UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)

T QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended
 
September 27, 2008
or

£ 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:
 
0-18914

DORMAN PRODUCTS, INC.
(Exact name of registrant as specified in its charter)

Pennsylvania
 
23-2078856
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
     
3400 East Walnut Street, Colmar, Pennsylvania
 
18915
(Address of principal executive offices)
 
(Zip Code)

(215) 997-1800
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) 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.
  x Yes         o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer   o
     
Accelerated filer   x
         
Non-accelerated filer   o  
 
(Do not check if a smaller reporting company)
 
Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   o Yes    x No


As of November 3, 2008 the Registrant had 17,648,020, shares of common stock, $.01 par value, outstanding.
 
 
 

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT ON FORM 10-Q
September 27, 2008

         
Page
Part I — FINANCIAL INFORMATION
   
           
 
Item 1.
     
           
     
Statements of Operations:
   
       
3
       
4
       
5
       
6
       
7
           
 
Item 2.
   
11
           
 
Item 3.
   
17
           
 
Item 4.
   
17
           
Part II — OTHER INFORMATION
   
           
 
Item 1.
   
19
           
 
Item 1A.
   
19
           
  Item 2.    
19
           
 
Item 3.
   
19
           
 
Item 4.
   
19
           
 
Item 5.
   
19
           
 
Item 6.
   
19
           
   
22
           
   
23

Page 2 of 23

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

   
For the Thirteen Weeks Ended
 
(in thousands, except for share data)
 
September 27,
2008
   
September 29,
2007
 
Net Sales
  $ 91,202     $ 83,174  
Cost of goods sold
    61,697       53,670  
Gross profit
    29,505       29,504  
Selling, general and administrative expenses
    21,010       19,853  
Income from operations
    8,495       9,651  
Interest expense, net
    221       512  
Income before taxes
    8,274       9,139  
Provision for taxes
    3,226       3,460  
Net Income
  $ 5,048     $ 5,679  
Earnings Per Share:
               
Basic
  $ 0.29     $ 0.32  
Diluted
  $ 0.28     $ 0.31  
Average Shares Outstanding:
               
Basic
    17,660       17,695  
Diluted
    18,046       18,145  


See accompanying notes to consolidated financial statements.
 
Page 3 of 23
 
DORMAN PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

   
For the Thirty-nine Weeks Ended
 
(in thousands, except for share data)
 
September 27,
2008
   
September 29,
2007
 
Net Sales
  $ 261,638     $ 243,263  
Cost of goods sold
    177,265       158,913  
Gross profit
    84,373       84,350  
Selling, general and administrative expenses
    62,463       57,863  
Income from operations
    21,910       26,487  
Interest expense, net
    774       1,551  
Income before taxes
    21,136       24,936  
Provision for taxes
    8,173       9,427  
Net Income
  $ 12,963     $ 15,509  
Earnings Per Share:
               
Basic
  $ 0.73     $ 0.88  
Diluted
  $ 0.72     $ 0.86  
Average Shares Outstanding:
               
Basic
    17,684       17,691  
Diluted
    18,059       18,130  


See accompanying notes to consolidated financial statements.

Page 4 of 23

DORMAN PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(unaudited)

(in thousands, except for share data)
 
September 27,
2008
   
December 29,
2007
 
Assets
           
Current Assets:
           
Cash and cash equivalents
  $ 7,100     $ 6,918  
Accounts receivable, less allowance for doubtful accounts and customer credits of $32,090 and $28,705
    84,865       76,897  
Inventories
    90,057       80,565  
Deferred income taxes
    10,751       10,111  
Prepaids and other current assets
    2,236       1,921  
Total current assets
    195,009       176,412  
Property, Plant and Equipment, net
    25,555       25,680  
Goodwill
    26,633       26,662  
Other Assets
    1,564       1,901  
Total
  $ 248,761     $ 230,655  
 
               
Liabilities and Shareholders' Equity
               
Current Liabilities:
               
Current portion of long-term debt
  $ 85     $ 8,654  
Accounts payable
    22,077       18,752  
Accrued compensation
    5,210       6,520  
Other accrued liabilities
    4,309       4,198  
Total current liabilities
    31,681       38,124  
Other Long-Term Liabilities
    2,057       1,869  
Long-Term Debt
    20,878       8,942  
Deferred Income Taxes
    8,625       7,862  
Commitments and Contingencies
               
Shareholders’ Equity:
               
Common stock, par value $.01; authorized 2­5,000,000 shares; issued and outstanding 17,651,557 and 17,702,948
    176       177  
Additional paid-in capital
    31,883       32,591  
Cumulative translation adjustments
    3,549       4,141  
Retained earnings
    149,912       136,949  
Total shareholders' equity
    185,520       173,858  
Total
  $ 248,761     $ 230,655  

 
See accompanying notes to consolidated financial statements.

Page 5 of 23

DORMAN PRODUCTS,  INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
   
For the Thirty-nine Weeks Ended
 
(in thousands)
 
September 27,
2008
   
September 29,
2007
 
Cash Flows from Operating Activities:
           
Net income
  $ 12,963     $ 15,509  
Adjustments to reconcile net income to cash provided by operating activities:
               
Depreciation and amortization
    5,707       5,752  
Provision for doubtful accounts
    411       205  
Provision (benefit) for deferred income tax
    123       (80 )
Provision for non-cash stock compensation
    180       365  
Changes in assets and liabilities:
               
Accounts receivable
    (8,219 )     (7,907 )
Inventories
    (10,474 )     (7,204 )
Prepaids and other current assets
    -       (189 )
Other assets
    158       312  
Accounts payable
    3,173       6,484  
Accrued compensation and other liabilities
    (1,024 )     (863 )
Cash provided by operating activities
    2,998       12,384  
Cash Flows from Investing Activities:
               
Property, plant and equipment additions
    (5,792 )     (4,061 )
Proceeds from sale of assets of a business
    766       -  
Business acquisition
    -       (3,392 )
Cash used in investing activities
    (5,026 )     (7,453 )
Cash Flows from Financing Activities:
               
Repayment of long-term debt
    (8,633 )     (8,631 )
Net proceeds from revolving credit facility
    12,000       5,100  
Proceeds from exercise of stock options
    68       121  
Other stock related activity
    38       123  
Purchase and cancellation of common stock
    (995 )     (887 )
Cash provided by (used in) financing activities
    2,478       (4,174 )
Effect of exchange rate changes on cash and cash equivalents
    (268 )     311  
Net Increase in Cash and Cash Equivalents
    182       1,068  
Cash and Cash Equivalents, Beginning of Period
    6,918       5,080  
Cash and Cash Equivalents, End of Period
  $ 7,100     $ 6,148  
Supplemental Cash Flow Information
               
Cash paid for interest expense
  $ 917     $ 1,591  
Cash paid for income taxes
  $ 7,870     $ 10,053  
 
 
See accompanying notes to consolidated financial statements.

Page 6 of 23

DORMAN PRODUCTS,  INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THIRTY-NINE WEEKS ENDED SEPTEMBER 27, 2008 AND SEPTEMBER 29, 2007 (UNAUDITED)

1.
Basis of Presentation

As used herein, unless the context otherwise requires, “Dorman”, the “Company”, “we”, “us”, or “our” refers to Dorman Products, Inc. and its subsidiaries.

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. However, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.  Operating results for the thirty-nine  week period ended September 27, 2008 are not necessarily indicative of the results that may be expected for the fiscal year ending December 27, 2008.   We  may experience significant fluctuations from quarter to quarter in our results of operations due to the timing of orders placed by our customers.  Generally, the second and third quarters have the highest level of customer orders, but the introduction of new products and product lines to customers may cause significant fluctuations from quarter to quarter.   For further infor­mation, refer to the consolidated financial statements and footnotes thereto included in our  Annual Report on Form 10-K for the year ended December 29, 2007.

Certain prior year amounts have been reclassified to conform with current year presentation.

2.
Sales of Accounts Receivable

 We have entered into several customer sponsored programs administered by unrelated financial institutions that permit us to sell, without recourse, certain accounts receivable at discounted rates to the financial institutions. We do  not retain any servicing requirements for these accounts receivable.  Transactions under these agreements are accounted for as sales of accounts receivable following the provisions of Statement of Financial Accounting Standards (SFAS) No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities - A Replacement of FASB Statement 125.”  At September 27, 2008 and December 29, 2007, $51.1 million and $39.4 million, respectively, of accounts receivable were sold and removed from the consolidated balance sheets based upon standard payment terms.   Selling, general and administrative expenses for the thirty-nine weeks ended September 27, 2008 and September 29, 2007 include $1.8 million and $1.1 million, respectively, in financing costs associated with these accounts receivable sales programs.  During the thirty-nine weeks ended September 27, 2008 and September 29, 2007, we sold $84.2 million and $70.0 million, respectively, under these programs.

3.
Inventories

Inventories include the cost of material, freight, direct labor and overhead utilized in the processing of our  products.  Inventories were as follows:

(in thousands)
 
September 27, 2008
   
December 29, 2007
 
Bulk product
  $ 34,154     $ 34,493  
Finished product
    52,999       43,212  
Packaging materials
    2,904       2,860  
Total
  $ 90,057     $ 80,565  


4.
Acquisitions

In September 2007, we acquired certain assets including inventory and various intangible assets of the Consumer  Products Division of Rockford Productions Corporation (Consumer Division) for $3.4 million.  The consolidated results for the thirteen  week and thirty-nine week periods ended September 27, 2008 include the results of the Consumer Division. We have not presented pro forma results of operations  as this result would not have been materially different than actual results for the periods.  In connection with the purchase, we recorded $1.1 million in contract rights, which are included in other assets and are being amortized over a 10 year period.

Page 7 of 23

Goodwill activity during the thirty-nine week period ended September 27, 2008 is as follows (in thousands):

Balance, December 29, 2007
  $ 26,662  
Currency translation
    (29 )
Balance, September 27, 2008
  $ 26,633  


5.
Sale of Assets

On May 15, 2008 we sold certain assets of our catalytic converter business at our Canadian subsidiary for $0.9 million, which is being paid in monthly installments throughout 2008.  Included in Other Current Assets is $0.3 million that remains due at September 27, 2008.

