Samuel Manu-Tech Inc. - First Quarter Results



    TORONTO, April 24 /CNW/ -

    RESULTS OF OPERATIONS

    Net Sales

    Sales for the three months to March 31, 2007 were $248.1 million, which
represents an increase of $35.3 million or 16.6% over the $212.8 million
achieved in the comparable period of last year with most of the increase
attributable to the acquisitions completed in 2006. In addition, steel prices
strengthened in the first quarter which also contributed to the increase.
    Sales of the Packaging segment, at $106.2 million, were up $2.3 million
or 2.2%. This increase was due entirely to the acquisition of the
Gerrard-Ovalstrapping Packaging business (GO Packaging) in October 2006 which
more than offset decreases in some of our traditional markets including the
forestry and construction sectors which continued to soften in the first
quarter. Metal Processing sales for the quarter were $114.1 million, which is
up 38.5%. This increase was due primarily to higher sales of steel pressure
vessels and welded tubular assemblies reflecting the acquisitions of Silvan
Industries, Inc. (Silvan) in May 2006 and Advanced Tubing Technology, Inc.
(Tube.tec) in June 2006. Sales of stainless steel tubular products and roll
formed products were also up compared to last year. These increases were
offset in part by lower steel pickling sales reflecting the slowdown in the
automotive sector and the resulting reduction in Canadian steel pickling
demand. Distribution sales were $27.8 million. This was up $1.3 million or
4.9% over last year with higher sales in the U.S. more than offsetting
decreases in Canada. The increases in the U.S. reflected higher stainless
steel pricing levels, more favourable market conditions and increased volumes.
Canadian sales continued to be negatively impacted by the slowdown in the
Southern Ontario manufacturing industries.

    Earnings

    Net earnings for the first three months of 2007 were $7.0 million or
$0.22 per share, compared to the $10.1 million or $0.32 per share achieved in
the comparable quarter of last year. The first quarter results this year
include a pre-tax restructuring charge of $3.7 million to cover the closure of
the Scarborough, Ontario strapping manufacturing facility as outlined in Note
4 to the interim consolidated financial statements. This restructuring charge
of $2.4 million after tax negatively impacted earnings in the first quarter by
$0.08 per share.
    Operating profit (see below for cautionary language regarding non-GAAP
measures) for the first quarter amounted to $15.9 million which is
$0.4 million or 2.6% above last year's $15.5 million with the increase due to
incremental profits flowing from the acquisitions completed in 2006 as well as
improved performance from roll formed and stainless steel tubular products and
U.S. distribution.
    The Packaging segment had an operating profit of $5.6 million which was
35.8% below the comparable quarter of last year, with decreases in both Canada
and the U.S. offset in part by the contribution from GO Packaging. The
decreased profitability reflects the continued slowdown in the Canadian
forestry and construction sectors, increased competition and higher steel
costs. The U.S. operations were also negatively impacted by certain start-up
costs incurred related to the new steel strapping facility in Heath County,
Ohio which is not scheduled to be fully operational until the end of the third
quarter of this year.
    The Metal Processing segment generated profits of $10.7 million which was
20.5% above the comparable quarter of last year. Profits from steel pressure
vessel and tubing operations were up reflecting the acquisitions of Silvan and
Tube.tec in 2006. Profits from roll formed products and stainless steel
tubular products were also up reflecting increased sales levels and a more
favourable product mix compared to last year. These increases were offset in
part by decreased profits from steel pickling operations reflecting lower
overall volumes and the impact of $2.0 million of additional costs incurred in
the first quarter associated with workforce reductions as the Canadian
operation downsized to meet lower demand levels.
    Within the Distribution segment there was an operating profit of
$2.2 million compared to a profit of $1.0 million in the comparable quarter of
last year with increases in the U.S. more than offsetting decreases in Canada,
reflecting increased volumes and pricing levels.

