |              |         |   |         |        



|      |                                                                                                                                                                                                                                                                              
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note: | The balance sheet at December 31, 2003 has
    been derived from the audited financial statements at that date,
    but does not include all of the information and footnotes
    required by generally accepted accounting principles for
    complete financial statements.

See notes to consolidated financial statements.

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PARK-OHIO INDUSTRIES, INC. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

|                                             |                            |                        |         |                  |  |      |         |        |  |   |         |        |  |   |         |        | 
|-------------------------------------------- | -------------------------- | ---------------------- | ------- | ---------------- |  | ---- | ------- | ------ |  | - | ------- | ------ |  | - | ------- | ------ | 
|                                             |                            |                        |         |                 
|                                             |                            | Three Months Ended     |         | Six Months Ended
|                                             |                            | June 30,               |         | June 30,        
|                                             |                            |                        |         |                 
|                                             |                            | 2004                   |         | 2003             |  | 2004 |         | 2003  
|                                             |                            |                        |         |                  |  |      |         |       
|                                             |                            |                       
|                                             |                            | (Amounts in thousands)
|Net sales                                    |                            | $                      | 200,908 |                  |  | $    | 159,916 |        |  | $ | 393,278 |        |  | $ | 314,767 |       
|Cost of products sold                        |                            |                        | 167,256 |                  |  |      | 134,069 |        |  |   | 329,388 |        |  |   | 264,510 |       
|                                             |                            |                        |         |                  |  |      |         |        |  |   |         |        |  |   |         |       
|                                             | Gross profit               |                        |         | 33,652           |  |      |         | 25,847 |  |   |         | 63,890 |  |   |         | 50,257 | 
|Selling, general and administrative expenses |                            |                        | 19,684  |                  |  |      | 15,497  |        |  |   | 37,328  |        |  |   | 30,498  |       
|                                             |                            |                        |         |                  |  |      |         |        |  |   |         |        |  |   |         |       
|                                             | Operating income           |                        |         | 13,968           |  |      |         | 10,350 |  |   |         | 26,562 |  |   |         | 19,759 | 
|Interest expense                             |                            |                        | 6,196   |                  |  |      | 6,695   |        |  |   | 12,332  |        |  |   | 13,452  |       
|                                             |                            |                        |         |                  |  |      |         |        |  |   |         |        |  |   |         |       
|                                             | Income before income taxes |                        |         | 7,772            |  |      |         | 3,655  |  |   |         | 14,230 |  |   |         | 6,307  | 
|Income taxes                                 |                            |                        | 1,035   |                  |  |      | 835     |        |  |   | 1,626   |        |  |   | 972     |       
|                                             |                            |                        |         |                  |  |      |         |        |  |   |         |        |  |   |         |       
|                                             | Net income                 |                        | $       | 6,737            |  |      | $       | 2,820  |  |   | $       | 12,604 |  |   | $       | 5,335  | 
|                                             |                            |                        |         |                  |  |      |         |        |  |   |         |        |  |   |         |       

See notes to consolidated financial statements.

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PARK-OHIO INDUSTRIES, INC. AND
SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS
EQUITY (UNAUDITED)

|                        |                                         |        |     |         |  |          |        |               |  |       |        |        |  |   |        |    |  |   |        |        | 
|----------------------- | --------------------------------------- | ------ | --- | ------- |  | -------- | ------ | ------------- |  | ----- | ------ | ------ |  | - | ------ | -- |  | - | ------ | ------ | 
|                        |                                         |        |     |         |  |          |        | Accumulated   |  |      
|                        |                                         |        |     |         |  |          |        | Other         |  |      
|                        |                                         | Common |     | Paid-In |  | Retained |        | Comprehensive |  |      
|                        |                                         | Stock  |     | Capital |  | Earnings |        | (Loss)        |  | Total
|                        |                                         |        |     |         |  |          |        |               |  |      
|Balance January 1, 2004 |                                         | $      | -0- |         |  | $        | 64,844 |               |  | $     | (3,219 | )      |  | $ | (3,264 | )  |  | $ | 58,361 |       
|Comprehensive income:   |                                         |        |     |         |  |          |        |               |  |       |        |        |  |   |        |    |  |   |        |       
|                        | Net income                              |        |     |         |  |          |        |               |  |       |        | 12,604 |  |   |        |    |  |   |        | 12,604 | 
|                        | Foreign currency translation adjustment |        |     |         |  |          |        |               |  |       |        |        |  |   |        | 93 |  |   |        | 93     | 
|                        |                                         |        |     |         |  |          |        |               |  |       |        |        |  |   |        |    |  |   |        |       
|                        | Comprehensive income                    |        |     |         |  |          |        |               |  |       |        |        |  |   |        |    |  |   |        | 12,697 | 
|                        |                                         |        |     |         |  |          |        |               |  |       |        |        |  |   |        |    |  |   |        |       
|Balance June 30, 2004   |                                         | $      | -0- |         |  | $        | 64,844 |               |  | $     | 9,385  |        |  | $ | (3,171 | )  |  | $ | 71,058 |       
|                        |                                         |        |     |         |  |          |        |               |  |       |        |        |  |   |        |    |  |   |        |       

See notes to consolidated financial statements.

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PARK-OHIO INDUSTRIES, INC. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