6.
Change in Vacation Policy

Effective December 31, 2006, we changed our vacation policy so that the current year's vacation time is earned ratably throughout the current year.  Prior to December 31, 2006, all rights to the subsequent year's vacation vested to our employees on the last day of the previous fiscal year and the corresponding liability was recorded in that previous year.  Since employees had vested all 2007 vacation time prior to the beginning of 2007 under the old policy, no additional vacation time was earned in 2007 and no expense was recorded.  This change resulted in a reduction in our vacation accrual of approximately $1.8 million in 2007.  As a result, vacation expense in cost of goods sold and selling, general and administrative expenses was reduced during each of the fiscal quarters in 2007.  Results for the thirteen  and thirty-nine weeks ended September 29, 2007 include vacation expense reductions of $0.1 million and $0.3 million in cost of goods sold and $0.4 million and $1.0 million in selling, general and administrative expenses, respectively.

7.
Stock-Based Compensation

Effective May 18, 2000 we amended and restated our Incentive Stock Option Plan (the “Plan”).  Under the terms of the Plan, our Board of Directors may grant incentive stock options or non-qualified stock options or combinations thereof to purchase up to 2,345,000 shares of common stock to officers, directors and employees.  Grants under the Plan must be made within 10 years of the plan amendment date and are exercisable at the discretion of the Board of Directors, but in no event more than 10 years from the date of grant.  At September 27, 2008, options to acquire 356,289 shares were available for grant under the Plan.

Effective January 1, 2006, we  adopted  SFAS No. 123R “Share-Based Payment,” and related interpretations and began expensing the grant-date fair value of employee stock options.  In accordance with  SFAS No. 123R, cash flows resulting from tax deductions in excess of the tax effect of compensation cost recognized in the financial statements is classified as financing cash flows.

Compensation cost is recognized on a straight-line basis over the vesting period during which employees perform related services.  The compensation cost charged against income for our stock-based compensation program for the thirty-nine weeks ended September 27, 2008 and September 29, 2007 was $180,000 and $365,000 before taxes.  The compensation cost charged against income for the thirteen weeks ended September 27, 2008 and September 29, 2007 was $67,000 and $115,000 before taxes. The compensation cost recognized is classified as selling, general and administrative expense in the consolidated  statement of operations.  No cost was capitalized during  2008 and 2007.  We included a forfeiture assumption of 4.6% in 2008 and 3.5% in 2007 in the calculation of expense.

We use the Black-Scholes option valuation model to estimate the fair value of options granted.  Expected volatility and expected dividend yield are based on the actual historical experience of our stock.  The expected life represents the period of time that options granted are expected to be outstanding and was calculated using the simplified method prescribed by the Securities and Exchange Commission Staff Accounting Bulletin No. 107.  The risk-free rate is based on the U.S. Treasury security with terms equal to the expected time of exercise as of the grant date.  There were no stock options granted in the thirty-nine weeks ended September 27, 2008 or September 29, 2007.

Transactions under the Plan were as follows:

Page 8 of 23


   
Shares
   
Weighted Average Price
   
Weighted Average Remaining Term (In years)
   
Aggregate Intrinsic Value
 
Balance at December 29,  2007
    903,150     $ 5.80              
Exercised
    (49,050 )     1.81              
Canceled
    (50,000 )     11.10              
Balance at September 27, 2008
    804,100     $ 5.72       4.5     $ 6,364,000  
Options exercisable at September 27, 2008
    644,066     $ 4.37       3.9     $ 5,959,000  

The total intrinsic value of stock options exercised during the thirty-nine weeks ended September 27, 2008  was $461,000.

As of September 27, 2008, there was approximately  $0.5 million of unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted-average period of approximately 3.0 years.

Cash received from option exercises during the thirty-nine weeks ended September 27, 2008 was $59,000.  The excess tax benefit generated from options granted prior to January 1, 2006, which were exercised during  2008, was  $123,000 and was credited to additional paid-in capital.

8.
Earnings Per Share

The following table sets forth the computation of basic earnings per share and diluted earnings per share:
 
   
Thirteen Weeks Ended
   
Thirty-nine Weeks Ended
 
 
 
September 27, 2008
   
September 29, 2007
   
September 27, 2008
   
September 29, 2007
 
Numerator:
                       
Net income
  $ 5,048     $ 5,679     $ 12,963     $ 15,509  
Denominator:
                               
Weighted average shares outstanding use used in basic earnings per share calculation
    17,660       17,695       17,684       17,691  
Effect of dilutive stock options
    386       450       375       439  
Adjusted weighted average shares outstanding diluted earnings per share
    18,046       18,145       18,059       18,130  
Basic earnings per share
  $ 0.29     $ 0.32     $ 0.73     $ 0.88  
Diluted earnings per share
  $ 0.28     $ 0.31     $ 0.72     $ 0.86  
 
Options to purchase 173,500 and 158,500 shares were outstanding at September 27, 2008 and September 29, 2007, respectively,  but were not included in the computation of diluted earnings per common share, as their effect would have been antidilutive.
 
Page 9 of 23

9.
Common Stock Repurchases

Share Repurchase Plan.  On February 22, 2008, we announced that our Board of Directors authorized the repurchase of up to 500,000 shares of our outstanding common stock.  Under this program, share repurchases may be made from time to time depending upon market conditions, share price and availability, and other factors at our discretion.  Repurchases will take place in open market transactions or in privately negotiated transactions in accordance with applicable laws.  During 2008, we have not made any purchases under the plan.

Purchase and cancellation of common stock. We periodically repurchase and cancel common stock issued to our defined contribution profit sharing and 401(k) plan. For the thirty-nine weeks ended September 27, 2008, we repurchased and cancelled 91,122 shares of common stock.  During 2007, we repurchased and cancelled 90,205 shares of common stock.

10 .
Related-Party Transactions

We have entered into a noncancelable operating lease for our primary operating facility from a partnership in which Richard N. Berman, our Chief Executive Officer, and Steven L. Berman, our  Executive Vice President, are partners.  Based upon the terms of the lease, payments in 2008 will be $1.4 million.  Total rental payments  to the partnership under the lease arrangement were $1.3 million in 2007.

11.
Income Taxes

We adopted the provisions of Financial Accounting Standards Board (“FASB”) Interpretation No.48, “Accounting  for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109” (“FIN 48") effective December 31, 2006. At September 27, 2008, we have $1.8 million of net unrecognized tax benefits, $1.1 million of which would affect our effective tax rate if recognized.

We recognize interest and penalties related to uncertain tax positions in income tax expense. As of September 27, 2008, we have approximately $0.4 million of accrued interest related to uncertain tax positions.

The last year examined by the IRS was 2005, and all years up through and including that year are closed by examination.   We are currently under examination for tax years 2003-2006 by one state tax authority to which we are subject to tax.  The tax years 2004-2007 remain open to examination by the remaining major taxing jurisdictions in the United States to which we are subject.  The tax years 2003-2007 remain open to examination in Sweden for our Swedish subsidiary.
 
12.
Comprehensive Income

Pursuant to the provisions of SFAS No. 130, “Reporting Comprehensive Income,” comprehensive income includes all changes to shareholders’ equity during a period, except those resulting from investment by and distributions to shareholders. Components of comprehensive income include net income and changes in foreign currency translation adjustments.  Total comprehensive income was $3.5 million and $6.6 million for the thirteen  weeks ended September  27, 2008, and September 29, 2007, respectively.  Total comprehensive income was $12.4 million and $16.8 million  for the thirty-nine  weeks ended September 27, 2008 and September 29, 2007, respectively.

13.
New Accounting Pronouncements

In December 2007, the FASB issued SFAS 141 (revised 2007), “Business Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) changes the requirements for an acquirer’s recognition and measurement of the assets acquired and the liabilities assumed in a business combination. SFAS No. 141(R) is effective for annual periods beginning after December 15, 2008 and should be applied prospectively for all business combinations entered into after the date of adoption.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51” (“SFAS No. 160”). SFAS No. 160 requires (i) that noncontrolling (minority) interests be reported as a component of shareholders’ equity, (ii) that net income attributable to the parent and to the noncontrolling interest be separately identified in the consolidated statement of operations, (iii) that changes in a parent’s ownership interest while the parent retains its controlling interest be accounted for as equity transactions, (iv) that any retained noncontrolling equity investment upon the deconsolidation of a subsidiary be initially measured at fair value, and (v) that sufficient disclosures are provided that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 is effective for annual periods beginning after December 15, 2008 and should be applied prospectively. However, the presentation and disclosure requirements of the statement shall be applied retrospectively for all periods presented. The adoption of the provisions of SFAS No. 160 is not expected to impact the Company’s consolidated results of operations and  financial position.

Page 10 of 23

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”(“SFAS No. 159").  SFAS No. 159  permits companies to choose to measure many financial instruments and certain other items at fair value.  The objective is to improve financial reporting by providing companies with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions.  We adopted  SFAS No. 159 effective December 30, 2007, which was the beginning of our fiscal year.  The adoption of SFAS No. 159 did not  have a material impact on our results of operations and financial position.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“ SFAS No. 157").  SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This statement applies under other accounting pronouncements that require or permit fair value measurements. Accordingly, SFAS No. 157 does not require any new fair value measurements. The provisions of SFAS No. 157 are to be applied prospectively and are effective for financial statements issued for fiscal years beginning after November 15, 2007.   SFAS No. 157’s fair value measurement requirements for non-financial assets and liabilities that are not required or permitted to be measured at fair value on a recurring basis have been deferred until fiscal years beginning after November 15, 2008.   We have certain non-financial assets, such as goodwill, intangibles and other long-lived assets, that may be remeasured to fair value on a non-recurring basis.   The adoption of SFAS No. 157 did not have a material impact on the Company’s consolidated results of operations and financial position.

DORMAN PRODUCTS, INC. AND SUBSIDIARIES
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward Looking Statements

Certain statements in this document constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995.  While forward-looking statements sometimes are presented with numerical specificity, they are based on various assumptions made by management regarding future circumstances over many of which the Company has little or no control.  Forward-looking statements may be identified by words including “anticipate,” “believe,” “estimate,” “expect,” and similar expressions.  The Company cautions readers that forward-looking statements, including, without limitation, those relating to future business prospects, revenues, working capital, liquidity, and income, are subject to certain risks and uncertainties that would cause actual results to differ materially from those indicated in the forward-looking statements.  Factors that could cause actual results to differ from forward-looking statements include but are not limited to competition in the automotive aftermarket industry, concentration of the Company’s sales and accounts receivable among a small number of customers, the impact of consolidation in  the automotive aftermarket industry, foreign currency fluctuations, dependence on senior management and other risks and factors identified from time to time in the reports the Company files with the Securities and Exchange Commission.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected.  For additional information concerning factors that could cause actual results to differ materially from the information contained in this report, reference is made to the information in  Part I, “Item 1A, Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2007.

