2005- Operating cash flows increased slightly.  Significant reductions in accounts receivable and inventories were offset by the purchase of trading securities. During the year the Company funded $991 toward its defined benefit pension plan.

Cash used in investing activities:

Expenditures for property, plant and equipment include the acquisition of new equipment, upgrading of facilities to maintain operating efficiency and investments in cost effective technologies to lower costs. Overall capital spending has declined in recent years as the Company carefully scrutinizes capital investments for short term pay-back of investment. A new major manufacturing line in the amount of $1,914 was put into service in the last quarter of fiscal year 2007.

Cash used in financing activities:

The Company’s stock repurchase program was approved by the Board of Directors in November 1999 and was expanded in June 2005 (500,000 additional shares authorized, disclosed in a press release and Form 8-K filed on June 17, 2005).  Under the stock repurchase program, the Company is authorized, at the discretion of management and the Board of Directors, to purchase up to an aggregate of 2,000,000 shares of the Company’s common stock on the open market. As of November 2, 2007, up to 518,758 shares were still authorized for repurchase under the program.

The Company has remained free of interest-bearing debt for twenty-one consecutive years. The Company maintains a line of credit with Bank of America that expires April 30, 2008. [The Company expects to renew this line of credit with Bank of America prior to its expiration.]   Under the terms of this line of credit, the Company may borrow up to $2,000 at an interest rate equal to the bank’s reference rate, unless the Company elects an optional interest rate. The borrowing agreement contains various covenants, the more significant of which require the Company to maintain certain levels of shareholders’ equity and working capital. The Company was in compliance with all provisions of the agreement during the 2007 fiscal year and there were no borrowings under this line of credit during such period. Management believes that the Company’s strong financial position and its capital resources are sufficient to provide for its operating needs and capital expenditures for fiscal 2008.

Off-Balance Sheet Arrangements

The Company does not currently have any off balance sheet arrangements within the meaning of Item 303(a)(4) of Regulation S-K.

Contractual Obligations (in thousands)

The Company has remained free of interest bearing debt for twenty-one consecutive years and had no other debt or other contractual obligations except for leases existing at November 2, 2007. The Company leases certain transportation equipment under operating leases. Future minimum lease payments are approximately (in thousands):

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Exhibit: 21.1 23.1 31.1 31.2 32.1 32.2