    FINANCIAL CONDITION

    Liquidity and Capital Resources

    Cash flow before changes in non-cash working capital for the first
quarter of 2007 amounted to $12.0 million which is down $3.9 million from
$15.9 million in the comparable quarter of last year. Overall cash flow used
in operating activities was $6.8 million compared to cash flow from operating
activities of $12.9 million last year. This reflects decreased levels of
profitability and increased requirements for non-cash working capital.
    Cash used in investing activities at $9.4 million was above last year's
$3.8 million and is due to increased spending on capital assets. Cash flow
generated from financing activities amounted to $6.0 million in the quarter
compared to $4.9 million used last year with the increase in cash this year
due to the net increase in long-term debt. During the quarter, 25,000 stock
options were exercised which resulted in the issuance of 25,000 common shares
in exchange for proceeds of $0.2 million. Dividends paid on common shares
amounted to $3.2 million in the quarter which was the same as last year
reflecting a dividend of $0.10 per share. In aggregate, the cash position
decreased by $10.1 million compared to a $4.1 million increase last year. The
Company continues to maintain credit facilities with various banks and at
March 31, 2007 had available unused credit facilities of approximately
$66 million.

    Capital Expenditures

    Capital expenditures in the three months to March 31, 2007 were
$9.5 million which was $3.7 million higher than depreciation and amortization
of $5.8 million and above the $3.9 million invested during the first quarter
last year. Expenditures in the current quarter related primarily to equipment
for our new steel strapping manufacturing facility in Heath, Ohio, and our new
roll forming facility in Iuka, Mississippi.

    Working Capital

    Working capital at March 31, 2007 was $244.5 million, an increase of
$8.2 million from the year-end position. An increase in receivables and
inventories was offset in part by higher bank indebtedness and payables.
Overall, the working capital ratio decreased slightly to 3.1 from 3.3 at the
year-end position, but increased compared to the end of the first quarter last
year when it was 2.9.

    Net Borrowings to Capitalization

    The Company's net borrowings as at March 31, 2007 amounted to
$126.6 million, an increase of $18.2 million from $108.4 million at December
31, 2006. The net debt to capitalization ratio at the end of the quarter
increased to 26.7% from both the year-end position and the end of the first
quarter last year when it was 24.0% and 5.2% respectively.

    Capital Stock

    Details of issued and outstanding common shares are outlined in Note 2 to
these interim consolidated financial statements. As at the date of this report
the number of outstanding common shares is 32,094,845. No stock options were
issued during the first quarter, however, 25,000 stock options were exercised,
resulting in the issuance of 25,000 common shares in exchange for proceeds of
$0.2 million.

    Outlook

    The steel market showed signs of strengthening in the first quarter,
relative to the second half of 2006. Carbon steel pricing levels in North
America increased in the first quarter but remained lower than other world
markets which in turn led to a reduction in the level of imports entering
North America. These price increases however are thought to be cost-driven,
due in part to rising scrap costs, rather than being market-driven. Although
inventory levels at services centres are reducing, they remain relatively high
compared to more traditional levels. Announced consolidations in the
international steel market should support stable pricing. Carbon steel pricing
levels are expected to remain relatively level in the short term reflecting
softer end user demand in certain markets compared to 2006. In addition,
stainless steel prices and related nickel surcharges continued to increase
during the first quarter. Stainless steel price levels are forecast to remain
high in the short term as nickel is expected to continue to be in short supply
throughout 2007.
    The Company has faced significant unusual costs in the first quarter to
address areas of long term competitiveness. Certain costs will also extend
into the balance of the year. In total, approximately $12 million of unusual
costs are anticipated to occur in 2007. The Company believes that its
businesses are increasingly well positioned to address the anticipated
business environment in 2007 and beyond.

