Net sales of $97.7 million for the second quarter of fiscal 2011 were 28% higher than net sales of $76.6 million for the second quarter of fiscal 2010, excluding the impact of changes in foreign currency exchange rates.

Pre-tax income was $9.7 million for the quarter as compared to a pre-tax loss of $11.1 million in the prior year.

Our net income for the second quarter of fiscal 2011 was $3.2 million ($0.29 per diluted share) compared to a net loss of $12.3 million ($1.14 loss per diluted share) for the second quarter of fiscal 2010. The current year includes $3.4 million ($0.31 per diluted share) of income tax expense related to noncash reserves recorded in Italy and England. The prior year includes $11.6 million of European restructuring costs.

Summary financial results are outlined below (in thousands, except earnings per share):

Quarter ended July 31,

Net sales

Gross profit

Gross profit %

SG&A

European restructuring costs

Operating income (loss)

Interest expense, net

Foreign currency loss, net

Income (loss) before taxes

Provision for income taxes

Effective tax rate

Net income (loss)

Diluted earnings (loss) per share

Consolidated net sales increased 28% during the second quarter of fiscal 2011, excluding the impact of foreign currency changes, due to higher sales volumes as a result of improving economic conditions and an improving lift truck market. Details of the change in net sales compared to the prior year second quarter follow (in thousands):

Revenue increase

Foreign currency changes

Total

The consolidated gross profit percentage increased during the second quarter of fiscal 2011 from 24% to 30%, primarily as a result of improved cost absorption due to increased sales volumes.

Selling and administrative expenses increased 9%, excluding foreign currency changes, due to increased personnel, selling and engineering costs.

The provision for income taxes in the second quarter of fiscal 2011 includes a $3.4 million provision for recording valuation allowances against deferred tax assets in Italy and England. These deferred tax assets relate to net operating losses in these countries.

The provision for income taxes in the second quarter of fiscal 2010 was primarily a result of taxes due in countries where we generated income. We were unable to realize a tax benefit in several European countries where we incurred losses.

Percentage changes in lift truck industry shipments and orders, by region, as compared to the prior year are outlined below. Although lift truck unit data provides an indicator of the general health of the industry and our business over a six to twelve month period, they do not necessarily correlate directly with the demand for our products on a quarterly basis.

North America

Europe

Asia Pacific

China

Global

Generally global lift truck markets are recovering based on order and shipment rates. However, it is difficult to predict with certainty the pace and extent of the recovery. The following is our view of the lift truck industry markets globally based on current conditions:

North America, Europe and Asia Pacific will continue at their current levels for the remainder of the year.

The market in China will level off during the second half of fiscal 2011.

Summary financial results are outlined below (in thousands):

Quarter ended July 31

Net sales

Transfers between areas

Net sales and transfers

Gross profit

Gross profit %

SG&A

Operating income

Net sales increased 29%, excluding the impact of currency changes, primarily due to higher sales volumes as a result of improving economic conditions. Details of the change in net sales over the prior year quarter follow (in thousands):

Revenue growth

Foreign currency changes

Total

Our gross profit percentage increased due to improved absorption of costs as a result of higher sales volumes during the current year and a reduction of overhead costs reflecting headcount reductions and other cost cutting measures implemented in the prior year. Our gross profit during the second quarter of fiscal 2011 was consistent with the first quarter of fiscal 2011.

Selling and administrative costs increased primarily due to higher executive incentive and other personnel costs in the current year.

Summary financial results are outlined below (in thousands):

Quarter ended July 31

Net sales

Transfers between areas

Net sales and transfers

Gross profit

Gross profit %

SG&A

Restructuring costs

Operating loss

Net sales increased 15%, excluding the impact of currency changes, due to higher sales volumes as a result of a stronger lift truck market. Details of the change in net sales over the prior year quarter follow (in thousands):

Revenue growth

Foreign currency changes

Total

During the second quarter of fiscal 2011, our gross profit margin increased to 13% from 9% experienced in the first quarter of fiscal 2011 as efficiencies from the restructuring of our production and distribution activities were more fully realized. The 13% gross profit margin, the highest in Europe since fiscal 2009, is a result of our recent restructuring efforts, which included closing production facilities in Germany, The Netherlands and France, other workforce reductions within Europe and the movement of certain production activities to Italy.