|                                                 |                                                                                   |                                                  |                                       |        |        |         |        |        |        |        |  
|------------------------------------------------ | --------------------------------------------------------------------------------- | ------------------------------------------------ | ------------------------------------- | ------ | ------ | ------- | ------ | ------ | ------ | ------ | -
|                                                 |                                                                                   |                                                 
|                                                 |                                                                                   | Six Months Ended                                
|                                                 |                                                                                   | June 30,                                        
|                                                 |                                                                                   |                                                 
|                                                 |                                                                                   | 2004                                             |                                       | 2003  
|                                                 |                                                                                   |                                                  |                                       |       
|                                                 |                                                                                   |                                                 
|                                                 |                                                                                   | (Dollars in                                     
|                                                 |                                                                                   | thousands)                                      
|OPERATING ACTIVITIES                             |                                                                                   |                                                  |                                       |        |        |         |        |       
|                                                 | Net income                                                                        |                                                  | $                                     | 12,604 |        |         | $      | 5,335  |       
|                                                 | Adjustments to reconcile net income to net cash
    used by operating activities: |                                                  |                                       |        |        |         |        |        |       
|                                                 |                                                                                   | Depreciation and amortization                    |                                       |        | 7,863  |         |        |        | 8,170  |       
|                                                 |                                                                                   | Changes in operating assets and liabilities:     |                                       |        |        |         |        |        |        |       
|                                                 |                                                                                   |                                                  | Accounts receivable                   |        |        | (41,307 | )      |        |        | (6,854 | )
|                                                 |                                                                                   |                                                  | Inventories and other current assets  |        |        | (22,774 | )      |        |        | (2,833 | )
|                                                 |                                                                                   |                                                  | Accounts payable and accrued expenses |        |        | 37,433  |        |        |        | (5,975 | )
|                                                 |                                                                                   |                                                  | Other                                 |        |        | (2,531  | )      |        |        | 56     |  
|                                                 |                                                                                   |                                                  |                                       |        |        |         |        |       
|                                                 |                                                                                   |                                                  | Net Cash Used by Operating Activities |        |        | (8,712  | )      |        |        | (2,101 | )
|INVESTING ACTIVITIES                             |                                                                                   |                                                  |                                       |        |        |         |        |       
|                                                 | Purchases of property, plant and equipment, net                                   |                                                  |                                       | (3,566 | )      |         |        | (5,846 | )     
|                                                 | Proceeds from sale of assets held for sale                                        |                                                  |                                       | -0-    |        |         |        | 7,340  |       
|                                                 |                                                                                   |                                                  |                                       |        |        |         |        |       
|                                                 |                                                                                   | Net Cash (Used) Provided by Investing Activities |                                       |        | (3,566 | )       |        |        | 1,494  |       
|FINANCING ACTIVITIES                             |                                                                                   |                                                  |                                       |        |        |         |        |       
|                                                 | Proceeds from debt, net                                                           |                                                  |                                       | 12,247 |        |         |        | -0-    |       
|                                                 | Payments on debt, net                                                             |                                                  |                                       | -0-    |        |         |        | (4,601 | )     
|                                                 |                                                                                   |                                                  |                                       |        |        |         |        |       
|                                                 |                                                                                   | Net Cash Provided (Used) by Financing Activities |                                       |        | 12,247 |         |        |        | (4,601 | )     
|                                                 |                                                                                   |                                                  |                                       |        |        |         |        |       
|Decrease in Cash and Cash Equivalents            |                                                                                   |                                                  | (31                                   | )      |        |         | (5,208 | )     
|Cash and Cash Equivalents at Beginning of Period |                                                                                   |                                                  | 2,191                                 |        |        |         | 8,800  |       
|                                                 |                                                                                   |                                                  |                                       |        |        |         |        |       
|Cash and Cash Equivalents at End of Period       |                                                                                   | $                                                | 2,160                                 |        |        | $       | 3,592  |       
|                                                 |                                                                                   |                                                  |                                       |        |        |         |        |       
|Taxes paid (received)                            |                                                                                   | $                                                | 1,457                                 |        |        | $       | (1,187 | )     
|Interest paid                                    |                                                                                   |                                                  | 12,076                                |        |        |         | 12,904 |       

See notes to consolidated financial statements.

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PARK-OHIO INDUSTRIES, INC. AND
SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

June 30, 2004

(Amounts in Thousands  except per
share data)

NOTE A  Basis of
Presentation

The consolidated financial statements include the
accounts of Park-Ohio Industries, Inc. and its subsidiaries
(Park-Ohio or the Company). Park-Ohio
became a wholly-owned subsidiary of Park-Ohio Holdings Corp. as
of June 10, 1998. All significant intercompany transactions
have been eliminated in consolidation.

The accompanying unaudited consolidated financial
statements have been prepared in accordance with accounting
principles generally accepted for interim financial information
and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by accounting principles
generally accepted in the United States for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results
for the three-month and six-month periods ended June 30,
2004 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2004. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Companys Annual Report
on Form 10-K for the year ended December 31, 2003.

NOTE B  Acquisition and
Dispositions

On April 1, 2004, the Company acquired the
remaining 66% of the common stock of Japan Ajax Magnethermic
Company (Jamco), for cash existing on the balance
sheet of Jamco at that date. No additional purchase price was
paid by the Company. The purchase price and the results of
operations of Jamco prior to its date of acquisition were not
deemed significant as defined in Regulation S-X.

During the first quarter of 2003, the Company
completed the sale of substantially all of the assets of Green
Bearing (Green) and St. Louis Screw and Bolt
(St. Louis Screw) for cash of approximately
$7.3 million in the aggregate. No gains or losses were
recorded on the sales. Green and St. Louis Screw were
non-core businesses in the ILS Segment and Manufactured Products
Segment, respectively, and had been identified as businesses the
Company was selling as part of its restructuring activities
during 2002 and 2001.

NOTE C  Recent Accounting
Pronouncements

In December 2003, the Financial Accounting
Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 132R,
Employers Disclosure about Pensions and Other
Postretirement Benefits. SFAS No. 132R requires,
among other things, additional disclosures about the components
of pension expense for interim periods beginning after
December 15, 2003. The Company adopted this pronouncement
as of December 31, 2003 and included the revised annual
disclosure in its 2003 Form 10-K. See Note H to the
consolidated financial statements in this report for the
required interim disclosures.

In December 2003, the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (the Medicare
Act) was enacted in the United States. The Medicare Act,
among other things, expanded existing Medicare healthcare
benefits to include an outpatient prescription drug benefit to
Medicare eligible residents of the
U.S. (Part D) beginning in 2006.
Prescription drug coverage will be available to eligible
individuals who voluntarily enroll under a Part D plan. As
an alternative, employers may provide drug coverage at least
actuarially equivalent to standard coverage and
receive a tax-free federal subsidy equal to 28% of a portion of
a Medicare beneficiarys drug costs. However, if covered
retirees enroll in a Part D plan, the employer would not
receive the subsidy.

The FASB has proposed Staff Position
(FSP) FAS No. 106-2, Accounting and
Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003, to

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PARK-OHIO INDUSTRIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  Continued

provide guidance on accounting for effects of
this healthcare benefit legislation. The FSP would treat the
effect of the employer subsidy on the accumulated postretirement
benefit obligation (APBO) as an actuarial gain. The
effect of the subsidy would also be reflected in the estimate of
service cost in measuring the cost of benefits attributable to
current service. The effects of plan amendments adopted
subsequent to the adoption of the Medicare Act to qualify plans
as actuarially equivalent would be treated as actuarial gains if
the net effect of the amendments reduces the APBO. The net
effect on the APBO of any plan amendments that (a) reduce
benefits under the plan and thus disqualify the benefits as
actuarially equivalent and (b) eliminate the subsidy would
be accounted for as prior service cost.

The Company has deferred accounting for the
effects of the Medicare Act pending an assessment of the
provisions of the Medicare Act on its postretirement healthcare
plans; accordingly, the measures of APBO and expense recognized
for the three-month and six-month periods ended June 30,
2004 do not reflect any amount associated with the subsidy. The
Company expects to reflect the effects of the Medicare Act on
its plans in the third quarter.

