##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
for the Year Ended December 31, 2007
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 Commission File Number: 0-3252
 LEXINGTON PRECISION CORPORATION
 (Exact name of registrant as specified in its charter)
 Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    22-1830121
(I.R.S. Employer
Identification No.)
 800 Third Avenue, New York, NY
(Address of principal executive offices)
    
    10022
(Zip code)
 Registrants telephone number, including area code: (212) 319-4657
 
 Securities registered pursuant to Section 12(b) of the Act: None
 Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.25 par value
(Title of Class)
 o þ
 o þ
 þ o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



LEXINGTON PRECISION CORPORATION
Annual Report on Form 10-K
Table of Contents
 PagePART IItem 1.
    
    Business
    
    
    1Item 1A.
    
    Risk Factors
    
    
    6Item 2.
    
    Properties
    
    
    10Item 3.
    
    Legal Proceedings
    
    
    11Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    11PART IIItem 5.
    
    Market for Our Common Stock and Other Stockholder Matters
    
    
    12Item 6.
    
    Selected Financial Data
    
    
    15Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    38Item 8.
    
    Financial Statements and Supplementary Data
    
    
    40Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    72Item 9A(T).
    
    Controls and Procedures
    
    
    72Item 9B.
    
    Other Information
    
    
    74PART IIIItem 10.
    
    Directors, Executive Officers, and Corporate Governance of the Registrant
    
    
    75Item 11.
    
    Executive Compensation
    
    
    75Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    75Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    75Item 14.
    
    Principal Accountant Fees and Services
    
    
    75PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    76EX-10.6EX-10.39EX-21.1EX-31.1EX-31.2EX-31.3EX-32.1EX-32.2EX-32.3




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PART I
 
 Item 1. BUSINESS
     Years Ended December 312007
    
    
    2006
    
    
    2005Rubber Group:Automotive original equipment
    
    $
    35,799
    
    
    
    48.0
    %
    
    $
    41,246
    
    
    
    54.2
    %
    
    $
    49,793
    
    
    
    58.6
    %Automotive aftermarket
    
    
    22,034
    
    
    
    29.5
    
    
    
    22,728
    
    
    
    29.9
    
    
    
    23,928
    
    
    
    28.2Total automotive
    
    
    57,833
    
    
    
    77.5
    
    
    
    63,974
    
    
    
    84.1
    
    
    
    73,721
    
    
    
    86.8Medical devices
    
    
    15,928
    
    
    
    21.4
    
    
    
    11,039
    
    
    
    14.5
    
    
    
    9,989
    
    
    
    11.8Other
    
    
    826
    
    
    
    1.1
    
    
    
    1,077
    
    
    
    1.4
    
    
    
    1,174
    
    
    
    1.4$
    74,587
    
    
    
    100.0
    %
    
    $
    76,090
    
    
    
    100.0
    %
    
    $
    84,884
    
    
    
    100.0
    %Metals Group:Automotive original equipment
    
    $
    11,597
    
    
    
    83.9
    %
    
    $
    9,490
    
    
    
    80.3
    %
    
    $
    9,856
    
    
    
    82.4
    %Industrial and commercial
equipment
    
    
    1,549
    
    
    
    11.2
    
    
    
    1,623
    
    
    
    13.8
    
    
    
    1,429
    
    
    
    12.0Other
    
    
    675
    
    
    
    4.9
    
    
    
    698
    
    
    
    5.9
    
    
    
    673
    
    
    
    5.6$
    13,821
    
    
    
    100.0
    %
    
    $
    11,811
    
    
    
    100.0
    %
    
    $
    11,958
    
    
    
    100.0
    %
  -1-




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Filing of Chapter 11
       1.
    
    We had decided to pursue the proposal to purchase the Rock Hill facility;2.
    
    We had received a proposal from a new secured lender to provide us with a
$36,700,000 senior, secured credit facility upon completion of the sale of the Rock
Hill facility;3.
    
    We believed that the proceeds of the sale and the new credit facility would
permit us to pay all accrued interest on the Senior Subordinated Notes plus 50% of the
principal amount of the Senior Subordinated Notes held by non-affiliates;
 -2-




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4.
    
    In order to facilitate the refinancing, the balance of the Senior Subordinated
Notes held by non-affiliates would have to be extended to mature on August 31, 2013,
and would receive cash interest at 12% per annum; and5.
    
    We agreed that the 22.7% of the Senior Subordinated Notes held by affiliates
would be converted into shares of our common stock. At the same time, we requested an
extension of the forbearance agreement to May 31, 2008, in order to provide the
prospective purchaser and the new secured lender the time they required to complete
their due diligence and documentation.
      -3-




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Major Customers
  Marketing and Sales
  Raw Materials
    -4-




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Patents and Trademarks
  Seasonal Variations
  Backlog
  Competition
  Research and Development
  Environmental Compliance
  -5-




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Employees
  December 312007
    
    2006
    
    2005Rubber Group
    
    
    538
    
    
    
    594
    
    
    
    685Metals Group
    
    
    121
    
    
    
    104
    
    
    
    107Corporate Office
    
    
    7
    
    
    
    8
    
    
    
    5666
    
    
    
    706
    
    
    
    797
  Discontinued Operations
  Filings with the Securities and Exchange Commission
 th
 
 Item 1A. RISK FACTORS
 We are subject to risks associated with bankruptcy proceedings.
   -6-




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We are dependent on a few major customers.
  We are highly dependent on the automotive industry.
  We encounter significant competition.
  -7-




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A lack of effective internal control over financial reporting may result in an inability to
accurately report our financial results.
  We may not be able to remediate the material weakness in our internal control over financial
reporting.
  Part of our labor force is unionized.
  Our major customers may be subject to labor interruptions.
  We are vulnerable to fluctuations in the cost and supply of raw materials.
  -8-




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We are subject to numerous environmental laws and regulations.
  We may be subject to product liability claims and litigation.
  Self-insurance may subject us to possible liability that may be partially or completely uninsured.
  -9-




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We are subject to interest rate changes
  
 Item 2. PROPERTIES
  SquareFeetRubber Group:Jasper, Georgia
    
    
    100,000North Canton, Ohio
    
    
    42,000Vienna, Ohio
    
    
    64,000Rock Hill, South Carolina
    
    
    61,000Total Rubber Group
    
    
    267,000Metals Group:Rochester, New York
    
    
    60,000Total Company
    
    
    327,000
     -10-




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Item 3. LEGAL PROCEEDINGS
    
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  -11-




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PART II
 
 Item 5. MARKET FOR OUR COMMON STOCK AND OTHER STOCKHOLDER MATTERS
  Years Ended December 312007
    
    2006High
    
    Low
    
    High
    
    LowFirst quarter
    
    $
    0.41
    
    
    $
    0.10
    
    
    $
    0.80
    
    
    $
    0.67Second quarter
    
    $
    0.70
    
    
    $
    0.13
    
    
    $
    1.01
    
    
    $
    0.60Third quarter
    
    $
    0.80
    
    
    $
    0.60
    
    
    $
    0.90
    
    
    $
    0.70Fourth quarter
    
    $
    0.70
    
    
    $
    0.25
    
    
    $
    0.80
    
    
    $
    0.41
   -12-




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Performance Graph
  
 2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007Lexington Precision Corporation
    
    
    100.00
    
    
    
    150.94
    
    
    
    113.21
    
    
    
    132.08
    
    
    
    77.36
    
    
    
    47.17S&P 500 Index
    
    
    100.00
    
    
    
    128.69
    
    
    
    142.69
    
    
    
    149.70
    
    
    
    173.34
    
    
    
    182.86NASDAQ Composite Index
    
    
    100.00
    
    
    
    150.02
    
    
    
    162.90
    
    
    
    165.14
    
    
    
    180.87
    
    
    
    198.61NASDAQ Industrial Index
    
    
    100.00
    
    
    
    155.74
    
    
    
    180.41
    
    
    
    180.63
    
    
    
    203.01
    
    
    
    211.58
  -13-




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Equity Compensation Plan Information
  Weighted-average
    
    
    Shares of common stockShares of common stock to
    
    
    exercise price of
    
    
    remaining available forbe issued upon exercise
    
    
    outstanding
    
    
    future issuance underof outstanding options,
    
    
    options,
    
    
    equity compensationwarrants and rights
    
    
    warrants and rights
    
    
    plansEquity compensation plans
approved by security holders
    
    
    
    
    
   $
   NA
    
    
    
    310Equity compensation plans not
approved by security holders
    
    
    
    
    
    
    NA
    
    
    
    Total
    
    
    
    
    
    $
    NA
    
    
    
    310
 -14-




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Item 6. SELECTED FINANCIAL DATA
  Years Ended December 312007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Summary of operations:Net sales
    
    $
    88,408
    
    
    $
    87,901
    
    
    $
    96,842
    
    
    $
    110,353
    
    
    $
    113,231Cost of sales
    
    
    76,529
    
    
    
    77,159
    
    
    
    87,369
    
    
    
    98,304
    
    
    
    99,773Gross profit
    
    
    11,879
    
    
    
    10,742
    
    
    
    9,473
    
    
    
    12,049
    
    
    
    13,458Selling and administrative expenses
    
    
    7,204
    (1)
    
    
    6,658
    
    
    
    6,747
    
    
    
    7,383
    
    
    
    7,904Gain on sale of assets held for sale
    
    
    
    
    
    
    
    
    
    
    (1,671
    )
    
    
    
    
    
    
    Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47Income from operations
    
    
    4,675
    
    
    
    4,084
    
    
    
    4,397
    
    
    
    4,666
    
    
    
    5,507Other income (expense):Interest expense (2)
    
    
    (11,339
    )(3)
    
    
    (10,943
    )
    
    
    (9,200
    )
    
    
    (8,662
    )
    
    
    (6,980
    )Gain on repurchase of debt
    
    
    
    
    
    
    
    
    
    
    77
    
    
    
    8,598
    
    
    
    Income (loss) from
continuing operations
before income tax
    
    
    (6,664
    )
    
    
    (6,859
    )
    
    
    (4,726
    )
    
    
    4,602
    
    
    
    (1,473
    )Income tax provision (benefit)
    
    
    6
    
    
    
    18
    
    
    
    (299
    )
    
    
    (196
    )
    
    
    76Income (loss) from
continuing operations
    
    
    (6,670
    )
    
    
    (6,877
    )
    
    
    (4,427
    )
    
    
    4,798
    
    
    
    (1,549
    )Income (loss) from discontinued operations
    
    
    (289
    )
    
    
    (472
    )
    
    
    644
    
    
    
    (3,208
    )
    
    
    (4,653
    )Cumulative effect of change in accounting
principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (247
    )Net income (loss)
    
    $
    (6,959
    )
    
    $
    (7,349
    )
    
    $
    (3,783
    )
    
    $
    1,590
    
    
    $
    (6,449
    )Net income (loss) per diluted common share
    
    $
    (1.41
    )
    
    $
    (1.49
    )
    
    $
    (0.77
    )
    
    $
    0.32
    
    
    $
    (1.36
    )
 (continued on next page)
 -15-




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(continued from prior page)
 Years Ended December 312007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Other data (continuing operations):Reconciliation of income (loss) from continuing
operations to EBITDA from continuing
operations:Income (loss) from continuing operations
    
    $
    (6,670
    )
    
    $
    (6,877
    )
    
    $
    (4,427
    )
    
    $
    4,798
    
    
    $
    (1,549
    )Adjustments:Depreciation and amortization included
in income from continuing operations
    
    
    6,437
    
    
    
    7,295
    
    
    
    8,374
    
    
    
    8,444
    
    
    
    8,955Gain on repurchase of debt
    
    
    
    
    
    
    
    
    
    
    (77
    )
    
    
    (8,598
    )
    
    
    Interest expense
    
    
    11,339
    
    
    
    10,943
    
    
    
    9,200
    
    
    
    8,662
    
    
    
    6,980Income tax provision (benefit)
    
    
    6
    
    
    
    18
    
    
    
    (299
    )
    
    
    (196
    )
    
    
    76EBITDA from continuing operations (4)
    
    
    11,112
    
    
    
    11,379
    
    
    
