##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 FORM 10-Q
 (Mark One)
 þ   Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For quarterly period ended September 30, 2007
 or
 o   Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission file Number: 0-10546
 LAWSON PRODUCTS, INC.
  Delaware
    
    36-2229304(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)1666 East Touhy Avenue, Des Plaines, Illinois
    
    60018(Address of principal executive offices)
    
    (Zip Code)
 (847) 827-9666
 þ o
  o þ o
 o þ




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TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPART II  OTHER INFORMATIONItem 6. ExhibitsSIGNATURESLetter from Ernst & Young LLP302 Certification of Chief Executive Officer302 Certification of Chief Financial Officer906 Certification of CEO and CFO




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Safe Harbor Statement under the Securities Litigation Reform Act of 1995:




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##### 



PART I  FINANCIAL INFORMATION
 
 Item 1. Condensed Consolidated Financial Statements
 LAWSON PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 September 30,
    
    
    December 31,(in thousands, except share data)
    
    2007
    
    
    2006ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    1,664
    
    
    $
    3,391Accounts receivable, less allowance for doubtful accounts
    
    
    62,577
    
    
    
    60,411Inventories
    
    
    91,008
    
    
    
    90,272Miscellaneous receivables and prepaid expenses
    
    
    7,970
    
    
    
    5,529Deferred income taxes
    
    
    3,098
    
    
    
    3,538Discontinued current assets
    
    
    1,171
    
    
    
    2,056Total Current Assets
    
    
    167,488
    
    
    
    165,197Property, plant and equipment, less allowances for depreciation and amortization
    
    
    50,656
    
    
    
    42,664Deferred income taxes
    
    
    22,803
    
    
    
    20,341Goodwill
    
    
    27,999
    
    
    
    27,999Other assets
    
    
    24,644
    
    
    
    22,679Discontinued non-current assets
    
    
    
    
    
    
    3Total Assets
    
    $
    293,590
    
    
    $
    278,883LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Revolving line of credit
    
    $
    13,000
    
    
    $
    Accounts payable
    
    
    15,038
    
    
    
    14,055Accrued expenses and other liabilities
    
    
    46,343
    
    
    
    46,746Income taxes
    
    
    
    
    
    
    855Discontinued current liabilities
    
    
    1,065
    
    
    
    1,770Total Current Liabilities
    
    
    75,446
    
    
    
    63,426Accrued liability under security bonus plans
    
    
    26,549
    
    
    
    25,522Other
    
    
    20,037
    
    
    
    19,61846,586
    
    
    
    45,140Stockholders Equity:Preferred Stock, $1 par value:Authorized - 500,000 sharesIssued and outstanding  None
    
    
    
    
    
    
    Common Stock, $1 par value:Authorized - 35,000,000 sharesIssued and outstanding-(2007-8,522,001 shares; 2006-8,521,001 shares)
    
    
    8,522
    
    
    
    8,521Capital in excess of par value
    
    
    4,774
    
    
    
    4,749Retained earnings
    
    
    158,301
    
    
    
    158,008Accumulated other comprehensive loss
    
    
    (39
    )
    
    
    (961
    )Total Stockholders Equity
    
    
    171,558
    
    
    
    170,317Total Liabilities and Stockholders Equity
    
    $
    293,590
    
    
    $
    278,883




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LAWSON PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands, except per share data)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Net sales
    
    $
    127,913
    
    
    $
    127,335
    
    
    $
    386,760
    
    
    $
    386,727Cost of goods sold
    
    
    51,456
    
    
    
    50,786
    
    
    
    157,779
    
    
    
    156,974Gross profit
    
    
    76,457
    
    
    
    76,549
    
    
    
    228,981
    
    
    
    229,753Operating expenses:Selling, general and administrative expenses
    
    
    67,435
    
    
    
    70,740
    
    
    
    205,124
    
    
    
    209,620Severance and other charges
    
    
    3,659
    
    
    
    
    
    
    