Overview

We are a leading supplier of Original Equipment (OE) Dealer "Exclusive" automotive replacement parts, automotive hardware, brake products, and household hardware to the automotive aftermarket and mass merchandise markets. Dorman automotive parts and hardware are marketed under the OE Solutions ™ , HELP!®, AutoGrade ™ , First Stop ™ , Conduct-Tite®, Pik-A-Nut®, and Scan-Tech ™ brand names. We design, package and market over 92,000 different automotive replacement parts (including brake parts), fasteners and service line products manufactured to our specifications. Our products are sold under one of the seven Dorman brand names listed above. Our products are sold primarily in the United States through automotive aftermarket retailers (such as AutoZone, Advance and O'Reilly), national, regional and local warehouse distributors (such as Carquest and NAPA) and specialty markets including parts manufacturers for resale under their own private labels and salvage yards. Through our Scan-Tech subsidiary, we are increasing our international distribution of automotive replacement parts, with sales into Europe, the Middle East and the Far East.

Page 11 of 23

The automotive aftermarket in which we compete has been growing in size; however, the market continues to consolidate. As a result, our customers regularly seek more favorable pricing, product returns and extended payment terms when negotiating with us. While we attempt to avoid or minimize such concessions, in some cases pricing concessions have been made, customer payment terms have been extended and returns of product have exceeded historical levels. The product returns and more favorable pricing primarily affect our profit levels while terms extensions generally reduce operating cash flow and require additional capital to finance the business. We expect both of these trends to continue for the foreseeable future. Gross profit margins have declined over the past three years as a result of this pricing pressure. Another contributing factor in our gross profit margin decline is a shift in mix to higher priced, but lower gross margin products. Both of these trends are expected to continue for the foreseeable future. We have increased our focus on efficiency improvements and product cost reduction initiatives to offset the impact of price pressures.

In addition, we are relying on new product development as a way to offset some of these customer demands and as our primary vehicle for growth. As such, new product development is a critical success factor for us. We have invested heavily in resources necessary for us to increase our new product development efforts and to strengthen our relationships with our customers. These investments are primarily in the form of increased product development resources and awareness programs, customer service improvements and increased customer credits and allowances. This has enabled us to provide an expanding array of new product offerings and grow our revenues.

We may experience significant fluctuations from quarter to quarter in our results of operations due to the timing of orders placed by our customers. Generally, the second and third quarters have the highest level of customer orders, but the introduction of new products and product lines to customers may cause significant fluctuations from quarter to quarter.

We operate on a fifty-two, fifty-three week period ending on the last Saturday of the calendar year.

Acquisition and Sale of Assets

In September 2007, we acquired certain assets including inventory and various intangible assets of the Consumer Products Division of Rockford Productions Corporation (Consumer Division) for $3.4 million.  The consolidated results for the thirteen  week and thirty-nine week periods ended September 27, 2008 includes the results of the Consumer Division. We have not presented pro forma results of operations  as this result would not have been materially different than actual results for the periods.  In connection with the purchase, we recorded $1.1 million in contract rights, which are included in other assets and are being amortized over a 10 year period.

On May 15, 2008, we sold certain assets of our Canadian subsidiary for $0.9 million, which is being paid in monthly installments throughout 2008.

Change in Vacation Policy

Effective December 31, 2006, we changed our vacation policy so that the current year's vacation time is earned ratably throughout the current year.  Prior to December 31, 2006, all rights to the subsequent year's vacation vested to our employees on the last day of the previous fiscal year and the corresponding liability was recorded in that previous year.  Since employees had vested all 2007 vacation time prior to the beginning of 2007 under the old policy, no additional vacation time was earned in 2007 and no expense was recorded.  This change resulted in a reduction in our vacation accrual of approximately $1.8 million in 2007.  As a result, vacation expense in cost of goods sold and selling, general and administrative expenses was reduced during each of the fiscal quarters in 2007.  Results for the thirteen and thirty-nine weeks ended September 27, 2008 include vacation expense reductions of $0.1 million and $0.3 million in cost of goods sold and $0.4 million and $1.0 million in selling, general and administrative expenses, respectively.

Page 12 of 23

Results of Operations

The following table sets forth, for the periods indicated, the percentage of net sales represented by cer­tain items in our Consolidated Statements of Operations:

   
Percentage of Net Sales
 
   
For the Thirteen Weeks Ended
   
For the Thirty-nine Weeks Ended
 
   
September 27,
2008
   
September 29,
2007
   
September 27, 
2008
   
September 29,
2007
 
Net Sales
    100.0 %     100.0 %     100.0 %     100.0 %
Cost of goods sold
    67.6       64.5       67.8       65.3  
Gross profit
    32.4       35.5       32.2       34.7  
Selling, general and administrative expenses
    23.1       23.9       23.8       23.8  
Income from operations
    9.3       11.6       8.4       10.9  
Interest expense, net
    0.2       0.6       0.3       0.6  
Income before taxes
    9.1       11.0       8.1       10.3  
Provision for taxes
    3.6       4.2       3.1       3.9  
Net Income
    5.5 %     6.8 %     5.0 %     6.4 %


Thirteen Weeks Ended September 27, 2008 Compared to Thirteen Weeks Ended September 29, 2007

Sales increased 10% to $91.2 million for the third quarter ended September 27, 2008 from $83.2 million in the same period last year.  Our revenue growth was driven by several large line updates that shipped during the quarter, higher new product sales, and increased market penetration.
 
Cost of goods sold, as a percentage of sales, increased to 67.6% for the thirteen weeks ended September 27, 2008 from 64.5% in the same period last year.  The increase is primarily the result of strategic investments to grow market share and higher material and shipping costs caused by  commodity price increases and weakness in the U.S. dollar.

Selling, general and administrative expenses for the thirteen weeks ended September 27, 2008 increased 6% to $21.0 million from $19.9 million in the same period last year.  Results for the thirteen weeks ended September 27, 2008  include a $0.4 million reduction in vacation expense due to the vacation policy change mentioned above. A tighter focus on cost control resulted in costs increasing just 4% before the vacation adjustment despite our 10% sales growth during the quarter.  Costs increased due to higher variable costs related to our sales growth and increased staffing levels in product development, engineering and quality control.  These increases were partially offset by cost reductions and incentive compensation expense which was $ 0.3 million lower in the thirteen weeks ended September 27, 2008 than in the prior year due to lower earnings levels in 2008.

Interest expense, net, decreased to $0.2 million in the thirteen weeks ended September 27, 2008 from $0.5 million in the same period last year due to lower borrowing levels and interest rates.

Our effective tax rate increased to 39.0% in the thirteen weeks ended September 27, 2008 from 37.9% in the same period last year.   The increase is the result of a loss at our Swedish subsidiary, which has a lower effective tax rate than our U.S. businesses.  The business was profitable last year.
 
Page 13 of 23

Thirty-nine Weeks Ended September 27, 2008 Compared to Thirty-nine Weeks Ended September 29, 2007

Sales increased 8% to $261.6 million for the thirty-nine weeks ended September 27, 2008 from $243.3 million in the same period last year.  The favorable effect of foreign currency exchange and the net impact of our acquisition and sale of assets accounted for approximately 2% of the net sales increase.  The remaining increase is primarily the result  of increased revenues from new sales and increased market penetration.

Cost of goods sold, as a percentage of sales, increased to 67.8% for the thirty-nine weeks ended September 27, 2008 from 65.3% in the same period last year.  The increase is primarily the result of competitive selling price pressures, higher material and shipping costs caused by higher commodity price increases and weakness in the U.S. dollar, and a $0.7 million increase in air freight costs necessary to expedite product to fill past due customer orders.  Spending on air freight returned to historical levels in the second quarter of 2008.

Selling, general and administrative expenses for the thirty-nine weeks ended September 27, 2008 increased 8% to $62.5 million from $57.9 million in the same period last year.  The increase is the result of higher variable costs related to our sales growth and increased staffing levels in product development, engineering and quality control.  These increases were partially offset by incentive compensation expense which was  $1.3 million lower in the thirty-nine weeks ended September 27, 2008 than in the prior year due to lower earnings levels in 2008.  Results for the thirty-nine weeks ended September 27, 2008 also include a $1.0 million reduction in vacation expense due to the vacation policy change mentioned above.

Interest expense, net, decreased to $0.8 million in the thirty-nine weeks ended September 27, 2008 from $1.6 million in the same period last year due to lower borrowing levels and interest rates.

Our effective tax rate increased to 38.7% in the thirty-nine weeks ended September 27, 2008 from 37.8% in the same period last year.   The increase is the result of the loss of certain state tax benefits and lower earnings from our Swedish subsidiary.

Liquidity and Capital Resources

Historically, we have financed our growth through a combination of cash flow from operations, accounts receivable sales programs provided by certain customers and through the issuance of senior indebtedness through our bank credit facility and senior note agreements.  At September 27, 2008, working capital was $163.3 million, total long-term debt (including the current portion and revolving credit borrowings) was $21.0 million and shareholders’ equity was $185.5 million.  Cash and cash equivalents as of September 27, 2008 were $7.1 million.

Over the past several years we have continued to extend payment terms to certain customers as a result of customer requests and market demands.  These extended terms have resulted in increased accounts receivable levels and significant uses of cash flow.  We participate in accounts receivable sales programs with several customers which allow us to sell our accounts receivable on a non-recourse basis to financial institutions to offset the negative cash flow impact of these payment terms extensions.  As of September 27, 2008 and December 27, 2007, we sold $51.1 million and $39.4 million in accounts receivable under these programs and removed them from our balance sheets based upon standard payment terms.  We expect continued pressure to extend our payment terms for the foreseeable future.  Further extensions of customer payment terms will result in additional uses of cash flow or increased costs associated with the sale of accounts receivable.

We have a $30.0 million revolving credit facility which expires in June 2010.  Borrowings under the facility are on an unsecured basis with interest at rates ranging from LIBOR plus 65 basis points to LIBOR plus 150 basis points based upon the achievement of certain benchmarks related to the ratio of funded debt to EBITDA.  The interest rate at September 27, 2008 was LIBOR plus 65 basis points (4.35%).  Borrowings under the facility were $20.5 million as of September 27, 2008.  We have approximately $7.5 million available under the facility at September 27, 2008.  The loan agreement also contains covenants, the most restrictive of which pertain to net worth and the ratio of debt to EBITDA.