NOTE D  Inventories

The components of inventory consist of the
following:

|                              |  |          |         |              |  |   |         | 
|----------------------------- |  | -------- | ------- | ------------ |  | - | ------- | 
|                              |  | June 30, |         | December 31,
|                              |  | 2004     |         | 2003        
|                              |  |          |         |             
|In process and finished goods |  | $        | 138,324 |              |  | $ | 121,154 | 
|Raw materials and supplies    |  |          | 33,479  |              |  |   | 27,921  | 
|                              |  |          |         |              |  |   |         | 
|                              |  | $        | 171,803 |              |  | $ | 149,075 | 
|                              |  |          |         |              |  |   |         | 

NOTE E  Pension Plans and Other
Postretirement Benefits

Effective December 31, 2003, the Company
adopted SFAS No. 132 (revised 2003),
Employers Disclosures about Pensions and Other
Postretirement Benefits. This standard requires the
disclosure of the components of net periodic benefit cost
recognized during interim periods.

|                                     |  |                    |        |                         |  |                    |        |                  |  |      |        |      |  |      |        |      |  |   |     |   |  |   |     |   |  |   |       |   |  |   |     |  
|------------------------------------ |  | ------------------ | ------ | ----------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | - | --- | - |  | - | --- | - |  | - | ----- | - |  | - | --- | -
|                                     |  |                    |        |                        
|                                     |  | Pension Benefits   |        | Postretirement Benefits
|                                     |  |                    |        |                        
|                                     |  |                    |        |                         |  |                    |        |                 
|                                     |  | Three Months Ended |        | Six Months Ended        |  | Three Months Ended |        | Six Months Ended
|                                     |  | June 30,           |        | June 30,                |  | June 30,           |        | June 30,        
|                                     |  |                    |        |                         |  |                    |        |                 
|                                     |  | 2004               |        | 2003                    |  | 2004               |        | 2003             |  | 2004 |        | 2003 |  | 2004 |        | 2003
|                                     |  |                    |        |                         |  |                    |        |                  |  |      |        |      |  |      |        |     
|Service costs                        |  | $                  | 78     |                         |  | $                  | 136    |                  |  | $    | 156    |      |  | $    | 272    |      |  | $ | 40  |   |  | $ | 37  |   |  | $ | 80    |   |  | $ | 74  |  
|Interest costs                       |  |                    | 834    |                         |  |                    | 874    |                  |  |      | 1,668  |      |  |      | 1,748  |      |  |   | 421 |   |  |   | 425 |   |  |   | 842   |   |  |   | 850 |  
|Expected return on plan assets       |  |                    | (2,093 | )                       |  |                    | (1,807 | )                |  |      | (4,186 | )    |  |      | (3,614 | )    |  |   | -0- |   |  |   | -0- |   |  |   | -0-   |   |  |   | -0- |  
|Transition obligation                |  |                    | (12    | )                       |  |                    | (12    | )                |  |      | (24    | )    |  |      | (24    | )    |  |   | -0- |   |  |   | -0- |   |  |   | -0-   |   |  |   | -0- |  
|Amortization of prior service cost   |  |                    | 32     |                         |  |                    | 64     |                  |  |      | 64     |      |  |      | 128    |      |  |   | (20 | ) |  |   | (20 | ) |  |   | (40   | ) |  |   | (40 | )
|Recognized net actuarial (gain) loss |  |                    | (81    | )                       |  |                    | 90     |                  |  |      | (162   | )    |  |      | 180    |      |  |   | 59  |   |  |   | 13  |   |  |   | 118   |   |  |   | 26  |  
|                                     |  |                    |        |                         |  |                    |        |                  |  |      |        |      |  |      |        |      |  |   |     |   |  |   |     |   |  |   |       |   |  |   |     |  
|Benefit (income) costs               |  | $                  | (1,242 | )                       |  | $                  | (655   | )                |  | $    | (2,484 | )    |  | $    | (1,310 | )    |  | $ | 500 |   |  | $ | 455 |   |  | $ | 1,000 |   |  | $ | 910 |  
|                                     |  |                    |        |                         |  |                    |        |                  |  |      |        |      |  |      |        |      |  |   |     |   |  |   |     |   |  |   |       |   |  |   |     |  

The Company has deferred accounting for the
effects of the Medicare Act pending an assessment of the
provisions of the Medicare Act on its postretirement healthcare
plans; accordingly, the measures of APBO and expense recognized
for the three-month and six-month periods ended June 30,
2004 do no reflect any amount associated with the subsidy. The
Company expects to reflect the effects of the Medicare Act on
its plans in the third quarter.

9



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##### Table of Contents



PARK-OHIO INDUSTRIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  Continued

NOTE F  Segments

The Company operates through three segments:
Integrated Logistics Solutions (ILS), Aluminum
Products and Manufactured Products. ILS is a leading supply
chain logistics provider of production components to large,
multinational manufacturing companies, other manufacturers and
distributors. In connection with the supply of such production
components, ILS provides a variety of value-added,
cost-effective supply chain management services. Aluminum
Products manufactures cast aluminum components for automotive,
agricultural equipment, heavy duty truck and construction
equipment. Aluminum Products also provides value-added services
such as design and engineering, machining and assembly.
Manufactured Products operates a diverse group of niche
manufacturing businesses that design and manufacture a broad
range of high quality products engineered for specific customer
applications.

Results by business segment were as follows:

|                            |                       |                    |         |                  |  |      |         |        |  |   |         |         |  |   |         |         | 
|--------------------------- | --------------------- | ------------------ | ------- | ---------------- |  | ---- | ------- | ------ |  | - | ------- | ------- |  | - | ------- | ------- | 
|                            |                       |                    |         |                 
|                            |                       | Three Months Ended |         | Six Months Ended
|                            |                       | June 30,           |         | June 30,        
|                            |                       |                    |         |                 
|                            |                       | 2004               |         | 2003             |  | 2004 |         | 2003  
|                            |                       |                    |         |                  |  |      |         |       
|Net sales:                  |                       |                    |         |                  |  |      |         |        |  |   |         |         |  |   |         |        
|                            | ILS                   |                    | $       | 114,849          |  |      | $       | 96,525 |  |   | $       | 231,114 |  |   | $       | 188,877 | 
|                            | Aluminum products     |                    |         | 28,269           |  |      |         | 23,931 |  |   |         | 55,850  |  |   |         | 47,973  | 
|                            | Manufactured products |                    |         | 57,790           |  |      |         | 39,460 |  |   |         | 106,314 |  |   |         | 77,917  | 
|                            |                       |                    |         |                  |  |      |         |        |  |   |         |         |  |   |         |        
|                            |                       | $                  | 200,908 |                  |  | $    | 159,916 |        |  | $ | 393,278 |         |  | $ | 314,767 |        
|                            |                       |                    |         |                  |  |      |         |        |  |   |         |         |  |   |         |        
|Income before income taxes: |                       |                    |         |                  |  |      |         |        |  |   |         |         |  |   |         |        
|                            | ILS                   |                    | $       | 8,269            |  |      | $       | 6,237  |  |   | $       | 17,478  |  |   | $       | 12,085  | 
|                            | Aluminum products     |                    |         | 2,744            |  |      |         | 3,222  |  |   |         | 4,331   |  |   |         | 6,800   | 
|                            | Manufactured products |                    |         | 5,229            |  |      |         | 2,598  |  |   |         | 8,521   |  |   |         | 3,746   | 
|                            |                       |                    |         |                  |  |      |         |        |  |   |         |         |  |   |         |        
|                            |                       |                    | 16,242  |                  |  |      | 12,057  |        |  |   | 30,330  |         |  |   | 22,631  |        
|Corporate costs             |                       |                    | (2,274  | )                |  |      | (1,707  | )      |  |   | (3,768  | )       |  |   | (2,872  | )      
|Interest expense            |                       |                    | (6,196  | )                |  |      | (6,695  | )      |  |   | (12,332 | )       |  |   | (13,452 | )      
|                            |                       |                    |         |                  |  |      |         |        |  |   |         |         |  |   |         |        
|                            |                       | $                  | 7,772   |                  |  | $    | 3,655   |        |  | $ | 14,230  |         |  | $ | 6,307   |        
|                            |                       |                    |         |                  |  |      |         |        |  |   |         |         |  |   |         |        