    10,571
    
    
    
    Loss on sale of equipment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    806Operating income
    
    
    5,363
    
    
    
    5,809
    
    
    
    13,286
    
    
    
    19,327Investment and other income
    
    
    160
    
    
    
    260
    
    
    
    555
    
    
    
    1,201Interest expense
    
    
    (295
    )
    
    
    
    
    
    
    (662
    )
    
    
    Income from continuing operations before income taxes
and cumulative effect of accounting change
    
    
    5,228
    
    
    
    6,069
    
    
    
    13,179
    
    
    
    20,528Provision for income taxes
    
    
    2,818
    
    
    
    2,768
    
    
    
    6,063
    
    
    
    8,587Income from continuing operations before cumulative
effect of accounting change
    
    
    2,410
    
    
    
    3,301
    
    
    
    7,116
    
    
    
    11,941Loss from discontinued operations, net of income taxes
    
    
    (11
    )
    
    
    (226
    )
    
    
    (496
    )
    
    
    (312
    )Income before cumulative effect of accounting change
    
    
    2,399
    
    
    
    3,075
    
    
    
    6,620
    
    
    
    11,629Cumulative effect of accounting change, net of income
taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (361
    )Net income
    
    $
    2,399
    
    
    $
    3,075
    
    
    $
    6,620
    
    
    $
    11,268Basic income (loss) per share of common stock:Continuing operations before cumulative
effect of accounting change
    
    $
    0.28
    
    
    $
    0.37
    
    
    $
    0.84
    
    
    $
    1.33Discontinued operations
    
    
    (0.00
    )
    
    
    (0.03
    )
    
    
    (0.06
    )
    
    
    (0.03
    )Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.04
    )$
    0.28
    
    
    $
    0.34
    
    
    $
    0.78
    
    
    $
    1.25Diluted income (loss) per share of common stock:Continuing operations before cumulative
effect of accounting change
    
    $
    0.28
    
    
    $
    0.37
    
    
    $
    0.83
    
    
    $
    1.33




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Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands, except per share data)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Discontinued operations
    
    
    (0.00
    )
    
    
    (0.03
    )
    
    
    (0.06
    )
    
    
    (0.03
    )Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.04
    )$
    0.28
    
    
    $
    0.34
    
    
    $
    0.78
    
    
    $
    1.25Cash dividends declared per share of common stock
    
    $
    0.20
    
    
    $
    0.20
    
    
    $
    0.60
    
    
    $
    0.60Weighted average shares outstanding:Basic
    
    
    8,522
    
    
    
    8,998
    
    
    
    8,522
    
    
    
    8,987Diluted
    
    
    8,524
    
    
    
    9,004
    
    
    
    8,524
    
    
    
    8,993




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LAWSON PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Nine Months EndedSeptember 30,(in thousands)
    
    2007
    
    
    2006Operating activities:Net income
    
    $
    6,620
    
    
    $
    11,268Adjustments to reconcile net income to net cash provided by operating
activities:Depreciation and amortization
    
    
    6,003
    
    
    
    6,196Changes in operating assets and liabilities
    
    
    (10,117
    )
    
    
    (6,200
    )Other
    
    
    1,610
    
    
    
    666Net Cash Provided by Operating Activities
    
    
    4,116
    
    
    
    11,930Investing activities:Additions to property, plant and equipment
    
    
    (13,805
    )
    
    
    (3,593
    )Other
    
    
    
    
    
    
    356Net Cash Used for Investing Activities
    
    
    (13,805
    )
    
    
    (3,237
    )Financing activities:Proceeds from revolving line of credit, net of payments
    
    
    13,000
    
    
    
    Dividends paid
    
    
    (5,113
    )
    
    
    (5,389
    )Other
    
    
    27
    
    
    
    676Net Cash Provided by (Used for) Financing Activities
    
    
    7,914
    
    
    
    (4,713
    )Increase (Decrease) in Cash and Cash Equivalents
    
    
    (1,775
    )
    