We also have outstanding $0.5 million under a commercial loan granted in connection with the opening of a distribution facility which bears interest at 4% payable monthly.  The principal balance is paid monthly in equal installments through September 2013.  The loan is secured by a letter of credit issued under our revolving credit facility.

Page 14 of 23

Our business activities do not include the use of unconsolidated special purpose entities, and there are no significant business transactions that have not been reflected in the accompanying financial statements.

We reported a net source of cash  from our operating activities of $3.0 million in the thirty-nine weeks ended September 27, 2008.  Net income, depreciation and a $3.2 million increase in accounts payable were the primary sources of operating cash flow.  Accounts payable increased primarily as a result of negotiated terms extensions with several of our suppliers.  The primary uses of cash  were inventory and accounts receivable, which increased $10.5 million and $8.2 million, respectively.  Inventory increased to support sales growth and increases in safety stock levels deemed necessary to enable us to better fill customer orders.  Accounts receivable increased due to sales growth, a promotional program that provided extended dating on second time orders of a new product line, and the extension of payment terms to certain customers.

Investing activities used $5.0 million of cash in the thirty-nine weeks ended September 27, 2008 primarily as a result of additions to property, plant and equipment.  Capital spending in 2008 consisted of tooling associated with new products, upgrades to information systems and scheduled equipment replacements.

Financing activities generated $2.5 million of cash  in the thirty-nine weeks ended September 27, 2008.  The primary elements of our financing activities were $12.0 million in borrowings under our revolving credit facility and the repayment of the final installment of $8.6 million on our senior notes originally issued in 1998.  We also repurchased $1.0 million in common stock from our 401(k) plan during the nine months ended September 27, 2008.

Based on our current operating plan, we believe that our sources of available capital are adequate to meet our ongoing cash needs for at least the next twelve months.

Foreign Currency Fluctuations

In 2007, approximately 73% of our products were purchased from a variety of foreign countries. The products generally are purchased through purchase orders with the purchase price specified in U.S. dollars. Accordingly, we do not have exposure to fluctuations in the relationship between the dollar and various foreign currencies between the time of execution of the purchase order and payment for the product. However, weakness in the dollar has resulted in numerous material price increases and continued pressure from several foreign suppliers to increase prices further.  To the extent that the dollar decreases in value to foreign currencies in the future the price of the product in dollars for new purchase orders may increase further.

The largest portion of our overseas purchases come from China.  The value of the Chinese Yuan has increased relative to the U.S. Dollar since July 2005 when it was allowed to fluctuate against a basket of currencies.  Most experts believe that the value of the Yuan will increase further relative to the U.S. Dollar over the next few years.  Such a move would most likely result in an increase in the cost of products that are purchased from China.

Page 15 of 23

Impact of Inflation

The overall impact of inflation has not resulted in a significant change in labor costs or the cost of general services utilized by the Company.  During the second and third quarter of 2008 we experienced significant increases in the cost of our materials and transportation costs as a result of commodity price increases and weakness in the U.S. Dollar.  We expect to be able to offset a portion of these cost increases with higher selling prices; however, we do not expect to be able to do so completely.  As a result, cost of goods sold as a percentage of net sales increased in the thirteen weeks ended September 27, 2008 and may increase further over the next few quarters.  We will attempt to offset any further cost increases by passing along selling price increases to customers, through the use of alternative suppliers and by  resourcing products to other countries.  However, there can be no assurance that we will be successful in these efforts.

Related-Party Transactions

We have a noncancelable operating lease for our primary operating facility from a partnership in which Richard N. Berman, our Chief Executive Officer, and Steven L. Berman, our Executive Vice President, are partners.  Based upon the terms of the lease, payments in 2008 will be $1.4 million.  Total rental payments to the partnership under the lease arrangement were $1.3 million in 2007.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles.  The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenues and expenses.  We regularly evaluate our estimates and judgments, including those related to revenue recognition, bad debts, customer credits, inventories, goodwill and income taxes.  Estimates and judgments are based upon historical experience and on various other assumptions believed to be accurate and reasonable under the circumstances.  Actual results may differ materially from these estimates under different assumptions or conditions.  We believe the following critical accounting policies affect our more significant estimates and judgments used in the preparation of our consolidated financial statements:

Allowance for Doubtful Accounts.  The preparation of our financial statements requires us to make estimates of the collectability of our accounts receivable.  We specifically analyze accounts receivable and historical bad debts, customer creditworthiness, current economic trends and changes in customer payment patterns when evaluating the adequacy of the allowance for doubtful accounts. A significant percentage of our accounts receivable have been, and will continue to be, concentrated among a relatively small number of automotive retailers and warehouse distributors in the United States.  Our five largest customers accounted for 71% and 73% of net accounts receivable as of December 29, 2007 and December 30, 2006, respectively.  A bankruptcy or financial loss associated with a major customer could have a material adverse effect on our sales and operating results.

Revenue Recognition and Allowance for Customer Credits.  Revenue is recognized from product sales when goods are shipped, title and risk of loss have been transferred to the customer and collection is reasonably assured.  We record estimates for cash discounts, product returns and warranties, discounts and promotional rebates in the period of the sale ("Customer Credits").  The provision for Customer Credits is recorded as a reduction from gross sales and reserves for Customer Credits are shown as a reduction of accounts receivable. Amounts billed to customers for shipping and handling are included in net sales.  Costs associated with shipping and handling are included in cost of goods sold.  Actual Customer Credits have not differed materially from estimated amounts for each period presented.

Excess and Obsolete Inventory Reserves.  We must make estimates of potential future excess and obsolete inventory costs.  We provide reserves for discontinued and excess inventory based upon historical demand, forecasted usage, estimated customer requirements and product line updates. We maintain contact with our customer base in order to understand buying patterns, customer preferences and the life cycle of our products.  Changes in customer requirements are factored into the reserves as needed.

Goodwill.  We follow the provisions of SFAS No. 142, “ Goodwill and Other Intangible Assets. ” We employ a discounted cash flow analysis and a market comparable approach in conducting our impairment tests.

Income Taxes.  We follow the liability method of accounting for deferred income taxes.  Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current year and for the change in the deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity's financial statements or tax returns.  We must make assumptions, judgments and estimates to determine our current provision for income taxes and also our deferred tax assets and liabilities and any valuation allowance to be recorded against a deferred tax asset.  Our judgments, assumptions and estimates relative to the current provision for income taxes takes into account current tax laws, our interpretation of current tax laws and possible outcomes of current and future audits conducted by tax authorities. Changes in tax laws or our interpretation of tax laws and the resolution of current and future tax audits could significantly impact the amounts provided for income taxes in our consolidated financial statements. Our assumptions, judgments and estimates relative to the value of a deferred tax asset takes into account predictions of the amount and category of future taxable income. Actual operating results and the underlying amount and category of income in future years could render our current assumptions, judgments and estimates of recoverable net deferred taxes inaccurate. Any of the assumptions, judgments and estimates mentioned above could cause our actual income tax obligations to differ from our estimates.

Page 16 of 23

Recent Accounting Pronouncements

In December 2007, the FASB issued SFAS 141 (revised 2007), “Business Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) changes the requirements for an acquirer’s recognition and measurement of the assets acquired and the liabilities assumed in a business combination. SFAS No. 141(R) is effective for annual periods beginning after December 15, 2008 and should be applied prospectively for all business combinations entered into after the date of adoption.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements -an amendment of ARB No. 51” (“SFAS No. 160”). SFAS No. 160 requires (i) that noncontrolling (minority) interests be reported as a component of shareholders’ equity, (ii) that net income attributable to the parent and to the noncontrolling interest be separately identified in the consolidated statement of operations, (iii) that changes in a parent’s ownership interest while the parent retains its controlling interest be accounted for as equity transactions, (iv) that any retained noncontrolling equity investment upon the deconsolidation of a subsidiary be initially measured at fair value, and (v) that sufficient disclosures are provided that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 is effective for annual periods beginning after December 15, 2008 and should be applied prospectively. However, the presentation and disclosure requirements of the statement shall be applied retrospectively for all periods presented. The adoption of the provisions of SFAS No. 160 is not expected to impact the Company’s consolidated results of operations and  financial position.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”  (“SFAS No. 159").  SFAS No. 159 permits companies to choose to measure many financial instruments and certain other items at fair value.  The objective is to improve financial reporting by providing companies with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions.  We adopted SFAS No. 159 effective December 30, 2007, which was the beginning of our fiscal year.   The adoption of SFAS No. 159 did not have a material impact on our results of operations and financial position.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157").  SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This statement applies under other accounting pronouncements that require or permit fair value measurements. Accordingly, SFAS No. 157 does not require any new fair value measurements. The provisions of SFAS No. 157 are to be applied prospectively and are effective for financial statements issued for fiscal years beginning after November 15, 2007.   SFAS No. 157’s fair value measurement requirements for non-financial assets and liabilities that are not required or permitted to be measured at fair value on a recurring basis have been deferred until fiscal years beginning after November 15, 2008.  We have certain non-financial assets, such as goodwill intangibles, and other long-lived assets, that may be remeasured to fair value on a non-recurring basis. The adoption of SFAS No. 157 did not have a material impact on the Company’s consolidated results of operations and financial position.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our market risk is the potential loss arising from adverse changes in interest rates.  Substantially all of our borrowings as well as our accounts receivable sale programs bear interest rates tied to LIBOR.  Under the terms of our revolving credit facility and customer-sponsored programs to sell accounts receivable, a change in either the lender’s base rate or LIBOR would affect the rate at which we could borrow funds thereunder. We have experienced increased borrowing costs over the past few months as a result of increases in the LIBOR borrowing rate and increased borrowing rates under our accounts receivable sale programs.  A one percentage point increase in LIBOR would increase our interest expense on our variable rate debt and our financing costs associated with our sales of accounts receivable by approximately $0.7 million annually.  This estimate assumes that our variable rate debt balance and the level of sales of accounts receivable remains constant for an annual period and the interest rate change occurs at the beginning of the period.


Item 4.   Controls and Procedures

Quarterly Evaluation of Our Disclosure Controls and Internal Controls

Page 17 of 23

We evaluated the effectiveness of the design and operation of our “disclosure controls and procedures” as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (“the Act”), as of the end of the period covered by this Form 10-Q (“Disclosure Controls”). This evaluation (“Disclosure Controls Evaluation”) was done under the supervision and with the participation of management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”).
 
