UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~[X]~~þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2004~~2005

[o ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 333-115267

ERICO INTERNATIONAL CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Ohio		34-0201460
(State or other jurisdiction of		(I.R.S. Employer
(State or Other Jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
Incorporation or Organization)		Identification Number)

30575 Bainbridge Road, Suite 300, Solon, OH		44139
(Address of Principal Executive Offices)		(Zip Code)

30575 Bainbridge Road
Suite 300
Solon, Ohio 44139
(440) 349-2630
(Address, including zip code, and telephone number, including area code, of Registrant’s Principal Executive Offices)

Indicate by check mark whether the registrant: (~~440~~1) ~~349-2630~~has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No þ

Indicate by a check mark whether the registrant is an accelerated filer (~~Registrant’s~~as ~~Telephone~~determined ~~Number,~~in ~~Including~~Rule 12b-2 ~~Area~~of ~~Code~~the Exchange Act). Yes o No þ

~~Indicate~~At byAugust 10, ~~check~~2005, ~~mark whether~~ the registrant: ~~(1) has~~had ~~filed~~one ~~all~~outstanding ~~reports required~~share ~~to be filed by Section 13 or 15(d)~~ of ~~the~~common Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 daysstock. ~~Yes [ ] No [X ]~~

Indicate by a check mark whether the registrant is an accelerated filer (as determined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X ]

As of August 4, 2004, the Registrant had one outstanding share of common stock.

INDEX TO QUARTERLY REPORT

	Page No.
Part I. Financial Information
Item 1. Financial Statements
Unaudited Condensed Consolidated Financial Statements of ERICO International Corporation and Subsidiaries
Condensed Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004		2
Condensed Consolidated Balance Sheets as of December 31, 2003 and June 30, 2004		2
Condensed Consolidated Income Statements for the Three and Six Months Ended June 30, 2005 and 2004		3
Statements of Condensed Consolidated Income for the three and six months ended June 30, 2003 and 2004		3
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004		4
Statements of Condensed Consolidated Cash Flows for the six months ended June 30, 2003 and 2004		4
Notes to Unaudited Condensed Consolidated Financial Statements		5
Notes to Condensed Consolidated Financial Statements		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3. Quantitative and Qualitative Disclosures About Market Risk		21
Item 3. Quantitative and Qualitative Disclosures About Market Risk		20
Item 4. Controls and Procedures		21
Item 4. Controls and Procedures		20
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K		21
Item 6. Exhibits		22
Signatures		2223
EX-31.1 Certification
EX-31.1 Form of Rule 13A-14(A)/15D-14(A) Cert. of CEO
EX-31.2 Certification
EX-31.2 Form of Rule 13A-14(A)/15D-14(A) Cert. of CFO
EX-32 Certification
EX-32 Form of Section 1350 Cert. of CEO & CFO

PART 1I. FINANCIAL INFORMATION

Item 1. Financial Statements

ERICO International Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(Dollars in thousands, ofexcept ~~dollars~~per share amounts)

	June 30,			December 31,
	2004			2003
	2005			2004
	(unaudited)
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	32,~~215~~294		$	2,~~421~~321
Trade accounts receivable, net		5860,~~051~~727			5450,~~252~~485
Inventories		51,990			45,513
Inventories, net		53,972			59,600
Other current assets		96,~~622~~889			78,~~745~~909
Total current assets		~~122~~123,~~878~~882			~~109~~121,~~931~~315
Property, plant and equipment, net		5546,~~141~~314			6052,~~630~~522
Goodwill		~~105~~101,~~237~~403			~~105~~101,~~194~~303
Trademarks and other intangible assets		36,469			36,572
Other intangible assets, net		36,922			36,905
Other assets		1510,~~211~~246			1110,~~440~~676
Total assets	$	~~334~~318,~~936~~767		$	~~323~~322,~~767~~721
Liabilities and stockholder’s net investment
Current liabilities:
Trade accounts payable	$	3330,~~749~~231		$	2926,~~607~~422
Accrued compensation		810,~~711~~861			913,~~216~~446
Other accrued expenses		27,584			25,956
Dividend payable		—			15,000
Total current liabilities		70,044			64,779
Other current liabilities		21,264			21,874
Long-term debt		166,715			140,920
Total current liabilities		62,356			76,742
Deferred income taxes		28,490			28,939
Long-term debt		160,175			152,175
Other long-term liabilities		16,138			16,699
Deferred income taxes		27,831			28,894
Other long-term liabilities		15,548			16,785
Stockholder’s net investment:
Common stock, $1.00 par value, authorized 1,500,000 shares, issued and outstanding 1 share		—			—
Common stock, par value $1.00 per share, 1,500,000 shares authorized, 1 share issued and outstanding		—			—
Parent company investment		55,~~512~~702			7246,~~668~~699
Accumulated other comprehensive loss		(1,963	)		(238	)
Accumulated other comprehensive (loss) income		(2,845	)		1,426
Total stockholder’s net investment		5352,~~549~~857			7248,~~430~~125
Total liabilities and stockholder’s net investment	$	~~334~~318,~~936~~767		$	~~323~~322,~~767~~721

~~See~~The ~~notes~~balance tosheet ~~unaudited~~at ~~condensed~~December 31, ~~consolidated~~2004 has been derived from the audited financial statements. at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

2The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~Table of Contents~~2

ERICOTable Internationalof Corporation and Subsidiaries Contents

~~Statements~~ERICO ofInternational ~~Condensed~~Corporation ~~Consolidated~~and ~~Income~~Subsidiaries

~~(thousands~~Condensed ofConsolidated ~~dollars~~Income Statements (Unaudited)

(~~unaudited~~Dollars in thousands)

	For the three months ended						For the six months ended
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2004			2003			2004			2003
	2005			2004			2005			2004
Net sales	$	92100,~~112~~128		$	8092,~~381~~112		$	~~175~~190,~~562~~078		$	~~149~~175,~~774~~562
Cost of products sold		58,529			51,391			112,140			95,751
Cost of sales		64,089			58,529			123,090			112,140
Gross profit		3336,~~583~~039			2833,~~990~~583			6366,~~422~~988			5463,~~023~~422
Operating expenses		2023,~~915~~004			20,~~327~~972			4244,~~265~~623			4042,~~320~~311
Interest expense, net		3,857			3,511			7,347			6,261
Operating income		13,035			12,611			22,365			21,111
Foreign exchange gain, net		(817	)		(1,224	)		(393	)		(3,600	)
Interest expense, net		3,905			3,857			7,785			7,347
Other (income) expense, net		57			(66	)		1,282			(54	)
Foreign exchange loss (gain), net		275			(817	)		466			(393	)
Income before income taxes		9,571			6,442			12,921			11,096
Other expense		—			—			—			1,236
Provision for income taxes		3,749			2,289			5,077			3,939
Income before income taxes		8,855			9,571			14,114			12,921
Net income	$	5,822		$	4,153		$	7,844		$	7,157
Provision for income taxes		3,062			3,749			5,111			5,077
Net income	$	5,793		$	5,822		$	9,003		$	7,844

~~See~~The accompanying notes toare an integral part of these unaudited condensed consolidated financial statements.

ERICO International Corporation and Subsidiaries

~~Statements of~~ Condensed Consolidated Statements of Cash Flows (Unaudited)

(~~thousands~~Dollars ofin ~~dollars~~thousands)

(unaudited)


	Six Months Ended
	June 30,
	2005			2004
Operating activities
Net income	$	9,003		$	7,844
Depreciation and amortization		6,664			6,074
Other operating activities		(6,848	)		(7,315	)

Net cash provided by operating activities		8,819			6,603

Investing activities
Capital expenditures		(1,175	)		(1,000	)
Other investing activities		(624	)		(205	)

Net cash used in investing activities		(1,799	)		(1,205	)

Financing activities
Dividends paid		(15,000	)		(25,000	)
Net borrowings (payments) on revolving line of credit		8,000			(23,200	)
Proceeds from issuance of subordinated debt		—			121,500
Principal payments on long-term debt		—			(72,950	)
Financing fees paid		—			(4,970	)

Net cash used in financing activities		(7,000	)		(4,620	)

Effect of exchange rate changes on cash and cash equivalents		(47	)		16

(Decrease) increase in cash and cash equivalents		(27	)		794
Cash and cash equivalents at beginning of period		2,321			2,421

Cash and cash equivalents at end of period	$	2,294		$	3,215

	For the six months
	ended June 30,
	2004			2003
Net cash provided by (used in) operating activities	$	6,398		$	(110	)
Investing activities
Acquisition payments, net of cash acquired		—			(3,329	)
Capital expenditures		(1,000	)		(2,532	)
Net cash used in investing activities		(1,000	)		(5,861	)
Financing activities
Net transfers to parent company		(25,000	)		—
Net borrowing (payments) on revolving line of credit		(23,200	)		7,785
Borrowings from subordinated debt		121,500			—
Principal payments on long-term debt		(72,950	)		(3,000	)
Financing fees paid		(4,970	)		—
Net cash (used in) provided by financing activities		(4,620	)		4,785
Effect of exchange rate changes on cash and cash equivalents		16			(55	)
Increase (decrease) in cash and cash equivalents		794			(1,241	)
Cash and cash equivalents at beginning of period		2,421			3,374
Cash and cash equivalents at end of period	$	3,215		$	2,133

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~See notes to unaudited condensed consolidated financial statements.~~4

4 Table of Contents

~~Table~~ERICO ofInternational ~~Contents~~Corporation and Subsidiaries

~~ERICO~~Notes ~~International~~to ~~Corporation~~Unaudited ~~and~~Condensed ~~Subsidiaries~~Consolidated Financial Statements

~~Notes~~June 30, ~~to Condensed Consolidated Financial Statements~~ 2005

~~June 30,~~(Dollars ~~2004~~in thousands)

~~(thousands~~1. Basis of ~~dollars)~~Presentation

(The accompanying unaudited condensed consolidated financial statements of ERICO International Corporation and subsidiaries (“ERICO” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements, and should be read together with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (“SEC”) on March 9, 2005. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position, results of operations and cash flows for the periods presented have been included. Certain prior year amounts have been reclassified to conform to the current year presentation. Operating results for the three and six months ended June 30, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.

1Nature of Operations: The Company is a wholly owned subsidiary of ERICO Holding Company (“Holding”), which is a wholly owned subsidiary of ERICO Global Company (“Global”), the Company’s ultimate parent. All activity associated with Holding and Global relates to the operations of the Company. Accordingly, all operating costs incurred by Holding and Global are reflected in the Company’s financial statements. In addition, in accordance with Staff Accounting Bulletin (“SAB”) No. 73, “Pushdown” Basis of ~~Presentation~~Accounting Required in Certain Limited Circumstances, senior subordinated notes issued by Holding and outstanding through February 20, 2004, including related financing costs, have been “pushed down” and are reflected in the accompanying financial statements.

~~ERICO~~The ~~International Corporation (“ERICO” or “~~Company”) is a ~~wholly~~leading ~~owned subsidiary of ERICO Holding Company (“Holding”)~~designer, ~~which~~manufacturer isand amarketer ~~wholly owned subsidiary~~ of ~~ERICO~~precision-engineered ~~Global Company (“Global”) (the Company’s ultimate parent).~~specialty ~~All~~metal ~~activity~~products ~~associated~~serving ~~with~~global ~~Holding~~niche ~~and~~product ~~Global~~markets ~~relates~~in toa ~~the~~diverse ~~operations~~range of ~~the~~ ~~Company. Accordingly~~electrical, ~~all~~commercial and ~~operating~~industrial ~~costs~~construction, ~~incurred~~utility ~~by Holding~~ and ~~Global are~~rail ~~reflected~~applications. inThe ~~the~~ Company’s ~~financial~~is ~~statements.~~headquartered Inin ~~addition~~Solon, ~~senior~~ ~~subordinated~~Ohio, ~~notes~~USA ~~issued~~with bya ~~Holding,~~network ~~including~~of ~~related~~sales ~~financing~~locations ~~costs,~~serving ~~have been~~more ~~“pushed~~than ~~down”~~25 ~~and~~countries. ~~are~~The ~~reflected~~Company operates in ~~the~~one ~~accompanying~~reportable ~~financial statements~~segment.

~~The~~Use ~~Company~~of ~~operates~~Estimates: ~~in one reportable segment.~~ The ~~Company~~preparation ~~manufactures precision-engineered~~of ~~specialty~~financial ~~metal~~statements ~~products~~in ~~serving~~conformity ~~global~~with ~~niche~~accounting ~~product~~principles ~~markets~~generally accepted in athe ~~diverse~~United ~~range~~States ofrequires ~~electrical,~~management ~~commercial~~to ~~and~~make ~~industrial construction,~~estimates ~~utility~~ and ~~rail~~assumptions ~~applications.~~that affect ~~The~~the ~~Company~~amounts ~~distributes~~reported ~~its~~in ~~products~~the tofinancial ~~customers through~~statements ~~a global sales~~ and ~~distribution~~accompanying ~~network~~notes. ~~serving~~Actual ~~more~~results could ~~than~~differ 25from ~~countries~~these estimates.