    
    3,980Cash and Cash Equivalents at Beginning of Period
    
    
    4,320
    (a)
    
    
    16,297
    (b)Cash and Cash Equivalents at End of Period
    
    
    2,545
    
    
    
    20,277Cash Held by Discontinued Operations
    
    
    (881
    )
    
    
    (1,369
    )Cash and Cash Equivalents Held by Continuing Operations at End of Period
    
    $
    1,664
    
    
    $
    18,908
 
 (a)
    
    Includes $929 of cash and cash equivalents from discontinued operations.(b)
    
    Includes $1,791 of cash and cash equivalents from discontinued operations.




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Lawson Products, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Dollars in Thousands)
 Note A  Basis of Presentation and Summary of Significant Accounting Policies
     Note B  Comprehensive Income (Loss)




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Note C  Earnings Per Share
  Three months ended September 30(in thousands)
    
    2007
    
    2006Basic weighted average shares outstanding
    
    
    8,522
    
    
    
    8,998Dilutive impact of options outstanding
    
    
    2
    
    
    
    6Dilutive weighted average shares outstanding
    
    
    8,524
    
    
    
    9,004
 Nine months ended September 302007
    
    2006Basic weighted average shares outstanding
    
    
    8,522
    
    
    
    8,987Dilutive impact of options outstanding
    
    
    2
    
    
    
    6Dilutive weighted average shares outstanding
    
    
    8,524
    
    
    
    8,993
 Note D  Revolving Line of Credit
  Note E  Reserve for Severance
  (in thousands)
    
    2007
    
    
    2006Balance at beginning of year
    
    $
    962
    
    
    $
    216Charged to earnings
    
    
    9,593
    
    
    
    760Cash paid
    
    
    (2,483
    )
    
    
    (148
    )Adjustment to reserves
    
    
    (120
    )
    
    
    (153
    )Balance at September 30
    
    $
    7,952
    
    
    $
    675




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Note F  Intangible Assets
  September 30, 2007Gross
    
    
    Accumulated
    
    
    Net Carrying(in thousands)
    
    Balance
    
    
    Amortization
    
    
    AmountTrademarks and tradenames
    
    $
    1,400
    
    
    $
    725
    
    
    $
    675Non-compete covenant
    
    
    1,000
    
    
    
    350
    
    
    
    650$
    2,400
    
    
    $
    1,075
    
    
    $
    1,325
 December 31, 2006Gross
    
    
    Accumulated
    
    
    Net CarryingBalance
    
    
    Amortization
    
    
    AmountTrademarks and tradenames
    
    $
    1,400
    
    
    $
    687
    
    
    $
    713Non-compete covenant
    
    
    1,000
    
    
    
    200
    
    
    
    800$
    2,400
    
    
    $
    887
    
    
    $
    1,513




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Note G  Stock-Based Compensation
  Stock Performance Rights
  September 30, 2007Expected volatility
    
    36.99% to 41.86%Risk-free interest rate
    
    3.98% to 4.28%Expected term (in years)
    
    
    1.6 to 5.6Expected dividend yield
    
    
    2.30
    %
   Average SPRExercise Price
    
    # of SPRsOutstanding December 31, 2006 (1)
    
    $
    33.31
    
    
    
    179,500Granted
    
    
    
    
    
    
    Exercised
    
    
    27.08
    
    
    
    (500
    )Forfeited
    
    
    
    
    
    
    Outstanding March 31, 2007 (2)
    
    $
    33.33
    
    
    
    179,000Granted
    
    
    36.71
    
    
    
    40,000Exercised
    
    
    26.93
    
    
    
    (1,950
    )Forfeited
    
    
    
    
    
    
    Outstanding June 30, 2007(3)
    
    $
    34.01
    
    
    
    217,050Granted
    
    
    
    
    
    
    Exercised
    
    
    32.80
    
    
    
    2,100Forfeited
    
    
    29.54
    
    
    