    12,771
    
    
    
    13,110
    
    
    
    14,462Adjustments to reconcile EBITDA to net cash
provided by operating activities:Interest expense
    
    
    (11,339
    )
    
    
    (10,943
    )
    
    
    (9,200
    )
    
    
    (8,662
    )
    
    
    (6,980
    )Amortization and write-off of deferred
financing expenses included in interest
expense
    
    
    1,249
    
    
    
    3,078
    
    
    
    1,315
    
    
    
    1,098
    
    
    
    610Interest expense converted to debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,953Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47Income tax (provision) benefit
    
    
    (6
    )
    
    
    (18
    )
    
    
    299
    
    
    
    196
    
    
    
    (76
    )Gain on sale of assets held for sale
    
    
    
    
    
    
    
    
    
    
    (1,671
    )
    
    
    
    
    
    
    Net change in operating assets and liabilities
    
    
    4,420
    
    
    
    (940
    )
    
    
    3,628
    
    
    
    1,326
    
    
    
    1,454Net cash provided by operating activities
    
    $
    5,436
    
    
    $
    2,556
    
    
    $
    7,142
    
    
    $
    7,068
    
    
    $
    13,470Net cash provided (used) by investing activities
    
    $
    (2,741
    )
    
    $
    (2,628
    )
    
    $
    683
    
    
    $
    (6,085
    )
    
    $
    (4,778
    )Net cash provided (used) by financing activities
    
    $
    (2,333
    )
    
    $
    621
    
    
    $
    (11,212
    )
    
    $
    (580
    )
    
    $
    (7,830
    )Capital expenditures (5)
    
    $
    2,664
    
    
    $
    2,661
    
    
    $
    3,330
    
    
    $
    6,057
    
    
    $
    5,686
 December 312007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Financial position(6):Current assets
    
    $
    21,877
    
    
    $
    20,222
    
    
    $
    22,396
    
    
    $
    28,907
    
    
    $
    30,101Current liabilities
    
    
    87,771
    
    
    
    82,211
    
    
    
    41,092
    
    
    
    35,777
    
    
    
    37,687Net working capital deficit
    
    $
    (65,894
    )
    
    $
    (61,989
    )
    
    $
    (18,696
    )
    
    $
    (6,870
    )
    
    $
    (7,586
    )Total assets
    
    $
    52,367
    
    
    $
    54,440
    
    
    $
    62,343
    
    
    $
    78,377
    
    
    $
    83,687Long-term debt, excluding current portion
    
    $
    5
    
    
    $
    406
    
    
    $
    41,545
    
    
    $
    58,949
    
    
    $
    63,681Total stockholders deficit
    
    $
    (35,941
    )
    
    $
    (28,991
    )
    
    $
    (21,656
    )
    
    $
    (17,875
    )
    
    $
    (19,492
    )
 (footnotes on next page)
 -16-




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(footnotes for the table on prior pages)
 
 (1)
    
    Selling and administrative expenses for 2007 include $698,000 of expenses incurred in
connection with the Companys efforts to refinance or restructure its indebtedness.(2)
    
    Includes the amortization and write-off of deferred financing expenses of $1,249,000,
$3,078,000, $1,315,000, $1,098,000, and $610,000 in 2007, 2006, 2005, 2004, and 2003,
respectively.(3)
    
    Interest expense for 2007 includes $698,000 of default interest expense on our secured
debt, $1,279,000 of forbearance interest expense on our Senior Subordinated Notes, and
$390,000 of interest on the interest payments that we failed to make on the Senior
Subordinated Notes in 2006 and 2007.(4)
    
    EBITDA is not a measure of performance under U.S. generally accepted accounting
principles (GAAP) and should not be considered in isolation or used as a substitute for
income from operations, net income, net cash provided by operating activities, or other
operating or cash flow statement data prepared in accordance with GAAP. For more
information on the use of EBITDA as a financial measure, please refer to our discussion of
EDITDA in Results of Operations  Comparison of 2007, 2006, and 2005 in Managements
Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item
7.(5)
    
    Includes $28,000 of equipment purchased under capital leases in 2007. Includes $157,000
of equipment acquired with seller-provided financing in 2006.(6)
    
    Data includes assets and liabilities of discontinued operations. -17-




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Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
   
    
    our ability to operate pursuant to the terms of our debtor-in-possession credit
arrangements;
    
    our ability to obtain court approval with respect to motions in the chapter 11
proceedings;
    
    our ability to develop, confirm, and consummate a plan of reorganization with
respect to the chapter 11 proceedings;
    
    increases and decreases in business awarded to us by our customers;
    
    unanticipated price reductions for our products as a result of competition;
    
    changes in the cost of raw materials;
    
    strength or weakness in the North American automotive market;
    
    changes in the competitive environment;
    
    unanticipated operating results;
    
    changes in economic conditions;
    
    changes in interest rates;
    
    financial difficulties encountered by our customers or suppliers;
    
    the filing of chapter 11 by one or more of our customers or suppliers;
    
    labor interruptions at our facilities or at our customers or suppliers facilities;
    
    our ability to develop adequate policies regarding and testing of internal
control over financial reporting; and
    
    other risks and uncertainties regarding the Company and its industry identified
from time to time in the Companys reports filed with the Securities and Exchange
Commission, including the risk factors identified in its annual report on Form 10-K for
the year ended December 31,
 -18-




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2006, and in its quarterly reports on Form 10-Q for the quarters ended March 31, June
30, and September 30, 2007.
    Results of Operations  Comparison of 2007, 2006, and 2005
   1.
    
    EBITDA excludes interest expense. Cash interest payments represent a reduction
in cash available to us, and accruals for interest expense represent an obligation to
pay cash interest in the future.2.
    
    EBITDA excludes provisions for taxes. Cash payments of taxes represent a
reduction in cash available to us, and accruals for non-cash taxes represent an
obligation to pay cash taxes in the future.3.
    
    EBITDA excludes depreciation and amortization related to buildings, equipment,
and tooling. Although depreciation and amortization are non-cash charges, they
represent the using up, over a projected period, of assets that produce revenue. EBITDA does not reflect the
capital expenditures required for the replacement of these depreciated assets.
 -19-




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4.
    
    EBITDA does not reflect cash provided or used as a result of changes in our
working capital.5.
    
    Our definition of EBITDA may not be the same as the definition of EBITDA used
by other companies, including companies in our industry; as the number of differences
in the definition of EBITDA increases, the usefulness of EBITDA as a comparative
measure decreases. The definition of EBITDA used here is different from the definition
of EBITDA used to calculate compliance with the financial covenants in our secured loan
agreements.
  -20-




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Years Ended December 312007
    
    
    2006
    
    
    2005Net sales
    
    $
    88,408
    
    
    
    100.0
    %
    
    $
    87,901
    
    
    
    100.0
    %
    
    $
    96,842
    
    
    
    100.0
    %Cost of sales
    
    
    76,529
    
    
    
    86.6
    
    
    
    77,159
    
    
    
    87.8
    
    
    
    87,369
    
    
    
    90.2Gross profit
    
    
    11,879
    
    
    
    13.4
    
    
    
    10,742
    
    
    
    12.2
    
    
    
    9,473
    
    
    
    9.8Selling and administrative expenses
    
    
    7,204
    
    
    
    8.1
    
    
    
    6,658
    
    
    
    7.6
    
    
    
    6,747
    
    
    
    7.0Gain on sale of assets held for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,671
    
    
    
    1.7Income from operations
    
    
    4,675
    
    
    
    5.3
    
    
    
    4,084
    
    
    
    4.6
    
    
    
    4,397
    
    
    
    4.5Interest expense
    
    
    (11,339
    )
    
    
    (12.8
    )
    
    
    (10,943
    )
    
    
    (12.4
    )
    
    
    (9,200
    )
    
    
    (9.5
    )Gain on repurchase of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77
    
    
    
    0.1Loss before income taxes
    
    
    (6,664
    )
    
    
    (7.5
    )
    
    
    (6,859
    )
    
    
    (7.8
    )
    
    
    (4,726
    )
    
    
    (4.9
    )Income tax provision (benefit)
    
    
    6
    
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    (299
    )
    
    
    (0.3
    )Loss from continuing operations
    
    
    (6,670
    )
    
    
    (7.5
    )
    
    
    (6,877
    )
    
    
    (7.8
    )
    
    
    (4,427
    )
    
    
    (4.6
    )Add back:Depreciation and amortization (1)
    
    
    6,437
    
    
    
    7.3
    
    
    
    7,295
    
    
    
    8.3
    
    
    
    8,374
    
    
    
    8.7Gain on repurchase of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (77
    )
    
    
    (0.1
    )Interest expense
    
    
    11,339
    
    
    
    12.8
    
    
    
    10,943
    
    
    
    12.4
    
    
    
    9,200
    
    
    
    9.5Income tax provision (benefit)
    
    
    6
    
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    (299
    )
    
    
    (0.3
    )EBITDA
    
    
    11,112
    
    
    
    12.6
    
    
    
    11,379
    
    
    
    12.9
    
    
    
    12,771
    
    
    
    13.2Adjustments to reconcile EBITDA to net cash
provided by operating activities:Interest expense
    
    
    (11,339
    )
    
    
    (12.8
    )
    
    
    (10,943
    )
    
    
    (12.4
    )
    
    
    (9,200
    )
    
    
    (9.5
    )Amortization and write-off of deferred
financing expenses included in interest
expense
    
    
    1,249
    
    
    
    1.4
    
    
    
    3,078
    
    
    
    3.5
    
    
    
    1,315
    
    
    
    1.4Income tax (provision) benefit
    
    
    (6
    )
    
    
    
    
    
    
    (18
    )
    
    
    
    
    
    
    299
    
    
    
    0.3Gain on sale of assets held for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,671
    )
    
    
    (1.7
    )Net change in operating assets and
liabilities
    
    
    4,420
    
    
    
    5.0
    
    
    
    (940
    )
    
    
    (1.1
    )
    
    
    3,628
    
    
    
    3.7Net cash provided by operating activities
    
    $
    5,436
    
    
    
    6.1
    %
    
    $
    2,556
    
    
    
    2.9
    %
    
    $
    7,142
    
    
    
    7.4
    %Net cash provided (used) by investing
activities
    
    $
    (2,741
    )
    
    
    (3.1
    )%
    
    $
    (2,628
    )
    
    
    3.0
    %
    
    $
    683
    
    
    
    0.7
    %Net cash provided (used) by financing
activities
    
    $
    (2,333
    )
    
    
    (2.6
    )%
    
    $
    621
    
    
    
    0.7
    %
    
    $
    (11,212
    )
    
    
    (11.6
    )%
 (footnote on following page)
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##### Table of Contents



(footnote for table on prior page)
 
 (1)
    
    Does not include the amortization and write-off of deferred financing expenses, which
totaled $1,249,000, $3,078,000, and $1,315,000, in 2007, 2006, and 2005, respectively, and
which is included in interest expense in the consolidated financial statements.  Years Ended December 312007
    
    
    2006
    
    
    2005Automotive
    
    $
    69,430
    
    
    
    78.5
    %
    
    $
    73,464
    
    
    
    83.6
    %
    
    $
    83,577
    
    
    
    86.3
    %Medical
    
    
    15,928
    
    
    
    18.0
    
    
    
    11,039
    
    
    
    12.6
    
    
    
    9,989
    
    
    
    10.3Industrial
    
    
    1,549
    
    
    
    1.8
    
    
    
    1,623
    
    
    
    1.8
    
    
    
    1,429
    
    
    
    1.5Other
    
    
    1,501
    
    
    
    1.7
    
    
    
    1,775
    
    
    
    2.0
    
    
    
    1,847
    
    
    
    1.9Total net sales
    
    $
    88,408
    
    
    
    100.0
    %
    
    $
    87,901
    
    
    
    100.0
    %
    
    $
    96,842
    
    
    
    100.0
    %
    -22-




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##### Table of Contents



Rubber Group
   Years Ended December 312007
    
    
    2006
    
    
    2005Net sales
    
    $
    74,587
    
    
    
    100.0
    %
    
    $
    76,090
    
    
    