~~The~~Principles ~~accompanying~~of Consolidation: The unaudited condensed consolidated financial statements ~~have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not~~ include ~~all of~~ the ~~information~~accounts ~~and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion~~ of ~~management,~~ ~~all~~ERICO ~~adjustments~~International ~~(consisting~~Corporation ~~of normal recurring accruals) necessary to present fairly the financial position, results of operations~~ and ~~cash~~its ~~flows for the periods presented have been included~~subsidiaries. ~~The~~Intercompany ~~preparation~~accounts ~~of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates~~ and ~~assumptions that affect~~ ~~the~~transactions ~~amounts~~are ~~reported~~eliminated in ~~the financial statements and accompanying notes~~consolidation. Actual results could differ from these estimates. Operating results for the six months ended June 30, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. For further information, refer to the consolidated financial statements and notes thereto for the year ended December 31, 2003, not included herein.

2Recently Issued Accounting Standards: In November 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 151, ~~Inventories~~Inventory Costs, an Amendment of ARB No. 43, Chapter 4. SFAS No. 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs and wasted material, and requires that such items be recognized as current-period charges regardless of whether they meet the “so abnormal” criterion outlined in ARB No. 43. SFAS No. 151 also introduces the concept of “normal capacity” and requires the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. Unallocated overheads must be recognized as an expense in the period incurred. SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. While we are still evaluating the impact of this statement, we do not currently believe it will have a material impact on our consolidated results of operations, financial position or cash flows.

~~The~~In ~~major~~December 2004, ~~categories~~the ofFASB ~~inventories~~issued atSFAS ~~June~~No. 30123(R), ~~2004~~Share-Based Payment, which replaces the prior SFAS No. 123, Accounting for Stock-Based Compensation, and ~~December~~supersedes APB Opinion No. 3125, ~~2003~~Accounting for Stock Issued to Employees. SFAS 123(R) requires compensation costs related to share-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or liability instruments issued. In addition, awards of liability instruments will be re-measured each reporting period. Compensation cost will be recognized over the period that an employee provides services in exchange for the award. This new standard will become effective for the Company on January 1, 2006. While we are still evaluating the impact of this statement, we do not currently asbelieve ~~follows:~~it will have a material impact on our consolidated results of operations, financial position or cash flows.

	June 30,			December 31,
	2004			2003
Finished goods	$	42,340		$	37,156
Work in process		3,480			2,978
Raw materials		10,779			8,941
		56,599			49,075
Inventory reserves		(4,609	)		(3,562	)
Net inventories	$	51,990		$	45,513

3.Table Goodwillof and Other Intangible Assets Contents

~~Goodwill~~ERICO ~~represents~~International ~~the~~Corporation ~~excess of purchase price paid over the fair value of the net assets acquired. Goodwill~~ and ~~indefinite-lived intangible assets are~~Subsidiaries no longer amortized but are subject to annual impairment testing. Impairment exists when the carrying amount of goodwill or indefinite-lived intangible assets exceeds its fair value. The Company’s policy is to perform its annual impairment testing in the fourth quarter of each year, unless circumstances dictate the need for more frequent assessments. The 2003 annual impairment assessments confirmed that the fair value of the Company exceeded its carrying value and no impairment loss recognition was required for goodwill or indefinite-lived intangible assets. There were no significant changes in the carrying amount of goodwill for the six months ended June 30, 2004.

5Notes to Unaudited Condensed Consolidated Financial Statements June 30, 2005 (Dollars in thousands)

~~Table~~2. ~~of Contents~~Inventories

~~ERICO~~Inventories ~~International~~are ~~Corporation~~stated ~~and~~at ~~Subsidiaries~~the lower of cost or market with cost being determined by the first-in, first-out (“FIFO”) method. The components of inventory are as follows:

Notes to Condensed Consolidated Financial Statements – (Continued) June 30, 2004 (thousands of dollars) (unaudited)


	June 30,			December 31,
	2005			2004
Finished goods	$	43,655		$	51,439
Work in process		4,688			4,166
Raw materials		11,005			9,515

		59,348			65,120
Inventory reserves		(5,376	)		(5,520	)

Inventories, net	$	53,972		$	59,600

3. Goodwill and Other Intangible Assets ~~(continued)~~

~~Trademarks~~Goodwill represents the excess of purchase price paid over the fair value of the net assets acquired. Goodwill and ~~other~~indefinite-lived intangible assets, are asno ~~follows:~~longer amortized but are subject to annual impairment testing. Impairment exists when the carrying amount of goodwill or indefinite-lived intangible assets exceeds its fair value. The Company’s policy is to perform its annual impairment testing in the fourth quarter of each year, unless circumstances dictate the need for more frequent assessments. The 2004 annual impairment assessments confirmed that the fair value of the Company exceeded its carrying value, and no impairment loss recognition was required for goodwill or indefinite-lived intangible assets.

	As of June 30, 2004
	Acquisition		Accumulated
	Cost		Amortization			Net
Finite-lived intangible assets:
Patents	$	2,879	$	(664	)	$	2,215
Customer relationships		787		(59	)		728
Total intangible assets subject to amortization		3,666		(723	)		2,943
Indefinite-lived intangible asset – trademarks		33,526		—			33,526
Total other intangible assets	$	37,192	$	(723	)	$	36,469

The following table displays the gross carrying amount, accumulated amortization amount and net carrying value for finite-lived intangible assets and indefinite-lived intangible assets:

	As of December 31, 2003
	June 30, 2005
	Acquisition		Accumulated
	Gross
	Cost		Amortization			Net
	Carrying		Accumulated
	Amount		Amortization			Net
Finite-lived intangible assets:
Patents	$	23,~~732~~952	$	(~~434~~1,288	)	$	2,~~298~~664
Customer relationships		787		(39102	)		~~748~~685
Total intangible assets subject to amortization		3,519		(473	)		3,046
	$	4,739	$	(1,390	)	$	3,349
Indefinite-lived intangible asset – trademarks		33,526		—			33,526
Indefinite-lived intangible assets:
Total other intangible assets	$	37,045	$	(473	)	$	36,572
Trademarks	$	33,573	$	—		$	33,573
Goodwill		101,403		—			101,403
	$	134,976	$	—		$	134,976

~~Amortization of other intangible assets was $124 and $54 for the three months~~6 ended June 30, 2004 and 2003, respectively, and $240 and $170 for the six months ended June 30, 2004 and 2003, respectively. Amortization expense for each of the five succeeding years is expected to be approximately $500 per year.

6 Table of Contents

~~Table~~ERICO ofInternational ~~Contents~~Corporation and Subsidiaries

~~ERICO~~Notes ~~International~~to ~~Corporation~~Unaudited ~~and~~Condensed ~~Subsidiaries~~Consolidated Financial Statements June 30, 2005 (Dollars in thousands)

~~Notes~~3. toGoodwill ~~Condensed~~and ~~Consolidated~~Other ~~Financial~~Intangible ~~Statements~~Assets – (~~Continued~~continued) ~~June 30, 2004 (thousands of dollars) (unaudited)~~

4. Debt and Financing Arrangements


	December 31, 2004
	Gross
	Carrying		Accumulated
	Amount		Amortization			Net

Finite-lived intangible assets:
Patents	$	3,647	$	(1,010	)	$	2,637
Customer relationships		787		(82	)		705

	$	4,434	$	(1,092	)	$	3,342

Indefinite-lived intangible assets:
Trademarks	$	33,563	$	—		$	33,563
Goodwill		101,303		—			101,303

	$	134,866	$	—		$	134,866

~~Long~~Amortization expense for finite-~~term~~lived ~~debt~~intangible atassets was $154 and $124 for the three months ended June 30, 2005 and 2004, respectively, and ~~December~~$298 and $240 for the six months ended June 3130, 2005 ~~2003~~and ~~consists~~2004, ofrespectively. Based upon the gross carrying amount of finite-lived intangible assets ~~following:~~as of June 30, 2005, amortization expense for 2005 through 2010 is expected to be approximately $600 per year.

	2004			2003
Credit facility with commercial banks	$	14,800		$	38,000
Term loans with commercial banks		—			39,000
8 7/8% Subordinated notes – ERICO International Corporation		140,900			—
11% Subordinated notes – ERICO International Corporation		10,600			30,000
11% Subordinated notes – ERICO Holding Company		—			35,000
Notes – original issue discount		(260	)		(1,755	)
Other		675			675
	$	166,715		$	140,920

4. Debt and Financing Arrangements

~~On February 20, 2004, the Company refinanced substantially all of its long~~Long-term debt. ~~The~~at ~~Company issued $140~~June 30,~~900~~ of2005 8and ~~7/8% senior subordinated notes~~December 31, ~~of which~~2004 ~~$19,400~~consists ~~was exchanged for its 11% senior subordinated notes. The proceeds~~ of ~~$140,900 were used in part to reduce amounts outstanding under~~ the ~~previous~~ ~~revolving credit facility, to repay term loans outstanding, to repay~~following: ~~$35,000 of the 11% senior subordinated notes of ERICO Holding Company, and to pay a dividend of $25,000 to the holders of ERICO Global Company Class L shares.~~

In connection with the refinancing, the Company also amended its Multicurrency Credit and Security Agreement (the “Credit Facility”). The Credit Facility has $75,000 of committed capital and a term of five years. The Credit Facility contains various customary covenants, including covenants limiting the ability of the Company and its subsidiaries to sell, pledge or incur liens on assets and to incur additional debt. The Credit Facility also includes financial covenants requiring the Company to maintain certain minimum net worth levels and to achieve certain ratios of debt to cash flow, and cash flow to fixed charges. Borrowings under the Credit Facility are secured by all assets of the Company. Borrowings under the Credit Facility accrue interest at the Alternate Base Rate (as defined in the Credit Facility) plus a 1.25% margin or LIBOR plus a 2.00% margin.


	June 30,		December 31,
	2005		2004
Revolving credit facility with commercial banks	$	8,000	$	—
8.875% subordinated notes, due 2012		151,500		151,500
Other notes, due 2009		675		675

	$	160,175	$	152,175

~~The~~On ~~Credit~~February 20, ~~Facility~~2004, ~~also~~the ~~provides~~Company ~~multicurrency~~refinanced ~~borrowing~~substantially ~~options~~all inof ~~Australian~~its long-term debt. The Company ~~dollars,~~issued ~~Euros~~$140,900 ~~Swiss~~of ~~francs,~~8.875% ~~Swedish~~senior ~~kronas,~~subordinated ~~British~~notes ~~pounds~~due ~~and~~2012 ~~other~~(the “Subordinated Notes”), of which ~~currencies~~$19,400 ~~that~~was ~~are~~exchanged ~~readily~~for ~~available~~its ~~and~~11.0% ~~freely~~senior ~~traded~~subordinated notes. ~~There~~The proceeds of $140,900 were noused in part to reduce amounts outstanding under the Company’s previous revolving credit facility, to repay $39,000 of term loans outstanding, atto ~~June 30~~repay $35,000 of the 11.0% senior subordinated notes of Holding and to pay a dividend of $25,000 to the holders of Global Class L shares. On August 13, 2004, ~~under~~the Company exchanged the ~~multicurrency~~remaining ~~borrowing~~$10,600 ~~options~~of 11.0% senior subordinated notes for $10,600 of its Subordinated Notes. The Company recorded non-cash charges of $1,236 and $500 in the first quarter and third quarter of 2004, respectively, to write-off original issue discount costs and deferred financing costs related to the February 2004 refinancing and August 2004 debt exchange transactions.

~~The~~In connection with the February 20, 2004 refinancing, the Company amended its $75,000 Multicurrency Credit and Security Agreement (the “Credit Facility”) ~~provides~~that ~~for~~expires December 2, 2007. The Credit Facility provides a ~~commitment~~revolving ~~fee~~credit line of 0.$75,000, of which $25%,000 ~~basis~~may ~~points~~be onused for the issuance ~~total~~of ~~facility~~letters of credit. The ~~amount~~Credit ~~available~~Facility allows for multicurrency borrowing options in Australian dollars, Euros, Swiss francs, Swedish kronor, British pounds and other currencies that are readily available and freely traded. Borrowings under the Credit Facility are secured by substantially all of the assets of the Company and accrue interest at ~~June 30,~~the ~~2004~~Alternate ~~was~~Base ~~$59,932~~Rate (as defined in the Credit Facility) or LIBOR plus a 1.75% margin. The Credit Facility provides for a commitment fee of 0.25% on the revolving credit line.

~~The Credit Facility permits up to $25,000 in outstanding letters of credit~~7 ~~under the revolving portion. At June 30, 2004 the Company had $268 of outstanding letters of credit.~~

7 Table of Contents

~~Table~~ERICO ofInternational ~~Contents~~Corporation and Subsidiaries

~~ERICO~~Notes ~~International~~to ~~Corporation~~Unaudited ~~and~~Condensed ~~Subsidiaries~~Consolidated Financial Statements June 30, 2005 (Dollars in thousands)

~~Notes~~4. toDebt ~~Condensed~~and ~~Consolidated~~Financing ~~Financial~~Arrangements ~~Statements –~~ (~~Continued~~continued) ~~June 30, 2004 (thousands of dollars) (unaudited)~~

5The Credit Facility and the Subordinated Notes contain certain customary covenants that impose limitations on the Company, including covenants limiting the ability of the Company and its subsidiaries to sell, pledge or incur liens on assets and to incur additional debt. ~~Income~~The ~~Taxes~~Credit Facility also includes requirements to meet certain financial tests and to maintain on a quarterly basis certain consolidated financial ratios, including minimum net worth, minimum fixed charge coverage ratio, maximum leverage ratio and minimum net income before interest expense, net, income taxes, depreciation, amortization and certain other non-cash, non-recurring items (“EBITDA”). The Company was in compliance with all covenants of the Credit Facility and the Subordinated Notes, and the conditions of the Credit Facility, at June 30, 2005.