    3,700Outstanding September 30, 2007(4)
    
    $
    34.10
    
    
    
    211,250
 
 (1)
    
    Includes 113,500 SPRs vested and exercisable at December 31, 2006 at a weighted average
exercise price of $28.88 per SPR.(2)
    
    Includes 113,000 SPRs vested and exercisable at March 31, 2007 at a weighted average exercise
price of $28.89 per SPR.(3)
    
    Includes 133,317 SPRs vested and exercisable at June 30, 2007 at a weighted average exercise
price of $31.21 per SPR.(4)
    
    Includes 131,117 SPRs vested and exercisable at September 30, 2007 at a weighted average
exercise price of $31.18 per SPR.




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Stock Options
  Average OptionExercise Price
    
    # of OptionsOutstanding December 31, 2006
    
    $
    23.72
    
    
    
    6,000Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited/expired/cancelled
    
    
    
    
    
    
    Outstanding March 31, 2007
    
    $
    23.72
    
    
    
    6,000Granted
    
    
    
    
    
    
    Exercised
    
    
    26.75
    
    
    
    1,000Forfeited/expired/cancelled
    
    
    
    
    
    
    Outstanding June 30, 2007
    
    $
    23.11
    
    
    
    5,000Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited/expired/cancelled
    
    
    
    
    
    
    Outstanding September 30, 2007
    
    $
    23.11
    
    
    
    5,000
 WeightedAverageExercisable options at:
    
    Price
    
    Option SharesDecember 31, 2006
    
    $
    23.72
    
    
    
    6,000September 30, 2007
    
    $
    23.11
    
    
    
    5,000
   Exercise price
    
    $
    23.56
    
    
    $
    22.44Options outstanding:
    
    
    3,000
    
    
    
    2,000Weighted average exercise price
    
    $
    23.56
    
    
    $
    22.44Weighted average remaining life (in years)
    
    
    2.6
    
    
    
    1.9Options exercisable:
    
    
    3,000
    
    
    
    2,000Weighted average exercise price
    
    $
    23.56
    
    
    $
    22.44




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Note H  Loss on Sale of Equipment
  Note I  Segment Reporting
      Three Months EndedSeptember 30(in thousands)
    
    2007
    
    
    2006Net salesMRO
    
    $
    108,183
    
    
    $
    106,044OEM
    
    
    19,730
    
    
    
    21,291Consolidated total
    
    $
    127,913
    
    
    $
    127,335Operating incomeMRO
    
    $
    5,065
    
    
    $
    4,792OEM
    
    
    298
    
    
    
    1,017Consolidated total
    
    $
    5,363
    
    
    $
    5,809
  Three Months EndedSeptember 30(in thousands)
    
    2007
    
    
    2006Total operating income from continuing operations from reportable segments
    
    $
    5,363
    
    
    $
    5,809Investment and other income
    
    
    160
    
    
    
    260Interest expense
    
    
    (295
    )
    
    
    Income from continuing operations before income taxes and cumulative
effect of accounting change
    
    $
    5,228
    
    
    $
    6,069
 Nine Months EndedSeptember 30(in thousands)
    
    2007
    
    
    2006Net salesMRO
    
    $
    323,344
    
    
    $
    322,350OEM
    
    
    63,416
    
    
    
    64,377Consolidated total
    
    $
    386,760
    
    
    $
    386,727Operating incomeMRO
    
    $
    10,263
    
    
    $
    16,115OEM
    
    
    3,023
    
    
    
    3,212Consolidated total
    
    $
    13,286
    
    
    $
    19,327




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Nine Months EndedSeptember 30(in thousands)
    
    2007
    
    
    2006Total operating income from continuing operations from reportable segments
    
    $
    13,286
    
    
    $
    19,327Investment and other income
    
    
    555
    
    
    
    1,201Interest expense
    
    
    (662
    )
    
    
    Income from continuing operations before income taxes and cumulative
effect of accounting change
    