    100.0
    %
    
    $
    84,884
    
    
    
    100.0
    %Cost of sales
    
    
    63,039
    
    
    
    84.5
    
    
    
    64,772
    
    
    
    85.1
    
    
    
    74,719
    
    
    
    88.0Gross profit
    
    
    11,548
    
    
    
    15.5
    
    
    
    11,318
    
    
    
    14.9
    
    
    
    10,165
    
    
    
    12.0Selling and administrative expenses
    
    
    3,573
    
    
    
    4.8
    
    
    
    3,676
    
    
    
    4.9
    
    
    
    3,702
    
    
    
    4.4Gain on sale of assets held for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    571
    
    
    
    0.7Income from operations
    
    
    7,975
    
    
    
    10.7
    
    
    
    7,642
    
    
    
    10.0
    
    
    
    7,034
    
    
    
    8.3Add back: depreciation and
amortization
    
    
    5,727
    
    
    
    7.7
    
    
    
    6,455
    
    
    
    8.5
    
    
    
    7,226
    
    
    
    8.5EBITDA
    
    $
    13,702
    
    
    
    18.4
    %
    
    $
    14,097
    
    
    
    18.5
    %
    
    $
    14,260
    
    
    
    16.8
    %
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##### Table of Contents



Metals Group
   Years Ended December 312007
    
    
    2006
    
    
    2005Net sales
    
    $
    13,821
    
    
    
    100.0
    %
    
    $
    11,811
    
    
    
    100.0
    %
    
    $
    11,958
    
    
    
    100.0
    %Cost of sales
    
    
    13,490
    
    
    
    97.6
    
    
    
    12,387
    
    
    
    104.9
    
    
    
    12,650
    
    
    
    105.8Gross profit (loss)
    
    
    331
    
    
    
    2.4
    
    
    
    (576
    )
    
    
    (4.9
    )
    
    
    (692
    )
    
    
    (5.8
    )Selling and administrative expenses
    
    
    523
    
    
    
    3.8
    
    
    
    669
    
    
    
    5.6
    
    
    
    723
    
    
    
    6.0Gain on sale of assets held for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,100
    
    
    
    9.2Loss from operations
    
    
    (192
    )
    
    
    (1.4
    )
    
    
    (1,245
    )
    
    
    (10.5
    )
    
    
    (315
    )
    
    
    (2.6
    )Add back: depreciation and amortization
    
    
    682
    
    
    
    4.9
    
    
    
    820
    
    
    
    6.9
    
    
    
    1,138
    
    
    
    9.5EBITDA
    
    $
    490
    
    
    
    3.5
    %
    
    $
    (425
    )
    
    
    (3.6
    )%
    
    $
    823
    
    
    
    6.9
    %
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##### Table of Contents



Corporate Office
   Years Ended December 312007
    
    
    2006
    
    
    2005Loss from operations
    
    $
    (3,108
    )
    
    $
    (2,313
    )
    
    $
    (2,322
    )Add back: depreciation and amortization (1)
    
    
    28
    
    
    
    20
    
    
    
    10EBITDA
    
    $
    (3,080
    )
    
    $
    (2,293
    )
    
    $
    (2,312
    )
 
 (1)
    
    Excludes the amortization and write-off of deferred financing expenses,
which totaled $1,249,000, $3,078,000, and $1,315,000, in 2007, 2006, and 2005,
respectively, and which is included in interest expense in the consolidated
financial statements.   Discontinued Operation
  -26-




---



##### Table of Contents



Years Ended December 312007
    
    
    2006
    
    
    2005Net sales
    
    $
    
    
    
    $
    
    
    
    $
    3,381Income (loss) from operations before increase in carrying
value of assets held for sale and gain on the sale of assets
    
    $
    (121
    )
    
    $
    (294
    )
    
    $
    130Increase in carrying value of assets held for sale
    
    
    
    
    
    
    
    
    
    
    542Gain on sale of assets
    
    
    
    
    
    
    
    
    
    
    568Income (loss) from discontinued operations
    
    
    (121
    )
    
    
    (294
    )
    
    
    1,240Allocated interest expense
    
    
    168
    
    
    
    178
    
    
    
    262Income (loss) from discontinued operations before income taxes
    
    
    (289
    )
    
    
    (472
    )
    
    
    978Income tax provision (1)
    
    
    
    
    
    
    
    
    
    
    334Income (loss) from discontinued operations
    
    $
    (289
    )
    
    $
    (472
    )
    
    $
    644
 
 (1)
    
    The income tax provision in 2005 was offset by an income tax benefit recorded in
continuing operations. Income tax benefits in 2007 and 2006 were offset by provisions for
valuation allowances. -27-




---



##### Table of Contents



Interest Expense
  Years Ended December 312007
    
    
    2006
    
    
    2005Contractual interest rates:Senior, secured loans
    
    $
    3,698
    
    
    $
    3,334
    
    
    $
    2,903Senior Subordinated Notes
    
    
    4,101
    
    
    
    4,101
    
    
    
    4,101All other
    
    
    92
    
    
    
    525
    
    
    
    1,143Subtotal
    
    
    7,891
    
    
    
    7,960
    
    
    
    8,147Incremental interest rates:Senior, secured loans  default or forbearance premium
    
    
    698
    
    
    
    62
    
    
    
    Senior Subordinated Notes  forbearance premium
    
    
    1,279
    
    
    
    
    
    
    
    Senior Subordinated Notes  interest on missed interest
payments
    
    
    390
    
    
    
    21
    
    
    
    Subtotal
    
    
    2,367
    
    
    
    83
    
    
    
    Costs and fees, including amortization and write-off of deferred
financing costs
    
    
    1,249
    
    
    
    3,078
    
    
    
    1,315Total interest expense
    
    
    11,507
    
    
    
    11,121
    
    
    
    9,462Less: Interest expense allocated to discontinued operations
    
    
    168
    
    
    
    178
    
    
    
    262Interest expense related to continuing operations
    
    $
    11,339
    
    
    $
    10,943
    
    
    $
    9,200
  Gain on the Repurchase of Debt
  Income Tax Provision
  -28-




---



##### Table of Contents



Liquidity and Capital Resources
 Operating activities
   Investing Activities
  Financing Activities
  Liquidity and Filing of Chapter 11
   -29-




---



##### Table of Contents



1.
    
    We had decided to pursue the proposal to purchase the Rock Hill facility;2.
    
    We had received a proposal from a new secured lender to provide us with a,
$36,700,000 senior, secured credit facility upon completion of the sale of the Rock
Hill facility;3.
    
    We believed that the proceeds of the sale and the new credit facility would
permit us to pay all accrued interest on the Senior Subordinated Notes plus 50% of the
principal amount of the Senior Subordinated Notes held by non-affiliates;4.
    
    In order to facilitate the refinancing, the balance of the Senior Subordinated
Notes held by non-affiliates would have to be extended to mature on August 31, 2013,
and would receive cash interest at 12% per annum; and5.
    
    We had agreed that the 22.7% of the Senior Subordinated Notes held by
affiliates would be converted into shares of our common stock. At the same time, we
requested an extension of the forbearance agreement to May 31, 2008, in order to
provide the prospective purchaser and
 -30-




---



##### Table of Contents



the new secured lender the time they required to complete their due diligence and
documentation.
      -31-




---



##### Table of Contents



1.
    
    At December 31, 2007, there were $10,632,000 of loans and $907,000 of letters
of credit outstanding under a $17,500,000 revolving line of credit; at April 1, 2008,
there were $14,219,000 of loans and $907,000 of letters of credit outstanding. The
contractual interest rate on loans under the revolving credit is LIBOR plus 2.75%. From
February 1, 2007, through March 31, 2008, a default premium of 2% was charged on the
outstanding loan balances.2.
    
    An equipment term loan with an outstanding principal balance of $9,167,000 at
December 31, 2007, and $8,333,000 at April 1, 2008. The contractual interest rate on
the equipment term loan is LIBOR plus 4.5%. From February 1, 2007, through March 31,
2008, a default premium of 2% was charged on the outstanding loan balances.3.
    
    A real estate term loan with an outstanding principal balance of $14,022,000 at
December 31, 2007, and $13,778,000 at April 1, 2008. The contractual interest rates on
the real estate term loan are the prime rate plus 6% on $4,000,000 principal amount and
LIBOR plus 4.5% on the balance. From February 1, 2007, through March 31, 2008, a
default premium of 2% was charges on the outstanding loan balances.
  1.
    
    Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio is
calculated by dividing consolidated EBITDA, less Unfinanced Capital Expenditures, by
consolidated Fixed Charges, and was required to be not less than 0.75 to 1.0 for the
five-, six-, and seven-month periods ending July 31, August 31 and September 30, 2007,
respectively, and not less than 0.85 to 1.0 for each period commencing March 1, 2007,
and ending on the last day of each month following September 30, 2007, until the
forbearance period terminated. At December 31, 2007, our Fixed Charge Coverage Ratio
was 1.16 to 1.00.2.
    
    Leverage Ratio. The Leverage Ratio is calculated by dividing Senior
Debt by consolidated EBITDA and was required to be not more than 3.75 to 1.0 for the
five-, six-, and seven-month periods ending July 31, August 31 and September 30, 2007,
respectively, and not more than 3.5 to 1.0 for each period commencing March 1, 2007,
and ending on the last day of each month following September 30, 2007, until the
forbearance period terminated. At December 31, 2007, our Leverage Ratio was 2.60 to
1.00.3.
    
    Minimum Revenue. Revenue was required to be not less than specified
amounts on a cumulative basis starting on March 1, 2007, through the last day of each
month from May 2007 through the end of the forbearance period. At December 31, 2007,
our cumulative revenue exceeded the minimum revenue requirement of $65,778,000 by
$8,101,000.4.
    
    Minimum EBITDA. EBITDA was required to be not less than specified
amounts on a cumulative basis starting on March 1, 2007, through the last day of each
month from May 2007 through the end of the forbearance period. At December 31, 2007,
our cumulative
 -32-




---



##### Table of Contents



EBITDA exceeded the minimum cumulative EBITDA requirement of $8,973,000 by $908,000.
  1.
    
    Minimum Cash. Our aggregate cash must exceed $1,000,000 on May 2, 2008,
and $500,000 on May 30, 2008, and on the last day of each four-week period thereafter.
At May 2, 2008, aggregate cash was $7,538,000.2.
    
    Maximum Expenditures. Our cumulative expenditures must be less than
110% of budgeted cumulative expenditures. At May 2, 2008, cumulative expenditures were
$2,756,000 less than 110% of budgeted cumulative expenditures.3.
    