~~The~~At June 30, 2005, the Company’s ~~operations~~had ~~have~~borrowings ~~been~~outstanding ~~included~~of in$8,000 under the ~~consolidated~~revolving ~~income~~credit ~~tax~~line ~~returns~~of ~~filed~~the byCredit ~~Global~~Facility, all in U.S. ~~Income~~dollars, ~~tax~~and ~~expense~~letters inof ~~the~~credit ~~Company’s~~outstanding ~~consolidated income~~of ~~statements~~$268 issupported ~~calculated~~by the onCredit aFacility. ~~separate~~The ~~tax~~amount ~~return~~available ~~basis~~for asadditional ifborrowing under the ~~Company~~ ~~had~~Credit ~~operated~~Facility asat June 30, a2005 ~~stand-alone~~was ~~entity~~$66,732.

~~The Company’s income tax provision was $3,749, or 39.2%, and $2,289, or 35.~~5~~%, for the three months ended June 30, 2004 and 2003, respectively, and $5,077, or 39~~.~~3%,~~ ~~and $3,939, or 35.5%, for the six months ended June 30, 2004 and 2003, respectively.~~ Income ~~tax expense in 2004 varies from the amount computed by applying~~Taxes the statutory federal tax rate to income before income taxes, due principally to state and local taxes. In 2003, the impact of state and local taxes was substantially offset by certain foreign currency transaction gains for which there was no income tax expense.

6The Company’s operations have been included in the consolidated income tax returns filed by Global. Income ~~Retirement~~tax ~~and~~expense ~~Post-retirement~~in ~~Benefit~~the ~~Plans~~Company’s consolidated income statements is calculated on a separate tax return basis as if the Company had operated as a stand-alone entity.

The ~~following~~Company’s ~~table~~income ~~sets~~tax ~~forth~~provision ~~the~~was ~~components~~$3,062, ofor ~~net~~34.6%, ~~periodic~~and ~~expense~~$3,749, or 39.2%, for the three months ~~post-retirement~~ended ~~benefit~~June 30, ~~plan~~2005 and 2004, respectively, and $5,111, or 36.2%, and $5,077, or 39.3%, for the ~~three~~ six months ended June 30, 2005 and 2004, respectively. The Company’s income tax provision in the three and six ~~months~~month periods ended June 30:, 2005 includes a $698 reduction in income tax expense related to a change in state tax laws. Excluding this item, the Company’s effective tax rate for the six months ended June 30, 2005 was 41.2%, up from 39.0% for the three months ended March 31, 2005, due to higher taxes on foreign earnings. Income tax expense varies from the amount computed by applying the statutory federal tax rate to income before income taxes, due principally to state and local taxes.

	For the three months				For the six months
	ended June 30,				ended June 30,
	2004		2003		2004		2003
Service cost	$	30	$	29	$	60	$	58
Interest cost		100		99		200		197
Net periodic post-retirement benefit expense	$	130	$	128	$	260	$	255

6. Post-Retirement Benefit Plan

The Company ~~previously~~has ~~disclosed~~a inhealth ~~its~~care ~~annual~~post-retirement ~~financial~~benefit ~~statements~~plan (the “Health Care Plan”) that itprovides ~~expects~~benefits ~~health~~to ~~care~~certain ~~post-retirement~~employees ~~contributions~~in the United States hired prior to beJanuary 1, ~~$250~~1993. ~~and~~On ~~benefit~~February 10, ~~payments~~2005, the Company amended the Health Care Plan to belimit ~~$325~~eligibility into those employees hired prior to January 1, 1993 that also have at least 24 years of service as of December 31, 2004. ~~The~~This amendment ~~Company~~eliminated ~~has~~approximately ~~made~~50 ~~health~~employees ~~care~~from ~~post-retirement~~eligibility and caused the Company to ~~benefit~~recognize ~~payments~~a curtailment gain of $~~128~~68 in the ~~six~~first ~~months~~quarter ~~ended~~of ~~June 30~~2005. At the same time, ~~2004.~~the Company increased retiree contributions such that retirees will pay 100% of medical costs by January 1, 2010. This change in assumption resulted in an unrecognized net gain that is being amortized to income as a component of periodic benefit income.

~~On December~~ 8~~, 2003, Congress passed the Medicare Prescription Drug,~~ Improvement and Modernization Act of 2003 (“Medicare Act”). On May 19, 2004, the Financial Accounting Standards Board issued Financial Staff Position Number 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (“FSP”). The FSP is effective for the first interim or annual period beginning after June 15, 2004. The Company is currently evaluating the effects of the Medicare Act on the accumulated post-retirement benefit obligation and post-retirement benefit costs and has not determined the amount of any subsidy, if any, that may be available. While the Company evaluates the effects of the Medicare Act, it has elected under the provisions of the FSP to defer recognizing any potential subsidy from the Medicare Act.

TheTable Company also sponsored a defined benefit pension plan covering U.S. employees hired prior to January 1, 1997. Effective January 1, 1997, the Company froze all benefits under the Plan. In 2003, the pension plan was terminated and plan assets are expected to be distributed to participants in the fourth quarter of 2004. At both June 30, 2004 and December 31, 2003, the Company had a termination liability of $6,335. Contents

7.ERICO ~~Commitments~~International Corporation and ~~Contingencies~~Subsidiaries

~~The~~Notes ~~Company is subject~~ to ~~legal~~Unaudited ~~proceedings,~~Condensed ~~claims~~Consolidated ~~and~~Financial ~~litigation arising in~~Statements ~~the~~June 30, ~~ordinary course of business. The Company’s management does not expect that~~2005 ~~the~~(Dollars ~~ultimate~~in ~~costs to resolve these matters will have a material adverse effect~~thousands) ~~on the Company’s consolidated financial position, results of operations or cash flows.~~

86. Post-Retirement Benefit Plan (continued)

~~Table~~The following table sets forth the components of ~~Contents~~net periodic (income) expense for the Company’s Health Care Plan for the three and six months ended June 30, 2005 and 2004:

ERICO International Corporation and Subsidiaries


	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2005			2004		2005			2004
Service cost	$	1		$	30	$	3		$	60
Interest cost		7			100		24			200
Amortization of net gain		(106	)		—		(310	)		—
Curtailment gain		—			—		(68	)		—

Net periodic (income) expense	$	(98	)	$	130	$	(351	)	$	260

~~Notes~~On toDecember 8, ~~Condensed~~2003, ~~Consolidated~~Congress passed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (“Medicare Act”). On May 19, 2004, the Financial ~~Statements~~Accounting –Standards Board issued Financial Staff Position Number 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (~~Continued~~“FSP”). The FSP was ~~June~~effective for the three-month period ending September 30, 2004. The Company’s accumulated post-retirement benefit obligation at June 30, 2005 and net periodic (~~thousands~~income) expense for the three and six months ended June 30, 2005 and 2004 do not reflect any amount associated with the Medicare Act because the Company has not finalized its determination of ~~dollars)~~whether the benefits provided by the ~~(unaudited)~~Company’s Health Care Plan are actuarially equivalent to Medicare Part D under the Medicare Act. Based on a preliminary analysis, the Company believes the effects of the Medicare Act on the accumulated post-retirement benefit obligation and post-retirement benefit cost, if any, will be immaterial.

87. ~~Comprehensive~~Commitments ~~Income~~and Contingencies

~~Total~~The ~~comprehensive~~Company ~~income~~is subject to legal proceedings, claims and ~~its~~litigation ~~components~~arising ~~are~~in asthe ~~follows:~~ordinary course of business. The Company’s management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company’s consolidated results of operations, financial position or cash flows.

	For the three months						For the six months
	ended June 30,						ended June 30,
	2004			2003			2004			2003
Net income	$	5,822		$	4,153		$	7,844		$	7,157
Foreign currency translation adjustments		(1,482	)		(61	)		(1,725	)		(1,193	)
Comprehensive income	$	4,340		$	4,092		$	6,119		$	5,964

8. Comprehensive Income

9.Accumulated ~~Reconciliation~~other comprehensive (loss) income of ~~EBITDA~~$(2,845) toand ~~Net~~$1,426 ~~Cash~~at ~~Provided~~June 30, by2005 ~~Operating~~and ~~Activities~~December 31, 2004, respectively, consists entirely of foreign currency translation adjustments. Total comprehensive income and its components are as follows:

EBITDA is defined as net income plus income taxes, interest expense, net, and depreciation and amortization. EBITDA is presented in this manner because the Company believes it is a widely accepted financial indicator of a company’s ability to service and incur indebtedness. In addition, EBITDA is used in the Company’s financial debt covenants. Also, management uses EBITDA, among other financial measures, for planning and forecasting purposes. However, EBITDA should not be considered as an alternative to net cash provided by operating activities as a measure of liquidity in accordance with accounting principles generally accepted in the United States. Since EBITDA is not calculated identically by all companies, the Company’s method of computation may not be comparable to those disclosed by other companies. Below is a reconciliation of EBITDA to net cash provided by operating activities:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
Net income	$	5,793		$	5,822		$	9,003		$	7,844
Foreign currency translation adjustments		(2,643	)		(1,482	)		(4,271	)		(1,725	)

Comprehensive income	$	3,150		$	4,340		$	4,732		$	6,119

	For the three months						For the six months
	ended June 30,						ended June 30,
	2004			2003			2004			2003
Net cash provided by (used in) operating activities	$	11,454		$	7,753		$	6,398		$	(110	)
Interest expense, net		3,857			3,511			7,347			6,261
Income taxes		3,749			2,289			5,077			3,939
Foreign exchange		817			1,224			393			3,600
Deferred taxes		253			66			458			799
Amortization of financing fees and discount on senior subordinated notes included in interest expense, net		(224	)		(149	)		(399	)		(332	)
Net changes in operating assets and liabilities		(3,440	)		(1,887	)		8,304			9,071
EBITDA	$	16,466		$	12,807		$	27,578		$	23,228

9 Table of Contents

~~Table~~ERICO ofInternational ~~Contents~~Corporation and Subsidiaries

~~ERICO~~Notes ~~International~~to ~~Corporation~~Unaudited ~~and~~Condensed ~~Subsidiaries~~Consolidated Financial Statements June 30, 2005 (Dollars in thousands)

~~Notes~~9. toGuarantor ~~Condensed~~and ~~Consolidated~~Non-Guarantor ~~Financial Statements – (Continued)~~Subsidiaries ~~June 30, 2004 (thousands of dollars) (unaudited)~~

10The following unaudited condensed consolidating financial statements set forth the Company’s balance sheets as of June 30, 2005 and December 31, 2004, the statements of income for the three and six months ended June 30, 2005 and 2004 and the statements of cash flows for the six months ended June 30, 2005 and 2004. In the following schedules, “Parent” refers to ERICO International Corporation, Holding and Global, collectively, “Guarantor Subsidiary” refers to ERICO Products, Inc., ERICO International Corporation’s sole domestic subsidiary, and “Non-Guarantor Subsidiaries” refers to ERICO International Corporation’s non-U.S. subsidiaries. “Eliminations” represent the adjustments necessary to (a) eliminate intercompany transactions and (b) eliminate the investments in ERICO International Corporation’s subsidiaries.

~~The~~Unaudited ~~following~~Condensed ~~condensed~~Consolidating ~~consolidating~~Balance ~~financial statements set forth the~~Sheets ~~Company’s balance sheets as of~~ June 30, ~~2004 and December 31, 2003, the~~2005 statements of income for the three months ended June 30, 2004 and 2003 and for the six months ended June 30, 2004 and 2003 and the statements of cash flows for the six months ended June 30, 2004 and 2003. In the following schedules, “Parent” refers to ERICO International Corporation, “Guarantor Subsidiary” refers to the U.S. subsidiary, ERICO Products, Inc., and “Non-Guarantor Subsidiaries” refers to non-U.S. subsidiaries. “Eliminations” represent the adjustments necessary to (a) eliminate intercompany transactions and (b) eliminate the investments in the Company’s subsidiaries accounted for under the equity method.