    $
    13,179
    
    
    $
    20,528
  September 30,
    
    
    December 31,(in thousands)
    
    2007
    
    
    2006Total assetsMRO
    
    $
    216,480
    
    
    $
    203,126OEM
    
    
    50,038
    
    
    
    49,819Total for reportable segments
    
    
    266,518
    
    
    
    252,945Corporate
    
    
    25,901
    
    
    
    23,879Consolidated total
    
    $
    292,419
    
    
    $
    276,824
  MRO
    
    $
    25,748OEM
    
    
    2,251Consolidated total
    
    $
    27,999
 Note J  Income Taxes
 Accounting for Contingencies Accounting
for Income Taxes




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Note K  Discontinued Operations
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in millions)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue
    
    $
    0.2
    
    
    $
    1.8
    
    
    $
    2.6
    
    
    $
    5.3Loss before income taxes
    
    
    (0.0
    )
    
    
    (0.2
    )
    
    
    (0.5
    )
    
    
    (0.3
    )Income tax
    
    
    (0.0
    )
    
    
    (0.0
    )
    
    
    (0.0
    )
    
    
    (0.0
    )Loss from discontinued operations
    
    $
    (0.0
    )
    
    $
    (0.2
    )
    
    $
    (0.5
    )
    
    $
    (0.3
    )
  September 30,
    
    
    December 31,(in millions)
    
    2007
    
    
    2006Current assets
    
    $
    0.6
    
    
    $
    1.4Total assets
    
    $
    0.6
    
    
    $
    1.4Current liabilities
    
    $
    0.8
    
    
    $
    0.9Total liabilities
    
    $
    0.8
    
    
    $
    0.9
   Note L  Legal Proceedings




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Quarter ended September 30, 2007 compared to Quarter ended September 30, 2006
  % of
    
    
    
    
    
    
    % of(in thousands)
    
    2007
    
    
    Net Sales
    
    
    2006
    
    
    Net SalesNet sales
    
    $
    127,913
    
    
    
    100.0
    
    
    $
    127,335
    
    
    
    100.0Cost of goods sold
    
    
    51,456
    
    
    
    40.2
    
    
    
    50,786
    
    
    
    39.9Gross profit
    
    
    76,457
    
    
    
    59.8
    
    
    
    76,549
    
    
    
    60.1Operating expenses:Selling, general and administrative expenses
    
    
    67,435
    
    
    
    52.7
    
    
    
    70,740
    
    
    
    55.6Severance and other charges
    
    
    3,659
    
    
    
    2.9
    
    
    
    
    
    
    
    Operating income
    
    
    5,363
    
    
    
    4.2
    
    
    
    5,809
    
    
    
    4.6Other, net
    
    
    (135
    )
    
    
    (0.1
    )
    
    
    260
    
    
    
    0.2Income from continuing operations before income taxes
    
    
    5,228
    
    
    
    4.1
    
    
    
    6,069
    
    
    
    4.8Provision for income taxes
    
    
    2,818
    
    
    
    2.2
    
    
    
    2,768
    
    
    
    2.2Income from continuing operations
    
    
    2,410
    
    
    
    1.9
    
    
    
    3,301
    
    
    
    2.6Loss from discontinued operations, net of income taxes
    
    
    (11
    )
    
    
    (0.0
    )
    
    
    (226
    )
    
    
    (0.2
    )Net income
    
    $
    2,399
    
    
    
    1.9
    
    
    $
    3,075
    
    
    
    2.4
 Net Sales and Gross Profit
   (in millions)
    
    2007
    
    
    2006MRO
    
    $
    108.2
    
    
    $
    106.0OEM
    
    
    19.7
    
    
    
    21.3Net sales
    
    $
    127.9
    
    
    $
    127.3
    Operating Expenses and Operating Income
 Selling, General and Administrative Expenses (SG&A)




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##### 



Severance and Other Charges
  Operating Income
  Investment and Other Income
  (in millions)
    