    
    Quarterly Results

    (thousands of dollar except per share amounts)
    -------------------------------------------------------------------------
                                          2007      2006      2006      2006
                                            Q1        Q4        Q3        Q2
    -------------------------------------------------------------------------
    Net Sales                         $248,117  $221,808  $238,424  $232,171
    Net Earnings                         7,024    11,254    12,384    12,997
    Basic Earnings per Share              0.22      0.35      0.39      0.40
    Diluted Earnings per Share            0.22      0.34      0.39      0.40
    -------------------------------------------------------------------------

    Quarterly Results

    (thousands of dollar except per share amounts)
    -------------------------------------------------------------------------
                                          2006      2005      2005      2005
                                            Q1        Q4        Q3        Q2
    -------------------------------------------------------------------------
    Net Sales                         $212,801  $205,672  $212,974  $226,324
    Net Earnings                        10,081    12,702    12,546    12,801
    Basic Earnings per Share              0.32      0.40      0.39      0.40
    Diluted Earnings per Share            0.31      0.40      0.39      0.40
    -------------------------------------------------------------------------
    

    Samuel Manu-Tech Inc. (SMT-TSX) is a leading North American industrial
products and technology company producing and distributing a wide range of
steel, plastic and related industrial products and services from locations in
Canada, the United States and Mexico.

    Mark C. Samuel
    Vice-Chairman
    & CEO

    April 24, 2007

    -------------------------------------------------------------------------
    The "First Quarter Results" utilize the term "operating profit (EBIT)"
    which is a non-GAAP measure. Securities regulations require that
    corporations caution readers that these terms do not have standardized
    meanings under GAAP and are unlikely to be comparable to similar measures
    used by other companies. Operating profit (EBIT) is defined as earnings
    before restructuring charge, interest and income taxes.
    Operating profit (EBIT) should not be construed as a substitute for net
    earnings or cash flows from operations (each as determined in accordance
    with generally accepted accounting principles) for the purpose of
    analyzing the Company's operating performance, financial position or cash
    flows. The Company believes that, in addition to cash flow from
    operations and net earnings, operating profit is a useful financial
    performance measurement for assessing operating performance as it
    provides investors with an additional basis to evaluate the ability of
    the Company to incur and service debt and to fund capital expenditures.
    This report may contain forward-looking information that is subject to
    risks, uncertainties and assumptions. Such information represents our
    current views based on information as at the date of issuing this report.
    We do not intend to update this information and disclaim any legal
    obligation to the contrary.
    -------------------------------------------------------------------------



    
    CONSOLIDATED STATEMENTS OF EARNINGS
    -------------------------------------------------------------------------
    Three Months ended March 31, 2007 and 2006 (unaudited)
    (in thousands of dollars except per share amounts)

    -------------------------------------------------------------------------
                                                              1ST QUARTER
    -------------------------------------------------------------------------
                                                           2007         2006
    -------------------------------------------------------------------------
    NET SALES                                        $  248,117   $  212,801
    COSTS AND EXPENSES (INCOME):
      Cost of sales, selling & administration           226,735      191,394
      Depreciation and amortization                       5,809        5,513
      Foreign exchange loss (gain)                         (306)         436
      Interest on long-term debt                          1,592          234
      Interest on short-term debt                           211           49
      Interest income                                       (12)         (16)
    -------------------------------------------------------------------------
                                                        234,029      197,610
    -------------------------------------------------------------------------

    EARNINGS BEFORE RESTRUCTURING CHARGE
     AND INCOME TAXES                                    14,088       15,191

    RESTRUCTURING CHARGE (note 4)                         3,664            -
    -------------------------------------------------------------------------

    EARNINGS BEFORE INCOME TAXES                         10,424       15,191

    INCOME TAXES:
      Current                                             3,519        4,599
      Future                                               (119)         511
    -------------------------------------------------------------------------
                                                          3,400        5,110
    -------------------------------------------------------------------------

    NET EARNINGS                                     $    7,024   $   10,081
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    BASIC EARNINGS PER SHARE                         $     0.22   $     0.32
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    DILUTED EARNINGS PER SHARE                       $     0.22   $     0.31
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to consolidated financial statements.