Unaudited Condensed Consolidating					Non-
					Non-
Balance Sheets			Guarantor		Guarantor
			Guarantor		Guarantor
June 30, 2004	Parent		Subsidiary		Subsidiaries			Eliminations			Consolidated
	Parent		Subsidiary		Subsidiaries			Eliminations			Consolidated
Cash and cash equivalents	$	~~309~~469	$	—515	$	21,~~906~~310		$	—		$	32,~~215~~294
Trade accounts receivable, net		—		2932,~~855~~618		28,~~196~~109			—			5860,~~051~~727
Inventories		—		29,089		22,901			—			51,990
Inventories, net		—		30,240		23,732			—			53,972
Other current assets		~~754~~1,325		32,~~979~~618		42,~~889~~946			—			96,~~622~~889
Total current assets		1,~~063~~794		6265,~~923~~991		5856,~~892~~097			—			~~122~~123,~~878~~882
Property, plant and equipment, net		~~249~~186		4135,~~575~~476		1310,~~317~~652			—			5546,~~141~~314
Goodwill		~~105~~101,~~237~~403		—		—			—			~~105~~101,~~237~~403
Trademarks and other intangible assets		36,469		—		—			—			36,469
Other intangible assets, net		36,922		—		—			—			36,922
Investment in and advances to subsidiaries		98103,~~584~~598		—		—			(98103,~~584~~598	)		—
Other assets		76,~~522~~369		52,~~759~~997		~~1,930~~880			—			1510,~~211~~246
Total assets	$	~~249~~250,~~124~~272	$	~~110~~104,~~257~~464	$	7467,~~139~~629		$	(98103,~~584~~598	)	$	~~334~~318,~~936~~767
Trade accounts payable	$	—	$	2021,~~600~~048	$	139,~~149~~183		$	—		$	3330,~~749~~231
Accrued compensation		~~474~~799		5,~~020~~872		34,~~217~~190			—			810,~~711~~861
Other accrued expenses		5,912		13,356		8,316			—			27,584
Other current liabilities		5,532		8,394		7,338			—			21,264
Total current liabilities		6,~~386~~331		3835,~~976~~314		2420,~~682~~711			—			7062,~~044~~356
Long-term debt		~~166~~159,~~040~~500		675		—			—			~~166~~160,~~715~~175
Deferred income taxes		1420,~~795~~769		95,~~349~~750		41,~~346~~312			—			2827,~~490~~831
Intercompany payable		—		3517,~~285~~473		6360,~~672~~827			(9878,~~957~~300	)		—
Other long-term liabilities		87,~~354~~970		6,~~689~~345		1,~~095~~233			—			1615,~~138~~548
Stockholder’s net investment		53,549		19,283		(19,656	)		373			53,549
Total stockholder’s net investment		55,702		38,907		(16,454	)		(25,298	)		52,857
Total liabilities and stockholder’s net investment	$	~~249~~250,~~124~~272	$	~~110~~104,~~257~~464	$	7467,~~139~~629		$	(98103,~~584~~598	)	$	~~334~~318,~~936~~767

ERICO International Corporation and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements ~~– (Continued)~~ June 30, ~~2004~~2005 (~~thousands~~Dollars ofin ~~dollars~~thousands) ~~(unaudited)~~

109. Guarantor and Non-Guarantor Subsidiaries (continued)

					Non-
Condensed Consolidating Balance Sheets			Guarantor		Guarantor
December 31, 2003	Parent		Subsidiary		Subsidiaries			Eliminations			Consolidated
Cash and cash equivalents	$	400	$	3	$	2,018		$	—		$	2,421
Trade accounts receivable, net		—		25,316		28,936			—			54,252
Inventories		—		23,532		21,981			—			45,513
Other current assets		1,926		3,316		2,503			—			7,745
Total current assets		2,326		52,167		55,438			—			109,931
Property, plant and equipment, net		297		45,231		15,102			—			60,630
Goodwill		105,194		—		—			—			105,194
Trademarks and other intangible assets		36,572		—		—			—			36,572
Investment in and advances to subsidiaries		60,477		—		—			(60,477	)		—
Other assets		3,713		5,785		1,942			—			11,440
Total assets	$	208,579	$	103,183	$	72,482		$	(60,477	)	$	323,767
Trade accounts payable	$	—	$	15,884	$	13,723		$	—		$	29,607
Accrued compensation		443		4,947		3,826			—			9,216
Other accrued expenses		3,223		11,091		11,642			—			25,956
Total current liabilities		3,666		31,922		29,191			—			64,779
Long-term debt		108,225		32,695		—			—			140,920
Deferred income taxes		15,232		9,349		4,358			—			28,939
Intercompany payable		—		13,986		58,780			(72,766	)		—
Other long-term liabilities		9,026		6,476		1,197			—			16,699
Stockholder’s net investment		72,430		8,755		(21,044	)		12,289			72,430
Total liabilities and stockholder’s net investment	$	208,579	$	103,183	$	72,482		$	(60,477	)	$	323,767

Condensed Consolidating Balance Sheets
December 31, 2004


					Non-
			Guarantor		Guarantor
	Parent		Subsidiary		Subsidiaries			Eliminations			Consolidated
Cash and cash equivalents	$	398	$	21	$	1,902		$	—		$	2,321
Trade accounts receivable, net		—		24,646		25,839			—			50,485
Inventories, net		—		32,709		26,891			—			59,600
Other current assets		2,801		2,498		3,610			—			8,909

Total current assets		3,199		59,874		58,242			—			121,315

Property, plant and equipment, net		224		38,986		13,312			—			52,522
Goodwill		101,303		—		—			—			101,303
Other intangible assets, net		36,905		—		—			—			36,905
Investment in and advances to subsidiaries		102,684		—		—			(102,684	)		—
Other assets		6,680		2,983		1,013			—			10,676

Total assets	$	250,995	$	101,843	$	72,567		$	(102,684	)	$	322,721


Trade accounts payable	$	—	$	15,972	$	10,450		$	—		$	26,422
Accrued compensation		1,555		6,547		5,344			—			13,446
Dividend payable		15,000		—		—			—			15,000
Other current liabilities		5,664		6,184		10,026			—			21,874

Total current liabilities		22,219		28,703		25,820			—			76,742

Long-term debt		151,500		675		—			—			152,175
Deferred income taxes		22,030		5,761		1,103			—			28,894
Intercompany payable		—		31,906		59,444			(91,350	)		—
Other long-term liabilities		8,547		6,860		1,378			—			16,785

Total stockholder’s net investment		46,699		27,938		(15,178	)		(11,334	)		48,125

Total liabilities and stockholder’s net investment	$	250,995	$	101,843	$	72,567		$	(102,684	)	$	322,721

~~Table of Contents~~11

ERICOTable Internationalof Corporation and Subsidiaries Contents

~~Notes~~ERICO toInternational ~~Condensed~~Corporation ~~Consolidated~~and ~~Financial Statements – (Continued)~~Subsidiaries ~~June 30, 2004 (thousands of dollars) (unaudited)~~

~~10.~~Notes ~~Guarantor~~to ~~and~~Unaudited ~~Non-Guarantor~~Condensed ~~Subsidiaries~~Consolidated Financial Statements June 30, 2005 (~~continued~~Dollars in thousands)

Unaudited Condensed Consolidating							Non-
Statements of Income				Guarantor			Guarantor
Three months ended June 30, 2004	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	58,796		$	37,560		$	(4,244	)	$	92,112
Cost of products sold		—			38,452			24,321			(4,244	)		58,529
Gross profit		—			20,344			13,239			—			33,583
Operating expenses		1,454			9,832			9,629			—			20,915
Interest expense, net		3,024			673			160			—			3,857
Foreign exchange (gain) loss, net		—			101			(918	)		—			(817	)
Other (income) expense, net		97			(26	)		(14	)		—			57
Income (loss) before income taxes and equity income		(4,575	)		9,764			4,382			—			9,571
Provision (benefit) for income taxes		(1,831	)		3,884			1,696			—			3,749
Income (loss) before equity income		(2,744	)		5,880			2,686			—			5,822
Equity income from subsidiaries		8,566			—			—			(8,566	)		—
Net income	$	5,822		$	5,880		$	2,686		$	(8,566	)	$	5,822

9. Guarantor and Non-Guarantor Subsidiaries (continued)

Unaudited Condensed Consolidating						Non-
Statements of Income				Guarantor		Guarantor
Three Months ended June 30, 2003	Parent			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	50,219	$	32,451		$	(2,289	)	$	80,381
Cost of products sold		—			30,818		22,862			(2,289	)		51,391
Gross profit		—			19,401		9,589			—			28,990
Operating expenses		1,012			9,116		10,199			—			20,327
Interest expense, net		2,619			674		218			—			3,511
Foreign exchange (gain) loss, net		2			1,557		(2,783	)		—			(1,224	)
Other (income) expense, net		(1	)		28		(93	)		—			(66	)
Income (loss) before income taxes and equity income		(3,632	)		8,026		2,048			—			6,442
Provision (benefit) for income taxes		(1,351	)		3,227		413			—			2,289
Income (loss) before equity income		(2,281	)		4,799		1,635			—			4,153
Equity income from subsidiaries		6,434			—		—			(6,434	)		—
Net income	$	4,153		$	4,799	$	1,635		$	(6,434	)	$	4,153

Unaudited Condensed Consolidating Income Statements
Three Months Ended June 30, 2005


						Non-
				Guarantor		Guarantor
	Parent			Subsidiary		Subsidiaries		Eliminations			Consolidated
Net sales	$	—		$	64,671	$	40,037	$	(4,580	)	$	100,128
Cost of sales		—			41,503		27,166		(4,580	)		64,089

Gross profit		—			23,168		12,871		—			36,039

Operating expenses		1,760			11,095		10,149		—			23,004

Operating (loss) income		(1,760	)		12,073		2,722		—			13,035
Interest expense, net		3,048			682		175		—			3,905
Foreign exchange loss, net		—			64		211		—			275

(Loss) income before income taxes and equity income		(4,808	)		11,327		2,336		—			8,855
(Benefit) provision for income taxes		(2,318	)		4,464		916		—			3,062

(Loss) income before equity income		(2,490	)		6,863		1,420		—			5,793
Equity income from subsidiaries		8,283			—		—		(8,283	)		—

Net income	$	5,793		$	6,863	$	1,420	$	(8,283	)	$	5,793

~~Table~~Unaudited ofCondensed ~~Contents~~Consolidating Income Statements Three Months Ended June 30, 2004

ERICO International Corporation and Subsidiaries


						Non-
				Guarantor		Guarantor
	Parent			Subsidiary		Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	58,796	$	37,560		$	(4,244	)	$	92,112
Cost of sales		—			38,452		24,321			(4,244	)		58,529

Gross profit		—			20,344		13,239			—			33,583

Operating expenses		1,551			9,806		9,615			—			20,972

Operating (loss) income		(1,551	)		10,538		3,624			—			12,611
Interest expense, net		3,024			673		160			—			3,857
Foreign exchange loss (gain), net		—			101		(918	)		—			(817	)

(Loss) income before income taxes and equity income		(4,575	)		9,764		4,382			—			9,571
(Benefit) provision for income taxes		(1,831	)		3,884		1,696			—			3,749

(Loss) income before equity income		(2,744	)		5,880		2,686			—			5,822
Equity income from subsidiaries		8,566			—		—			(8,566	)		—

Net income	$	5,822		$	5,880	$	2,686		$	(8,566	)	$	5,822

~~Notes to Condensed Consolidated Financial Statements – (Continued)~~12 ~~June 30, 2004 (thousands of dollars) (unaudited)~~

10.Table Guarantorof and Non-Guarantor Subsidiaries (continued) Contents

Unaudited Condensed Consolidating						Non-
Statements of Income				Guarantor		Guarantor
Six months ended June 30, 2004	Parent			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	110,707	$	72,742		$	(7,887	)	$	175,562
Cost of products sold		—			71,639		48,388			(7,887	)		112,140
Gross profit		—			39,068		24,354			—			63,422
Operating expenses		2,715			19,934		19,616			—			42,265
Interest expense, net		5,612			1,352		383			—			7,347
Foreign exchange (gain) loss, net		—			215		(608	)		—			(393	)
Other (income) expense, net		1,333			22		(73	)		—			1,282
Income (loss) before income taxes and equity income		(9,660	)		17,545		5,036			—			12,921
Provision (benefit) for income taxes		(3,864	)		7,017		1,924			—			5,077
Income (loss) before equity income		(5,796	)		10,528		3,112			—			7,844
Equity income from subsidiaries		13,640			—		—			(13,640	)		—
Net income	$	7,844		$	10,528	$	3,112		$	(13,640	)	$	7,844

ERICO International Corporation and Subsidiaries

Unaudited Condensed Consolidating						Non-
Statements of Income				Guarantor		Guarantor
Six Months ended June 30, 2003	Parent			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	93,974	$	60,738		$	(4,938	)	$	149,774
Cost of products sold		—			60,290		40,399			(4,938	)		95,751
Gross profit		—			33,684		20,339			—			54,023
Operating expenses		2,369			18,838		19,113			—			40,320
Interest expense, net		4,363			1,360		538			—			6,261
Foreign exchange (gain) loss, net		2			1,587		(5,189	)		—			(3,600	)
Other (income) expense, net		—			35		(89	)		—			(54	)
Income (loss) before income taxes and equity income		(6,734	)		11,864		5,966			—			11,096
Provision (benefit) for income taxes		(2,505	)		4,770		1,674			—			3,939
Income (loss) before equity income		(4,229	)		7,094		4,292			—			7,157
Equity income from subsidiaries		11,386			—		—			(11,386	)		—
Net income	$	7,157		$	7,094	$	4,292		$	(11,386	)	$	7,157

Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2005
(Dollars in thousands)

139. Guarantor and Non-Guarantor Subsidiaries (continued)

~~Table~~Unaudited ofCondensed ~~Contents~~Consolidating Income Statements Six Months Ended June 30, 2005

ERICO International Corporation and Subsidiaries


						Non-
				Guarantor		Guarantor
	Parent			Subsidiary		Subsidiaries		Eliminations			Consolidated
Net sales	$	—		$	121,089	$	79,100	$	(10,111	)	$	190,078
Cost of sales		—			79,724		53,477		(10,111	)		123,090

Gross profit		—			41,365		25,623		—			66,988

Operating expenses		2,804			21,721		20,098		—			44,623

Operating (loss) income		(2,804	)		19,644		5,525		—			22,365
Interest expense, net		6,085			1,363		337		—			7,785
Foreign exchange loss, net		1			175		290		—			466

(Loss) income before income taxes and equity income		(8,890	)		18,106		4,898		—			14,114
(Benefit) provision for income taxes		(3,929	)		7,137		1,903		—			5,111