Our management, with the participation of the CEO and CFO, also conducted an evaluation of our internal control over financial reporting, as defined in Rule 13a-15(f) of the Act, to determine whether any changes occurred during the period ended September 27, 2008  that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (“Internal Controls Evaluation”).

Limitations on the Effectiveness of Controls

Control systems, no matter how well conceived and operated, are designed to provide a reasonable, but not an absolute, level of assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. We conduct periodic evaluation of our internal controls to enhance, where necessary, our procedures and controls.

Conclusions

Based upon the Disclosure Controls Evaluation, the CEO and CFO have concluded that the Disclosure Controls are effective in reaching a reasonable level of assurance that (i) information that we are required to disclose in the reports that we file or submit under the Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) information that we are required to disclose in the reports that we file or submit under the Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in internal controls over financial reporting as defined in Rule 13a-15(f) of the Act that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Page 18 of 23

PART II: OTHER INFORMATION

Item 1. Legal Proceedings

We are a party to or otherwise involved in legal proceedings that arise in the ordinary course of business, such as various claims and legal actions involving contracts, competitive practices, patent rights,  trademark rights, product liability claims and other matters arising out of the conduct of our business. In the opinion of management, none of the actions, individually or in the aggregate, would likely have a material financial impact on us.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item A, Risk Factors” in our Annual Report on Form 10-K for the year ended December 29, 2007, which could materially affect our business, financial condition or future results.  The risks described in our Annual Report on Form 10-K are not the only risks we face.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds     Not Applicable

Item 3.  Defaults Upon Senior Securities    Not Applicable

Item 4.  Submission of Matters to a Vote of Security Holders     Not Applicable

Item 5.  Other Information

In a press release dated  May 15, 2008, we announced the sale of certain assets of our catalytic converter business to Eastern Manufacturing, Inc. (“Eastern Catalytic”) and entered into a joint venture agreement with Eastern Catalytic to mutually develop, manufacture and distribute an integrated exhaust manifold and converter product line.  Total proceeds  approximately equal the book value of the assets on our financial statements.

Under the terms of the joint venture agreement, the Company and Eastern Catalytic will co-develop and market a line of integrated exhaust manifolds and catalytic converters for the traditional, retail and export automotive channels.  In addition, the arrangement will enable us to offer Eastern Catalytic’s full line of direct fit catalytic converters to the automotive aftermarket.  We will continue to maintain a Canadian distribution facility for our Dorman-branded line of automotive aftermarket products.

Item 6. Exhibits

Item 601 Exhibit Number
 
Title
     
3.1 (1)
 
Amended and Restated Articles of Incorporation of the Company dated May 23, 2007.
     
3.2 (2)
 
Bylaws of the Company.
     
4.1
 
Amended and Restated Shareholder’s Agreement dated July 1, 2006 (included with this report)
     
10.1 (2)
 
Lease, dated December 1, 1990, between the Company and the Berman Real Estate Partnership, for premises located at 3400 East Walnut Street, Colmar, Pennsylvania.
     
10.1.1 (4)
 
Amendment to Lease, dated September 10, 1993, between the Company and the Berman Real Estate Partnership, for premises located at 3400 East Walnut Street, Colmar, Pennsylvania, amending 10.1.
     
10.1.2 (5)
 
Assignment of Lease, dated February 24, 1997, between the Company, the Berman Real Estate Partnership and BREP 1, for the premises located at 3400 East Walnut Street, Colmar, Pennsylvania, assigning 10.1.
     
10.1.3 (8)
 
Amendment to Lease, dated April 1, 2002, between the Company and the BREP I, for premises located at 3400 East Walnut Street, Colmar, Pennsylvania, amending 10.1.

Page 19 of 23

10.1.4 (11)
 
Amendment to Lease, dated December 12, 2007, between the Company and BREP I, for premises located at 3400 East Walnut Street, Colmar, Pennsylvania, amending 10.1.
     
10.2  (12)
 
Lease, dated January 31, 2006, between the Company and First Industrial, L.P. for premises located at 3150 Barry Drive, Portland, Tennessee.
     
10.2.1 (13)
 
Amendment to Lease, dated January 28, 2008, between the Company and First Industrial, L.P. for premises located at 3150 Barry Drive, Portland, Tennessee.
     
10.3 (9)
 
Third Amended and Restated Credit Agreement dated as of July 24, 2006, between the Company and Wachovia Bank, N.A.
     
10.3.1 (14)
 
Amendment to Amended and Restated Credit Agreement, dated December 24, 2007, between the Company and Wachovia Bank, N.A.
     
10.4  (10)
 
Commercial Loan Agreement, dated September 27, 2006, between the Company and the Tennessee Valley Authority.
     
10.5 (6)†
 
Dorman Products, Inc. Amended and Restated Incentive Stock Plan.
     
10.6 (3)†
 
Dorman Products, Inc. 401(k) Retirement Plan and Trust.
     
10.6.1 (7)†
 
Amendment No. 1 to the Dorman Products, Inc. 401(k) Retirement Plan and Trust.
     
10.7 (3)†
 
Dorman Products, Inc. Employee Stock Purchase Plan.
     
10.8 (15)
 
Employment Agreement, dated April 1, 2008, between the Company and Richard N. Berman.
     
10.9 (15)
 
Employment Agreement, dated April 1, 2008, between the Company and Steven L. Berman.
     
31.1
 
Certification of Chief Executive Officer as required by Section 302 of the Sarbanes-Oxley Act of 2002 (filed with this report).
     
31.2
 
Certification of Chief Financial Officer as required by Section 906 of the Sarbanes-Oxley Act of 2002 (filed with this report).
     
32
 
Certification of Chief Executive and Chief Financial Officer as required by Section 906 of the Sarbanes-Oxley Act of 2002 (filed with this report).
________________________
†
Management Contracts and Compensatory Plans, Contracts or Arrangements.
(1)
Incorporated by reference to the Company’s Current Report on Form 8-K filed on May 24, 2007.
(2)
Incorporated by reference to the Exhibits filed with the Company's Registration Statement on Form S-1 andAmendments No. 1, No. 2, and No. 3 thereto (Registration 33-37264).
(3)
Incorporated by reference to the Exhibits files with the Company's Annual Report on Form 10-K for the fiscal year ended December 26, 1992.
(4)
Incorporated by reference to the Exhibits filed with the Company's Registration Statement on Form S-1 and Amendment No. 1 thereto (Registration No. 33-68740).
(5)
Incorporated by reference to the Exhibits filed with the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 1996.
(6)
Incorporated by reference to the Exhibits filed with the Company’s Proxy Statement for the fiscal year ended December 27, 1997.
(7)
Incorporated by reference to the Exhibits filed with the Company's Quarterly Report on Form 10-Q for the quarter ended June 25, 1994.
(8)
Incorporate by reference to the Exhibits filed with the Company's Quarterly Report on Form 10-Q for the quarter ended June 29, 2002.
(9)
Incorporated by reference to the Exhibit filed with the Company’s Current Report on Form 8-K dated May 24, 2005.
 
Page 20 of 23

(10)
Incorporated by reference to the Exhibit filed with the Company’s Current Report on Form 8-K dated September 28, 2006.
(11)
Incorporated by reference to the Exhibits filed with the Company’s Current Report on Form 8-K dated December 12, 2007.
(12)
Incorporated by reference to the Exhibits filed with the Company’s Current Report on Form 8-K dated February 2, 2006.
(13)
Incorporated by reference to the Exhibits filed with the Company’s Current Report on Form 8-K dated January 29, 2008.
(14)
Incorporated by reference to the Exhibits filed with the Company’s Current Report on Form 8-K dated January 2, 2008.
(15)
Incorporated by reference to Exhibits filed with the Company’s Current Report on Form 8-K dated April 1, 2008.

Page 21 of 23

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.


   
Dorman Products, Inc.
     
     
Date November 4,  2008
   
   
\s\ Richard Berman
   
Richard Berman
   
Chairman and Chief Executive Officer
   
(Principal executive officer)
     
     
     
Date November 4,, 2008
   
   
\s\ Mathias Barton
   
Mathias Barton
   
Chief Financial Officer and
   
Principal Accounting Officer
   
(Principal financial officer)

Page 22 of 23
 
EXHIBIT INDEX
 
3.1
 
Amended and Restated Articles of Incorporation of the Company dated May 23, 2007.
     
3.2
 
Bylaws of the Company.
     
 
Amended and Restated Shareholders’ dated July 1, 2006.
     
10.1
 
Lease, dated December 1, 1990, between the Company and the Berman Real Estate Partnership, for premises located at 3400 East Walnut Street, Colmar, Pennsylvania.
     
10.1.1
 
Amendment to Lease, dated September 10, 1993, between the Company and the Berman Real Estate Partnership, for premises located at 3400 East Walnut Street, Colmar, Pennsylvania, amending 10.1.
     
10.1.2
 
Assignment of Lease, dated February 24, 1997, between the Company, the Berman Real Estate Partnership and BREP 1, for the premises located at 3400 East Walnut Street, Colmar, Pennsylvania, assigning 10.1.
     
10.1.3
 
Amendment to Lease, dated April 1, 2002, between the Company and the BREP I, for premises located at 3400 East Walnut Street, Colmar, Pennsylvania, amending 10.1.
     
10.1.4
 
Amendment to Lease, dated December 12, 2007, between the Company and BREP I, for premises located at 3400 East Walnut Street, Colmar, Pennsylvania, amending 10.1.
     
10.2
 
Lease, dated January 31, 2006, between the Company and First Industrial, L.P. for premises located at 3150 Barry Drive, Portland, Tennessee.
     
10.2.1
 
Amendment to Lease, dated January 28, 2008, between the Company and First Industrial, L.P. for premises located at 3150 Barry Drive, Portland, Tennessee.
     
10.3
 
Third Amended and Restated Credit Agreement dated as of July 24, 2006, between the Company and Wachovia Bank, N.A.
     
10.3.1
 
Amendment to Amended and Restated Credit Agreement, dated December 24, 2007, between the Company and Wachovia Bank, N.A.
     
10.4
 
Commercial Loan Agreement, dated September 27, 2006, between the Company and the Tennessee Valley Authority.
     
10.5
 
Dorman Products, Inc. Amended and Restated Incentive Stock Plan.
     
10.6
 
Dorman Products, Inc. 401(k) Retirement Plan and Trust.
     
