**EXHIBIT 99**

 

Letter To Our Shareholders

The deterioration of the economy in 2008 affected our company as it did so many others. Many of the expectations on which we had based our 2008 business plans slowly eroded as the year went on. In the fourth quarter particularly, many of our customers responded to the severe economic pressures in their marketplaces by cutting back purchases, downsizing operations, re-scheduling delivery of product and in some cases canceling orders. Some of those actions have continued into the early part of 2009. We have had to respond and modify our activities accordingly.

At first glance, our results for 2008 appear to reflect the growing distress in the economy. Sales totaled $135.9 million versus $156.3 million in 2007, while net income totaled $4.5 million versus $10.1 million in 2007. However, the 2008 results for our core businesses actually compared favorably with those for 2007. That’s because the 2007 results had been bolstered by a military contract to provide latching systems for Humvees. Sales under the contract contributed $20.5 million to 2007 sales. It was because of the outsized impact from this non-core contract that we specifically noted, in all of our 2008 reports making comparisons with 2007, that the contract had had a one-time effect. With the contract excluded, 2007 sales totaled $135.8 million—indicating no fall-off in sales during 2008. 

Nevertheless, there’s no question that most of the diverse markets we serve were affected either directly or indirectly last year by the deterioration in the U.S. economy. In our planning, we had anticipated 10% growth in sales, but the much lower growth that occurred in our core businesses resulted in lower gross margins. This was because of the reduced utilization of our facilities, which we had not expected. 

Segment Performance in 2008

*Security Products Group—*Several economic factors negatively affected this segment. Reduced travel activity in general, as well as the airlines’ policy regarding the checking of baggage, softened what had been a robust demand for the locks we furnish to the luggage industry under the SearchAlertTM brand. We also produce hardware for the Recreational Vehicle industry, which softened when gasoline prices spiked at mid-year, causing a drop-off in the industry’s business and in its hardware requirements. Additionally, the consumer credit crunch and housing industry problems had their effect on the appliance markets to which we provide oven latches. 

*Metal Products Group—*While the financial results for this segment in 2008 were far from what we expected, sales  were actually up 48% from 2007, bolstered in large part by demand for our proprietary mine roof anchor products used in underground mining. The poor financial results were caused by operational factors that we are continuing to address. 

Coal has long played a dominant role in meeting the country’s energy requirements, and we believe that this will continue to be the case in the U.S. as well as in China and other developing nations. We are committed to serving those markets.

*Industrial Hardware Group—*Our Eberhard units provide hardware to the trucking industry and to the manufacturers of service vehicles, buses and other transportation vehicles. And our Canadian Commercial Vehicles subsidiary furnishes sleeper cabs used on Class 8 trucks. All of the vehicle manufacturers were impacted negatively by the downturn in the economy. In the case of Canadian Commercial Vehicles, it was believed that the Class 8 truck market would recover in the second half of 2008, but it now appears the recovery may not occur until early in 2010. Rising activity in the trucking industry is generally considered a sign of improving economic health, since it means more goods are being brought to market. 

The Eberhard division also furnishes highly engineered latching systems used in several military vehicles. We currently anticipate that, notwithstanding a weak economy, our military business will remain fairly strong in 2009, while the trucking industry and vehicular markets will continue to be soft. 

 

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