(Loss) income before equity income		(4,961	)		10,969		2,995		—			9,003
Equity income from subsidiaries		13,964			—		—		(13,964	)		—

Net income	$	9,003		$	10,969	$	2,995	$	(13,964	)	$	9,003

~~Notes~~Unaudited to Condensed ~~Consolidated~~Consolidating ~~Financial~~Income Statements Six –Months ~~(Continued)~~ Ended June 30, 2004 ~~(thousands of dollars) (unaudited)~~

10. Guarantor and Non-Guarantor Subsidiaries (continued)


						Non-
				Guarantor		Guarantor
	Parent			Subsidiary		Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	110,707	$	72,742		$	(7,887	)	$	175,562
Cost of sales		—			71,639		48,388			(7,887	)		112,140

Gross profit		—			39,068		24,354			—			63,422

Operating expenses		2,812			19,956		19,543			—			42,311

Operating (loss) income		(2,812	)		19,112		4,811			—			21,111
Interest expense, net		5,612			1,352		383			—			7,347
Foreign exchange loss (gain), net		—			215		(608	)		—			(393	)
Other expense		1,236			—		—			—			1,236

(Loss) income before income taxes and equity income		(9,660	)		17,545		5,036			—			12,921
(Benefit) provision for income taxes		(3,864	)		7,017		1,924			—			5,077

(Loss) income before equity income		(5,796	)		10,528		3,112			—			7,844
Equity income from subsidiaries		13,640			—		—			(13,640	)		—

Net income	$	7,844		$	10,528	$	3,112		$	(13,640	)	$	7,844

Unaudited Condensed Consolidating							Non-
Statements of Cash Flows				Guarantor			Guarantor
Six Months ended June 30, 2004	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	12,342		$	11,384		$	(3,688	)	$	(13,640	)	$	6,398
Cash flows from investing activities
Capital expenditures		—			(598	)		(402	)		—			(1,000	)
Net cash used in investing activities		—			(598	)		(402	)		—			(1,000	)
Cash flows from financing activities
Transfer to parent company		(25,000	)		—			—			—			(25,000	)
Change in intercompany payables/receivables		(7,813	)		(10,789	)		4,962			13,640			—
Net borrowing (payments) on revolving line of credit		(23,200	)		—			—			—			(23,200	)
Proceeds from issuance of subordinated debentures		121,500			—			—			—			121,500
Principal payments on long-term debt		(72,950	)		—			—			—			(72,950	)
Financing fees paid		(4,970	)		—			—			—			(4,970	)
Net cash (used in) provided by financing activities		(12,433	)		(10,789	)		4,962			13,640			(4,620	)
Effect of exchange rates on cash		—			—			16			—			16
Net (decrease) increase in cash and cash equivalents		(91	)		(3	)		888			—			794
Cash and cash equivalents at beginning of period		400			3			2,018			—			2,421
Cash and cash equivalents at end of period	$	309		$	—		$	2,906		$	—		$	3,215

Unaudited Condensed Consolidating							Non-
Statements of Cash Flows				Guarantor			Guarantor
Six Months ended June 30, 2003	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	6,634		$	10,592		$	(5,950	)	$	(11,386	)	$	(110	)
Cash flows from investing activities
Acquisition payments, net of cash acquired		—			(3,329	)		—			—			(3,329	)
Capital expenditures		—			(1,509	)		(1,023	)		—			(2,532	)
Net cash used in investing activities		—			(4,838	)		(1,023	)		—			(5,861	)
Cash flows from financing activities
Change in intercompany payables/receivables		(21,946	)		(10,964	)		21,524			11,386			—
Net borrowing on revolving line of credit		18,256			5,207			(15,678	)		—			7,785
Principal payments on long-term debt		(3,000	)		—			—			—			(3,000	)
Net cash (used in) provided by financing activities		(6,690	)		(5,757	)		5,846			11,386			4,785
Effect of exchange rates on cash		—			—			(55	)		—			(55	)
Net (decrease) increase in cash and cash equivalents		(56	)		(3	)		(1,182	)		—			(1,241	)
Cash and cash equivalents at beginning of period		138			3			3,233			—			3,374
Cash and cash equivalents at end of period	$	82		$	—		$	2,051		$	—		$	2,133

14ERICO International Corporation and Subsidiaries

~~Table~~Notes ofto ~~Contents~~Unaudited Condensed Consolidated Financial Statements June 30, 2005 (Dollars in thousands)

~~Item 2~~9. ~~Management’s~~Guarantor ~~Discussion~~ and ~~Analysis~~Non-Guarantor ofSubsidiaries ~~Financial Condition and Results of Operations~~(continued)

~~The~~Unaudited ~~following~~Condensed ~~discussion~~Consolidating ~~and~~Statements ~~analysis~~ of ~~our~~Cash ~~consolidated financial condition~~Flows ~~and~~Six ~~results~~Months ofEnded ~~operations should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes~~June 30, ~~which~~2005 are included elsewhere in this report. The following discussion and analysis also contains forward-looking statements, which reflect the expectations, beliefs, plans and objectives of management about future financial performance and assumptions underlying our judgments concerning matters discussed below. These statements, accordingly, involve estimates, assumptions, judgments and uncertainties. In particular, this discussion pertains to management’s comments on financial resources, capital spending and the outlook for our business. You should read and review the section entitled “Forward-Looking Statements” for some important factors that could cause actual results or outcomes to differ materially from those addressed in forward-looking statements.

Overview


							Non-
				Guarantor			Guarantor
	Parent			Subsidiary			Subsidiaries			Eliminations			Consolidated
Operating activities
Net income	$	9,003		$	10,969		$	2,995		$	(13,964	)	$	9,003
Depreciation and amortization		342			4,289			2,033			—			6,664
Other operating activities		1,956			(1,846	)		(6,958	)		—			(6,848	)

Net cash provided by (used in) operating activities		11,301			13,412			(1,930	)		(13,964	)		8,819
Investing activities
Capital expenditures		(2	)		(632	)		(541	)		—			(1,175	)
Other investing activities		(516	)		(150	)		42			—			(624	)

Net cash used in investing activities		(518	)		(782	)		(499	)		—			(1,799	)

Financing activities
Dividends paid		(15,000	)		—			—			—			(15,000	)
Change in intercompany payables/receivables		(3,712	)		(12,136	)		1,884			13,964			—
Net borrowings on revolving line of credit		8,000			—			—			—			8,000

Net cash (used in) provided by financing activities		(10,712	)		(12,136	)		1,884			13,964			(7,000	)

Effect of exchange rates on cash		—			—			(47	)		—			(47	)

Net increase (decrease) in cash and cash equivalents		71			494			(592	)		—			(27	)
Cash and cash equivalents at beginning of period		398			21			1,902			—			2,321

Cash and cash equivalents at end of period	$	469		$	515		$	1,310		$	—		$	2,294

~~We are a leading designer, manufacturer and marketer of precision-engineered~~14 specialty metal products serving global niche product markets in a diverse range of electrical, commercial and industrial construction, utility and rail applications. We distribute our products to customers through a well-established global sales and distribution network serving more than 25 countries.

InTable 2001, we implemented a “One Company” strategy in order to bring uniformity to our worldwide operations and as a result increase our operational efficiency. As part of this plan, we have reduced the number of employees by 12.8% from a twelve-month average of 1,546 in 2001 to a twelve-month average of 1,348 in 2003. We recognized a charge to operations of $1.9 million in 2001 and $3.7 million in 2002 to cover severance and outplacement costs related to employee termination and certain other exit costs. These efforts along with productivity improvements enabled us to improve our operating margin from 5.4% in 2001 to 9.4% in 2003. Contents

~~The Company is a wholly owned subsidiary of~~ ERICO ~~Holding~~International ~~Company.~~Corporation On December 2, 2002, a newly formed wholly owned subsidiary of ERICO Global Company merged with ERICO Holding Company, with ERICO Holding Company as the surviving company. As a result, ERICO Holding Company became a wholly owned subsidiary of ERICO Global Company. In connection with the merger, affiliates of Citigroup Venture Capital Equity Partners, L.P. and ~~other investors acquired~~Subsidiaries ~~approximately two-thirds of the stock of ERICO Global Company.~~

~~Market~~Notes ~~Outlook~~to Unaudited Condensed Consolidated Financial Statements June 30, 2005 (Dollars in thousands)

We9. ~~expect~~Guarantor ~~a continued recovery in the electrical, commercial~~ and ~~industrial construction,~~Non-Guarantor ~~utility~~Subsidiaries ~~and rail markets in 2004. We continue to expect modest growth in sales in the second half of 2004 as a result of this~~ (continued ~~recovery, new product~~) ~~introductions and market penetration.~~

~~During~~Unaudited ~~the~~Condensed ~~first~~Consolidating ~~half~~Statements of ~~the~~Cash ~~year, we experienced a significant increase in the~~Flows ~~prices~~Six weMonths ~~pay~~Ended ~~for steel and copper. We have or intend to pass on the majority of the increase in these costs to our customers. However~~June 30, ~~we may not be~~2004 ~~successful in recovering all of the increases in steel and copper costs.~~


							Non-
				Guarantor			Guarantor
	Parent			Subsidiary			Subsidiaries			Eliminations			Consolidated
Operating activities
Net income	$	7,844		$	10,528		$	3,112		$	(13,640	)	$	7,844
Depreciation and amortization		288			4,353			1,433			—			6,074
Other operating activities		4,415			(3,497	)		(8,233	)		—			(7,315	)


Net cash provided by (used in) operating activities		12,547			11,384			(3,688	)		(13,640	)		6,603
Investing activities
Capital expenditures		—			(598	)		(402	)		—			(1,000	)
Other investing activities		(205	)		—			—			—			(205	)

Net cash used in investing activities		(205	)		(598	)		(402	)		—			(1,205	)

Financing activities
Dividends paid		(25,000	)		—			—			—			(25,000	)
Change in intercompany payables/receivables		(7,813	)		(10,789	)		4,962			13,640			—
Net payments on revolving line of credit		(23,200	)		—			—			—			(23,200	)
Proceeds from issuance of subordinated debentures		121,500			—			—			—			121,500
Principal payments on long-term debt		(72,950	)		—			—			—			(72,950	)
Financing fees paid		(4,970	)		—			—			—			(4,970	)

Net cash (used in) provided by financing activities		(12,433	)		(10,789	)		4,962			13,640			(4,620	)

Effect of exchange rates on cash		—			—			16			—			16

Net (decrease) increase in cash and cash equivalents		(91	)		(3	)		888			—			794
Cash and cash equivalents at beginning of period		400			3			2,018			—			2,421

Cash and cash equivalents at end of period	$	309		$	—		$	2,906		$	—		$	3,215

~~Table of Contents~~15

ResultsTable of Operations Contents

~~The~~Item 2. ~~following~~Management’s ~~table~~Discussion ~~sets~~and ~~forth~~Analysis ~~statements~~ of ~~operations~~Financial ~~data~~Condition ~~expressed~~and asResults ~~a percentage~~ of ~~net sales:~~ Operations

	Three months						Six months
	ended June 30,						ended June 30,
	2004			2003			2004			2003
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of products sold		63.5	%		63.9	%		63.9	%		63.9	%
Gross profit		36.5	%		36.1	%		36.1	%		36.1	%
Operating expenses		22.8	%		25.3	%		24.1	%		26.9	%
Interest expense, net		4.2	%		4.4	%		4.2	%		4.2	%
Foreign exchange gain, net		(1.0	%)		(1.5	%)		(0.2	%)		(2.4	%)
Other (income) expense, net		0.1	%		(0.1	%)		0.6	%		(0.0	%)
Income before income taxes		10.4	%		8.0	%		7.4	%		7.4	%
Provision for income taxes		4.1	%		2.8	%		2.9	%		2.6	%
Net income		6.3	%		5.2	%		4.5	%		4.8	%

The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes, which are included elsewhere in this report. The following discussion and analysis also contains forward-looking statements, which reflect the expectations, beliefs, plans and objectives of management about future financial performance and assumptions underlying our judgments concerning matters discussed below. These statements, accordingly, involve estimates, assumptions, judgments and uncertainties. In particular, this discussion pertains to management’s comments on financial resources, capital spending and the outlook for our business. You should read and review the section entitled “Forward-Looking Statements” for some important factors that could cause actual results or outcomes to differ materially from those addressed in forward-looking statements.

~~Three Months Ended June 30, 2004 Compared to Three Months Ended June 30, 2003~~Overview

~~Net~~ERICO ~~sales.~~is ~~Net~~a ~~sales~~leading ~~for~~designer, ~~the~~manufacturer ~~three~~and ~~months~~marketer ~~ended~~of ~~June 30,~~precision-engineered ~~2004~~specialty ~~totaled $92.1~~metal ~~million,~~products anserving ~~increase~~global ofniche ~~$11.7 million,~~product ormarkets ~~14.6%~~in ~~from~~a ~~the~~diverse ~~$80.4 million~~range ~~reported for~~of ~~the~~electrical, ~~three~~commercial ~~months~~and industrial ~~ended June 30~~construction, ~~2003~~utility and rail applications. The ~~increase~~Company is headquartered in ~~net~~Solon, ~~sales~~Ohio, ~~was~~USA, ~~due~~with ~~primarily~~a tonetwork ~~higher~~of sales ~~volumes~~locations inserving ~~the~~more ~~three months~~than ~~ended~~25 ~~June 30,~~countries ~~2004~~and ~~compared~~with tomanufacturing and ~~the~~distribution ~~three~~facilities ~~months ended June 30, 2003~~worldwide.