    Minimum Net Sales. Our cumulative net sales must be greater than 90% of
budgeted net sales. At May 2, 2008, cumulative net sales exceeded 90% of budgeted
cumulative net sales by $596,000.
    -33-




---



##### Table of Contents



Contractual Obligations
  Payments Due by Period2009 &
    
    
    2011 &
    
    
    More thanTotal
    
    
    2008
    
    
    2010
    
    
    2012
    
    
    5 yearsEquipment term loan
    
    $
    9,167
    
    
    $
    9,167
    
    
    $
    
    
    
    $
    
    
    
    $
    Real estate term loan
    
    
    14,022
    
    
    
    14,022
    
    
    
    
    
    
    
    
    
    
    
    Subordinated debt
    
    
    42,088
    
    
    
    42,088
    (1)
    
    
    
    
    
    
    
    
    
    
    Series B Preferred Stock
    
    
    693
    
    
    
    693
    (1)
    
    
    
    
    
    
    
    
    
    
    Other long-term debt
    
    
    67
    
    
    
    67
    
    
    
    
    
    
    
    
    
    
    
    Capital lease obligations
    
    
    19
    
    
    
    14
    
    
    
    5
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    188
    
    
    
    71
    
    
    
    115
    
    
    
    2
    
    
    
    Equipment purchase obligations
    
    
    113
    
    
    
    113
    
    
    
    
    
    
    
    
    
    
    
    Fixed interest payments
    
    
    8,316
    
    
    
    8,316
    (2)
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    74,673
    
    
    $
    74,551
    
    
    $
    120
    
    
    $
    2
    
    
    $
    
 
 (1)
    
    Includes interest accrued at December 31, 2007.(2)
    
    Assumes (a) interest at the rate of 12% and 13%, respectively, on the Senior
Subordinated Notes and Junior Subordinated Notes outstanding on December 31, 2007, and the
interest accrued thereon, (b) interest on the equipment and real estate term loans at the
contractual rates in effect on December 31, 2007, excluding default interest premiums and
(c) interest on the revolving line of credit equivalent to the interest paid on the
revolving line during 2007 excluding default interest premiums. Inflation
  Environmental Matters
  -34-




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##### Table of Contents



Quarterly Financial Data
  Off-Balance Sheet Arrangements
  Critical Accounting Policies and Estimates
   Valuation of Accounts Receivable and Provision for Credit Losses
  Valuation of Inventory
  -35-




---



##### Table of Contents



Valuation of Long-Lived Assets other than Goodwill
   Valuation of Goodwill
   Revenue Recognition
  Other
  -36-




---



##### Table of Contents



Recently Issued Accounting Standards
  Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in
Consolidated Financial Statements  an Amendment of ARB No. 51
  Statement of Financial Accounting Standards No. 141 (Revised 2007), Business Combinations
  Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities
  Statement of Financial Accounting Standards No. 157, Fair Value Measurements
  -37-




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##### Table of Contents



Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in
Income Taxes
  
 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
      -38-




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-39-




---



##### Table of Contents



Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Table of Contents
 PageReport of Malin, Bergquist & Company, LLP, Independent
Registered Public Accounting Firm (2007)
    
    41Report of Ernst & Young LLP, Independent Registered Public
Accounting Firm (2006 and 2005)
    
    42Consolidated Statements of Operations for the Years Ended
December 31, 2007, 2006, and 2005
    
    43Consolidated Balance Sheets at December 31, 2007 and 2006
    
    44Consolidated Statements of Stockholders Deficit for the Years Ended
December 31, 2007, 2006, and 2005
    
    46Consolidated Statements of Cash Flows for the Years Ended
December 31, 2007, 2006, and 2005
    
    47Notes to Consolidated Financial Statements
    
    48
 -40-




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
 -41-




---



##### Table of Contents



REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
 
      
 -42-




---



##### Table of Contents



LEXINGTON PRECISION CORPORATION
AND SUBSIDIARY
 
 Consolidated Statements of Operations
(thousands of dollars, except per share data)
 Years Ended December 312007
    
    
    2006
    
    
    2005Net sales
    
    $
    88,408
    
    
    $
    87,901
    
    
    $
    96,842Cost of sales
    
    
    76,529
    
    
    
    77,159
    
    
    
    87,369Gross profit
    
    
    11,879
    
    
    
    10,742
    
    
    
    9,473Selling and administrative expenses
    
    
    7,204
    
    
    
    6,658
    
    
    
    6,747Gain on the sale of assets held for sale
    
    
    
    
    
    
    
    
    
    
    1,671Income from operations
    
    
    4,675
    
    
    
    4,084
    
    
    
    4,397Other income (expense):Interest expense
    
    
    (11,339
    )
    
    
    (10,943
    )
    
    
    (9,200
    )Gain on repurchase of debt
    
    
    
    
    
    
    
    
    
    
    77Income (loss) from continuing operations before
income taxes
    
    
    (6,664
    )
    
    
    (6,859
    )
    
    
    (4,726
    )Income tax provision (benefit)
    
    
    6
    
    
    
    18
    
    
    
    (299
    )Income (loss) from continuing operations
    
    
    (6,670
    )
    
    
    (6,877
    )
    
    
    (4,427
    )Income (loss) from discontinued operations
    
    
    (289
    )
    
    
    (472
    )
    
    
    644Net income (loss)
    
    $
    (6,959
    )
    
    $
    (7,349
    )
    
    $
    (3,783
    )Basic and diluted income (loss) per share of common stock:Continuing operations
    
    $
    (1.35
    )
    
    $
    (1.39
    )
    
    $
    (0.90
    )Discontinued operations
    
    
    (0.06
    )
    
    
    (0.10
    )
    
    
    0.13Net income (loss)
    
    $
    (1.41
    )
    
    $
    (1.49
    )
    
    $
    (0.77
    )
 See notes to consolidated financial statements
 -43-




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##### Table of Contents



LEXINGTON PRECISION CORPORATION
AND SUBSIDIARY
 
 Consolidated Balance Sheets
(thousands of dollars, except share data)
 December 312007
    
    
    2006Assets:Current assets:Cash
    
    $
    212
    
    
    $
    35Marketable securities
    
    
    214
    
    
    
    Accounts receivable, net of allowances of $476
and $412, respectively
    
    
    10,981
    
    
    
    9,852Inventories, net of allowances of $612
and $417, respectively
    
    
    9,330
    
    
    
    8,787Prepaid expenses and other current assets
    
    
    1,032
    
    
    
    1,073Deferred income taxes
    
    
    98
    
    
    
    374Current assets of discontinued operations
    
    
    10
    
    
    
    101Total current assets
    
    
    21,877
    
    
    
    20,222Plant and equipment:Land
    
    
    1,817
    
    
    
    1,776Buildings
    
    
    13,370
    
    
    
    13,368Equipment
    
    
    110,723
    
    
    
    110,980125,910
    
    
    
    126,124Accumulated depreciation
    
    
    105,056
    
    
    
    101,898Plant and equipment, net
    
    
    20,854
    
    
    
    24,226Plant and equipment of discontinued operations, net
    
    
    1,338
    
    
    
    1,418Goodwill, net
    
    
    7,623
    
    
    
    7,623Other assets, net
    
    
    675
    
    
    
    951$
    52,367
    
    
    $
    54,440
 See notes to consolidated financial statements
 (continued on next page)
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##### Table of Contents



LEXINGTON PRECISION CORPORATION
AND SUBSIDIARY
 Consolidated Balance Sheets
(thousands of dollars, except share data)
 December 312007
    
    
    2006Liabilities and stockholders deficit:Current liabilities:Accounts payable
    
    $
    6,558
    
    
    $
    6,370Accrued expenses, excluding interest expense
    
    
    3,932
    
    
    
    3,789Accrued interest expense
    
    
    7,954
    
    
    
    2,130Debt in default
    
    
    68,345
    
    
    
    68,967Current portion of long-term debt
    
    
    741
    
    
    
    734Current liabilities of discontinued operations
    
    
    241
    
    
    
    221Total current liabilities
    
    
    87,771
    
    
    
    82,211Long-term debt, excluding current portion
    
    
    5
    
    
    
    406Deferred income taxes
    
    
    98
    
    
    
    374Other long-term liabilities
    
    
    434
    
    
    
    440Stockholders deficit:Common stock, $0.25 par value, 10,000,000 shares
authorized, 5,021,767 and 4,981,767 shares issued and
outstanding at December 31, 2007 and 2006, respectively
    
    
    1,238
    
    
    
    1,235Additional paid-in-capital
    
    
    13,187
    
    
    
    13,181Accumulated deficit
    
    
    (50,366
    )
    
    
    (43,407
    )Total stockholders deficit
    
    
    (35,941
    )
    
    
    (28,991
    )$
    52,367
    
    
    $
    54,440
 See notes to consolidated financial statements
 -45-




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##### Table of Contents



LEXINGTON PRECISION CORPORATION
AND SUBSIDIARY
 
 Consolidated Statements of Stockholders Deficit
(thousands of dollars)
 Additional
    
    
    
    
    
    
    TotalCommon
    
    
    Paid-in-
    
    
    Accumulated
    
    
    StockholdersStock
    
    
    Capital
    
    
    Deficit
    
    
    DeficitBalance at January 1, 2005
    
    $
    1,233
    
    
    $
    13,169
    
    
    $
    (32,277
    )
    
    $
    (17,875
    )Net income
    
    
    
    
    
    
    
    
    
    
    (3,783
    )
    
    
    (3,783
    )Vesting of restricted stock grants
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Balance at December 31, 2005
    
    
    1,233
    
    
    
    13,169
    
    
    
    (36,058
    )
    
    
    (21,656
    )Net loss
    
    
    
    
    
    
    
    
    
    
    (7,349
    )
    
    
    (7,349
    )Vesting of restricted stock grants
    
    
    2
    
    
    
    12
    
    
    
    
    
    
    
    14Balance at December 31, 2006
    
    
    1,235
    
    
    
    13,181
    
    
    
    (43,407
    )
    
    
    (28,991
    )Net loss
    
    
    
    
    
    
    
    
    
    
    (6,959
    )
    
    
    (6,959
    )Vesting of restricted stock grants
    
    
    3
    
    
    
    6
    
    
    
    
    
    
    
    9Balance at December 31, 2007
    
    $
    1,238
    
    
    $
    13,187
    
    
    $
    (50,366
    )
    
    $
    (35,941
    )
 See notes to consolidated financial statements
 -46-




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##### Table of Contents



LEXINGTON PRECISION CORPORATION
AND SUBSIDIARY
 
 Consolidated Statements of Cash Flows
(thousands of dollars)
 Years Ended December 312007
    
    
    2006
    
    
    2005Operating activities:Net loss
    
    $
    (6,959
    )
    
    $
    (7,349
    )
    
    $
    (3,783
    )Adjustments to reconcile net loss to net cash
provided (used) by operating activities of continuing operations:Net loss (income) from discontinued operations
    
    
    289
    
    
    
    472
    
    
    
    (644
    )Depreciation
    
    
    6,036
    
    
    
    6,919
    
    
    
    8,012Amortization included in cost of sales
    
    
    401
    
    
    
    376
    
    
    
    362Amortization and write-off of deferred financing
expenses included in interest expense
    
    
    1,249
    
    
    
    3,078
    
    
    
    1,315Gain on repurchase of debt
    
    
    
    
    
    
    
    
    
    
    (77
    )Gain on sale of assets held for sale
    
    
    
    
    
    
    
    
    
    
    (1,671
    )Changes in operating assets and liabilities that
provided (used) cash:Accounts receivable, net
    
    
    (1,256
    )
    
    
    2,849
    
    
    
    2,621Inventories, net
    
    
    (543
    )
    
    
    (1,003
    )
    
    
    1,007Prepaid expenses and other assets
    
    
    108
    
    
    
    (457
    )
    
    
    1,151Accounts payable
    
    
    188
    
    
    
    (2,683
    )
    
    
    (700
    )Accrued expenses, excluding interest expense
    
    
    143
    
    
    
    (912
    )
    
    
    (138
    )Accrued interest expense
    
    
    5,824
    
    
    
    1,281
    
    
    
    (126
    )Other long term liabilities
    
    
    (2
    )
    
    
    12
    
    
    
    (31
    )Other
    
    
    (42
    )
    
    
    (27
    )
    
    
    (156
    )Net cash provided by continuing operations
    
    
    5,436
    
    
    
    2,556
    
    
    
    7,142Net cash provided (used) by discontinued operations
    
    
    (158
    )
    
    
    (514
    )
    
    
    1,023Net cash provided by operating activities
    
    
    5,278
    
    
    
    2,042
    
    
    
    8,165Investing activities:Purchases of plant and equipment
    
    
    (2,636
    )
    
    
    (2,504
    )
    
    
    (3,330
    )Proceeds from sales of assets and assets held for sale
    
    
    118
    
    
    
    
    
    
    
    4,518Expenditures for tooling owned by customers
    
    
    (197
    )
    
    
    (174
    )
    
    
    (544
    )Other
    
    
    (26
    )
    
    
    50
    
    
    
    39Net cash provided (used) by continuing operations
    
    
    (2,741
    )
    
    
    (2,628
    )
    
    
    683Net cash provided (used) by discontinued operations
    
    
    (27
    )
    
    
    (13
    )
    
    
    2,360Net cash provided (used) by investing activities
    
    
    (2,768
    )
    
    
    (2,641
    )
    
    
    3,043Financing activities:Net increase (decrease) in borrowings under revolving
lines of credit
    
    
    2,263
    
    
    
    (3,585
    )
    