10.6.1
 
Amendment No. 1 to the Dorman Products, Inc. 401(k) Retirement Plan and Trust.
     
10.7
 
Dorman Products, Inc. Employee Stock Purchase Plan.
     
10.8
 
Employment Agreement, dated April 1, 2008, between the Company and Richard N. Berman.
     
10.9
 
Employment Agreement, dated April 1, 2008, between the Company and Steven L. Berman.
     
 
Certification of Chief Executive Officer as required by Section 302 of the Sarbanes-Oxley Act of 2002 (filed with this  report).
     
 
Certification of Chief Financial Officer as required by Section 906 of the Sarbanes-Oxley Act of 2002 (filed with this report).
     
 
Certification of Chief Executive and Chief Financial Officer as required by Section 906 of the Sarbanes-Oxley Act of 2002.

 
Page 23 of 23  
Exhibit 4.1

AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT

THIS AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT, entered into as of July 1, 2006, amends and restates in its entirety the Amended and Restated Shareholders’ Agreement made as of the   1 st day of August, 2004 (“Shareholders’ Agreement”), by and among Richard Berman (“Richard”), Steven Berman (“Steven”), Jordan Berman (“Jordan”), Marc Berman (“Marc”), Fred Berman (“Fred”), Deanna Berman (“Deanna”) and all of the shareholders set forth on Exhibit A attached hereto (the “Additional Shareholders”), all of whom are shareholders of Dorman Products, Inc. (formerly R&B, Inc.), a Pennsylvania corporation (the “Company”) (Richard, Steven, Jordan, Marc, Fred, Deanna and the Additional Shareholders are sometimes hereinafter collectively referred to as the “Shareholders” or individually referred to as “Shareholder”).

BACKGROUND

A.           As of the date of this Agreement, the Shareholders each own that certain amount of shares of the Company’s common stock as set forth in the books and records of the Company (these shares now owned, together with any other shares of the Company’s capital stock which hereafter may be issued to or acquired by the Shareholders, are collectively referred to in this Agreement as the “Shares”).

B.            The Shareholders desire for the Shareholders’ Agreement to be terminated, and to be replaced in its entirety by this Amended and Restated Shareholders’ Agreement.

 
1
 

C.            The Shareholders desire to make certain provisions relating to the rights of the Shareholders to dispose of their Shares.

NOW, THEREFORE, incorporating the foregoing herein, in consideration of the premises and of the mutual covenants, conditions and agreements contained herein, the parties hereto, each intending to be legally bound hereby, agree as follows:

 
1.              Restrictions on Transfer and Issuance .

(a)           Except as set forth in Section 1(b), Section 1(c), Section 1(d),  Section 1(e), and Section 1(f) herein, no Shareholder shall sell, assign, transfer, give, bequeath or donate (other than gifts, bequests or donations by a Shareholder which do not, in the aggregate, exceed 5% of the Shares owned by that Shareholder on the date of this Agreement) or otherwise dispose of, or pledge, deposit or otherwise encumber, in any way or manner whatsoever, whether voluntary or involuntary, any of the Shares now or hereafter owned (of record or beneficially) by him or her except in accordance with the terms and conditions of this Agreement.

(b)           Notwithstanding anything herein to the contrary, the Shareholders may each transfer their respective Shares, in whole or in part, and in all cases as they shall determine in their sole discretion, to (i) their lineal descendants (including, but not limited to, their children and their children’s children (including but not limited to their children’s adopted children) (collectively, “Lineal Descendants”); (ii) the spouses or partners of their Lineal Descendants; and/or (iii) a trust for the benefit of themselves, a Lineal Descendant and/or the spouse or partner of a Lineal Descendant.

 
2
 

(c)           Notwithstanding anything herein to the contrary, Jordan and/or Deanna, individually or together, may sell up to 300,000 Shares in the aggregate to third parties, without the prior consent of the Shareholders, provided (1) such 300,000 Shares in the aggregate are sold over a period of eighteen   months or longer, and (2) no more than 50,000 Shares are sold in any three month period.

(d)           Notwithstanding anything herein to the contrary, Jordan and/or Deanna, individually or together, may transfer Shares, as they shall determine in their sole discretion, to a Family Foundation (of which the initial trustees shall be Jordan, Deanna, Richard, Steven, Marc and Fred).

(e)           Notwithstanding anything herein to the contrary, Jordan and/or Deanna, individually or together, may pledge to a third party, in the aggregate, an amount not to exceed 175,000 Shares as security and collateral in connection with financings and/or guarantees on behalf of Lineal Descendants, the spouses or partners of their Lineal Descendants, and/or trust for the benefit of a Lineal Descendant and/or the spouse or partner of a Lineal Descendant.

(f)           Any and all Shares transferred by a Shareholder in accordance with, and pursuant to, Section 1(b) herein, shall not then be transferred or sold by the transferee, (except in accordance with, and pursuant to, Section 1(b) herein), for three years (the “Restriction Period”) from the date of such transfer (the foregoing shall hereafter be referred to as the “Substantial Transfer Restrictions”).  Without limiting the foregoing, and for the avoidance of doubt, the parties to this Agreement acknowledge and agree that the Shares owned by the Additional Shareholders, as of the date hereof, as well as certain of the Shares owned by Richard, Steven, Fred and Marc (relating to Shares transferred to them by Jordan and/or Deanna as of the date hereof) are subject to the Substantial Transfer Restrictions for the Restriction Period.  Furthermore, the Shares subject to the Substantial Transfer Restrictions shall not be sold pursuant to Section 2 herein until after the Restriction Period has lapsed.

 
3
 

2.              Shareholder’s Limited Right to Dispose of Shares During His Lifetime .

(a)           If any Shareholder during his lifetime proposes to sell all or any of his Shares, then that Shareholder (the “Selling Shareholder”) shall first provide written notice (the “Notice”) to the other Shareholders setting forth the number of Shares which the Selling Shareholder proposes to sell (the “Offered Shares”).

(b)           The Notice shall be deemed to be the Selling Shareholder’s offer to sell any and all of his Offered Shares to the other Shareholders (“Offeree Shareholders”) at the price set forth in subparagraph 4(a) of this Agreement and upon the terms set forth in subparagraph 4(b) of this Agreement.  For a period of 30 days after the effective date of the Notice, the Offeree Shareholders shall have options, exercisable by written notice to the Selling Shareholder with a copy to each of the other Offeree Shareholders, to accept the Selling Shareholder’s offer as to the Offered Shares.  Each Offeree Shareholder who exercises this option agrees, by so doing, to purchase all or that portion of the Offered Shares which he specifies in his written notice of exercise.  If the aggregate number of Offered Shares as to which the Offeree Shareholders exercise their options exceeds the total number of Offered Shares, then each Offeree Shareholder who exercised his option shall be entitled to purchase that proportionate part of the Offered Shares which the number of Shares owned by that Offeree Shareholder bears to the total number of Shares owned by all Offeree Shareholders exercising their options under this subparagraph 2(b) (or any other proportionate part as those Offeree Shareholders may agree among themselves).

 
4
 

(c)            Sale to Third Parties .  If, at the end of the 30-day period described in subparagraph 2(b) of this Agreement, options have not been exercised by the Offeree Shareholders to purchase all of the Offered Shares, then the Selling Shareholder will be free for a period of 90 days thereafter to sell those of the Offered Shares which the Offeree Shareholders have not agreed to purchase to any prospective purchasers at any price and upon any terms and conditions.  If all of the Offered Shares are not sold within this 90-day period, then the Selling Shareholder may not sell any of his Shares thereafter without again complying with this Paragraph 2.

(d)            Death of a Shareholder .

(e)            Options of Surviving Shareholders .  Upon the death of a Shareholder, the surviving Shareholders shall have options, exercisable by written notice to the personal representatives of the deceased Shareholder (or, if no personal representative of the deceased Shareholder has been duly qualified at the time of exercise, then to the Company, which will provide the notice to the personal representative first appointed immediately after appointment) within 30 days after the date of the deceased Shareholder’s death, to purchase from the personal representatives of the deceased Shareholder, and the personal representatives of the deceased Shareholder shall sell to each surviving Shareholder who exercises this option, all or that portion of the deceased Shareholder’s Shares which that surviving Shareholder specifies in his written notice of exercise.  If the aggregate number of the deceased Shareholder’s Shares as to which the surviving Shareholders exercise their options exceeds the number of the deceased Shareholder’s Shares, then each surviving Shareholder who exercised his option shall be entitled to purchase that proportionate part of the Shares of the deceased Shareholder which the number of Shares owned by that surviving Shareholder bears to the total number of Shares owned by all surviving Shareholders who have exercised their options under this subparagraph 3(a) (or any other proportionate part as those surviving Shareholders may agree among themselves).  Purchases made under this Paragraph 3 shall be at the price set forth in subparagraph 4(a) of this Agreement and upon the terms set forth in subparagraph 4(c) of this Agreement.

 
5
 

(f)             Sale to Third Parties .  If the surviving Shareholders purchase less than all of the remaining Shares of the deceased Shareholder pursuant to the exercise of the options granted in subparagraph 3(a) of this Agreement, then the personal representatives of the deceased Shareholder shall be free to see all of the deceased Shareholder’s then remaining Shares to any or all of the surviving Shareholders or to third parties, provided that any sales to third parties may only be made (i) in unsolicited broker’s transactions from time to time on any exchange or in the over-the-counter market, if the Shares to be sold in any such transaction may be sold without registration pursuant to the Securities Act of 1933 (the “1933 Act”), or (ii) in an offering of Shares to be sold pursuant to a registration statement under the 1933 Act, in which Shares may only be sold in blocks of not more than 25,000 Shares.