|                                     |                       |          |         |              |  |   |         |         | 
|------------------------------------ | --------------------- | -------- | ------- | ------------ |  | - | ------- | ------- | 
|                                     |                       | June 30, |         | December 31,
|                                     |                       | 2004     |         | 2003        
|                                     |                       |          |         |             
|Identifiable assets were as follows: |                       |          |         |              |  |   |         |        
|                                     | ILS                   |          | $       | 300,337      |  |   | $       | 267,361 | 
|                                     | Aluminum products     |          |         | 84,550       |  |   |         | 88,031  | 
|                                     | Manufactured products |          |         | 167,308      |  |   |         | 121,331 | 
|                                     | General corporate     |          |         | 19,098       |  |   |         | 32,821  | 
|                                     |                       |          |         |              |  |   |         |        
|                                     |                       | $        | 571,293 |              |  | $ | 509,544 |        
|                                     |                       |          |         |              |  |   |         |        

10



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##### Table of Contents



PARK-OHIO INDUSTRIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  Continued

NOTE G  Comprehensive
Income

Total comprehensive income was as follows:

|                             |  |                    |       |                  |  |      |       |      |  |   |        |  |  |   |       | 
|---------------------------- |  | ------------------ | ----- | ---------------- |  | ---- | ----- | ---- |  | - | ------ |  |  | - | ----- | 
|                             |  |                    |       |                 
|                             |  | Three Months Ended |       | Six Months Ended
|                             |  | June 30,           |       | June 30,        
|                             |  |                    |       |                 
|                             |  | 2004               |       | 2003             |  | 2004 |       | 2003
|                             |  |                    |       |                  |  |      |       |     
|Net income                   |  | $                  | 6,737 |                  |  | $    | 2,820 |      |  | $ | 12,604 |  |  | $ | 5,335 | 
|Foreign currency translation |  |                    | (721  | )                |  |      | 2,044 |      |  |   | 93     |  |  |   | 2,770 | 
|                             |  |                    |       |                  |  |      |       |      |  |   |        |  |  |   |       | 
|Total comprehensive income   |  | $                  | 6,016 |                  |  | $    | 4,864 |      |  | $ | 12,697 |  |  | $ | 8,105 | 
|                             |  |                    |       |                  |  |      |       |      |  |   |        |  |  |   |       | 

The components of accumulated comprehensive loss
at June 30, 2004 and December 31, 2003 are as follows:

|                                        |  |          |        |              |  |   |        |  
|--------------------------------------- |  | -------- | ------ | ------------ |  | - | ------ | -
|                                        |  | June 30, |        | December 31,
|                                        |  | 2004     |        | 2003        
|                                        |  |          |        |             
|Foreign currency translation adjustment |  | $        | (1,184 | )            |  | $ | (1,091 | )
|Minimum pension liability               |  |          | 4,355  |              |  |   | 4,355  |  
|                                        |  |          |        |              |  |   |        |  
|                                        |  | $        | 3,171  |              |  | $ | 3,264  |  
|                                        |  |          |        |              |  |   |        |  

NOTE H  Restructuring
Activities

The Company responded to the economic downturn by
reducing costs in a variety of ways, including restructuring
businesses and selling non-core manufacturing assets. These
activities, which included asset write-downs and other exit
costs related to the shutdown of facilities, generated
restructuring and asset impairment charges of
$19.4 million, $19.2 million and $28.5 million in
2003, 2002 and 2001, respectively (of which $1.0 million in
2003, $5.6 million (490 employees) in 2002 and
$6.9 million (525 employees) in 2001 related to severance
and exit costs). For further details on the restructuring plan,
see Note P to the audited financial statements contained in the
Companys Annual Report on Form 10-K for the year
ended December 31, 2003.

11



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##### Table of Contents



PARK-OHIO INDUSTRIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  Continued

The accrued liability balance for severance and
exit costs and related cash payments consisted of:

|                             |  |   |        |  
|---------------------------- |  | - | ------ | -
|2001                         |  |   |        |  
|Severance and exit charges   |  | $ | 6,883  |  
|Cash payments                |  |   | (2,731 | )
|                             |  |   |        |  
|Balance at December 31, 2001 |  |   | 4,152  |  
|                            
|2002                         |  |   |        |  
|Severance and exit charges   |  |   | 5,599  |  
|Cash payments                |  |   | (5,706 | )
|                             |  |   |        |  
|Balance at December 31, 2002 |  |   | 4,045  |  
|                            
|2003                         |  |   |        |  
|Severance and exit charges   |  |   | 990    |  
|Cash payments                |  |   | (2,500 | )
|                             |  |   |        |  
|Balance at December 31, 2003 |  |   | 2,535  |  
|                            
|2004                         |  |   |        |  
|Cash payments                |  |   | (369   | )
|                             |  |   |        |  
|Balance at June 30, 2004     |  | $ | 2,166  |  
|                             |  |   |        |  

As of June 30, 2004, all of the 525
employees identified in 2001 and 490 employees identified in
2002 had been terminated. The workforce reductions under the
restructuring plan consisted of hourly and salaried employees at
various operating facilities due to either closure or
consolidation.

Net sales for the businesses that were included
in net assets held for sale were $-0- and $7,129 for the six
months ended June 30, 2004 and 2003, respectively.
Operating income for these entities was $-0- and $23 for the six
months ended June 30, 2004 and 2003, respectively.

NOTE I  Accrued Warranty
Costs

The Company estimates the amount of warranty
claims on sold products that may be incurred based on current
and historical data. The actual warranty expense could differ
from the estimates made by the Company based on product
performance. The following table presents the changes in the
Companys product warranty liability:

|                           |                                              |   |       |        |  
|-------------------------- | -------------------------------------------- | - | ----- | ------ | -
|Balance at January 1, 2004 |                                              | $ | 5,614 |       
|                           | Claims paid during the year                  |   |       | (2,742 | )
|                           | Additional warranties issued during the year |   |       | 1,252  |  
|                           | Acquired warranty liabilities                |   |       | 501    |  
|                           |                                              |   |       |       
|Balance at June 30, 2004   |                                              | $ | 4,625 |       
|                           |                                              |   |       |       

NOTE J  Income Taxes

The effective income tax rate for the six-month
period ended June 30, 2004 was 11%, compared to 15% for the
corresponding period in 2003. Only foreign and state income
taxes were provided for in both periods, because federal income
taxes were offset by net operating loss carryforwards that were
not recognized previously due to valuation allowances. At
December 31, 2003, the Company had net operating loss

12



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##### Table of Contents



PARK-OHIO INDUSTRIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  Continued

carryforwards of approximately
$35.7 million. Tax benefits related to these carryforwards
were fully offset by valuation allowances in 2002, because the
Company was in a three-year cumulative loss position.