    
    (2,555
    )Proceeds from issuance of debt
    
    
    
    
    
    
    28,500
    
    
    
    1,500Repayment of debt
    
    
    (3,310
    )
    
    
    (22,527
    )
    
    
    (9,705
    )Payment of financing expenses
    
    
    (1,286
    )
    
    
    (1,767
    )
    
    
    (452
    )Net cash provided (used) by financing activities
    
    
    (2,333
    )
    
    
    621
    
    
    
    (11,212
    )Net increase (decrease) in cash
    
    
    177
    
    
    
    22
    
    
    
    (4
    )Cash at beginning of year
    
    
    35
    
    
    
    13
    
    
    
    17Cash at end of year
    
    $
    212
    
    
    $
    35
    
    
    $
    13
 See notes to consolidated financial statements
 -47-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Summary of Significant Accounting Policies
 The Company
  Principles of Consolidation
  Basis of Presentation
    -48-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Use of Estimates
  Marketable Securities
  Valuation of Accounts Receivable and Provision for Credit Losses
  -49-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Valuation of Inventory
   December 312007
    
    
    2006Finished goods
    
    $
    5,201
    
    
    $
    4,595Work in process
    
    
    2,185
    
    
    
    2,279Raw materials
    
    
    1,944
    
    
    
    1,913$
    9,330
    
    
    $
    8,787
 Plant and Equipment
  Valuation of Long-Lived Assets other than Goodwill
   -50-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Valuation of Goodwill
   Deferred Financing Expenses
  Research and Development Expenses
  -51-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Interest Expense
  Years
Ended December 312007
    
    
    2006
    
    
    2005Contractual interest rates:Senior, secured loans
    
    $
    3,698
    
    
    $
    3,334
    
    
    $
    2,903Senior Subordinated Notes
    
    
    4,101
    
    
    
    4,101
    
    
    
    4,101All other
    
    
    92
    
    
    
    525
    
    
    
    1,143Subtotal
    
    
    7,891
    
    
    
    7,960
    
    
    
    8,147Incremental interest rates:Senior, secured loans  default or forbearance premium
    
    
    698
    
    
    
    62
    
    
    
    Senior Subordinated Notes  forbearance premium
    
    
    1,279
    
    
    
    
    
    
    
    Senior Subordinated Notes  interest on missed interest
payments
    
    
    390
    
    
    
    21
    
    
    
    Subtotal
    
    
    2,367
    
    
    
    83
    
    
    
    Costs and fees, including amortization and write-off of deferred
financing costs
    
    
    1,249
    
    
    
    3,078
    
    
    
    1,315Total interest expense
    
    
    11,507
    
    
    
    11,121
    
    
    
    9,462Less: Interest expense allocated to discontinued operations
    
    
    168
    
    
    
    178
    
    
    
    262Interest expense related to continuing operations
    
    $
    11,339
    
    
    $
    10,943
    
    
    $
    9,200
 Net Income or Loss per Common Share
  Revenue Recognition
  -52-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Recently Issued Accounting Standards
  Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in
Consolidated Financial Statements  an Amendment of ARB No. 51
  Statement of Financial Accounting Standards No. 141 (Revised 2007), Business Combinations
  Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities
  -53-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Statement of Financial Accounting Standards No. 157, Fair Value Measurements
  Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in
Income Taxes
  Note 2  Other Noncurrent Assets
  -54-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 3  Accrued Expenses, excluding Interest Expense
  December
312007
    
    
    2006Employee fringe benefits
    
    $
    2,617
    
    
    $
    2,530Salaries and wages
    
    
    298
    
    
    
    356Taxes
    
    
    148
    
    
    
    117Other
    
    
    869
    
    
    
    786$
    3,932
    
    
    $
    3,789
 Note 4  Debt
  December 312007
    
    
    2006Debt in default:Senior, secured credit facility:Revolving line of credit
    
    $
    10,632
    
    
    $
    8,369Equipment term loan
    
    
    9,167
    
    
    
    11,666Real estate term loan
    
    
    14,022
    
    
    
    14,755Subtotal
    
    
    33,821
    
    
    
    34,790Senior Subordinated Notes
    
    
    34,177
    
    
    
    34,177Junior Subordinated Note
    
    
    347
    
    
    
    Total debt in default
    
    
    68,345
    
    
    
    68,967Current portion of long-term debt
    
    
    741
    
    
    
    734Long-term debt:Junior Subordinated Note
    
    
    
    
    
    
    347Series B Preferred Stock
    
    
    660
    
    
    
    657Other
    
    
    86
    
    
    
    136Subtotal
    
    
    746
    
    
    
    1,140Less current portion
    
    
    (741
    )
    
    
    (734
    )Total long-term debt
    
    
    5
    
    
    
    406Total debt
    
    $
    69,091
    
    
    $
    70,107
 -55-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Senior, Secured Credit Facility
  1.
    
    A $17,500,000 revolving line of credit that had a stated maturity of May 15,
2009. At December 31, 2007, there were $10,632,000 of loans and $907,000 of letters of
credit outstanding under the revolving line of credit, and unused availability was
$1,433,000. The revolving line of credit, loans and reimbursement obligations with
respect to letters of credit were limited to the lesser of $17,500,000 or an amount
equal to (1) 85% of eligible accounts receivable, plus (2) the lesser of 65% of eligible
inventories or 51% of eligible accounts receivable, minus (3) $500,000. The contractual
interest rate on loans under the revolving line of credit was LIBOR plus 2.75%. The
Companys obligations under the revolving line of credit are secured by a first priority
lien on substantially all of the Companys assets other than real estate and a second
priority lien on the Companys real estate.2.
    
    An equipment term loan with an outstanding principal balance of $9,167,000 at
December 31, 2007. The equipment term loan is payable in monthly principal installments
of $208,000 through May 1, 2009, with the unpaid balance payable on May 15, 2009. The
contractual rate of interest on the equipment term loan is LIBOR plus 4.5%. The
equipment term loan is secured by a first priority lien on substantially all of the
Companys assets other than real estate and a second priority lien on the Companys real
estate.3.
    
    A real estate term loan with an outstanding principal balance of $14,022,000 at
December 31, 2007. The real estate term loan is payable in monthly principal
installments of $61,000 through May 1, 2009, with the unpaid balance payable on May 15,
2009. The contractual interest rates on the real estate term loan were the prime rate
plus 6% as to $4,000,000 principal amount and LIBOR plus 4.5% as to the balance.
Principal payments made on the real estate term loan are allocable first to the portion
of the loan that bears interest at LIBOR plus 4.5% and then to the portion of the loan
that bears interest at the prime rate plus 6%. The real estate term loan is secured by a
first priority lien on the Companys real estate and a second priority lien on
substantially all of the Companys other assets.
   -56-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    1.
    
    The interest rates on all of the senior, secured loans were reduced to the
contractual rates.2.
    
    The principal amount of loans under the revolving line of credit was fixed at
$14,219,000 for the term of the chapter 11 proceedings.3.
    
    The Company agreed to continue to make the regular monthly principal payments of
$208,000 on the equipment term loan, which had an outstanding principal balance of
$8,333,000 on the filing date, and $61,000 on the real estate term loan, which had an
outstanding principal balance of $13,778,000 on the filing date.
  1.
    
    Minimum Cash. The Companys aggregate cash must exceed $1,000,000 on May
2, 2008, and $500,000 on May 30, 2008, and on the last day of each four-week period
thereafter. At May 2, 2008, aggregate cash was $7,538,000.2.
    
    Maximum Expenditures. The Companys cumulative expenditures must be less
than 110% of budgeted cumulative expenditures. At May 2, 2008, cumulative expenditures
were $2,756,000 less than 110% of budgeted cumulative expenditures.3.
    
    Minimum Net Sales. The Companys cumulative net sales must be greater
than 90% of budgeted net sales. At May 2, 2008, cumulative net sales exceeded 90% of
budgeted cumulative net sales by $596,000.
  Senior Subordinated Notes
  -57-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Junior Subordinated Note
  Series B Preferred Stock
   Fair Value of Financial Instruments
   Cash Interest Paid
  -58-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Non-Cash Investing and Financing Activities
  Note 5  Common Stock, Warrants, and Other Equity Securities
 Common Stock, $.25 Par Value
  Warrants
  Other Authorized Preferred Stock
  Note 6  Employee Benefit Plans
 Retirement and Savings Plan
  -59-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Incentive Compensation Plan
  2005 Stock Award Plan
  
  -60-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7  Income Taxes
   Years
Ended December 312007
    
    
    2006
    
    
    2005Current:Federal
    
    $
    
    
    
    $
    
    
    
    $
    (334
    )State
    
    
    6
    
    
    
    18
    
    
    
    356
    
    
    
    18
    
    
    
    (299
    )Deferred:Federal
    
    
    
    
    
    
    
    
    
    
    Income tax provision (benefit)
    
    $
    6
    
    
    $
    18
    
    
    $
    (299
    )
    Years Ended December 312007
    
    
    2006
    
    
    2005Federal statutory income tax provision
    
    $
    (2,364
    )
    
    $
    (2,495
    )
    
    $
    (1,607
    )Change in valuation allowance
    
    
    1,807
    
    
    
    2,317
    
    
    
    1,265Expiration of operating loss carryforwards
    
    
    360
    
    
    
    163
    
    
    
    Adjustment of impairment of long-lived assets
    
    
    163
    
    
    
    
    
    
    
    State income taxes, net of federal benefit
    
    
    4
    
    
    
    12
    
    
    
    23Other
    
    
    36
    
    
    
    21
    
    
    
    20Income tax provision (benefit)
    
    $
    6
    
    
    $
    18
    
    
    $
    (299
    )
 -61-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  December 312007
    
    
    2006Deferred tax assets:Net operating losses and tax credit carryforwards:Federal net operating losses
    
    $
    8,843
    
    
    $
    9,267State net operating losses
    
    
    2,056
    
    
    
    2,079Federal alternative minimum taxes
    
    
    864
    
    
    
    864Investment tax credit
    
    
    100
    
    
    
    100Other tax credit
    
    
    81
    
    
    
    81Total tax carryforwards
    
    
    11,944
    
    
    
    12,391Deductible temporary differences:Impairment of long-lived assets
    
    
    12
    
    
    
    175Accounts receivable and inventory reserves
    
    
    418
    
    
    
    310Tax inventory over book
    
    
    103
    
    
    
    142Interest
    
    
    2,583
    
    
    
    590Compensation accruals
    
    
    292
    
    
    
    321Other accruals
    
    
    333
    
    
    
    384Other
    
    
    141
    
    
    
    145Total deferred tax assets
    
    
    15,826
    
    
    
    14,458Valuation allowance
    
    
    (14,752
    )
    
    
    (12,945
    )Net deferred tax assets
    
    
    1,074
    
    
    
    1,513Deferred tax liabilities: Tax over book depreciation
    
    
    (1,074
    )
    
    
    (1,513
    )Net deferred taxes
    
    $
    
    
    
    $
    
   -62-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2008
    
    $
    2009
    
    
    2010
    
    
    2011
    
    
    1,3792012
    
    
    1,371Thereafter
    
    
    23,259Total federal net operating loss
carryforwards
    
    $
    26,009
 Note 8  Segments
 Description of Segments and Products
   Measurement of Segment Profit or Loss
   -63-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Factors Management Used to Identify Reportable Segments
  Industry Concentration, Reliance on Large Customers, and Credit Risk
  Years Ended December 312007
    
    
    2006
    
    
    2005Automotive
    
    $
    69,430
    
    
    
    78.5
    %
    
    $
    73,464
    
    
    
    83.6
    %
    
    $
    83,577
    
    
    
    86.3
    %Medical
    
    
    15,928
    
    
    
    18.0
    
    
    
    11,039
    
    
    
    12.6
    
    
    
    9,989
    
    
    
    10.3Industrial
    
    
    1,549
    
    
    
    1.8
    
    
    
    1,623
    
    
    
    1.8
    
    
    
    1,429
    
    
    
    1.5Other
    
    
    1,501
    
    
    
    1.7
    
    
    
    1,775
    
    
    
    2.0
    
    
    
    1,847
    
    
    