 
6
 

3.             Purchase Price; Terms; Settlement .

(a)           The purchase price (“Purchase Price”) per share for any Share to be sold pursuant to the exercise of an option or options under this Agreement will be determined in the following manner:

(i)           If the total number of votes which may be cast in the election of the Company’s Directors by holders of the Shares to be purchased pursuant to the exercise of options granted under this Agreement is greater than or equal to 5% of the number of votes which may be cast in the election of Directors by those holders of all of the issued and outstanding voting securities of the Company (including all votes which might be cast after conversion by the holders of securities convertible into voting securities) at the time those options first become exercisable who are not Shareholders, or if the class of securities to be sold is neither listed on a national securities exchange at the time of sale nor regularly traded in the over-the-counter market, then the Purchase Price per share shall be the value of the entire block of Shares to be so purchased (taking into account any possible impact of the sale of a block of Shares of that size upon the market for the Company’s securities generally), as determined by a recognized investment banking firm (the expenses of which shall be borne per capita by the seller and the purchasers) selected by the Company, divided by the number of Shares to be so purchased;

(ii)          If the total number of votes which may be cast in the election of the Company’s Directors by holders of the Shares to be purchased pursuant to the exercise of options granted under this Agreement is less than 5% of the number of votes which may be cast in the election of Directors by those holders of all of the issued and outstanding voting securities of the Company (including all votes which might be cast after conversion by the holders of securities convertible into voting securities) at the time those options first become exercisable who are not Shareholders, and if the class of securities to be sold is either listed on a national securities exchange at the time of sale or regularly traded in the over-the-counter market, then the Purchase Price per Share shall be 95% (in order to take into account the absence of transaction costs which would otherwise be incurred in open market transactions) of the average closing market price per share of the class of securities to be so purchased over the 30 days preceding the date on which the options first become exercisable, or over any shorter time within that 30-day period during which the securities have been listed on a national securities exchange or regularly traded in the over-the counter market.

 
7
 

(b)           Settlement for the purchase of Shares by a Shareholder pursuant to the options granted in Paragraph 2 of this Agreement shall be made within 30 days following the effective date of the applicable notice giving rise to the exercisability of the options.  The Purchase Price per Share shall be payable in full at settlement in immediately available funds; provided, however, that if the total price to be paid by any purchaser of Shares exceeds $500,000, then payment for any purchase of those Shares by that Purchaser may be made with not less than $500,000 of the total Purchase Price paid in immediately available funds at settlement, and the balance by the execution and delivery by that purchaser of his promissory note in the form of Exhibit B (attached hereto) in the amount of the balance.

(c)           Settlement for the purchase of Shares by Shareholder pursuant to the options granted in Paragraph 3 of this Agreement shall be made within 60 days following the date of the deceased Shareholder’s death.  The Purchase Price shall be payable in full at settlement in immediately available funds.

 
8
 

(d)           Unless otherwise agreed by all of the purchasers and sellers, all settlements for the purchase and sale of Shares will be held at the principal executive offices of the Company during regular business hours.  The precise date and hour of settlement must be fixed by the purchaser or purchasers (within the time limits allowed by the provisions of this Agreement) by notice in writing to the seller given at least five days in advance of the settlement date specified.  In the event that more than one purchaser is involved in a settlement and the purchasers cannot agree on a precise time of settlement, the precise time of settlement shall be 2:00 p.m. (local time at the principal executive offices of the Company) on the 30 th day following the date of exercise of the last option exercised.

(e)           At settlement, the stock certificate or certificates representing the Shares being sold shall be delivered by the seller to the purchaser or purchasers, duly endorsed for transfer or with executed stock powers attached, with signatures guaranteed by a bank or member firm of the New York Stock Exchange, and with any necessary documentary and transfer tax stamps affixed by the seller.

4.             Copy of Agreement to be Kept on File .  The Company will keep on file at its principal executive offices, and will exhibit to any Shareholder or his duly authorized representative at any and all reasonable times, an executed copy of this Agreement and all amendments thereto and a copy of its most recent fiscal year end financial statements.

5.             Stock Certificates to be Marked with Legend .  All certificates representing Shares now outstanding or hereafter issued by the Company to the Shareholders will be marked with the following legend:

 
9
 

“This certificate and the shares represented hereby are held subject to the terms, covenants and conditions of a certain Amended and Restated Shareholders’ Agreement (the “Agreement”), by and among certain of the Company’s shareholders, as it may be amended from time to time, and may not be transferred or disposed of except in accordance with the terms and provisions of the Agreement.  A copy of the Agreement and all amendments thereto is on file and may be inspected at the principal executive offices of the Company.”

The Company will issue replacement stock certificates without the foregoing legend to any Shareholder upon request following termination of this Agreement.

6.             Effective Date; Term of Agreement .

(a)           This Agreement shall become effective immediately upon the Company becoming subject to the periodic reporting requirements of Section 13 of the Securities Exchange Act of 1934, as amended, with respect to any class of its capital stock and, unless terminated sooner by unanimous agreement in writing of the then Shareholders, this Agreement will terminate on the earlier of (i): 10 business days after the Company first becomes subject to the periodic reporting requirements of Section 13 of the Securities Exchange Act of 1934, as amended (the “1934 Act”), by reason of the effectiveness of a registration statement (“Registration Statement”) referred to in Section 15(d) of the 1934 Act, if the sale of the shares offered pursuant to the Registration Statement has not been consummated by that 10 th business day; and (ii) the death of the second-to-last of the then Shareholders (but Paragraph 3 of this Agreement will apply to the death of that second-to-last Shareholder).

(b)           Notwithstanding anything to the contrary contained in this Agreement, if all of the Shareholders die within 30 days of each other, then the provisions of this Agreement will not pertain with respect to the deaths of those Shareholders and this Agreement will terminate in all respects effective as of the first of those deaths.  Any and all transfers, payments or other actions made or taken with respect to a sale of Shares made during that 30-day period will be deemed rescinded by the parties or their respective personal representatives.

 
10
 

7.             Rights, Obligations and Remedies .  The rights and obligations under, and the remedies to enforce, this Agreement are joint and several as to the Shareholders with each being completely free to enforce any or all of the rights or obligations under this Agreement against any of the others with or without the concurrence or joinder of any of the others.  The Shares are unique, and recognizing that the remedy at law for any breach or threatened breach by a party hereto of the covenants and agreements set forth in this Agreement would be inadequate and that any such breach or threatened breach would cause immediate and permanent damage which would be irreparable and the exact amount of which would be impossible to ascertain, the parties hereto agree that in the event of any breach or threatened breach of any covenant or agreement set forth in this Agreement, in addition to any and all other legal and equitable remedies which may be available, any party hereto may specifically enforce the terms of this Agreement and may obtain temporary and/or permanent injunctive relief without the necessity of proving actual damage by reason of any breach or threatened breach hereof and, to the extent permissible under the applicable statutes and rules of procedure, a temporary injunction may be granted immediately upon the commencement of any such suit and without notice.

8.              Entire Agreement .  This Agreement and the Exhibit hereto contain the entire understanding among the parties hereto with respect to the subject matter of this Agreement, and supersede all prior and contemporaneous agreements and understandings, inducements or conditions, express or implied, oral or written, with respect to the subject matter of this Agreement, including but not limited to, the Original Shareholders’ Agreement (which such prior agreement is expressly terminated as of the date hereof).

 
11
 

9.             Amendment, Modification and Termination .  This Agreement may be amended, modified or terminated at any time or times by the unanimous agreement in writing of the then Shareholders.  Subject to the provisions of subparagraph 7(b) of this Agreement, no amendment, modification or termination, nor any termination pursuant to Paragraph 7 of this Agreement, shall affect the right of any person or entity to receive, or the obligation of any person or entity to pay, on the terms and conditions of this Agreement, the Purchase Price for Shares sold pursuant to this Agreement prior to that amendment, modification or termination, or the right or obligation of any person or entity to sell or purchase Shares on the terms and conditions of this Agreement, if the event giving rise to that right or obligation to sell or purchase Shares has in fact taken place prior to that amendment, modification or termination.

10.            Miscellaneous .

(a)            Indulgences, Etc.   Any failure or delay on the part of any party to exercise any right, remedy, power or privilege under this Agreement will not operate as a waiver thereof, nor will any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor will any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of that right, remedy, power or privilege with respect to any other occurrence.

(b)            Controlling Law .  This Agreement and all questions relating to its validity, interpretation, performance and enforcement (including, without limitation, provisions concerning limitations of actions), shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, notwithstanding any conflict-of-laws doctrines of that Commonwealth or any other jurisdiction to the contrary, and without the aid of any canon, custom or rule of law requiring construction against the draftsman.

 
12
 

(c)            Notices .  All notices, requests, demands and other communications required or permitted under this Agreement must be in writing and will be deemed to have been duly given, made and received only when delivered (personally, by facsimile transmission or by courier service such as Federal Express, or by other messenger) or when deposited in the United States mails, registered or certified mail, postage prepaid, return receipt requested, addressed to the Shareholders and the Company at their respective addresses set forth in the Company’s records.  In addition, notice by mail must be by airmail if posted outside of the continental United States.  Any Shareholder may alter the address to which communications or copies are to be sent by giving notice of any change of address to the Company and to the other Shareholders in conformity with the provisions of this paragraph for the giving of notice.

(d)            Binding Nature of Agreement; No Assignment .  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their representative heirs, personal representatives, successors and assigns, except that no party may assign or transfer its rights or obligations under this Agreement, except for the right to receive payments pursuant to a settlement under Paragraph 4 of this Agreement, without the prior written consent of the other parties hereto.

 
13
 

(e)            Execution in Counterparts .  This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original and all of which will together constitute one and the same instrument.

(f)             Provisions Separable .  The provisions of this Agreement are independent of and separable from each other, and no provision will be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

(g)            Paragraph Headings .  The paragraph headings in this Agreement are for convenience only; they form no part of this Agreement and will not affect its interpretation.

(h)            Gender, Etc.   Words used herein, regardless of the number and gender specifically used, will be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate.

(i)             Number of Days .  In computing the number of days for purposes of this Agreement, all days will be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or holiday on which Federal banks are or may elect to be closed, then the final day will be deemed to be the next day which is not a Saturday, Sunday or such holiday.
 
 
14
 

(j)             Exhibit .  The Exhibit attached to this Agreement is hereby incorporated by reference into, and made a part of, this Agreement.

*           *           *           *           *

 
15
 

Intending to be legally bound, the parties hereto have hereby executed and delivered this Agreement as of the date first above written.