NOTE K  Derivatives and
Hedging

The Company recognizes all derivative financial
instruments as either assets or liabilities at fair value. The
Company has no derivative instruments that are classified as
fair value hedges. Changes in the fair value of derivative
instruments that are classified as cash flow hedges are
recognized in other comprehensive income until such time as the
hedged items are recognized in net income.

During the second quarter of 2004, the Company
entered into forward contracts, for the purpose of hedging
exposure to changes in the value of accounts receivable in Euros
against the US dollar, for a notional amount of
$5.1 million, of which $4.5 million was outstanding at
June 30, 2004. These transactions are considered cash flow
hedges and, therefore, the fair market value at the end of the
second quarter 2004 of a $.2 million loss, has been
recognized in other comprehensive income (loss). Because there
is no ineffectiveness on the cash flow hedges, all changes in
fair value of these derivatives are recorded in equity and not
included in the current periods income statement. The
$.2 million of loss on the fair value of the hedges is
classified in current accrued liabilities.

13



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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

Board of Directors and Shareholder

Park-Ohio Industries, Inc.


We have reviewed the accompanying consolidated
balance sheet of Park-Ohio Industries, Inc. and subsidiaries as
of June 30, 2004 and the related consolidated statements of
income for the three-month and six-month periods ended
June 30, 2004 and 2003, the consolidated statement of
shareholders equity for the six-month period ended
June 30, 2004 and the consolidated statements of cash flows
for the six-month periods ended June 30, 2004 and 2003.
These financial statements are the responsibility of the
Companys management.

We conducted our review in accordance with
standards of the Public Company Accounting Oversight Board
(United States). A review of interim financial information
consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in
scope than an audit conducted in accordance with the standards
of the Public Company Accounting Oversight Board, the objective
of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such
an opinion.

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

We have previously audited, in accordance with
the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheet of Park-Ohio
Industries, Inc. and subsidiaries as of December 31, 2003
and the related consolidated statements of operations,
shareholders equity, and cash flows for the year then
ended, not presented herein, and in our report dated
March 9, 2004, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the
information set forth in the accompanying consolidated balance
sheet as of December 31, 2003, is fairly stated, in all
material respects, in relation to the consolidated balance sheet
from which it has been derived.



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

Cleveland, Ohio

August 6, 2004


14



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##### Table of Contents








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis of
    Financial Condition and Results of Operations

The consolidated financial statements of the
Company include the accounts of Park-Ohio Industries, Inc. and
its subsidiaries. All significant intercompany transactions have
been eliminated in consolidation. Financial information for the
three-months and six-month periods ended June 30, 2004 is
not directly comparable to the financial information for the
same periods in 2003 primarily due to the divestitures of Green
Bearing and St. Louis Screw and Bolt in first quarter 2003,
and the second quarter 2004 acquisition of the remaining 66% of
the common stock of Japan Ajax Magnethermic Company
(Jamco).

Executive Overview

The Company operates through three segments, ILS,
Aluminum Products and Manufactured Products. ILS is a leading
supply chain logistics provider of production components to
large, multinational manufacturers. In connection with the
supply of such production components, ILS provides a variety of
value-added, cost-effective supply chain management services.
The principal customers of ILS are in the heavy-duty truck,
semiconductor equipment, industrial equipment, aerospace and
defense, electrical controls, HVAC, vehicle parts and
accessories, appliances, and lawn and garden equipment
industries. Aluminum Products manufactures cast aluminum
components primarily for automotive manufacturers. Aluminum
Products also provides value-added services such as design and
engineering, machining and assembly. Manufactured Products
operates a diverse group of niche manufacturing businesses that
design and manufacture a broad range of high quality products
engineered for specific customer applications. The principal
customers of Manufactured Products are OEMs and end-users in the
aerospace, automotive, steel, forging, railroad, truck, oil,
food processing and consumer appliance industries. Sales,
earnings and other relevant financial data for these three
segments are provided in Note F to the consolidated
financial statements, included elsewhere herein.

The Company continues to experience the increased
sales and profitability it previously forecast for 2004 as the
manufacturing economy returns to growth, particularly in two of
the Companys customer segments, heavy-duty truck and
semiconductor equipment. Net sales increased 25% in the first
six months of 2004 compared to the same period in 2003. Net
income increased 136% in the first six months of 2004 compared
to the same period in 2003.

The Companys sales grew strongly from 1993
through 2000, through both internal growth and acquisitions.
Starting in the second half of 2000, both sales and
profitability declined due to overall weakness in the
manufacturing economy, and particularly to contraction in the
heavy-duty truck industry. Despite these sales declines, the
Company retained or gained market share in most major markets
served. The Companys sales stabilized in 2002 and 2003,
declining slightly due primarily to divestitures, and losses
(including restructuring and impairment charges) began to
diminish.

The Company responded to the economic downturn by
reducing costs, increasing prices on targeted products,
restructuring many of its businesses and selling non-core
manufacturing assets. Since 2000, the Company has consolidated
28 supply chain logistics facilities, and closed or sold 11
manufacturing plants. In regard to these actions, the Company
recorded restructuring and impairment charges in 2001, 2002 and
2003. For more information on these charges, see Note H to
the consolidated financial statements, included elsewhere herein.

The Companys primary sources of liquidity
are funds provided by operations and funds available from an
existing bank revolving credit arrangement. The Company may
borrow up to $165.0 million under its revolving credit
agreement, expiring July 30, 2007, subject to an asset
based formula. The credit agreement is secured by substantially
all the assets of the Company. At June 30, 2004, the
Company had approximately $44.6 million of unused borrowing
availability from the revolving credit agreement. The
Companys $199.9 million of outstanding Senior
Subordinated Notes mature in December, 2007. Funds provided by
operations plus available borrowings under the revolving credit
agreement are expected to be adequate to meet the Companys
cash requirements until 2007, by which time management expects
to have entered into replacement financing agreements.

15



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##### Table of Contents



The Company completed the sale of substantially
all of the assets of St. Louis Screw and Bolt (St.
Louis Screw) and Green Bearing (Green) for
cash totaling approximately $7.3 million in the aggregate.
The Company acquired the remaining 66% of the common stock of
Japan Ajax Magnethermic Company (Jamco) on
April 1, 2004 for cash existing on the balance sheet of
Jamco at that date. No additional purchase price was paid by the
Company.