    2007
    
    
    2006Interest and other
    
    $
    0.2
    
    
    $
    0.3$
    0.2
    
    
    $
    0.3
 Provision for Income Taxes
   Income from Continuing Operations before Cumulative Effect of Accounting Change
  Loss from Discontinued Operations




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##### 



Nine Months ended September 30, 2007 compared to Nine Months ended September 30, 2006
  % of
    
    
    
    
    
    
    % of(in thousands)
    
    2007
    
    
    Net Sales
    
    
    2006
    
    
    Net SalesNet sales
    
    $
    386,760
    
    
    
    100.0
    
    
    $
    386,727
    
    
    
    100.0Cost of goods sold
    
    
    157,779
    
    
    
    40.8
    
    
    
    156,974
    
    
    
    40.6Gross profit
    
    
    228,981
    
    
    
    59.2
    
    
    
    229,753
    
    
    
    59.4Operating expenses:Selling, general and administrative expenses
    
    
    205,124
    
    
    
    53.0
    
    
    
    209,620
    
    
    
    54.2Severance and other charges
    
    
    10,571
    
    
    
    2.7
    
    
    
    Loss on sale of equipment
    
    
    
    
    
    
    
    
    
    
    806
    
    
    
    0.2Operating income
    
    
    13,286
    
    
    
    3.4
    
    
    
    19,327
    
    
    
    5.0Other, net
    
    
    (107
    )
    
    
    (0.0
    )
    
    
    1,201
    
    
    
    0.3Income from continuing operations before income taxes
and cumulative effect of accounting change
    
    
    13,179
    
    
    
    3.4
    
    
    
    20,528
    
    
    
    5.3Provision for income taxes
    
    
    6,063
    
    
    
    1.6
    
    
    
    8,587
    
    
    
    2.2Income from continuing operations before cumulative
effect of accounting change
    
    
    7,116
    
    
    
    1.8
    
    
    
    11,941
    
    
    
    3.1Loss from discontinued operations, net of income taxes
    
    
    (496
    )
    
    
    (0.1
    )
    
    
    (312
    )
    
    
    (0.1
    )Income before cumulative effect of accounting change
    
    
    6,620
    
    
    
    1.7
    
    
    
    11,629
    
    
    
    3.0Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    (361
    )
    
    
    (0.1
    )Net income
    
    $
    6,620
    
    
    
    1.7
    
    
    $
    11,268
    
    
    
    2.9
 Net Sales and Gross Profit
   (in millions)
    
    2007
    
    
    2006MRO
    
    $
    323.4
    
    
    $
    322.3OEM
    
    
    63.4
    
    
    
    64.4Net Sales
    
    $
    386.8
    
    
    $
    386.7




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##### 



Operating Expenses and Operating Income
 Selling, General and Administrative Expenses (SG&A)
   Severance and Other Charges
  Loss on Sale of Equipment
  Operating Income
  Investment and Other Income
  (in millions)
    
    2007
    
    
    2006Realized foreign exchange gains
    
    $
    0.1
    
    
    $
    0.6Interest and other
    
    
    0.5
    
    
    
    0.6$
    0.6
    
    
    $
    1.2




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##### 



Provision for Income Taxes
   Income from Continuing Operations before Cumulative Effect of Accounting Change




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##### 



Loss from Discontinued Operations
  Cumulative Effect of Accounting Change
  Liquidity and Capital Resources




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##### 



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures




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##### 



PART II
 OTHER INFORMATION
  
 Item 6. Exhibits
 15
    
    Letter from Ernst & Young LLP Regarding Unaudited Interim Financial
Information31.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    Certification of Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002




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##### 



SIGNATURES
  LAWSON PRODUCTS, INC.(Registrant)Date: November 2, 2007
    
    /s/ Thomas J. NeriThomas J. NeriChief Executive OfficerDate: November 2, 2007
    
    /s/ Scott F. StephensScott F. StephensChief Financial Officer