Restructuring costs in the prior year were primarily a result of the cessation of production at our facility in the Netherlands. These costs included severance costs of $7.3 million, fixed asset write downs of $4.0 million and legal and other restructuring costs of $0.3 million.

Summary financial results are outlined below (in thousands):

Quarter ended July 31

Net sales

Transfers between areas

Net sales and transfers

Gross profit

Gross profit %

SG&A

Operating income

Net sales increased 20%, excluding the impact of currency changes, due to higher sales volumes as a result of an improvement in economic conditions and a strong lift truck market. Details of the change in net sales over the prior year quarter follow (in thousands):

Revenue growth

Foreign currency changes

Total

Our gross profit percentage remained consistent compared to the prior year, however it decreased slightly compared to the first quarter of fiscal 2011 due primarily to fluctuations in foreign currency rates.

Selling and administrative costs were 9% higher due to warranty and other general costs.

Summary financial results are outlined below (in thousands):

Quarter ended July 31

Net sales

Transfers between areas

Net sales and transfers

Gross profit

Gross profit %

SG&A

Operating income

Net sales increased 70%, excluding currency changes, primarily due to the recovery of the Chinese economy and lift truck market. Details of the change in net sales over the prior year quarter follow (in thousands):

Revenue growth

Foreign currency changes

Total

The gross profit percentage in China decreased due to changes in product mix and higher intercompany transfers, which carry lower gross margins.

Sales and administrative costs increased 24% due to higher selling and engineering costs.

On August 31, 2010, our Board of Directors declared a quarterly dividend of $0.10 per share, payable on October 14, 2010 to shareholders of record as of September 29, 2010.

Free cash flow, a non-GAAP measure, is defined as cash flow from operating activities less capital expenditures. The following table presents a summary of our free cash flow for the three and six months ended July 31, 2010 and 2009.

Cash flow from operating activities

Capital expenditures

Free cash flow

Net sales

Cost of goods sold

Gross profit

Selling and administrative expenses

European restructuring costs

Operating income (loss)

Interest expense

Interest income

Foreign currency loss, net

Income (loss) before provision for income taxes

Provision for income taxes

Net income (loss)

Basic earnings (loss) per share

Diluted earnings (loss) per share

Basic weighted average shares outstanding

Diluted weighted average shares outstanding

Current assets:

Cash and cash equivalents

Accounts receivable, less allowance for doubtful accounts of $1,193 and $1,328

Inventories

Deferred income taxes

Assets available for sale

Prepaid expenses and other

Total current assets

Property, plant and equipment, net

Goodwill

Deferred income taxes

Intangible assets, net

Other assets

Total assets

Current liabilities:

Notes payable to banks

Current portion of long-term debt

Accounts payable

Accrued payroll and payroll taxes

Accrued restructuring costs

Other accrued expenses

Total current liabilities

Long-term debt, net of current portion

Accrued environmental expenses

Deferred income taxes

Employee benefit obligations

Other liabilities

Total liabilities

Shareholders’ equity:

Common stock, $.50 par value, 40,000 authorized shares; 10,961 and 10,885 shares issued and outstanding

Additional paid-in capital

Retained earnings

Accumulated other comprehensive income

Total shareholders’ equity

Total liabilities and shareholders’ equity

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Fixed asset write off due to restructuring

Depreciation

Amortization

Share-based compensation

Deferred income taxes

Loss on disposition of assets, net

Changes in operating assets and liabilities:

Accounts receivable

Inventories

Prepaid expenses and other

Accounts payable and accrued expenses

Income taxes payable and receivable

Other assets and liabilities

Net cash provided by operating activities

Cash flows from investing activities:

Capital expenditures

Proceeds from disposition of assets

Net cash used in investing activities

Cash flows from financing activities:

Cash dividends paid

Payments on long-term debt

Proceeds from long-term debt

Notes payable to banks, net

Common stock issued under share-based compensation plans

Net cash used in financing activities

Effect of exchange rate changes

Change in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period