Press Releases

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


FARMINGDALE, N.Y., AUGUST 14, 2002 - P&F Industries, Inc. (Nasdaq NM: PFIN), today announced results from operations for the second quarter ended June 30, 2002.

Revenues for the second quarter of 2002 increased 15% to $18.7 million, compared to $16.2 million for the second quarter of 2001. Excluding a one-time after-tax charge of $3.2 million, net income for the second quarter of 2002 increased 130% to $959,000, or diluted earnings per share of $0.27, from $416,000, or diluted earnings per share of $0.11, for the comparable period of 2001. The primary reason for the increases was the acquisition of Nationwide Industries, Inc., on May 3, 2002. The one-time charge resulted from P&F?s adherence to the new Statement of Financial Accounting Standards number 142, which requires periodic testing of all goodwill for impairment. Upon testing the goodwill associated with the Green Manufacturing acquisition that took place in 1998, P&F made a one-time after-tax adjustment to earnings of $3.2 million that produced a net loss for the quarter of $2.3 million or a diluted loss per share of $0.64.

Revenues for the six months ended June 30, 2002, increased 6.2% to $35.8 million, from $33.7 million in the comparable period of 2001. Excluding the one-time charge referred to above, net income for the six months ended June 30, 2002, increased 78.5% to $1.5 million, or diluted earnings per share of $0.42, compared to $848,000, or diluted earnings per share of $0.23, for the same period last year. After giving effect to the charge for the goodwill write-down, the net loss for the six months was $1.7 million or a diluted loss per share of $0.48.

Florida Pneumatic?s revenues for the second quarter of 2002 increased 2.3% to $9.7 million, from $9.5 million for the comparable period of 2001, due primarily to strong sales of a Father?s Day promotion at a major customer and the launch of two new product lines. These increases were partially offset by the sale and disposition of a small product line in the second quarter of 2001 which increased revenues for the 2001 period. Gross margins increased to 41.5% from 40.1%, due mainly to a weakening of the yen which was offset by a price reduction to a major customer in the second half of 2001.

Richard Horowitz, Chairman of the Board, President and Chief Executive Officer of P&F Industries, Inc., stated, ?We are pleased with Florida Pneumatic?s performance so far this year, given the relatively weak economy and competitive pressures in the pneumatic tool market. We have successfully launched two new product lines at Florida Pneumatic and now feature one of these lines as part of our expansion into a new retail chain. The combination of new product lines and expanded distribution channels are important catalysts for growth and we are optimistic about their future impact on this business.?

At P&F?s hardware group, which now includes Franklin Manufacturing and the newly acquired Nationwide Industries, Inc., revenues increased 227% primarily as a result of the Nationwide acquisition. Revenues at Franklin alone increased 26% for the quarter. Revenues were $3.8 million in the second quarter of 2002 compared to $1.2 million for the same period in 2001. Margins increased to 32.6% from 27.2% due to the addition of Nationwide?s higher margin OEM business now in the product mix.

Mr. Horowitz continued, ?So far, we are quite pleased with the Nationwide acquisition and its impact on earnings. There remain many opportunities for growth and synergy as we combine Nationwide with our traditional Franklin hardware business.?

Green Manufacturing, Inc.?s revenues for the second quarter of 2002 decreased 8.1% to $3.2 million from $3.4 million, primarily due to the phasing out of a major customer as anticipated. In spite of the decrease in revenue, gross margins increased to 9.0% from 7.6%, due primarily to a change in product mix. Margins continue to be impacted by heavy prototyping activity which reduced productivity, but should help generate future revenues.

Commenting on Green?s performance, Mr. Horowitz stated, ?The heavy selling effort at Green continues to bear fruit, although newly acquired customers are slow in ordering due to the sluggish economy. The loss of a significant wrecker customer will continue to impact sales for the remainder of this year. Nonetheless, there has been some encouraging news in what is now Green?s largest single segment, the refuse market. The price of recycled cardboard has increased substantially in the last three to four months. This is generally a precursor to increased sales in the refuse market.?

Embassy?s revenues from heating products for the second quarter of 2002 decreased 7.8% to $2.0 million from $2.2 million, primarily due to weakness in the commercial and radiant businesses. Gross margins decreased from 34.9% to 29.9% due to a change in the product mix as well as due to the inability to reduce fixed expenses in line with the volume decreases.

Mr. Horowitz continued, ?Embassy is selling into an extremely competitive environment. The ability to grow the baseboard business is limited since all the players are working extremely hard to gain new accounts. We have therefore focused on other markets, particularly the commercial market, where we have developed a full line of new products to be introduced later this year. With this additional sales tool, we hope to begin to make a stronger effort in the commercial segment. Growth in radiant sales has slowed as the largest competitor in the market has been able to retain most of its significant customers, but we continue to develop new approaches to take advantage of niche opportunities in this market.?

Concerning anticipated performance in the third quarter, Mr. Horowitz stated, ?We expect overall revenues to increase 25% to 35%. Florida Pneumatic?s revenues should increase 20% to 25% due to major promotions at two of our largest accounts. Our hardware division should realize a 240% to 260% increase in revenues with the addition of Nationwide Industries to our hardware segment, which had included only Franklin Manufacturing in 2001. Revenues at Green will likely decrease 15% to 20% as we feel the full effects of the loss of the major customer mentioned earlier. Finally, Embassy?s sales should increase 5% to 10% due to an overall better climate for residential and commercial heating in the third quarter versus a year ago.

Mr. Horowitz concluded, ?Overall gross profits for the third quarter are expected to be between 28% and 30% of revenues compared to 30.8% for the comparable period in 2001. This slight decrease is primarily the result of the heavy discounting for the major third quarter promotions at Florida Pneumatic. We also expect selling, general and administrative expenses to decrease temporarily below 21% of revenues as a result of the additional sales generated by the two large promotions. Interest expense will increase due to the acquisition of Nationwide and the mortgage for the related real estate which was purchased in connection with that acquisition. Hence, profit for the quarter should increase by approximately 60% over the third quarter of 2001.?

P&F Industries has scheduled a conference call today at 11:00 a.m. Eastern Time to discuss its second quarter 2002 results. Investors and other interested parties can listen to the call by dialing 703-871-3026 or via a live webcast accessible at To listen, please register and download audio software at the site at least 15 minutes prior to the call. The webcast will be archived on P&F?s Web site and a telephone replay of the call will be available for 24 hours beginning at 2:00 p.m. Eastern Time, August 14, 2002, at 1-888-266-2081, reservation # 6155450.

P&F Industries, Inc., through its four wholly-owned subsidiaries, Florida Pneumatic Manufacturing Corporation, Green Manufacturing, Inc., Embassy Industries, Inc. and Countrywide Hardware, Inc., manufactures and/or imports air-powered tools, hydraulic cylinders, baseboard and radiant heating products and residential and commercial hardware. P&F?s 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 future performance, 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 2002 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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