 
 
Richard Berman
 
   
   
 
 
Steven Berman
 
   
 
 
Deanna Berman
 
   
   
 
 
Jordan Berman
 
   
   
 
 
Marc Berman
 
   
   
 
 
Fred Berman
 
   
   
 
 
Richard Berman, Trustee u/a/t dated
 
October 27, 2003 f/b/o Joshua Berman
 
(EIN #25-6844141)
 
   
   
 
 
Richard Berman, Trustee u/a/t dated
 
October 27, 2003 f/b/o Matthew Berman
 
(EIN #25-6844140)
 
   
   
 
 
Richard Berman, Trustee u/a/t dated
 
October 27, 2003 f/b/o Zachary Berman
 
(EIN #25-6844139)
 
   
   
 
 
Richard Berman, Trustee u/a/t dated
 
October 27, 2003 f/b/o Alexander Berman
 
(EIN #25-6844138)
 
   
   
 
 
Richard Berman, Trustee u/a/t dated
 
October 27, 2003 f/b/o Nicholas Berman
 
(EIN #25-6844137)
 

 
16
 
 
   
 
 
Richard Berman, Trustee u/a/t dated
 
October 27, 2003 f/b/o Jenna Rose Berman
 
(EIN #25-6844136)
 
   
   
 
 
Steven Berman, Trustee u/a/t dated
 
October 27, 2003 f/b/o Nina Berman
 
(EIN #25-6844135)
 
   
   
 
 
Steven Berman, Trustee u/a/t dated
 
October 27, 2003 f/b/o Lee Berman
 
(EIN #25-6844134)
 
   
   
 
 
Steven Berman, Trustee u/a/t dated
 
October 27, 2003 f/b/o Holly Berman
 
(EIN #25-6844133)
 
   
   
 
 
Frederick Berman, Trustee u/a/t dated
 
October 27, 2003 f/b/o Scott Berman
 
(EIN #25-6844132)
 
   
   
 
 
Frederick Berman, Trustee u/a/t dated
 
October 27, 2003 f/b/o Michael Berman
 
(EIN #25-6844131)
 
   
   
 
 
Frederick Berman, Trustee u/a/t dated
 
October 27, 2003 f/b/o Blair Berman
 
(EIN #25-6844130)
 
   
   
 
 
Marc Berman, Trustee u/a/t dated
 
October 27, 2003 f/b/o Daniel Berman
 
(EIN #25-6844129)
 
   
   
 
 
Marc Berman, Trustee u/a/t dated
 
October 27, 2003 f/b/o Andrew Berman
 
(EIN #25-6844128  
 

 
17
 

FOR VALUE RECEIVED, and in order to induce the Shareholders to enter into the foregoing Agreement, the Company hereby covenants and agrees that, upon the death of any Shareholder, to the extent that any of that deceased Shareholder’s Shares are not purchased by the surviving Shareholders and may not be sold without registration pursuant to the 1933 Act, the Company will use its best efforts to:

(a)           Prepare and file with the Securities and Exchange Commission (the “Commission”), within 60 days after the request of the personal representatives of the deceased Shareholder, a registration statement (the “Registration Statement”) with respect to all of the deceased Shareholder’s Shares (the “Registrable Shares”), and cause the Registration Statement to become effective;

(b)           Prepare and file with the Commission any amendments and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement (the “Prospectus”) as may be necessary to keep the Registration Statement effective for a period for not less than 120 days;

(c)           Furnish to the personal representatives of the deceased Shareholder that number of copies of the Registration Statement and the Prospectus (including each preliminary Prospectus), each amendment and supplement thereto and any other documents as those personal representatives may reasonably request, in order to facilitate the disposition of the Registrable Shares;

(d)           Register or qualify the Registrable Shares under the securities or blue sky laws of any jurisdictions which the personal representatives of the deceased Shareholder reasonably request, and do any and all other acts and things which may be reasonably necessary or advisable to enable those personal representatives to consummate the disposition in those jurisdictions of the Registrable Shares (provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not be required so to qualify but for this subparagraph (d), (ii) subject itself to taxation in any jurisdiction where it would not be so subject but for this subparagraph (d), or (iii) consent to general service of process in any jurisdiction where it would not be required so to consent but for this subparagraph (d));

 
18
 

(e)           Notify the personal representatives of the deceased Shareholder, at any time when a Prospectus is required to be delivered under the 1933 Act within the period during which the Company is required to keep the Registration Statement effective, of the happening of any event as a result of which the Prospectus contains an untrue statement of a material fact or omits any fact necessary to make a statement not misleading, and if that event occurs within 120 days after the effective date of the Registration Statement, the Company will, at the request of the personal representatives of the deceased Shareholder, prepare a supplement or amendment to the Prospectus so that, as thereafter delivered to purchasers of the Registrable Shares, the Prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make a statement not misleading;

(f)            Cause the Registrable Shares to be listed on the securities exchanges on which securities of the same class and series issued by the Company are then listed; and

 
19
 

(g)           Provide a transfer agent and registrar for all of the Registrable Shares not later than the effective date of the Registration Statement.

All of the expenses incident to the Company’s registration of the Registrable Shares will be borne by the estate of the deceased Shareholder.

 
Dorman Products, Inc.
         
         
 
By:
 
 
   
Name:
Richard Berman
   
Title:
President
         
 
Attest:
 
         
         
 
By:
 
 
   
Name:
Thomas J. Knoblauch
   
Title:
Assistant Secretary

 
20
 

Exhibit A

ADDITIONAL SHAREHOLDERS OF R&B, INC.

1.
Richard Berman, Trustee u/a/t dated October 27, 2003 f/b/o Joshua Berman (EIN #25-6844141)

2.
Richard Berman, Trustee u/a/t dated October 27, 2003 f/b/o Matthew Berman (EIN #25-6844140)

3.
Richard Berman, Trustee u/a/t dated October 27, 2003 f/b/o Zachary Berman (EIN #25-6844139)

4.
Richard Berman, Trustee u/a/t dated October 27, 2003 f/b/o Alexander Berman (EIN #25-6844138)

5.
Richard Berman, Trustee u/a/t dated October 27, 2003 f/b/o Nicholas Berman (EIN #25-6844137)

6.
Richard Berman, Trustee u/a/t dated October 27, 2003 f/b/o Jenna Rose Berman (EIN #25-6844136)

7.
Steven Berman, Trustee u/a/t dated October 27, 2003 f/b/o Nina Berman (EIN #25-6844135)

8.
Steven Berman, Trustee u/a/t dated October 27, 2003 f/b/o Lee Berman (EIN #25-6844134)

9.
Steven Berman, Trustee u/a/t dated October 27, 2003 f/b/o Holly Berman (EIN #25-6844133)

10.
Frederick Berman, Trustee u/a/t dated October 27, 2003 f/b/o Scott Berman (EIN #25-6844132)

11.
Frederick Berman, Trustee u/a/t dated October 27, 2003 f/b/o Michael Berman (EIN #25-6844131)

12.
Frederick Berman, Trustee u/a/t dated October 27, 2003 f/b/o Blair Berman (EIN #25-6844130)

13.
Marc Berman, Trustee u/a/t dated October 27, 2003 f/b/o Daniel Berman (EIN #25-6844129)

14.
Marc Berman, Trustee u/a/t dated October 27, 2003 f/b/o Andrew Berman (EIN #25-6844128  

 
21
 

Exhibit B

PROMISSORY NOTE

$ ___________
 
___________ , 20 __

FOR VALUE RECEIVED,                                                                                                                      (“Maker”) promises to pay to                                                                                                                       (“Payee”) the principal sum of $                 (the “Principal Sum”), together with interest from the date of this Note on the unpaid balance of the Principal Sum at the “prime rate” per annum as published from time to time in The Wall Street Journal , plus ¼ % per annum, as follows:

1.            Payment .  The Principal Sum shall be payable in                             consecutive, equal monthly installments, without set-off or deduction, commencing on the first day of the first month after the date hereof and on the first day of each month thereafter until the entire Principal Sum has been paid.  Each monthly installment o the Principal Sum shall be accompanied by accrued interest on the unpaid balance of the Principal Sum.

2.            Place of Payment .  The principal and interest shall be payable at                                                                                                       , or at such other place as Payee, from time to time, may designate in writing.

3.            Prepayment .  Maker shall have the right to prepay, without notice and without prepayment penalty or premium, on the first day of any month, the entire unpaid balance of the Principal Sum or any part thereof.  Each prepayment of the Principal Sum or any part thereof shall be accompanied by accrued interest on the amount prepaid to the date of prepayment.  Prepayments applied to installments of principal shall be applied in inverse order of maturity.

4.            Acceleration .  If Maker should fail to pay any installment of the Principal Sum or interest on the date fixed for payment, Payee, at its option and without notice to Maker, may declare due and payable immediately the entire unpaid balance of the Principal Sum and all accrued interest.  From and after the date of default, the applicable rate of interest shall be 18%, but not more than the highest rate allowable by law.

5.            Costs and Expenses .  In addition to all other sums payable under this Note, Maker also agrees to pay to Payee, on demand, all reasonable costs and expenses (including reasonable attorneys’ fees and legal expenses) incurred by Payee in the enforcement of Maker’s obligations under this Note.

6.            Severability .  If any provision of this Note is held to be invalid or unenforceable by court of competent jurisdiction, the other provisions of this Note shall remain in full force and effect and shall be construed liberally in favor of Payee in order to effectuate the provisions of this Note.

7.            Governing Law .  This instrument shall be governed by and construed according to the laws of the Commonwealth of Pennsylvania.
 
22
 
8.            Successors and Assigns .  The provisions of this Note shall be binding upon and inure to the benefit of Maker and Payee and their respective heirs, executors or administrators and assigns.

9.            Shareholders’ Agreement .  This Note is the Note referred to in subparagraph 4(b) of that certain Amended and Restated Shareholders’ Agreement by and among Maker, Payee and certain other shareholders of Dorman Products, Inc., a Pennsylvania corporation.
 
 
Witness:
 
Maker
     
     

 
23
 
Exhibit 31.1
CERTIFICATION

I, Richard Berman certify that:

1. I have reviewed this Form 10-Q of Dorman Products, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 4, 2008


\s\ Richard Berman
Richard Berman
President and Chief Executive Officer
 
 

Exhibit 31.2
CERTIFICATION

I, Mathias Barton certify that:

1. I have reviewed this Form 10-Q of Dorman Products, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have,
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 4, 2008


\s\ Mathias Barton
Mathias Barton
Chief Financial Officer
 
 
 
Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

This Certification is intended to accompany the Quarterly Report of Dorman Products, Inc. (the "Company") on Form 10-Q for the period ended September 27, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), and is given solely for the purpose of satisfying the requirements of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. To the best of their knowledge, the undersigned, in their respective capacities as set forth below, hereby certify that:

1.       The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.       The  information  contained  in the  Report  fairly  presents,  in all material  respects,  the  financial condition and results of operations of the Company.


/s/ Richard N. Berman
Chief Executive Officer
Date: November 4, 2008


/s/   Mathias J. Barton
Chief Financial Officer
Date: November 4, 2008