    SEGMENTED INFORMATION
    -------------------------------------------------------------------------
    Three Months ended March 31, 2007 and 2006 (unaudited)
    (in thousands of dollars)

    -------------------------------------------------------------------------
                                                              1ST QUARTER
    -------------------------------------------------------------------------
    NET SALES                                              2007         2006
    -------------------------------------------------------------------------

    Packaging                                        $  106,232   $  103,948
    Metal Processing                                    114,098       82,374
    Distribution                                         27,787       26,479
    -------------------------------------------------------------------------
    Consolidated                                     $  248,117   $  212,801
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                              1ST QUARTER
    -------------------------------------------------------------------------
    EARNINGS BEFORE RESTRUCTURING CHARGE,
     INTEREST AND INCOME TAXES                             2007         2006
    -------------------------------------------------------------------------

    Packaging                                        $    5,555   $    8,649
    Metal Processing                                     10,716        8,890
    Distribution                                          2,218          994
    Corporate                                            (2,610)      (3,075)
    -------------------------------------------------------------------------
    Earnings before restructuring charge,
     interest and income taxes                           15,879       15,458
    Restructuring charge                                  3,664            -
    Interest on long-term debt                            1,592          234
    Interest on short-term debt                             211           49
    Interest income                                         (12)         (16)
    -------------------------------------------------------------------------
    Earnings before income taxes                     $   10,424   $   15,191
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to consolidated financial statements.



    CONSOLIDATED BALANCE SHEETS
    -------------------------------------------------------------------------
    March 31, 2007 (unaudited) and December 31, 2006 (audited)
    (in thousands of dollars)

    -------------------------------------------------------------------------
                                                       March 31,     Dec. 31,
                                                           2007         2006
    -------------------------------------------------------------------------
    ASSETS

    CURRENT ASSETS:
      Cash and cash equivalents                      $    3,846   $    5,744
      Accounts receivable                               133,717      121,055
      Inventories                                       214,236      200,882
      Prepaid expenses and sundry                         3,084        5,752
      Future income taxes                                 7,011        7,046
      Income taxes receivable                               488            -
    -------------------------------------------------------------------------
                                                        362,382      340,479

    CAPITAL ASSETS                                      155,482      151,587
    ACCRUED PENSION ASSET                                 8,214        7,394
    FUTURE INCOME TAXES                                     487          489
    GOODWILL                                             50,776       51,631
    INTANGIBLE ASSETS                                    14,573       15,460
    OTHER ASSETS                                          2,506        2,600
    -------------------------------------------------------------------------
                                                     $  594,420   $  569,640
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    CURRENT LIABILITIES:
      Bank indebtedness                              $   18,187   $   10,011
      Accounts payable and accrued liabilities
       (note 1)                                          92,943       84,928
      Deferred revenue                                    3,532        4,508
      Dividends payable                                   3,241        3,234
      Income taxes payable                                    -        1,486
    -------------------------------------------------------------------------
                                                        117,903      104,167

    LONG-TERM DEBT                                      112,253      104,164
    POST-RETIREMENT BENEFITS OTHER THAN PENSIONS          2,321        2,285
    FUTURE INCOME TAXES                                  14,866       15,033
    -------------------------------------------------------------------------
                                                        247,343      225,649

    SHAREHOLDERS' EQUITY:
      Capital stock (note 2)                             29,643       29,464
      Contributed surplus                                   162          162
      Retained earnings                                 331,287      327,472
      Accumulated other comprehensive loss
       (note 3)                                         (14,015)     (13,107)
    -------------------------------------------------------------------------
                                                        347,077      343,991

    -------------------------------------------------------------------------
                                                     $  594,420   $  569,640
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to consolidated financial statements.



    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
    -------------------------------------------------------------------------
    Three Months ended March 31, 2007 and 2006 (unaudited)
    (in thousands of dollars)

    -------------------------------------------------------------------------
                                                              1ST QUARTER
    -------------------------------------------------------------------------
                                                           2007         2006
    -------------------------------------------------------------------------
    RETAINED EARNINGS, BEGINNING OF PERIOD           $  327,472   $  293,533
    NET EARNINGS                                          7,024       10,081
    DIVIDENDS PAID ON COMMON SHARES                      (3,209)      (3,185)
    -------------------------------------------------------------------------
    RETAINED EARNINGS, END OF PERIOD                 $  331,287   $  300,429
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to consolidated financial statements.