Results of Operations



| |                                           
| | ------------------------------------------
| | Six Months 2004 versus Six Months
    2003



| |                      
| | ---------------------
| | Net Sales by Segment:

|                       |  |                  |       |      |  |         |       |             |  |          |      |      |  |  |    |   |  |   |      |   |  |  |    |  
|---------------------- |  | ---------------- | ----- | ---- |  | ------- | ----- | ----------- |  | -------- | ---- | ---- |  |  | -- | - |  | - | ---- | - |  |  | -- | -
|                       |  |                  |       |      |  |         |       |             |  |         
|                       |  | Six Months Ended |       |      |  |         |       |             |  |         
|                       |  | June 30,         |       |      |  |         |       | (Acquired)/ |  | Internal
|                       |  |                  |       |      |  | Percent |       | Divested    |  | Growth  
|                       |  | 2004             |       | 2003 |  | Change  |       | Change      |  | Sales    |      | Rate
|                       |  |                  |       |      |  |         |       |             |  |          |      |     
|ILS                    |  | $                | 231.1 |      |  | $       | 188.9 |             |  | $        | 42.2 |      |  |  | 22 | % |  | $ | 1.0  |   |  |  | 23 | %
|Aluminum products      |  |                  | 55.9  |      |  |         | 48.0  |             |  |          | 7.9  |      |  |  | 16 | % |  |   | 0.0  |   |  |  | 16 | %
|Manufactured products  |  |                  | 106.3 |      |  |         | 77.9  |             |  |          | 28.4 |      |  |  | 36 | % |  |   | (1.2 | ) |  |  | 35 | %
|                       |  |                  |       |      |  |         |       |             |  |          |      |      |  |  |    |   |  |   |      |   |  |  |    |  
|Consolidated Net Sales |  | $                | 393.3 |      |  | $       | 314.8 |             |  | $        | 78.5 |      |  |  | 25 | % |  | $ | (0.2 | ) |  |  | 25 | %
|                       |  |                  |       |      |  |         |       |             |  |          |      |      |  |  |    |   |  |   |      |   |  |  |    |  

Net sales increased 25% for the first six months
of 2004, compared to the same period in 2003. ILS sales
increased due to general economic growth, and in particular to
significant growth in the heavy-duty truck and semiconductor
industries. The divestiture of Green reduced ILS sales by
$1.0 million in the first six months of 2004. Aluminum
Products sales increased primarily due to volume increases in
the automotive industry, combined with extension of specific
products to an additional engine platform. Manufactured Products
sales increased $28.4 million in the first six months of
2004 compared to the same period of 2003, primarily in the
induction business. Of this increase, $1.2 million was due
to the net effect of the second quarter 2004 acquisition of the
remaining 66% of the common stock of Jamco, partially offset by
the divestiture of St. Louis Screw in the first quarter of
2003.



| |                                          
| | -----------------------------------------
| | Cost of Products Sold & Gross
    Profit:

|                                   |  |                  |       |      |  |         |       |        |  |        |      |        |  |  |    |   |  |  |      |   |  |  |      |  
|---------------------------------- |  | ---------------- | ----- | ---- |  | ------- | ----- | ------ |  | ------ | ---- | ------ |  |  | -- | - |  |  | ---- | - |  |  | ---- | -
|                                   |  |                  |       |      |  |         |       |        |  |       
|                                   |  | Six Months Ended |       |      |  |         |       |        |  |       
|                                   |  | June 30,         |       |      |  |         |       | 2004   |  | 2003  
|                                   |  |                  |       |      |  | Percent |       | Gross  |  | Gross 
|                                   |  | 2004             |       | 2003 |  | Change  |       | Change |  | Margin |      | Margin
|                                   |  |                  |       |      |  |         |       |        |  |        |      |       
|Consolidated cost of products sold |  | $                | 329.4 |      |  | $       | 264.5 |        |  | $      | 64.9 |        |  |  | 25 | % |  |  |      |   |  |  |      |  
|                                   |  |                  |       |      |  |         |       |        |  |        |      |        |  |  |    |   |  |  |      |   |  |  |      |  
|Consolidated gross profit          |  | $                | 63.9  |      |  | $       | 50.3  |        |  | $      | 13.6 |        |  |  | 27 | % |  |  | 16.2 | % |  |  | 16.0 | %
|                                   |  |                  |       |      |  |         |       |        |  |        |      |        |  |  |    |   |  |  |      |   |  |  |      |  

Cost of products sold increased 25% for the first
six months of 2004, compared to the same period in 2003, while
gross margin increased to 16.2% from 16.0%. ILS gross margin
increased modestly, primarily due to cost reductions from
restructuring and the absorption of fixed overhead over a larger
sales base. Aluminum Products gross margin decreased due to a
combination of product mix and pricing changes and specific
one-time costs incurred in the first half for product startup,
scrap and reserves. Gross margin in the Manufactured Products
segment increased, primarily as a result of increased sales and
overhead efficiencies achieved in the induction business, and
the absorption of fixed overhead over a larger sales base.



| |                                                         
| | --------------------------------------------------------
| | Selling, General & Administrative
    (SG&A) Expenses:

|                           |  |                  |      |      |  |         |      |        |  |         |     |         |  |  |    |   |  |  |     |   |  |  |     |  
|-------------------------- |  | ---------------- | ---- | ---- |  | ------- | ---- | ------ |  | ------- | --- | ------- |  |  | -- | - |  |  | --- | - |  |  | --- | -
|                           |  |                  |      |      |  |         |      |        |  |        
|                           |  | Six Months Ended |      |      |  |         |      |        |  |        
|                           |  | June 30,         |      |      |  |         |      | 2004   |  | 2003   
|                           |  |                  |      |      |  | Percent |      | SG&A   |  | SG&A   
|                           |  | 2004             |      | 2003 |  | Change  |      | Change |  | Percent |     | Percent
|                           |  |                  |      |      |  |         |      |        |  |         |     |        
|Consolidated SG&A expenses |  | $                | 37.3 |      |  | $       | 30.5 |        |  | $       | 6.8 |         |  |  | 22 | % |  |  | 9.5 | % |  |  | 9.7 | %

SG&A expenses increased 22% for the first six
months of 2004, compared to the same period in 2003.
Approximately half of this increase was due to acquisitions,
Sarbanes-Oxley compliance costs and specific one-time charges
and credits, while the remainder was primarily due to increased
sales and production

16



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##### Table of Contents



volumes. Despite this increase, SG&A expenses
as a percent of sales decreased by .2% due both to cost
reductions from restructuring and to the absorption of these
expenses over increased sales. SG&A expenses were reduced in
the first six months of 2004 compared to the same period in 2003
by a $1.2 million increase in net pension credits
reflecting improved returns on pension plan assets.




| |                  
| | -----------------
| | Interest Expense:

|                               |  |                  |       |      |  |         |       |        |  |   |      |   |  |             
|------------------------------ |  | ---------------- | ----- | ---- |  | ------- | ----- | ------ |  | - | ---- | - |  | ------------
|                               |  |                  |       |      |  |        
|                               |  | Six Months Ended |       |      |  |        
|                               |  | June 30,         |       |      |  |        
|                               |  |                  |       |      |  | Percent
|                               |  | 2004             |       | 2003 |  | Change  |       | Change
|                               |  |                  |       |      |  |         |       |       
|Interest expense               |  | $                | 12.3  |      |  | $       | 13.5  |        |  | $ | (1.2 | ) |  | (9)%        
|Average outstanding borrowings |  | $                | 315.9 |      |  | $       | 324.2 |        |  | $ | (8.3 | ) |  | (3)%        
|Average borrowing rate         |  |                  | 7.81  | %    |  |         | 8.30  | %      |  |   | (49  | ) |  | basis points