    1.9Total net sales
    
    $
    88,408
    
    
    
    100.0
    %
    
    $
    87,901
    
    
    
    100.0
    %
    
    $
    96,842
    
    
    
    100.0
    %
   -64-




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   -65-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Segment Financial Data
  Years Ended December 312007
    
    
    2006
    
    
    2005Net sales:Rubber Group
    
    $
    74,587
    
    
    $
    76,090
    
    
    $
    84,884Metals Group
    
    
    13,821
    
    
    
    11,811
    
    
    
    11,958Total net sales
    
    $
    88,408
    
    
    $
    87,901
    
    
    $
    96,842Income (loss) from operations:Rubber Group
    
    $
    7,975
    
    
    $
    7,642
    
    
    $
    7,034Metals Group
    
    
    (192
    )
    
    
    (1,245
    )
    
    
    (315
    )Subtotal
    
    
    7,783
    
    
    
    6,397
    
    
    
    6,719Corporate Office
    
    
    (3,108
    )
    
    
    (2,313
    )
    
    
    (2,322
    )Total income from operations
    
    $
    4,675
    
    
    $
    4,084
    
    
    $
    4,397Depreciation and amortization(1):Rubber Group
    
    $
    5,727
    
    
    $
    6,455
    
    
    $
    7,226Metals Group
    
    
    682
    
    
    
    820
    
    
    
    1,138Subtotal
    
    
    6,409
    
    
    
    7,275
    
    
    
    8,364Corporate Office
    
    
    28
    
    
    
    20
    
    
    
    10Total depreciation and amortization
    
    $
    6,437
    
    
    $
    7,295
    
    
    $
    8,374Capital expenditures(2):Rubber Group
    
    $
    2,068
    
    
    $
    2,118
    
    
    $
    3,034Metals Group
    
    
    519
    
    
    
    511
    
    
    
    292Subtotal
    
    
    2,587
    
    
    
    2,629
    
    
    
    3,326Corporate Office
    
    
    77
    
    
    
    32
    
    
    
    4Total capital expenditures
    
    $
    2,664
    
    
    $
    2,661
    
    
    $
    3,330
 December 312007
    
    
    2006
    
    
    2005Assets:Rubber Group
    
    $
    42,236
    
    
    $
    45,056
    
    
    $
    50,412Metals Group
    
    
    7,963
    
    
    
    7,381
    
    
    
    7,692Subtotal
    
    
    50,199
    
    
    
    52,437
    
    
    
    58,104Corporate Office
    
    
    820
    
    
    
    484
    
    
    
    2,511Total assets (3)
    
    $
    51,019
    
    
    $
    52,921
    
    
    $
    60,615
 
 (1)
    
    Excludes the amortization and write-off of deferred financing expenses, which
totaled $1,249,000, $3,078,000, and $1,315,000, during 2007, 2006, and 2005,
respectively, and which is included in interest expense in the consolidated financial
statements.(2)
    
    Capital expenditures for 2007 included $28,000 of equipment purchased under capitalized
lease obligations. Capital expenditures for 2006 included $157,000 of equipment acquired
with seller-provided financing. -66-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (3)
    
    Excludes the assets of discontinued operations, which totaled $1,348,000, $1,519,000,
and $1,728,000, at December 31, 2007, 2006, and 2005, respectively. Note 9  Net Income or Loss per Common Share
  Years Ended December 312007
    
    
    2006
    
    
    2005Numerator  Net income (loss):Continuing operations
    
    $
    (6,670
    )
    
    $
    (6,877
    )
    
    $
    (4,427
    )Discontinued operations
    
    
    (289
    )
    
    
    (472
    )
    
    
    644Net income (loss)
    
    $
    (6,959
    )
    
    $
    (7,349
    )
    
    $
    (3,783
    )Denominator  Weighted average shares outstanding
    
    
    4,949
    
    
    
    4,939
    
    
    
    4,932Basic and diluted income (loss) per share of
common stock:Continuing operations
    
    $
    (1.35
    )
    
    $
    (1.39
    )
    
    $
    (0.90
    )Discontinued operations
    
    
    (0.06
    )
    
    
    (0.10
    )
    
    
    0.13Net income (loss)
    
    $
    (1.41
    )
    
    $
    (1.49
    )
    
    $
    (0.77
    )
 Note 10  Commitments and Contingencies
 Purchase Commitments
  Leases
  -67-




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Legal Actions
  Other
  Note 11  Related Parties
    -68-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 12 Gain on the Repurchase of Debt
 3 4
 Note 13  Discontinued Operations
    Years Ended December 312007
    
    
    2006
    
    
    2005Net sales
    
    $
    
    
    
    $
    
    
    
    $
    3,381Income (loss) from operations before increase in carrying
value of
assets held for sale, and gain on the sale of assets
    
    $
    (121
    )
    
    $
    (294
    )
    
    $
    130Increase in carrying value of assets held for sale
    
    
    
    
    
    
    
    
    
    
    542Gain on sale of assets
    
    
    
    
    
    
    
    
    
    
    568Income (loss) from discontinued operations
    
    
    (121
    )
    
    
    (294
    )
    
    
    1,240Allocated interest expense
    
    
    168
    
    
    
    178
    
    
    
    262Income (loss) from discontinued operations before income taxes
    
    
    (289
    )
    
    
    (472
    )
    
    
    978Income tax provision (1)
    
    
    
    
    
    
    
    
    
    
    334Income (loss) from discontinued operations
    
    $
    (289
    )
    
    $
    (472
    )
    
    $
    644
 
 (1)
    
    The income tax provision in 2005 was offset by an income tax benefit recorded in
continuing operations. Income tax benefits in 2006 were offset by provisions for valuation
allowances. -69-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 14  Quarterly Financial Data (Unaudited)
  Quarters Ended2007
    
    Mar. 31
    
    
    June 30
    
    
    Sept. 30
    
    
    Dec. 31Net sales
    
    $
    22,530
    
    
    $
    23,778
    
    
    $
    23,060
    
    
    $
    19,040Gross profit
    
    $
    3,053
    
    
    $
    3,576
    
    
    $
    3,310
    
    
    $
    1,940Loss from continuing operations
    
    $
    (915
    )
    
    $
    (1,305
    )
    
    $
    (1,806
    )
    
    $
    (2,644
    )Loss from discontinued operations
    
    
    (2
    )
    
    
    (56
    )
    
    
    (53
    )
    
    
    (178
    )Net loss
    
    $
    (917
    )
    
    $
    (1,361
    )
    
    $
    (1,859
    )
    
    $
    (2,822
    )Basic and diluted loss per
share of common stock:Continuing operations
    
    $
    (0.19
    )
    
    $
    (0.26
    )
    
    $
    (0.37
    )
    
    $
    (0.53
    )Discontinued operations
    
    
    
    
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.04
    )Net loss
    
    $
    (0.19
    )
    
    $
    (0.27
    )
    
    $
    (0.38
    )
    
    $
    (0.57
    )
 Quarters Ended2006
    
    Mar. 31
    
    
    June 30
    
    
    Sept. 30
    
    
    Dec. 31Net sales
    
    $
    24,798
    
    
    $
    24,439
    
    
    $
    20,371
    
    
    $
    18,293Gross profit
    
    $
    3,739
    
    
    $
    3,411
    
    
    $
    2,186
    
    
    $
    1,406Loss from continuing operations
    
    $
    (330
    )
    
    $
    (1,033
    )
    
    $
    (1,456
    )
    
    $
    (4,058
    )Loss from discontinued operations
    
    
    (70
    )
    
    
    (69
    )
    
    
    (49
    )
    
    
    (284
    )Net loss
    
    $
    (400
    )
    
    $
    (1,102
    )
    
    $
    (1,505
    )
    
    $
    (4,342
    )Basic and diluted loss
per share of common stock:Continuing operations
    
    $
    (0.07
    )
    
    $
    (0.21
    )
    
    $
    (0.29
    )
    
    $
    (0.82
    )Discontinued operations
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.06
    )Net loss
    
    $
    (0.08
    )
    
    $
    (0.22
    )
    
    $
    (0.30
    )
    
    $
    (0.88
    )
   -70-




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 15  Plant Closings and Sales of Land and Buildings
   Note 16  Subsequent Event
  -71-




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##### Table of Contents



Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 Item 9A(T). CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
  Internal Control  Integrated Framework,
  -72-




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##### Table of Contents




    
    Incomplete documentation of the internal control system.The Company maintains
numerous internal financial controls. Certain controls and procedures are properly
documented within the Companys Authorization Guidelines and Policy Memoranda. Many
controls are embedded within our third-party enterprise resource planning system
software in use at all of the Companys manufacturing locations, the software of our
third-party cash management system provider, and the software of our Company-wide
third-party payroll provider, but are not documented in a methodical fashion outside of
these software systems. Other controls, including higher level entity controls, such
as the review of our pre-formatted monthly divisional financial reporting package by
division controllers and our Chief Financial Officer and President, are not formally
documented.
    
    We do not have a procedure for documenting the internal control activities performed
within the internal control system by our employees. We currently do not have a
procedure in place for our employees to document the internal control activities they
perform on a routine basis, such as the review of monthly financial packages, so we do
not have evidence that such controls are being performed.
    
    Incomplete segregation of duties. At December 31, 2007, the Company consisted of six
operating divisions and the corporate office. All six divisions function as independent
businesses with their own management staffs and are required, on a monthly basis, to
complete an extensive monthly financial reporting package. Because of the size of these
facilities, complete segregation of accounting duties is not cost-effective. In its
place, we believe that we have sufficient entity-level oversight controls to mitigate
the lack of segregation of duties. However, because the completion of oversight
controls is not documented, the Company cannot test these oversight controls to prove
that the lack of segregation of duties is not an internal control deficiency.
    
    The Company has not tested the operational effectiveness of its internal controls
over financial reporting. Because we have not adequately documented certain internal
controls over financial reporting and lack a procedure for documenting the completion
of certain control activities, we are unable to test and prove the effectiveness of
those internal controls over financial reporting in accordance with COSO standards.
Since we have not completely tested our controls, we have determined that our controls
over financial reporting were ineffective.
   -73-




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##### Table of Contents



Remediation of Weaknesses
   1.
    
    Establish a set of procedures for documentation of the performance of internal
control processes by our employees.2.
    
    Establish formal documentation for higher level entity controls that are
currently undocumented.3.
    
    Develop a plan for testing of our internal controls in accordance with COSO
standards.4.
    
    Dedicate additional personnel resources to the improvement, monitoring and
testing of our internal controls over financial reporting.
 Changes in Internal Controls over Financial Reporting
  
 Item 9B. Other Information.
  -74-




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##### Table of Contents



PART III
 
 Item 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE OF THE REGISTRANT
  
 Item 11. EXECUTIVE COMPENSATION
  
 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  
 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  -75-




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##### Table of Contents



PART IV
 
 Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)
    
    1.
    
    Financial StatementsThe consolidated financial statements of Lexington Precision Corporation and its
wholly owned subsidiaries, Lexington Rubber Group, Inc. and Lexington Precision
GmbH, are included in Part II, Item 8.2.
    
    Financial Statement ScheduleSchedule II, Valuation and Qualifying Accounts and Reserves, is included in this
Part IV, Item 15, on page 77. All other schedules are omitted because the required
information is not applicable, not material, or included in the consolidated
financial statements or the notes thereto.3.
    