~~Gross~~The ~~profit.~~Company ~~Gross~~is ~~profit~~a ~~for~~wholly ~~the~~owned ~~three~~subsidiary ~~months~~of ~~ended~~Holding. ~~June~~On December 302, ~~2004~~2002, ~~increased by~~a ~~$4.6 million,~~newly orformed ~~15.9%,~~wholly owned tosubsidiary ~~$33.6 million~~of ~~from~~Global ~~the~~merged ~~$29.0 million~~with ~~reported~~Holding, ~~for the~~with ~~three~~Holding ~~months~~as ~~ended~~the ~~June 30,~~surviving ~~2003~~company. ~~Gross~~As ~~profit as~~ a result, ~~percentage~~Holding ofbecame ~~net sales~~a ~~was~~wholly ~~relatively~~owned ~~constant~~subsidiary atof 36Global.5% inIn ~~the~~connection ~~three~~with ~~months~~the ~~ended June 30~~merger, ~~2004~~ ~~from 36.1%~~Citigroup inVenture ~~the~~Capital ~~three~~Equity ~~months ended June 30~~Partners, ~~2003~~L.P. ~~Gross~~and ~~profit~~its ~~increased primarily~~affiliates ~~due~~acquired toapproximately two-thirds ~~sales~~of ~~volume increases and~~ the ~~favorable~~stock ~~effect on net sales~~ of ~~currency exchange rates~~Global.

~~Operating~~Market ~~expenses. Operating expenses include engineering and development~~Outlook expenses, selling and marketing expenses, and general and administrative expenses. Operating expenses increased by $0.6 million, or 3.0%, to $20.9 million in the three months ended June 30, 2004 from $20.3 million in the three months ended June 30, 2003. As a percentage of net sales, operating expenses decreased to 22.8% in the three months ended June 30, 2004 from 25.3% in the three months ended June 30, 2003. The decrease in operating expenses as a percent of sales in the three months ended June 30, 2004 was primarily due to higher sales volumes along with management’s continued focus on controlling expenses.

~~Interest~~Based ~~expense,~~on ~~net.~~our ~~Interest~~year ~~expense~~to ~~for~~date ~~the three months ended June 30~~performance, ~~2004~~ ~~was~~we ~~$3.9 million~~expect ~~compared~~performance ~~with $3.5 million~~ in the ~~three~~electrical, ~~months~~commercial ~~ended June~~and 30industrial construction, ~~2003.~~utility ~~The~~and rail markets to increase in ~~interest~~the ~~expense~~second ~~was~~half ~~primarily~~of ~~caused~~2005 byover ~~higher~~2004 ~~average~~levels. ~~debt~~We ~~balances~~continue into ~~the~~expect ~~three~~this ~~months~~additional ~~ended~~sales ~~June 30,~~growth ~~2004~~will ~~compared~~be togenerated ~~the three~~through ~~months~~new ~~ended~~product introductions ~~June 30,~~and ~~2003~~further asmarket ~~a result of the February 2004 refinancing~~penetration.

~~Foreign~~Results ~~exchange gain, net. The gain on the exchange~~ of ~~foreign currencies was~~Operations $0.8 million for the three months ended June 30, 2004 caused by the weakening of the U.S. dollar compared to some currencies. The gain on the exchange of foreign currencies was $1.2 million for the three months ended June 30, 2003. The largest component of this gain was $1.1 million associated with debt held by our Australian subsidiary, denominated in U.S. dollars, which was paid off in May 2003.

~~Provision for income taxes.~~ The ~~provision~~following ~~for~~table ~~income~~sets ~~taxes~~forth ~~increased~~statements ~~$1.4 million~~of tooperations ~~$3.7 million~~data ~~for~~expressed ~~the~~as three months ended June 30, 2004 from $2.3 million for the three months ended June 30, 2003. The effective tax rate was 39.2% for the three months ended June 30, 2004 compared to 35.5% for three months ended June 30, 2003. During 2003, including the three months ended June 30, 2003, we recognized certain foreign currency transaction gains for which there was no income tax expense, which resulted in a ~~lower~~percentage ~~effective tax~~of ~~rate in 2003.~~net sales:

Net income. Net income was $5.8 million in the three months ended June 30, 2004, an increase of $1.6 million, or 38.1%, from the $4.2 million in the three months ended June 30, 2003. The increase in net income was due primarily to increased sales from higher volumes and higher prices, partially offset by higher interest expense and income taxes.


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		64.0			63.5			64.8			63.9
Gross profit		36.0			36.5			35.2			36.1
Operating expenses		23.0			22.8			23.5			24.1
Interest expense, net		3.9			4.2			4.1			4.1
Foreign exchange loss (gain), net		0.3			(0.9	)		0.2			(0.2	)
Other expense, net		—			—			—			0.7
Income before income taxes		8.8			10.4			7.4			7.4
Provision for income taxes		3.0			4.1			2.7			2.9
Net income		5.8			6.3			4.7			4.5

16Three Months Ended June 30, 2005 Compared With Three Months Ended June 30, 2004

~~Table~~Net sales. Net sales for the three months ended June 30, 2005 were $100.1 million, an increase of $8.0 million, ~~Contents~~or 8.7%, from net sales of $92.1 million for the three months ended June 30, 2004. This increase in net sales was due primarily to higher sales volume and increased selling prices. This performance is a new record for quarterly net sales and represents the first time that we have achieved quarterly net sales greater than $100.0 million.

~~Six Months Ended June 30, 2004 Compared to Six Months Ended June 30, 2003~~16

NetTable sales. Net sales for the six months ended June 30, 2004 totaled $175.6 million, an increase of $25.8 million, or 17.2% from the $149.8 million reported for the six months ended June 30, 2003. The increase in net sales was due primarily to higher sales volumes in the six months ended June 30, 2004 compared to the six months ended June 30, 2003. Contents

Gross profit. Gross profit for the ~~six~~three months ended June 30, ~~2004~~2005 increased by $92.4 million, or 17 7.43%, to $6336.40 million from ~~the~~ $5433.06 million ~~reported~~ for the ~~six~~three months ended June 30, ~~2003~~2004. Gross profit ~~as a percentage of net sales~~ ~~was~~margin ~~relatively~~declined ~~constant~~slightly atto 36.10% ~~for~~in the ~~six~~three months ended June 30, ~~2004 compared~~2005 tofrom 36.5% in the ~~equivalent~~three months ~~prior~~ended ~~period~~June 30, 2004. Gross profit ~~increased~~margin decreased primarily due to ~~sales~~the ~~volume~~ significant increases in raw material costs, primarily steel and copper, that the ~~favorable~~Company ~~effect~~experienced onbeginning late ~~net~~in ~~sales~~the ofsecond ~~currency exchange~~quarter ~~rates~~of 2004.

Operating expenses. Operating expenses include engineering and development expenses, selling and marketing expenses, and general and administrative expenses. Operating expenses increased by $2.0 million, or 59.07%, to $4223.3 0 million in the ~~six~~three months ended June 30, ~~2004~~2005 from $4021.30 million in the ~~six~~ three months ended June 30, ~~2003~~2004. As a percentage of net sales, operating expenses slightly ~~decreased~~increased to 2423.10% in the ~~six~~three months ended June 30, ~~2004~~2005 from 2622.98% in the ~~six months~~three ~~ended June 30, 2003. The decrease in operating expenses as a percent of sales in the six~~ months ended June 30, 2004 ~~was primarily due to higher sales volumes along with management’s continued focus on controlling expenses~~.

Interest expense, net. Interest expense for the ~~six~~three months ended June 30, ~~2004~~ ~~was~~2005 ~~$7.3 million~~and ~~compared~~2004 ~~with~~was $6.3 ~~million in the six months ended June 30, 2003~~. ~~The increase in interest expense was primarily caused by higher~~9 ~~average debt balances in the six months ended June 30, 2004 compared to the six months ended June 30, 2003 as a result of the debt refinancing in February 2004~~million.

Foreign exchange loss (gain), net. The ~~gain~~Company onreported ~~the~~a foreign exchange loss of ~~foreign currencies was~~ $0.43 million for the ~~six~~three months ended June 30, ~~2004~~2005 ~~caused by the weakening of the U.S. dollar~~ compared towith ~~some~~a ~~currencies.~~foreign ~~The~~exchange gain ~~on the exchange~~ of ~~foreign~~ ~~currencies was~~ $30.68 million for the ~~six~~three months ended June 30, ~~2003. The~~2004, ~~largest~~primarily ~~component~~due ofto ~~this~~the ~~gain~~strengthening ~~was~~of $2the U.~~2 million~~S. ~~associated~~dollar ~~with debt held~~against bythe ~~our~~Euro ~~Australian subsidiary, denominated~~ in ~~U.S.~~the ~~dollars,~~second ~~which~~quarter ~~was~~of ~~paid off in May 2003~~2005.

~~Other~~Provision (for income~~) expense,~~ ~~net~~taxes. ~~Other~~The ~~expense~~provision for income taxes was $1.3.1 million for the ~~six~~three months ended June 30, ~~2004~~2005 ~~and~~compared ~~consisted~~with ~~primarily~~$3.7 million offor the ~~acceleration~~three ofmonths ~~previously~~ended June 30, 2004. The ~~deferred~~effective ~~financing~~tax ~~costs~~rate ~~resulting~~was ~~from~~34.6% for the ~~February~~three months ended June 30, 2005 compared with 39.2% for the three months ended June 30, 2004. ~~refinancing~~The ofCompany’s ~~our~~income tax provision for the three months ended ~~credit~~June 30, ~~facility~~2005 includes a $0.7 million reduction in income tax expense related to a change in state tax laws.

~~Provision~~Net ~~for~~ income ~~taxes~~. ~~The~~As ~~provision~~a ~~for~~result ~~income~~of ~~taxes~~the ~~increased~~foregoing, ~~$1.2 million to $5.1 million for~~ the ~~six~~Company ~~months~~reported ~~ended~~net ~~June 30,~~income ~~2004~~of ~~from~~ $35.9 8 million for the ~~six months ended June 30, 2003. The effective tax rate was~~ ~~39.3%~~three ~~for the six~~ months ended June 30, ~~2004~~2005 ~~compared~~and ~~to 35~~2004.~~5% for six months~~ ended June 30, 2003. During 2003, including the six months ended June 30, 2003, we recognized foreign currency transaction gains for which there was no income tax expense, which resulted in a lower effective tax rate in 2003.

~~Net~~Six ~~income.~~Months ~~Net~~Ended ~~income was $7.8 million in the six months ended~~ June 30, ~~2004, an~~2005 ~~increase~~Compared ofWith ~~$0.6 million~~Six orMonths ~~8.3%~~Ended ~~from the $7.2 million in the six months ended~~ June 30, ~~2003. The increase in net income was due primarily to the~~2004 ~~increased sales from the higher volumes and higher prices partially offset by higher interest expense and income taxes.~~

~~Liquidity~~Net ~~and~~sales. ~~Capital~~Net ~~Resources~~sales for the six months ended June 30, 2005 were $190.1 million, an increase of $14.5 million, or 8.3%, from $175.6 million of net sales for the six months ended June 30, 2004. This increase in net sales was due primarily to higher sales volume and increased selling prices.

~~Short-term~~Gross ~~liquidity~~profit. ~~requirements~~Gross ~~consist~~profit offor ~~activities~~the ~~related~~six tomonths ~~day-to-day operations,~~ended ~~required debt service~~June 30, ~~capital~~2005 ~~expenditure~~increased ~~funding~~by ~~and~~$3.6 million, ~~meeting~~or ~~working~~5.6%, ~~capital~~to ~~requirements~~$67.0 million ~~Long-term~~from ~~liquidity~~$63.4 million ~~requirements~~in ~~include principal~~the ~~payments~~six ~~relating~~months toended ~~long-term~~June 30, ~~debt~~2004. ~~and~~Gross ~~acquisition funding.~~profit ~~Sources~~margin ~~for~~declined ~~our~~to ~~short-term~~35.2% ~~liquidity~~in ~~needs~~the ~~are~~six ~~primarily~~months ~~cash~~ended ~~generated~~June 30, 2005 from ~~operations~~ ~~and~~36.1% ~~borrowings~~in ~~under~~ the ~~revolving~~six ~~portion~~months ~~of our credit facility.~~ended ~~As of~~ June 30, 2004,. ~~the~~Gross ~~revolving~~profit ~~portion~~margin ofdecreased ~~our~~primarily ~~current~~due ~~senior~~to ~~credit facility~~the ~~had~~significant ~~commitments~~increases in ~~the~~raw material ~~amount~~costs, ofprimarily ~~$75.0 million.~~steel ~~Borrowings~~and ~~against~~ copper, that the ~~revolving~~Company ~~portion~~experienced ~~were~~starting ~~$14.8 million~~in asthe second quarter of ~~June 30,~~ 2004.

