Following is a comparison of results for the 2009 and 2008 quarters:

Operating Income: The operating income for the 2009 and 2008 quarters, mainly from textile products operations, was $4.8 million and $6.2 million, correspondingly. The decline in revenue and operating income was mainly because of a decline in revenue from Brookwood’s commercial market segment, in addition to sail cloth, flag and other customers and products affected by the present economic downturn. Sales of specialty fabric to US military contractors in the 2009 first quarter of $28,394,000 were comparable to the year-ago quarter which amounted to $28,158,000.

Other Income (Loss): Other income (loss) comprises of equity losses from Hallwood Group minority investment in its Hallwood Energy L.P. affiliate, interest expense, and interest and other income.

For the 2009 and 2008 quarters other income (loss) was a loss of $61,000 and $3.2 million, correspondingly. The equity loss in Hallwood Energy was zero for the 2009 quarter, compared to a loss of $3 million in the year-ago quarter. Interest expense was $72,000 and $247,000, and interest and other income was $11,000 and $18,000 in the 2009 and 2008 quarters, correspondingly.

Income Tax Expense: For the 2009 first quarter, the income tax expense was $1.8 million, which comprised a $1.5 million non-cash deferred federal tax expense and a $243,000 state tax expense, compared to the a 2008 first quarter income tax expense of $1.5 million, which comprised $807,000 of non-cash deferred federal tax expense and a $659,000 state tax expense.

Hallwood Financial Limited Intention To Make Offer To Acquire Balance Of Outstanding Common Stock.

On April 20, 2009, Hallwood Financial Limited (Hallwood Financial), a corporation affiliated with Anthony J. Gumbiner, a director, chairman of the board of directors and chief executive officer of the company, which at present holds 65.7% of the outstanding common stock of the company, said that it had advised the board of the company that it plans to make an offer to obtain all of the outstanding shares of common stock of the company not already constructively owned by Hallwood Financial (about 523,591 shares).

In its statement, Hallwood Financial has pointed out that it plans to offer $12 per share in cash for each share of common stock not already owned by Hallwood Financial.