    ExhibitsThe exhibits listed on the accompanying Exhibit Index are filed herewith or incorporated herein by
reference.
 -76-




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##### Table of Contents



LEXINGTON PRECISION CORPORATION
AND SUBSIDIARY
 Schedule II  Valuation and Qualifying Accounts and Reserves
of Continuing Operations
(thousands of dollars)
 Balance at
    
    Charged to
    
    Deductions
    
    BalanceBeginning
    
    Costs and
    
    From
    
    at Endof Period
    
    Expenses
    
    Reserves
    
    of PeriodAllowance for
Doubtful AccountsYear ended December 31, 2007
    
    $
    412
    
    
    $
    210
    
    
    $
    146
    
    
    $
    476Year ended December 31, 2006
    
    $
    697
    
    
    $
    55
    
    
    $
    340
    
    
    $
    412Year ended December 31, 2005
    
    $
    537
    
    
    $
    170
    
    
    $
    10
    
    
    $
    697Inventory ReserveYear ended December 31, 2007
    
    $
    417
    
    
    $
    379
    
    
    $
    184
    
    
    $
    612Year ended December 31, 2006
    
    $
    435
    
    
    $
    245
    
    
    $
    263
    
    
    $
    417Year ended December 31, 2005
    
    $
    845
    
    
    $
    11
    
    
    $
    421
    
    
    $
    435
 -77-




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##### Table of Contents



SIGNATURES
  LEXINGTON PRECISION CORPORATION
(Registrant)By:
    /s/Warren DelanoWarren Delano, President   Principal Executive Officers and Directors:/s/Michael A. LubinMichael A. Lubin, Chairman of the Board/s/Warren DelanoWarren Delano, President and DirectorPrincipal Financial and Accounting Officer:/s/Dennis J. WelhouseDennis J. Welhouse, Senior Vice
President, Chief Financial Officer, and SecretaryDirectors:/s/William B. ConnerWilliam B. Conner, Director/s/Kenneth I. GreensteinKenneth I. Greenstein, Director/s/Joseph A. PardoJoseph A. Pardo, Director/s/Elizabeth H. RumlElizabeth H. Ruml, Director -78-




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##### Table of Contents



EXHIBIT INDEX
 EXHIBITNUMBER
    
    EXHIBIT
    
    LOCATION3  1
    
    Articles of Incorporation and Restatement thereof
    
    Incorporated by reference from Exhibit 3-1 to
Lexington Precision Corporations (the Company) Form
10-K for the year ended May 31, 1981, located under
Securities and Exchange Commission File No. 0-3252
(1981 10-K)3  2
    
    By-laws, as amended
    
    Incorporated by reference from Exhibit 3-2 to the
Companys Form 10-K for the year ended December 31,
1998, located under Securities and Exchange Commission
File No. 0-3252 (1998 10-K)3  3
    
    Certificate of Correction dated September 21, 1976
    
    Incorporated by reference from Exhibit 3-3 to the
Companys Form 10-K for the year ended May 31, 1983,
located under Securities and Exchange Commission File
No. 0-3252 (1983 10-K)3  4
    
    Certificate of Ownership and Merger dated May 24, 1977
    
    Incorporated by reference from Exhibit 3-4 to 1983 10-K3  5
    
    Certificate of Ownership and Merger dated May 31, 1977
    
    Incorporated by reference from Exhibit 3-5 to 1983 10-K3  6
    
    Certificate of Reduction of Capital dated December 30,
1977
    
    Incorporated by reference from Exhibit 3-6 to 1983 10-K3  7
    
    Certificate of Retirement of Preferred Shares dated
December 30, 1977
    
    Incorporated by reference from Exhibit 3-7 to 1983 10-K3  8
    
    Certificate of Reduction of Capital dated December 18,
1978
    
    Incorporated by reference from Exhibit 3-8 to 1983 10-K3  9
    
    Certificate of Retirement of Preferred Shares dated
December 28, 1978
    
    Incorporated by reference from Exhibit 3-9 to 1983 10-K3  10
    
    Certificate of Reduction of Capital dated January 9, 1979
    
    Incorporated by reference from Exhibit 3-10 to 1983
10-K3  11
    
    Certificate of Reduction of Capital dated December 20,
1979
    
    Incorporated by reference from Exhibit 3-11 to 1983
10-K3  12
    
    Certificate of Retirement of Preferred Shares dated
December 20, 1979
    
    Incorporated by reference from Exhibit 3-12 to 1983
10-K3  13
    
    Certificate of Reduction of Capital dated December 16,
1982
    
    Incorporated by reference from Exhibit 3-13 to 1983
10-K3  14
    
    Certificate of Reduction of Capital dated December 17,
1982
    
    Incorporated by reference from Exhibit 3-14 to 1983
10-K3  15
    
    Certificate of Amendment of Restated Certificate of
Incorporation dated September 26, 1984
    
    Incorporated by reference from Exhibit 3-15 to the
Companys Form 10-K for the year ended May 31, 1985,
located under Securities and Exchange Commission File
No. 0-32523  16
    
    Certificate of Retirement of Stock dated September 24,
1986
    
    Incorporated by reference from Exhibit 4-3 to the
Companys Registration Statement in Form S-2 located
under Securities and Exchange Commission File No.
33-9380 (1933 Act Registration Statement)3  17
    
    Certificate of Amendment of Restated Certificate of
Incorporation dated November 21, 1986
    
    Incorporated by reference from Exhibit 3-17 to the
Companys Form 10-K for the year ended May 31, 1987,
located under Securities and Exchange Commission File
No. 0-32523  18
    
    Certificate of Retirement of Stock dated January 15, 1987
    
    Incorporated by reference from Exhibit 4-5 to
Amendment No. 1 to 1933 Act Registration Statement
 -79-




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##### Table of Contents



EXHIBITNUMBER
    
    EXHIBIT
    
    LOCATION3  19
    
    Certificate of Retirement of Stock dated February 22,
1988
    
    Incorporated by reference from Exhibit 3-19 to the
Companys Form 10-K for the year ended May 31, 1989,
located under Securities and Exchange Commission File
No. 0-3252 (May 31, 1989 10-K)3  20
    
    Certificate of Amendment of Restated Certificate of
Incorporation dated January 6, 1989
    
    Incorporated by reference from Exhibit 3-20 to May 31,
1989 10-K3  21
    
    Certificate of Retirement of Stock dated August 17, 1989
    
    Incorporated by reference from Exhibit 3-21 to May 31,
1989 10-K3  22
    
    Certificate of Retirement of Stock dated January 9, 1990
    
    Incorporated by reference from Exhibit 3-22 to the
Companys Form 10-K for the seven months ended
December 31, 1989, located under Securities and
Exchange Commission File No. 0-3252 (December 31,
1989 10-K)3  23
    
    Certificate of the Designations, Preferences and
Relative Participating, Optional and Other Special
Rights of 12% Cumulative Convertible Exchangeable
Preferred Stock, Series C, and the Qualifications,
Limitations and Restrictions thereof dated January 10,
1990
    
    Incorporated by reference from Exhibit 3-1 to the
Companys Form 10-Q for the quarter ended November 30,
1989, located under Securities and Exchange Commission
File No. 0-3252 (November 30, 1989 10-Q)3  24
    
    Certificate of Ownership and Merger dated April 25, 1990
    
    Incorporated by reference from Exhibit 3-24 to
December 31, 1989 10-K3  25
    
    Certificate of Elimination of 12% Cumulative Convertible
Exchangeable Preferred Stock, Series C, dated June 4,
1990
    
    Incorporated by reference from Exhibit 3-25 to the
Companys Form 10-K for the year ended December 31,
1990, located under Securities and Exchange Commission
File No. 0-3252 (1990 10-K)3  26
    
    Certificate of Retirement of Stock dated March 6, 1991
    
    Incorporated by reference from Exhibit 3-26 to 1990
10-K3  27
    
    Certificate of Retirement of Stock dated April 29, 1994
    
    Incorporated by reference from Exhibit 3-28 to the
Companys Form 10-K for year the ended December 31,
1994, located under Securities and Exchange Commission
File No. 0-3252 (1994 10-K)3  28
    
    Certificate of Retirement of Stock dated January 6, 1995
    
    Incorporated by reference from Exhibit 3-27 to 1994
10-K3  29
    
    Certificate of Retirement of Stock dated January 5, 1996
    
    Incorporated by reference from Exhibit 3-29 to the
Companys Form 10-K for year the ended December 31,
1995, located under Securities and Exchange Commission
File No. 0-32523  30
    
    Certificate of Retirement of Stock dated January 6, 1997
    
    Incorporated by reference from Exhibit 3-30 to the
Companys Form 10-K for the year ended December 31,
1996, located under Securities and Exchange Commission
File No. 0-32523  31
    
    Certificate of Retirement of Stock dated January 9, 1998
    
    Incorporated by reference from Exhibit 3-31 to the
Companys Form 10-K for the year ended December 31,
1997, located under Securities and Exchange Commission
File No. 0-32523  32
    
    Certificate of Retirement of Stock dated January 13, 1999
    
    Incorporated by reference from Exhibit 3-32 to the
Companys Form 10-K for the year ended December 31,
1998, located under Securities and Exchange Commission
File No. 0-32523  33
    
    Certificate of Retirement of Stock dated January 26, 2000
    
    Incorporated by reference from Exhibit 3-33 to the
Companys Form 10-K for year the ended December 31,
1999, located under Securities and Exchange Commission
File No. 0-32524  1
    
    Certificate of Designations, Preferences, Rights and
Number of Shares of Redeemable Preferred Stock, Series B
    
    Incorporated by reference from Exhibit 3-3 to the
Companys Form 10-K for year the ended December 31,
1981, located under Securities and Exchange Commission
File No. 0-3252
 -80-




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##### Table of Contents



EXHIBITNUMBER
    
    EXHIBIT
    
    LOCATION4  2
    
    Purchase Agreement dated as of February 7, 1985, between
Lexington Precision Corporation (LPC) and L&D
Precision Limited Partnership (L&D Precision) and
exhibits thereto
    
    Incorporated by reference from Exhibit 4-1 to the
Companys Form 8-K dated February 7, 1985, (date of
earliest event reported) located under Securities and
Exchange Commission File No. 0-32524  3
    
    Amendment Agreement dated as of April 27, 1990, between
LPC and L&D Precision with respect to Purchase Agreement
dated as of February 7, 1985
    
    Incorporated by reference from Exhibit 10-2 to 1990
10-K4  4
    
    Recapitalization Agreement dated as of April 27, 1990,
between LPC and L&D Woolens Limited Partnership (L&D
Woolens) and exhibits thereto
    
    Incorporated by reference from Exhibit 4-10 to
December 31, 1989 10-K4  5
    
    Indenture, dated as of December 18, 2003, between the
Company and Wilmington Trust Company, as Trustee
    
    Incorporated by reference from Exhibit 4-1 to Form 8-K
filed December 18, 2003, located under Securities and
Exchange Commission File No. 0-3252 (December 18,
2003 8-K)4  6
    
    Registration Rights Agreement, dated as of December 18,
2003, between the Company and Purchasers listed therein
    
    Incorporated by reference from Exhibit 4-2 to December
18, 2003 8-K4  7
    
    Form of Unit
    
    Incorporated by reference from Exhibit 4-3 to December
18, 2003 8-K4  8
    
    Form of Warrant
    
    Incorporated by reference from Exhibit 4-4 to December
18, 2003 8-K4  9
    
    Form of 12% Senior Subordinated Note due August 1, 2009
    
    Incorporated by reference from Exhibit 4-5 to December
18, 2003 8-K4  10
    
    Form of 13% Junior Subordinated Note due November 1, 2009
    
    Incorporated by reference from Exhibit 4-6 to December
18, 2003 8-K10  1
    
    Purchase Agreement dated as of February 7, 1985, between
LPC and L&D Precision and exhibits thereto
    
    See Exhibit 4-2 hereto10  2
    
    Amendment Agreement dated as of April 27, 1990, between
LPC and L&D Precision with respect to Purchase Agreement
dated as of February 7, 1985
    
    See Exhibit 4-3 hereto10  3
    
    Lexington Precision Corporation Flexible Compensation
Plan, as amended
    
    Incorporated by reference from Exhibit 10-3 to the
Companys Form 10-K for the year ended December 31,
1991, located under Securities and Exchange Commission
File No. 0-3252 (1991 10-K)10  4
    
    1986 Restricted Stock Award Plan, as amended
    
    Incorporated by reference from Exhibit 10-38 to
December 31, 1989 10-K10  5
    
    Lexington Precision Corporation Retirement and Savings
Plan, as amended
    
    Incorporated by reference from Exhibit 10-5 to
December 31, 1998 10-K10  6
    
    Description of 2007 Compensation Arrangements with
Lubin, Delano & Company
    
    Filed herewith10  7
    
    Corporate Office 2002 Management Cash Bonus Plan
    
    Incorporated by reference from Exhibit 10-7 to the
Companys Form 10-K for the year ended December 31,
2002, located under Securities and Exchange Commission
File No. 0-3252 (2002 10-K)10  8
    