OnOperating ~~February 20,~~expenses. ~~2004,~~Operating weexpenses ~~refinanced~~in ~~substantially~~the ~~all~~six ofmonths ~~our~~ended ~~outstanding long-term~~June 30, ~~indebtedness.~~2005 Wewere ~~issued~~ $~~140~~44.96 million ~~aggregate principal amount of~~, 8up ~~7/8% senior subordinated notes, of which~~ $192.43 million, ~~were~~or ~~exchanged for our 11% senior subordinated notes~~5. ~~As a result~~5%, anfrom ~~aggregate~~operating ~~principal~~expenses ~~amount~~ of $1042.63 million ofin ~~these~~the ~~11%~~six ~~senior~~months ~~subordinated~~ended ~~notes~~June 30, 2004. ~~remain~~As ~~outstanding.~~a ~~In connection~~percentage ~~with~~of ~~the~~net ~~refinancing~~sales, weoperating ~~also~~expenses ~~amended~~declined ~~our~~to ~~existing credit facility~~23. ~~The~~5% ~~amended~~in ~~credit~~the ~~facility~~six ~~has~~months ~~$75.0~~ended June ~~million~~30, of2005 ~~committed~~from ~~capital and a term of five years~~24.1% ~~Borrowings~~in ~~under~~the ~~our~~six ~~amended~~months ~~credit~~ended ~~facility~~June 30, ~~accrue interest at LIBOR plus 2~~2004.~~00%.~~

WeOn ~~used~~February 10, 2005, the ~~proceeds~~Company ofamended ~~$140.9 million~~the inHealth ~~part~~Care Plan to ~~repay~~limit ~~our~~eligibility ~~$39.0 million~~to those ~~senior~~employees ~~term~~hired ~~loan~~prior ~~and~~to ~~$42.4~~January ~~million revolver outstanding at February 20~~1, ~~2004 under~~1993 ~~our~~that ~~previous~~also ~~credit~~have ~~facility.~~at Weleast ~~also~~24 years ~~used~~of aservice ~~portion~~as of ~~the proceeds to~~December ~~repay~~31, ~~$35~~2004.~~0 million~~ ofThis ~~the~~amendment ~~11%~~eliminated ~~senior~~approximately ~~subordinated~~50 ~~notes~~employees offrom ~~ERICO~~eligibility ~~Holding~~and caused the Company, ~~our~~to ~~direct~~recognize ~~parent.~~a Incurtailment ~~addition,~~gain weof ~~transferred~~ $~~25.~~0.1 million toin ~~ERICO Global~~the ~~Company,~~first ~~our~~quarter ~~ultimate~~of ~~parent,~~2005. ~~which~~At ~~was~~the ~~paid~~same time, asthe aCompany ~~dividend~~increased toretiree ~~the holders~~contributions ofsuch ~~ERICO~~that ~~Global~~retirees ~~Company’s~~will ~~Class L~~pay ~~Common~~100% ~~Stock.~~of ~~These~~medical ~~repayments and~~costs ~~the~~by ~~dividend~~January 1, ~~payment~~2010. ~~were~~This ~~financed~~change ~~with~~in ~~the~~assumption ~~net~~resulted ~~cash~~in ~~proceeds~~an ~~from~~unrecognized ~~the~~net ~~sale~~gain ~~of the~~that 8is ~~7/8%~~being amortized ~~senior~~to ~~subordinated~~income ~~notes,~~as ~~together~~a ~~with~~component ~~borrowings~~of ~~under~~periodic ~~our amended~~benefit ~~credit facility~~income.

17Interest expense, net. Interest expense for the six months ended June 30, 2005 was $7.8 million compared with $7.3 million for the six months ended June 30, 2004. The increase in interest expense was primarily caused by higher average debt balances in the six months ended June 30, 2005 compared with the six months ended June 30, 2004 as a result of the February 2004 refinancing.

~~Table~~Foreign exchange loss (gain), net. The Company reported a foreign exchange loss of ~~Contents~~$0.5 million for the six months ended June 30, 2005 compared with a foreign exchange gain of $0.4 million for the six months ended June 30, 2004, primarily due to the stronger U.S. dollar in the first half of 2005 in comparison to the first half of 2004.

~~Six Months Ended June 30, 2004 Compared to Six Months Ended June 30, 2003~~17

CashTable providedof by operating activities for the six months ended June 30, 2004 was $6.4 million. For the six months ended June 30, 2003, cash used in operating activities was $0.1 million. The increase was primarily attributable to improved working capital management. Contents

~~Cash~~Other ~~used in investing activities decreased $4~~expense.~~9 million~~ toOther ~~$1.0 million~~expense for the six months ended June 30, 2004. ~~The~~represented ~~decrease~~a ~~was primarily due to acquisition payments of~~ $31.32 million ~~for the net assets of Hunt Manufacturing~~ ~~Ltd.~~non-cash ~~made~~charge into ~~the~~write-off ~~six~~previously ~~months~~deferred ~~ended~~financing ~~June 30,~~costs ~~2003.~~and ~~Capital~~original ~~expenditures~~issue ~~were~~discount costs ~~also~~related ~~lower~~to in the ~~six months ended June~~February ~~30,~~ 2004 ~~compared to the equivalent prior period~~refinancing.

~~Cash~~Provision ~~used~~for inincome ~~financing~~taxes. ~~activities~~The provision for income taxes was $45.61 million for the six months ~~ended~~ ended June 30, 2005 and 2004. ~~Cash~~The ~~provided~~effective bytax ~~financing~~rate ~~activities~~ was $436.~~8 million~~2% for the six months ended June 30, 2005 ~~2003.~~compared ~~The~~with ~~change~~39.3% ~~was~~for ~~primarily~~the ~~attributable~~six ~~to higher~~months ~~payments~~ended ~~made~~June 30, on2004. ~~our~~The ~~revolving~~Company’s ~~line~~income oftax ~~credit~~provision for in the six months ended June 30, ~~2004,~~2005 ~~versus~~includes ~~borrowings~~a ~~made~~$0.7 million reduction in ~~the~~income ~~comparable~~tax ~~period~~expense related ofto ~~2003,~~a ~~and~~change ~~the net effect of our debt refinancing~~ in ~~February~~state ~~2004~~tax laws.

WeNet ~~believe~~income. ~~that~~As ~~cash~~a ~~generated~~result ~~from~~of ~~operations,~~the ~~together with amounts available under our amended credit facility~~foregoing, ~~will~~the beCompany ~~adequate~~reported tonet ~~meet~~income ~~our~~of ~~debt~~$9.0 million ~~service requirements,~~for ~~capital expenditures, cash disbursements in connection with~~ the ~~termination~~six ofmonths ~~our~~ended ~~pension plan and working capital needs for at least the next 12~~June ~~months~~30, ~~although~~2005, noan ~~assurance~~increase ~~can~~of ~~be given~~$1.2 million, ~~Our future operating performance and ability to extend~~ or ~~refinance~~14.8%, ~~our~~from ~~indebtedness~~net ~~will~~income beof ~~dependent on future~~$7.8 ~~economic~~million ~~conditions~~in ~~and~~the ~~financing,~~six ~~business~~months ~~and~~ended ~~other~~June 30, ~~factors that are beyond our control~~2004.

We have significant future cash commitments, primarily maturities of long-term debt and scheduled lease payments. There have been no material changes to our cash commitments and commercial commitments in the six months ended June 30, 2004 from those shown as of December 31, 2003 in our Prospectus filed on July 16, 2004 under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.”

~~Critical~~Short-term ~~Accounting~~liquidity ~~Policies~~requirements consist of activities related to day-to-day operations, required debt service, capital expenditure funding and ~~Estimates~~meeting working capital requirements. Long-term liquidity requirements include principal payments relating to long-term debt and acquisition funding. Sources for our short-term liquidity needs are primarily cash generated from operations and borrowings under the revolving credit portion of our Credit Facility.

ItOn isFebruary 20, ~~important~~2004, towe ~~understand~~refinanced ~~our~~substantially ~~significant~~all ~~accounting~~of ~~policies in order to understand~~ our ~~consolidated~~long-term ~~financial~~debt ~~statements,~~outstanding. ~~which~~We ~~have been prepared in~~issued ~~accordance~~$140.9 million ~~with~~aggregate ~~accounting~~principal ~~principles~~amount ~~generally~~of ~~accepted~~Subordinated inNotes, ~~the~~of ~~United~~which ~~States~~$19. ~~These~~4 million ~~accounting principles require us to make estimates and assumptions that~~was ~~affect~~exchanged ~~amounts~~for ~~reported in~~ our ~~consolidated~~11.0% ~~financial~~senior ~~statements~~subordinated ~~and the accompanying~~ notes. WeThe ~~base~~proceeds ~~our~~of ~~estimates~~$140.9 million onwere ~~historical~~used ~~experience and various~~in ~~other~~part ~~assumptions that we believe~~ to bereduce ~~reasonable~~amounts outstanding under the ~~circumstances.~~previous ~~On an~~revolving ~~ongoing~~credit ~~basis~~facility, ~~we evaluate our estimates~~ to ~~ensure~~repay ~~that they appropriately~~$39.0 ~~reflect~~million ~~changes~~of interm ~~our~~loans ~~business~~outstanding orand ~~new~~to ~~information~~repay as$35.0 million itof ~~becomes~~the ~~available~~11. ~~Actual~~0% ~~results~~senior ~~are~~subordinated ~~likely~~notes of toHolding. ~~differ~~In ~~from our estimates~~addition, ~~but~~ we dopaid ~~not~~a ~~believe such~~dividend ~~differences~~of ~~will~~$25.0 million ~~materially~~to ~~affect~~Holding, as our ~~financial~~sole ~~position~~stockholder. On orAugust 13, ~~results~~2004, ~~of operations~~we ~~for~~exchanged the ~~periods~~remaining ~~presented~~$10.6 million inof ~~this report~~11.0% ~~The~~senior ~~Company~~subordinated ~~has~~notes ~~not~~for ~~changed~~$10.6 million ~~any~~ of ~~its~~our ~~critical~~Subordinated ~~accounting policies or estimates, or adopted any new accounting policies in 2004~~Notes.

18In connection with the February 20, 2004 refinancing, the Company amended its Credit Facility, which expires December 2, 2007. The Credit Facility provides a revolving credit line of $75.0 million, of which $25.0 million may be used for the issuance of letters of credit. The Credit Facility allows for multicurrency borrowing options in Australian dollars, Euros, Swiss francs, Swedish kronor, British pounds and other currencies that are readily available and freely traded. Borrowings under the Credit Facility are secured by substantially all of the assets of the Company and accrue interest at the Alternate Base Rate (as defined in the Credit Facility) or LIBOR plus a 1.75% margin. The Credit Facility provides for a commitment fee of 0.25% on the revolving credit line.

~~Table~~The Credit Facility and the Subordinated Notes contain certain customary covenants that impose limitations on the Company, including covenants limiting the ability of ~~Contents~~the Company and its subsidiaries to sell, pledge or incur liens on assets and to incur additional debt. The Credit Facility also includes requirements to meet certain financial tests and to maintain on a quarterly basis certain consolidated financial ratios, including minimum net worth, minimum fixed charge coverage ratio, maximum leverage ratio and minimum EBITDA. The Company was in compliance with all covenants of the Credit Facility and the Subordinated Notes, and the conditions of the Credit Facility, at June 30, 2005.

~~FORWARD-LOOKING~~At ~~STATEMENTS~~June 30, 2005, the Company had borrowings outstanding of $8.0 million under the revolving credit line of the Credit Facility, all in U.S. dollars, and letters of credit outstanding of $0.3 million supported by the Credit Facility. The amount available for additional borrowing under the Credit Facility at June 30, 2005 was $66.7 million.

~~This~~Six ~~report~~Months ~~includes~~Ended ~~statements that are not historical facts. These “forward-looking statements” can be identified by the use of terminology such as “believe~~June 30,” ~~“may,”~~2005 ~~“anticipate,”~~Compared ~~“should,”~~With ~~“intend,”~~Six ~~“plan,”~~Months ~~“will,” “expect,”~~Ended ~~“estimate~~June 30,” ~~“continue,” “positioned,” “strategy” and similar~~2004 expressions. Those statements are only our predictions. The forward-looking statements included in this report are not guarantees of future performances, and should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results could differ materially from those contemplated by these forward-looking statements. In the light of these risks and uncertainties, we cannot assure that the results and events contemplated by the forward-looking information contained in this report will in fact transpire. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.

~~Such~~Cash ~~risks~~provided by operating activities for the six months ended June 30, ~~uncertainties~~2005 ~~and~~was ~~contingencies~~$8.8 million compared ~~include~~with $6.6 million for the six months ended June 30, ~~without~~2004. ~~limitation~~In comparison to the first half of 2004, the Company’s first half 2005 operating cash flow reflects a $1.7 million increase in net ~~following:~~income plus depreciation and amortization, combined with a $0.5 million decrease in cash used for working capital.

•Capital ~~economic~~expenditures ~~and~~were ~~other~~$1.2 million ~~conditions~~for inthe six months ended June 30, 2005, compared with $1.0 million for the ~~markets~~six inmonths ~~which~~ended weJune 30, ~~operate;~~2004. •We ~~raw~~currently ~~material~~do ~~prices~~not ~~for~~have ~~steel~~any ~~and~~significant ~~copper;~~capital projects in process.

