Investor Relations| P & F Industries Reports Second Quarter 2001 Results

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Lippert/Heilshorn & Assoc., Inc.
Harriet Fried/Klea Theoharis
Investors Relations
212-838-3777 or

P & F Industries Reports Second Quarter 2001 Results

FARMINGDALE, N.Y., AUGUST 9, 2001 - P&F Industries, Inc. (Nasdaq NM: PFIN) , today announced results from operations for the quarter ended June 30, 2001.

Revenues for the second quarter of 2001 decreased to $16.2 million, from $19.0 million in the comparable period of 2000. The decrease in consolidated revenues was due primarily to decreased sales at both Florida Pneumatic and Green Manufacturing. Net income for the quarter totaled $416,569, or diluted earnings per share of $0.11, compared to $1.0 million, or diluted earnings per share of $0.27, for the same period last year.

Revenues for the six months ended June 30, 2001 decreased to $33.7 million, from $39.8 million in the comparable period of 2000. Net income for the six months ended June 30, 2001 was $847,548, or diluted earnings per share of $0.23, compared to $2.1 million, or diluted earnings per share of $0.57, for the same period last year.

Florida Pneumatic's sales for the second quarter of 2001 decreased to $9.5 million, from $10.0 million for the second quarter of 2000, due primarily to the weak economic environment in both its retail and industrial segments. Gross margins decreased to 40.1%, from 42.7%, due primarily to the disposal of a small product line at cost, the previously mentioned decrease in sales and a less favorable product mix. However, a continued weakening of the Japanese yen in the second quarter, which decreased the cost of imported products, helped offset some of this decrease in gross margins.

Green Manufacturing's sales for the second quarter of 2001 decreased to $3.4 million, from $5.5 million for the second quarter of 2000, due primarily to low demand for capital goods products that use hydraulic cylinders, and the suspension of production by two major aerial lift customers. Gross margins decreased to 7.6%, from 16.4 0n 2000, due primarily to the decrease in sales, which reduced coverage of fixed expenses.

Embassy Industries' sales of heating products for the second quarter of 2001 increased to $2.2 million, from $2.1 million for the second quarter of 2000, due primarily to an increase in sales of radiant heating products, which was partially offset by a decrease in sales of baseboard heating products. Gross margins from sales of heating products were virtually unchanged from last year at 34.9%. Hardware sales at Embassy's Franklin division decreased to $1.2 million for the second quarter of 2001, from $1.4 million in the second quarter of 2000, due primarily to the loss of two significant customers that declared bankruptcy since the first quarter of 2000. Gross margins from hardware sales decreased to 27.2%, from 28.9%, due primarily to this decrease in sales.

Richard Horowitz, Chairman of the Board, President and Chief Executive Officer of P&F Industries, Inc. stated: "General economic conditions are negatively affecting P&F's performance even more than we had anticipated. Nevertheless, we believe that our continued focus on manufacturing and sales initiatives will provide lasting benefits."

"At Florida Pneumatic, we expect that a continued weakening of the Japanese yen will benefit Florida Pneumatic through the end of 2001. We are also continuing to focus on our manufacturing initiatives, which have enabled us to reduce work-in-process inventory by approximately 50 0uring the second quarter."

"Our near-term plans at Florida Pneumatic include a significant product line overhaul at a major customer that will entail redesigning packaging, providing alternative line items and lowering selling prices. At the same time, we have several products under development for review by several other major customers. We believe that our manufacturing initiatives, combined with the strategy to increase sales, will help mitigate the effects of the current economic downturn." "Green Manufacturing was affected by a significant slowdown in the capital goods sector and a continued weakening of the refuse market. After workforce reductions of 20% and 14 0n the first and second quarters of 2001, respectively, Green is now operating at approximately 500f capacity. However, we are very encouraged by the prototype production order rate, which has resulted from quote activity in the first quarter of this year. Prototypes are good indicators of orders and, historically, over 900f such prototypes develop into new business."

"Another bright spot during the second quarter was the 52 0ncrease in radiant heating product sales at Embassy, compared to the second quarter of last year. This performance was achieved through the continued success of our new "Embassy Elite" program initiated earlier this year. Other positive developments at Embassy included initial production of several heating products that were previously outsourced. Manufacturing these products in-house will help to improve margins on these products and to reduce lead-time for delivery to customers. Short order lead-time is an important component of demand for these products."

"Overall, we anticipate continuing softness in demand for most of our product categories in the third quarter of 2001. We expect consolidated revenues for the third quarter to decline between 10% and 15 0.000000rom the third quarter of 2000. We expect Florida Pneumatic's revenues to decline between 12% and 17%, as weakness in both the retail and industrial segments continues. We anticipate a revenue decline of 35% to 40% at Green Manufacturing, due to the continued downturn in the capital goods market. Heating product sales at Embassy are expected to be flat to slightly down, and we anticipate a 15% to 20 0ecline at Franklin, resulting from the loss of the two accounts noted earlier."

"In the third quarter of 2001, we expect selling, general and administrative expenses to be flat compared to the third quarter of last year. Interest expense will decline dramatically as both our borrowings and the average rate of interest on these borrowings are expected to decrease. We expect gross profits to be between 27% and 30 0n the third quarter. As a result of the foregoing, we expect P&F's net income for the third quarter to decrease between 20% and 30 0.000000rom the previous year."

P&F Industries has scheduled a conference call on Thursday, August 9th at 11:00 a.m. Eastern Time to discuss its second quarter results. Investors and other interested parties can listen to the call by dialing 212-896-6094 or by accessing the live Web cast at To listen, please register and download audio software at the site at least 15 minutes prior to the call. The Web cast will be archived on P&F's Web site and a telephone replay of the call will be available for 24 hours beginning at 1:00 p.m. Eastern Time, August 9th, 2001, at 1-800-633-8284, reservation #19493810.

P&F Industries, Inc., through its three wholly-owned subsidiaries, Florida Pneumatic Manufacturing Corporation, Green Manufacturing, Inc. and Embassy Industries, Inc., manufactures and/or imports air-powered tools, hydraulic cylinders and baseboard and radiant heating products. The Company also imports various security hardware items and compressor air filters, markets a line of pipe-cutting and threading tools and makes heavy-duty pipe wrenches. P&F products are sold under their own trademarks, as well as under the private labels of major manufacturers and retailers.

This is a "Safe-Harbor" Statement under the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein, including those related to the Company's performance for the third quarter of 2001, are based upon the Company's historical performance and on current plans, estimates and expectations. They are subject to various risks and uncertainties, including, but not limited to, the impact of competition, product demand and pricing. These risks could cause the Company's actual results for the third quarter of the 2001 fiscal year and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. CONSOLIDATED BALANCE SHEETS & STATEMENTS OF INCOME (PDF)

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