    Recapitalization Agreement dated as of April 27, 1990,
between LPC and L&D Woolens and exhibits thereto
    
    See Exhibit 4-4 hereto10  9
    
    Exchange Agreement, dated as of December 18, 2003,
between the Company and each of Michael A. Lubin and
Warren Delano
    
    Incorporated by reference from Exhibit 10-1 to
December 18, 2003 8-K
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##### Table of Contents



EXHIBITNUMBER
    
    EXHIBIT
    
    LOCATION10  10
    
    Warrant Agent Agreement, Dated as of December 18, 2003,
between the Company and Wilmington Trust Company, as
Warrant Agent
    
    Incorporated by reference from Exhibit 10-2 to
December 18, 2003 8-K10  11
    
    Payoff Agreement, dated as of December 18, 2003, by and
between Nomura Special Situations Investment Trust and
the Company
    
    Incorporated by reference from Exhibit 10-9 to
December 18, 2003 8-K10  121
    
    Delphi Corporation Lifetime Contract, dated as of
November 22, 2004, by and between Delphi Automotive
Systems LLC and Lexington Connector Seals
    
    Incorporated by reference from Exhibit 10-1 to Form
8-K filed November 29, 2004, located under Securities
and Exchange Commission File No. 0-325210  13
    
    Purchase Agreement, dated as of February 22, 2005, by
and between Lexington Precision Corporation and City of
Casa Grande
    
    Incorporated by reference from Exhibit 10-1 to the
Companys Form 10-Q for the period ended March 31,
2005, located under Securities and Exchange Commission
File No. 0-325210  14
    
    Lexington Precision Corporation 2005 Stock Award Plan 
incorporated by reference from Exhibit A to the Proxy
Statement on Schedule 14A of Lexington Precision
Corporation filed with the Securities and Exchange
Commission on April 22, 2005
    
    Incorporated by reference from Exhibit A to the Proxy
Statement on Schedule 14A of Lexington Precision
Corporation filed with the Securities and Exchange
Commission on April 22, 200510  15
    
    Form of the Incentive Stock Option Award Agreement
Pursuant to the Lexington Precision Corporation 2005
Stock Award Plan
    
    Incorporated by reference from Exhibit 10-2 to Form
8-K filed May 19, 2005, located under Securities and
Exchange Commission File No. 0-3252 (May 19, 2005
8-K)10  16
    
    Form of the Non-Qualified Stock Option Award Agreement
Pursuant to the Lexington Precision Corporation 2005
Stock Award Plan
    
    Incorporated by reference from Exhibit 10-3 to May 19,
2005 8-K10  17
    
    Form of the Restricted Stock Award Agreement Pursuant to
the Lexington Precision Corporation 2005 Stock Award
Plan
    
    Incorporated by reference from Exhibit 10-4 to May 19,
2005 8-K10  18
    
    Equipment Purchase Agreement dated as of August 2, 2005,
between Lexington Precision Corporation and Premier Tool
& Die Cast Corp.
    
    Incorporated by reference from Exhibit 10-1 to Form
8-K filed August 8, 2005, located under Securities and
Exchange Commission File No. 0-3252 (August 8, 2005
8-K)10  19
    
    Bailment Agreement dated as of August 2, 2005, between
Lexington Precision Corporation and Premier Tool & Die
Cast Corp.
    
    Incorporated by reference from Exhibit 10-2 to August
8, 2005 8-K10  20
    
    Indemnity Agreement dated as of August 2, 2005, between
Lexington Precision Corporation and Premier Tool & Die
Cast Corp.
    
    Incorporated by reference from Exhibit 10-3 to August
8, 2005 8-K10  21
    
    Credit and Security Agreement, dated as of May 31, 2006,
by and among LPC and LRG, as borrowers, the lenders from
time to time party thereto (the Lenders),
CapitalSource Finance LLC, as collateral agent and
administrative agent for the Lenders, and CapitalSource
Finance LLC and Webster Business Credit Corporation, as
co-documentation agents
    
    Incorporated by reference from Exhibit 10-4 to the
Companys Form 10-Q for the period ended March 31,
2006, located under Securities and Exchange Commission
File No. 0-3252 (March 31, 2006 10-Q)10  22
    
    Pledge Agreement, dated as of May 31, 2006, made by LPC
in favor of CapitalSource Finance LLC, as agent
    
    Incorporated by reference from Exhibit 10-5 to March
31, 2006 10-Q
 
 1
    
    Portions of this exhibit have been omitted pursuant to
a request for confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934, as amended, and the omitted material has been separately
filed with the Securities and Exchange Commission. -82-




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##### Table of Contents



EXHIBITNUMBER
    
    EXHIBIT
    
    LOCATION10  23
    
    Loan and Security Agreement, dated as of May 31, 2006, by and among LPC and LRG,
as borrowers, the lenders from time to time party thereto (the Term Lenders),
and CSE Mortgage LLC, as collateral agent and administrative agent for the Term
Lenders
    
    Incorporated by reference from Exhibit 10-6 to March 31, 2006 10-Q10  24
    
    Pledge Agreement, dated as of May 31, 2006, made by LPC in favor of CSE Mortgage
LLC, as agent
    
    Incorporated by reference from Exhibit 10-7 to March 31, 2006 10-Q10  25
    
    Termination Agreement, dated as of May 31, 2006, by and among Wachovia Bank,
National Association, as agent and lender, Ableco Finance LLC, as lender, LPC,
LRG, and CapitalSource Finance LLC
    
    Incorporated by reference from Exhibit 10-8 to March 31, 2006 10-Q10  26
    
    Intercreditor Agreement, dated as of May 31, 2006, by and between CapitalSource
Finance LLC, as agent, and CSE Mortgage LLC, as agent, with the acknowledgment
of LPC and LRG, as borrowers, and Webster Business Credit Corporation,
CapitalSource Finance LLC, CSE Mortgage LLC, and DMD Special Situations, LLC, as
lenders
    
    Incorporated by reference from Exhibit 10-9 to March 31, 2006 10-Q10  27
    
    First Amendment and Default Waiver Agreement dated as of November 20, 2006,
among Lexington Precision Corporation and Lexington Rubber Group, Inc., as
borrowers, and CapitalSource Finance LLC, as a lender, as Agent and as
Co-Documentation Agent, Webster Business Credit Corporation, as a lender and as
Co-Documentation Agent, CSE Mortgage LLC, as a lender and an Agent, and DMD
Special Situations, LLC, as a lender
    
    Incorporated by reference from Exhibit 10-31 to the Companys Form
10-K for the year ended December 31, 2006, located under Securities
and Exchange Commission File No. 0-3252 (2006 10-K)10  28
    
    Amendment Agreement dated as of January 31, 2006, between LPC and Michael A.
Lubin with respect to the 13% Junior Subordinated Note
    
    Incorporated by reference from Exhibit 10-31 to the 2006 10-K10  29
    
    Agreement, dated May 19, 2007, by and among Lexington Precision Corporation,
Lexington Rubber Group, Inc., CapitalSource Finance LLC, Webster Business Credit
Corporation, CSE Mortgage LLC, and DMD Special Situations Funding, LLC
    
    Incorporated by reference from Exhibit 10-1 to the Companys Form 10-Q
for the period ended March 31, 2007, located under Securities and
Exchange Commission File No. 0-3252 (March 31, 2007 10-Q)10  30
    
    Forbearance Agreement, dated May 25, 2007, by and among Lexington Precision
Corporation and the holders of 12% Senior Subordinated Notes due August 1, 2009,
signatory thereto
    
    Incorporated by reference from Exhibit 10-2 to the March 31, 2007
10-Q10  31
    
    First Supplemental Indenture, dated May 25, 2007, by and between Lexington
Precision Corporation and Wilmington Trust Company, as Trustee
    
    Incorporated by reference from Exhibit 10-3 to the March 31, 2007
10-Q10  32
    
    First Amendment, dated July 20, 2007, to the Forbearance Agreement, dated as of
May 18, 2007, by and among Lexington Precision Corporation, Lexington Rubber
Group, Inc., CapitalSource Finance LLC, Webster Business Credit Corporation, CSE
Mortgage LLC, and DMD Special Situations Funding, LLC
    
    Incorporated by reference from Exhibit 10-1 to the Companys Form 10-Q
for the period ended June 30, 2007, located under Securities and
Exchange Commission File No. 0-3252
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##### Table of Contents



EXHIBITNUMBER
    
    EXHIBIT
    
    LOCATION10  33
    
    Second Amendment, dated September 24, 2007, to the Forbearance Agreement, dated
as of May 18, 2007, by and among Lexington Precision Corporation, Lexington
Rubber Group, Inc., CapitalSource Finance LLC, Webster Business Credit
Corporation, CSE Mortgage LLC, and DMD Special Situations Funding, LLC
    
    Incorporated by reference from Exhibit 10-1 to the Companys Form 10-Q
for the period ended September 30, 2007, located under Securities and
Exchange Commission File No. 0-3252 (September 30, 2007 10-Q)10  34
    
    First Amendment, dated September 24, 2007, to the Forbearance Agreement, dated
as of May 25, 2007, by and among Lexington Precision Corporation and the holders
of the 12% Senior Subordinated Notes due August 1, 2009, signatory thereto
    
    Incorporated by reference from Exhibit 10-2 to the September 30, 2007
10-Q10  35
    
    Restricted Stock Award Agreement, dated as of October 9, 2007, between Lexington
Precision Corporation (the Company) and William B. Conner, a current member of
the Companys Board of Directors
    
    Incorporated by reference from Exhibit 10-3 to the September 30, 2007
10-Q10  36
    
    Restricted Stock Award Agreement, dated as of October 9, 2007, between Lexington
Precision Corporation (the Company) and Kenneth I. Greenstein, a current
member of the Companys Board of Directors
    
    Incorporated by reference from Exhibit 10-4 to the September 30, 2007
10-Q10  37
    
    Restricted Stock Award Agreement, dated as of October 9, 2007, between Lexington
Precision Corporation (the Company) and Joseph A. Pardo, a current member of
the Companys Board of Directors
    
    Incorporated by reference from Exhibit 10-5 to the September 30, 2007
10-Q10  38
    
    Restricted Stock Award Agreement, dated as of October 9, 2007, between Lexington
Precision Corporation (the Company) and Elizabeth H. Ruml, a current member of
the Companys Board of Directors
    
    Incorporated by reference from Exhibit 10-6 to the September 30, 2007
10-Q10  39
    
    Super-Priority DIP Note, dated April 3, 2008, of Lexington Precision Corporation
and Lexington Rubber Group, Inc. payable to the order of Lubin Partners LLC,
William B. Connor, and ORA Associates LLC in the aggregate principal amount of
$2,000,000
    
    Filed herewith21  1
    
    Significant Subsidiary of Registrant
    
    Filed herewith31  1
    
    Rule 13(a)  14(a) / 15(d)  14(a) Certification of Michael A. Lubin, Chairman
of the Board and Co-Principal Executive Officer of the registrant
    
    Filed herewith31  2
    
    Rule 13(a)  14(a) / 15(d)  14(a) Certification of Warren Delano, President
and Co-Principal Executive Officer of the registrant
    
    Filed herewith31  3
    
    Rule 13(a)  14(a) / 15(d)  14(a) Certification of Dennis J. Welhouse, Chief
Financial Officer and Principal Financial Officer of the registrant
    
    Filed herewith32  1
    
    Certification of Michael A. Lubin, Chairman of the Board and Co-Principal
Executive Officer of the registrant, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith
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##### Table of Contents



EXHIBITNUMBER
    
    EXHIBIT
    
    LOCATION32  2
    
    Certification of Warren Delano, President and Co-Principal Executive Officer of
the registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith32  3
    
    Certification of Dennis J. Welhouse, Chief Financial Officer and Principal
Financial Officer of the registrant, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith
 -85-