Interest expense decreased 9% for the first six
months of 2004, compared to the same period in 2003, due to
reductions in both borrowings and the interest rate on the
Companys new revolving credit facility, which became
effective in August 2003.



| |            
| | -----------
| | Income Tax:

The effective income tax rate for the six-month
period ended June 30, 2004 was 11%, compared to 15% for the
corresponding period in 2003. Only foreign and certain state
income taxes were provided for in both years, because federal
income taxes were not owed due to the recognition of net
operating loss carryforwards for which valuation allowances had
been provided. At December 31, 2003, subsidiaries of the
Company had $35.7 million of net operating loss
carryforwards for federal tax purposes. The Company has not
recognized any tax benefit for these loss carryforwards.



| |                                                   
| | --------------------------------------------------
| | Second Quarter 2004 versus Second Quarter
    2003



| |                      
| | ---------------------
| | Net Sales by Segment:

|                       |  |                    |       |      |  |         |       |             |  |          |      |      |  |  |    |   |  |   |      |   |  |  |    |  
|---------------------- |  | ------------------ | ----- | ---- |  | ------- | ----- | ----------- |  | -------- | ---- | ---- |  |  | -- | - |  | - | ---- | - |  |  | -- | -
|                       |  |                    |       |      |  |         |       |             |  |         
|                       |  | Three Months Ended |       |      |  |         |       |             |  |         
|                       |  | June 30,           |       |      |  |         |       | (Acquired)/ |  | Internal
|                       |  |                    |       |      |  | Percent |       | Divested    |  | Growth  
|                       |  | 2004               |       | 2003 |  | Change  |       | Change      |  | Sales    |      | Rate
|                       |  |                    |       |      |  |         |       |             |  |          |      |     
|ILS                    |  | $                  | 114.8 |      |  | $       | 96.5  |             |  | $        | 18.3 |      |  |  | 19 | % |  | $ | 0.0  |   |  |  | 19 | %
|Aluminum products      |  |                    | 28.3  |      |  |         | 23.9  |             |  |          | 4.4  |      |  |  | 18 | % |  |   | 0.0  |   |  |  | 18 | %
|Manufactured products  |  |                    | 57.8  |      |  |         | 39.5  |             |  |          | 18.3 |      |  |  | 46 | % |  |   | (1.4 | ) |  |  | 43 | %
|                       |  |                    |       |      |  |         |       |             |  |          |      |      |  |  |    |   |  |   |      |   |  |  |    |  
|Consolidated Net Sales |  | $                  | 200.9 |      |  | $       | 159.9 |             |  | $        | 41.0 |      |  |  | 26 | % |  | $ | (1.4 | ) |  |  | 25 | %
|                       |  |                    |       |      |  |         |       |             |  |          |      |      |  |  |    |   |  |   |      |   |  |  |    |  

Net sales increased 26% for the second quarter of
2004, compared to the same period in 2003. ILS sales increased
due to general economic growth, and in particular to significant
growth in the heavy-duty truck and semiconductor industries.
Aluminum Products sales increased primarily due to volume
increases in the automotive industry, combined with extension of
specific products to an additional engine platform. Manufactured
Products sales increased $18.3 million in the second
quarter of 2004 compared to the same quarter of 2003, primarily
in the induction, pipe threading and forging businesses. The
April 1, 2004 acquisition of the remaining 66% of the
common stock of Jamco increased Manufactured Products segment
sales by $1.4 million in the second quarter of 2004.

17



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##### Table of Contents





| |                                          
| | -----------------------------------------
| | Cost of Products Sold & Gross
    Profit:

|                                   |  |                    |       |      |  |         |       |        |  |        |      |        |  |  |    |   |  |  |      |   |  |  |      |  
|---------------------------------- |  | ------------------ | ----- | ---- |  | ------- | ----- | ------ |  | ------ | ---- | ------ |  |  | -- | - |  |  | ---- | - |  |  | ---- | -
|                                   |  |                    |       |      |  |         |       |        |  |       
|                                   |  | Three Months Ended |       |      |  |         |       |        |  |       
|                                   |  | June 30,           |       |      |  |         |       | 2004   |  | 2003  
|                                   |  |                    |       |      |  | Percent |       | Gross  |  | Gross 
|                                   |  | 2004               |       | 2003 |  | Change  |       | Change |  | Margin |      | Margin
|                                   |  |                    |       |      |  |         |       |        |  |        |      |       
|Consolidated cost of products sold |  | $                  | 167.3 |      |  | $       | 134.1 |        |  | $      | 33.2 |        |  |  | 25 | % |  |  |      |   |  |  |      |  
|                                   |  |                    |       |      |  |         |       |        |  |        |      |        |  |  |    |   |  |  |      |   |  |  |      |  
|Consolidated gross profit          |  | $                  | 33.7  |      |  | $       | 25.8  |        |  | $      | 7.9  |        |  |  | 31 | % |  |  | 16.8 | % |  |  | 16.1 | %
|                                   |  |                    |       |      |  |         |       |        |  |        |      |        |  |  |    |   |  |  |      |   |  |  |      |  

Cost of products sold increased 25% for the
second quarter of 2004, compared to the same period in 2003,
while gross margin increased to 16.8% from 16.1%. ILS gross
margin decreased modestly, primarily due to mix changes and
steel price increases. Aluminum Products gross margin decreased
due to a combination of product mix and pricing changes and
specific one-time costs incurred in the second quarter for
product startup, scrap and reserves. Gross margin in the
Manufactured Products segment increased, primarily as a result
of increased sales and overhead efficiencies achieved in the
induction business, and the absorption of fixed overhead over a
larger sales base.



| |               
| | --------------
| | SG&A Expenses:

|                           |  |                    |      |      |  |         |      |        |  |         |     |         |  |  |    |   |  |  |     |   |  |  |     |  
|-------------------------- |  | ------------------ | ---- | ---- |  | ------- | ---- | ------ |  | ------- | --- | ------- |  |  | -- | - |  |  | --- | - |  |  | --- | -
|                           |  |                    |      |      |  |         |      |        |  |        
|                           |  | Three Months Ended |      |      |  |         |      |        |  |        
|                           |  | June 30,           |      |      |  |         |      | 2004   |  | 2003   
|                           |  |                    |      |      |  | Percent |      | SG&A   |  | SG&A   
|                           |  | 2004               |      | 2003 |  | Change  |      | Change |  | Percent |     | Percent
|                           |  |                    |      |      |  |         |      |        |  |         |     |        
|Consolidated SG&A expenses |  | $                  | 19.7 |      |  | $       | 15.5 |        |  | $       | 4.2 |         |  |  | 27 | % |  |  | 9.8 | % |  |  | 9.7 | %

SG&A expenses increased 27% for the second
quarter of 2004, compared to the same period in 2003.
Approximately half of this increase was due to acquisitions,
Sarbanes-Oxley compliance costs and specific one-time charges
and credits, while the remainder was primarily due to increased
sales and production volumes. As a result of this increase,
SG&A expenses as a percent of sales increased by .1%.
SG&A expenses were reduced in the second quarter of 2004
compared to the same period in 2003 by a $.6 million
increase in net pension credits reflecting improved returns on
pension plan assets.