•Cash ~~acts~~used ~~of war or terrorism; • risks associated with foreign operations, including fluctuations~~ in ~~exchange rates of foreign currencies; • competitive pressure on pricing; • operational issues at our facilities; • availability of~~ financing toactivities ~~fund~~was ~~operations~~$7.0 million atfor ~~anticipated~~the ~~rates~~six ~~and~~months ~~terms;~~ended •June 30, ~~prolonged~~2005 ~~work stoppages; • governmental or regulatory policies; • rapid increases in health care costs; • our acquisition activities; • our substantial debt~~ and reflects ~~leverage~~$8.0 million ~~and~~of ~~our~~borrowings ~~ability~~on tothe ~~service~~Credit ~~our~~Facility ~~debt;~~offsetting • the ~~restrictive~~$15.0 million ~~covenants~~dividend paid ~~contained in our senior secured credit facility; • potential pension plan funding requirements; • our ability~~ to ~~realize revenue growth; • our ability to implement initiatives designed to increase operating efficiencies and improve results; and •~~ the ~~loss~~Holders of ~~major~~Global ~~customers.~~Class L

1918

~~Item 3~~Shares. ~~Quantitative~~The ~~and~~2004 ~~Qualitative~~financing ~~Disclosures~~activities ~~Regarding~~primarily ~~Market~~reflect ~~Risk~~the net effect of the February 2004 debt refinancing activities previously discussed.

~~Derivative~~We ~~Financial~~have ~~Instruments~~significant future cash commitments, primarily for debt service requirements and ~~Market~~scheduled lease ~~Risk~~payments. There have been no material changes to our cash commitments and commercial commitments in the six months ended June 30, 2005 from those shown as of December 31, 2004 in our Annual Report on Form 10-K under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources,” other than the payment in January 2005 of the dividend as discussed above.

We ~~are~~believe ~~exposed~~that tocash ~~various~~forecasted ~~changes~~to inbe ~~financial~~generated ~~market~~from ~~conditions~~operations, ~~including fluctuations~~together inwith ~~interest~~amounts ~~rates,~~available under ~~foreign~~our ~~currency~~Credit ~~exchange~~Facility, ~~rates~~will ~~and~~be ~~commodity prices.~~adequate Weto ~~manage~~meet our ~~exposure~~cash tocommitments, ~~such~~capital ~~risks~~expenditures ~~through various operating~~ and ~~financing~~working ~~activities.~~capital Weneeds ~~are~~for ~~exposed~~at toleast ~~interest~~the ~~rate~~next ~~risk~~12 months, ~~associated~~although ~~with borrowings~~no ~~under~~assurance ~~our~~can ~~bank~~be ~~Credit Facility~~given. ~~Borrowings under this facility bear~~Our ~~interest~~future atoperating ~~variable~~performance ~~rates,~~and ~~based~~ability ~~upon published indices. In order~~ to ~~partially mitigate~~extend ~~this~~or ~~exposure,~~refinance weour ~~have~~indebtedness ~~historically~~will ~~entered~~be ~~into interest rate swaps~~dependent toon ~~fix~~future aeconomic ~~portion~~conditions ofand ~~our~~general ~~interest~~financial, ~~payable.~~business Atand ~~December 31,~~other ~~2003~~factors, wemany ~~had~~of awhich ~~swap~~are ~~with~~beyond aour ~~notional amount of $15~~control.~~0 million that matured on February 2, 2004.~~ ~~There were no interest rate swaps as of June 30, 2004~~

WeReconciliation ~~are~~of ~~also~~EBITDA ~~exposed~~ to ~~various~~Net ~~foreign~~Cash ~~currency~~Provided ~~risks,~~by ~~i.e.,~~Operating ~~there is a risk~~Activities that we will incur economic losses due to adverse changes in foreign currency exchange rates. Our foreign currency exchange rate risks primarily relate to the Euro, the Australian dollar and the Brazilian real. We monitor these risks, and attempt to establish offsetting positions, when practical, between our various subsidiaries. Under our senior Credit Facility with a group of banks, we also have the option of denominating a portion of our borrowings in multiple foreign currencies. There are no amounts outstanding under the multicurrency borrowing options. We had net assets denominated in foreign currencies of approximately $44.0 million associated with our foreign subsidiaries at June 30, 2004.

WeThe ~~utilize~~Company ~~various~~has ~~raw~~chosen ~~material~~to ~~commodities~~present inEBITDA ~~our~~because ~~manufacturing~~the Company believes it is a widely accepted ~~process~~financial indicator of a company’s ability to service and incur indebtedness, ~~including~~and ~~steel~~because EBITDA is used in the Company’s financial covenants under the Credit Facility and ~~copper~~in the indenture governing the Subordinated Notes. ~~These~~Additionally, ~~materials~~management ~~are~~uses ~~obtained~~EBITDA, ~~from~~among ~~various supply~~other ~~sources~~financial measures, for planning and ~~there~~forecasting ~~have~~purposes. ~~historically~~However, ~~been~~EBITDA ~~adequate~~should ~~levels~~not ofbe ~~material available.~~considered Weas ~~are~~an ~~exposed~~alternative to net ~~adverse~~cash ~~price~~provided ~~fluctuations~~by ~~when~~operating ~~purchasing~~activities ~~these~~as a measure of liquidity in accordance with GAAP. Since ~~materials~~EBITDA is not calculated identically by all companies, ~~and~~the ~~may~~Company’s ~~not~~method ~~necessarily~~of computation may not be ~~able~~comparable to ~~offset~~those ~~such~~disclosed ~~increases~~by ~~through~~other companies. Following is a reconciliation of EBITDA to ~~increased~~net ~~selling~~cash ~~prices~~used ~~for~~in ~~our~~operating ~~products.~~activities, Wewhich dothe ~~not~~Company ~~hedge~~believes ~~our~~is ~~commodity~~the ~~price~~most directly comparable ~~risks~~GAAP ~~via~~measure ~~the~~of ~~derivatives~~a ~~markets.~~company’s ability to service and incur indebtedness:

Item 4. Controls and Procedures


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
Net cash provided by operating activities	$	16,720		$	11,615		$	8,819		$	6,603
Interest expense, net		3,905			3,857			7,785			7,347
Provision for income taxes		3,062			3,749			5,111			5,077
Foreign exchange (loss) gain, net		(275	)		817			(466	)		393
Deferred taxes		917			252			1,136			457
Amortization of financing fees and discount on senior subordinated notes included in interest expense, net		(223	)		(224	)		(446	)		(399	)
Net changes in operating assets and liabilities		(8,467	)		(3,600	)		6,623			8,100


EBITDA	$	15,639		$	16,466		$	28,562		$	27,578

AsCritical ofAccounting ~~the~~Policies ~~end of the period covered by this report, the Company’s management, under the supervision~~ and ~~with the participation of the Chief Executive Officer~~Estimates and Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the disclosure controls and procedures are effective. There were no material changes made in the Company’s internal controls over financial reporting during the period covered by this report.

20The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with GAAP. As such, some accounting policies have a significant impact on amounts reported in these unaudited condensed consolidated financial statements. A summary of those significant accounting policies can be found in the Company’s Annual Report on Form 10-K filed with the SEC March 9, 2005 under the caption “Critical Accounting Policies and Estimates” within Management’s Discussion and Analysis of Financial Condition and Results of Operations. In particular, judgment is used in areas such as determining the allowance for doubtful accounts and inventory valuation reserves, goodwill and indefinite lived intangible assets, product warranty costs, debt covenants and deferred tax assets.

~~Table~~Recently ofIssued ~~Contents~~Accounting Standards

~~PART~~In IINovember 2004, the FASB issued SFAS No. 151, ~~OTHER~~Inventory ~~INFORMATION~~Costs, an Amendment of ARB No. 43, Chapter 4. SFAS No. 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs and wasted material, and requires that such items be recognized as current-period charges regardless of whether they

~~Item 6. Exhibits and Current Reports~~19

A.Table Exhibits of Contents

Exhibit Number		Description
31.1		Form of Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2		Form of Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32		Form of Section 1350 Certification of Chief Financial Officer and Chief Executive Officer

meet the “so abnormal” criterion outlined in ARB No. 43. SFAS No. 151 also introduces the concept of “normal capacity” and requires the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. Unallocated overheads must be recognized as an expense in the period incurred. SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. While we are still evaluating the impact of this statement, we do not currently believe it will have a material impact on our consolidated results of operations, financial position or cash flows.

BIn December 2004, the FASB issued SFAS No. 123(R), ~~Reports~~Share-Based onPayment, ~~Form~~which replaces the prior SFAS No. 8123, Accounting for Stock-KBased Compensation, and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. SFAS 123(R) requires compensation costs related to share-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or liability instruments issued. In addition, awards of liability instruments will be re-measured each reporting period. Compensation cost will be recognized over the period that an employee provides services in exchange for the award. This new standard will become effective for the Company on January 1, 2006. While we are still evaluating the impact of this statement, we do not currently believe it will have a material impact on our consolidated results of operations, financial position or cash flows.

~~None~~FORWARD-LOOKING STATEMENTS

21The Company is making this statement in order to satisfy the “safe harbor” provisions contained in the Private Securities Litigation Reform Act of 1995. This Quarterly Report on Form 10-Q includes forward-looking statements related to the business of the Company that are not historical facts. These “forward-looking statements” can be identified by the use of terminology such as “believe,” “may,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “continue,” “positioned,” “strategy” and similar expressions. These statements are only our predictions. The forward-looking statements included in this report are not guarantees of future performances, and should one or more of these, or other, risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results could differ materially from those contemplated by these forward-looking statements. In the light of these risks and uncertainties, we cannot assure that the results and events contemplated by the forward-looking information contained in this report will in fact transpire. Readers are cautioned not to place undue reliance on these forward-looking statements, which, unless otherwise noted, speak only as of the date of this report. The Company undertakes no obligation, except as required by law, to update these statements.

~~Table~~Risks, ofuncertainties ~~Contents~~and contingencies that could cause actual results to vary materially from those anticipated in forward-looking statements in this report include general economic conditions in the markets in which we operate and industry related and other factors including, without limitation, the following:

~~SIGNATURES~~ • the availability of sufficient amounts of raw materials, particularly steel and copper, and our ability to acquire these raw materials on an economic basis; • risks associated with foreign operations, including fluctuations in exchange rates of foreign currencies; • competitive pressures on pricing; • operational issues at our facilities; • availability of financing to fund operations at anticipated rates and terms; • prolonged work stoppages; • governmental or regulatory policies; • product warranty, product liability and product recall costs; • rapid increases in health care costs; • our acquisition activities; • our substantial debt and leverage and our ability to service our debt; • the restrictive covenants contained in the agreements governing our indebtedness; • our ability to realize revenue growth; • our ability to implement initiatives designed to increase operating efficiencies and improve results; • the loss of major customers; and • acts of war or terrorism.

~~Pursuant~~For toadditional ~~the~~information ~~requirements~~on ofrisks ~~the~~and ~~Securities~~uncertainties ~~Exchange~~that ~~Act~~could ofcause ~~1934~~actual results to differ from those anticipated in forward-looking statements, see the discussion set forth under “Risk ~~registrant~~Factors” ~~has~~in ~~duly~~the ~~caused~~Company’s ~~this~~SEC ~~report~~filings, toincluding beits ~~signed~~Annual Report on ~~its~~Form ~~behalf~~10-K byfiled with the SEC ~~undersigned~~on ~~thereunto~~March 9, ~~duly authorized~~2005.

		ERICO INTERNATIONAL CORPORATION
		By:		/s/ William H. Roj
		Name:		William H. Roj
		Title:		Chief Executive Officer
				August 4, 2004
		By:		/s/ Jeffrey R. Steinhilber
		Name:		Jeffrey R. Steinhilber
		Title:		Chief Financial Officer
				August 4, 2004

22 Table of Contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, we are exposed to various changes in financial market conditions, including fluctuations in interest rates, foreign currency exchange rates and commodity prices. We manage our exposure to such risks through various operating and financing activities.

We are exposed to interest rate risk associated with borrowings under our Credit Facility. Borrowings under the Credit Facility bear interest at variable rates, based upon published indices. In order to partially mitigate this exposure, we have occasionally entered into interest rate swaps to fix a portion of our interest payable. There were no interest rate swaps outstanding as of June 30, 2005.

We are also exposed to various foreign currency risks, i.e., there is a risk that we will incur economic losses due to adverse changes in foreign currency exchange rates. Our foreign currency exchange rate risks primarily relate to the Euro, the Australian dollar and the Brazilian real. We monitor these risks, and attempt to establish offsetting positions, when practical, between our various subsidiaries. Under our Credit Facility, we also have the option of denominating a portion of our borrowings in multiple foreign currencies. There are no amounts outstanding under the multicurrency borrowing options at June 30, 2005. We had net assets denominated in foreign currencies of approximately $44.4 million associated with our foreign subsidiaries at June 30, 2005.

We utilize various raw material commodities in our manufacturing processes, including steel and copper. These materials are obtained from various supply sources, and there have historically been adequate levels of material available. We are exposed to adverse price fluctuations when purchasing these materials, and may not necessarily be able to offset such increases through increased selling prices for our products. We do not hedge our commodity price risks via the derivatives markets.

Item 4. Controls and Procedures

As of June 30, 2005 an evaluation was performed, under the supervision and with the participation of the Company’s management including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, such officers concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 6. Exhibits


Exhibit Number		Description of Document

31.1		Form of Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

31.2		Form of Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

32		Form of Section 1350 Certification of Chief Financial Officer and Chief Executive Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		ERICO INTERNATIONAL CORPORATION

		By:		/s/ William H. Roj

		Name:		William H. Roj
		Title:		Chairman, Chief Executive Officer and Director
				August 10, 2005

		By:		/s/ Jeffrey R. Steinhilber

		Name:		Jeffrey R. Steinhilber
		Title:		Chief Financial Officer and Director
				August 10, 2005

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