| |                  
| | -----------------
| | Interest Expense:

|                               |  |                    |       |      |  |         |       |        |  |   |      |   |  |             
|------------------------------ |  | ------------------ | ----- | ---- |  | ------- | ----- | ------ |  | - | ---- | - |  | ------------
|                               |  |                    |       |      |  |        
|                               |  | Three Months Ended |       |      |  |        
|                               |  | June 30,           |       |      |  |        
|                               |  |                    |       |      |  | Percent
|                               |  | 2004               |       | 2003 |  | Change  |       | Change
|                               |  |                    |       |      |  |         |       |       
|Interest expense               |  | $                  | 6.2   |      |  | $       | 6.7   |        |  | $ | (0.5 | ) |  | (7)%        
|Average outstanding borrowings |  | $                  | 318.4 |      |  | $       | 319.7 |        |  | $ | (1.3 | ) |  | 0%          
|Average borrowing rate         |  |                    | 7.78  | %    |  |         | 8.38  | %      |  |   | (60  | ) |  | basis points

Interest expense decreased 7% for the second
quarter of 2004, compared to the same period in 2003, due
primarily to reductions in the interest rate on the
Companys new revolving credit facility, which became
effective in August 2003.



| |            
| | -----------
| | Income Tax:

The effective income tax rate for the three-month
period ended June 30, 2004 was 13%, compared to 23% for the
corresponding period in 2003. Only foreign and certain state
income taxes were provided for in both years, because federal
income taxes were not owed due to the recognition of net
operating loss carryforwards for which valuation allowances had
been provided. At December 31, 2003, subsidiaries of the
Company had $35.7 million of net operating loss
carryforwards for federal tax purposes. The Company has not
recognized any tax benefit for these loss carryforwards.

18



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##### Table of Contents



Seasonality; Variability of Operating
Results

The Companys results of operations are
typically stronger in the first six months compared to the last
six months of each calendar year due to scheduled plant
maintenance in the third quarter to coincide with customer plant
shutdowns and due to holidays in the fourth quarter.

The timing of orders placed by the Companys
customers has varied with, among other factors, orders for
customers finished goods, customer production schedules,
competitive conditions and general economic conditions. The
variability of the level and timing of orders has, from time to
time, resulted in significant periodic and quarterly
fluctuations in the operations of the Companys business
units. Such variability is particularly evident at the capital
equipment businesses included in the Manufactured Products
segment, which typically ship a few large systems per year.

Forward-Looking Statements

This Form 10-Q contains certain statements
that are forward-looking statements within the
meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act. Certain statements in this
Managements Discussion and Analysis of Financial Condition
and Results of Operations contain forward-looking statements,
including without limitation, credit availability, levels and
funding of capital expenditures and trends for the remainder of
2004. Forward-looking statements are necessarily subject to
risks, uncertainties and other factors, many of which are
outside our control, which could cause actual results to differ
materially from such statements. These uncertainties and other
factors include such things as: general business conditions,
competitive factors, including pricing pressures and product
innovation; raw material availability and pricing; changes in
our relationships with customers and suppliers; the ability of
the Company to successfully integrate recent and future
acquisitions into its existing operations; changes in general
domestic economic conditions such as inflation rates, interest
rates, foreign currency exchange rates, tax rates and adverse
impacts to us, our suppliers and customers from acts of
terrorism or hostilities; our ability to meet various covenants,
including financial covenants, contained in the Credit Agreement
and the indenture governing the Senior Subordinated Notes;
increasingly stringent domestic and foreign governmental
regulations including those affecting the environment; inherent
uncertainties involved in assessing our potential liability for
environmental remediation-related activities; the outcome of
pending and future litigation and other claims; dependence on
the automotive and heavy truck industries; dependence on key
management; and dependence on information systems. Any
forward-looking statement speaks only as of the date on which
such statement is made, and we undertake no obligation to update
any forward-looking statement, whether as a result of new
information, future events or otherwise. In light of these and
other uncertainties, the inclusion of a forward-looking
statement herein should not be regarded as a representation by
us that our plans and objectives will be achieved.

Review By Independent Accountants

The consolidated financial statements at
June 30, 2004, and for the three-month and six-month
periods ended June 30, 2004 and 2003, have been reviewed,
prior to filing, by Ernst & Young LLP, the
Companys independent registered public accountants, and
their report is included herein.






|        |                        
|------- | -----------------------
|Item 4. | Controls and Procedures

As of June 30, 2004, management, including
our chief executive officer and chief financial officer,
evaluated the effectiveness of the design and operation of the
Companys disclosure controls and procedures. Based upon,
and as of the date of that evaluation, our chief executive
officer and chief financial officer concluded that the
disclosure controls and procedures were effective, in all
material respects, to ensure that information required to be
disclosed in the reports we file and submit under the Securities
Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported as and when required.

There have been no changes in the Companys
internal control over financial reporting that occurred during
the first half of 2004 that has materially affected, or is
reasonably likely to materially affect, the Companys
internal control over financial reporting.

19



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##### Table of Contents






PART II

OTHER INFORMATION






|        |                                     
|------- | ------------------------------------
|Item 6. | Exhibits and Reports on
    Form 8-K

(a) The following exhibits are included herein:

| |        |  |  |                                                                                                          
| | ------ |  |  | ---------------------------------------------------------------------------------------------------------
| | (31.1) |  |  | Principal Executive Officers Certification
    Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
| | (31.2) |  |  | Principal Financial Officers Certification
    Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
| | (32)   |  |  | Certification requirement under Section 906
    of the Sarbanes-Oxley Act of 2002                        

(b) The Company did not file any reports on
Form 8-K during the three months ended June 30, 2004.

20



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##### Table of Contents






SIGNATURE

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



| |                           
| | --------------------------
| | PARK-OHIO INDUSTRIES, INC.
| |                           
| | (Registrant)              



| |    |                       
| | -- | ----------------------
| | By | /s/ RICHARD P. ELLIOTT

| |                         
| | ------------------------
| |                         
| | Name: Richard P. Elliott

| |        |                         
| | ------ | ------------------------
| | Title: | Vice President and Chief

| |                                             
| | --------------------------------------------
| | Financial Officer (Principal                
| | Financial and Accounting Officer)           
|
| | Dated                     August 6,
    2004
| |                                             

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##### Table of Contents






EXHIBIT INDEX

QUARTERLY REPORT ON FORM 10-Q

PARK-OHIO INDUSTRIES, INC. AND
SUBSIDIARIES

FOR THE QUARTER ENDED JUNE 30,
2004


|        |        |  |  |                                                                                                          
|------- | ------ |  |  | ---------------------------------------------------------------------------------------------------------
|Exhibit |        | 
|        |        | 
|        | (31.1) |  |  | Principal Executive Officers Certification
    Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|        | (31.2) |  |  | Principal Financial Officers Certification
    Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|        | (32)   |  |  | Certification requirement under Section 906
    of the Sarbanes-Oxley Act of 2002                        

22