    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------------------------------------------
    Three Months ended March 31, 2007 and 2006 (unaudited)
    (in thousands of dollars)

    -------------------------------------------------------------------------
                                                              1ST QUARTER
    -------------------------------------------------------------------------
                                                           2007         2006
    -------------------------------------------------------------------------
    CASH FLOWS FROM (USED IN) OPERATING
     ACTIVITIES:
      Net earnings                                   $    7,024   $   10,081
      Items not involving cash:
        Depreciation and amortization                     5,809        5,513
        Loss (gain) on disposal of capital assets            23           (7)
        Future income taxes                                (119)         511
        Increase in accrued pension asset                  (824)        (218)
        Increase in post-retirement benefits
         other than pensions                                 53           13
    -------------------------------------------------------------------------
                                                         11,966       15,893
      Change in non-cash operating working
       capital:
        Increase in accounts receivable                 (13,300)      (9,850)
        Increase in inventories                         (13,902)      (8,102)
        Decrease in prepaid expenses and sundry           2,644          725
        Increase in accounts payable and accrued
         liabilities                                      8,748       14,256
        Increase (decrease) in deferred revenue            (957)          42
        Decrease in income taxes payable                 (1,950)        (113)
    -------------------------------------------------------------------------
                                                         (6,751)      12,851
    CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
      Proceeds on sale of capital assets                     52          101
      Purchase of capital assets                         (9,459)      (3,909)
    -------------------------------------------------------------------------
                                                         (9,407)      (3,808)
    CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
      Decrease in other assets                               71            -
      Issuance of common shares (note 2)                    179          392
      Increase in long-term debt                         10,544        2,854
      Repayment of long-term debt                        (1,538)      (5,000)
      Dividends paid on common shares                    (3,209)      (3,185)
    -------------------------------------------------------------------------
                                                          6,047       (4,939)

    EFFECT OF EXCHANGE RATE CHANGES ON CASH
     POSITION                                                37           30
    -------------------------------------------------------------------------
    INCREASE (DECREASE) IN CASH POSITION                (10,074)       4,134
    CASH POSITION, BEGINNING OF PERIOD                   (4,267)      (4,807)
    -------------------------------------------------------------------------
    CASH POSITION, END OF PERIOD                     $  (14,341)  $     (673)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash position is comprised of cash and cash equivalents, with maturities
    at the date of purchase of three months or less, less bank indebtedness.

    See accompanying notes to consolidated financial statements.



    CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
    -------------------------------------------------------------------------
    Three Months ended March 31, 2007 and 2006 (unaudited)
    (in thousands of dollars)

    -------------------------------------------------------------------------
                                                              1st QUARTER
    -------------------------------------------------------------------------
                                                           2007         2006
    -------------------------------------------------------------------------
    NET EARNINGS                                     $    7,024   $   10,081

    OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
      Unrealized gain (loss) on translation of net
       foreign operations                                  (882)       1,234
      Change in unrealized derivative gain (loss)
       on derivatives designated as cash flow
       hedges (net of taxes of $32)                          61            -
      Reclassification of earnings on cash
       flow loss (net of taxes of $205)                     395            -
    -------------------------------------------------------------------------
    TOTAL OTHER COMPREHENSIVE INCOME (LOSS)                (426)       1,234
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    COMPREHENSIVE INCOME                             $    6,598   $   11,315
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to consolidated financial statements.



    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Three Months ended March 31, 2007 and 2006 (unaudited)
    (in thousands of dollars except per share amounts)

    1.  SIGNIFICANT ACCOUNTING POLICIES:
    The unaudited consolidated financial statements are prepared in
    accordance with accounting principles generally accepted in Canada. These
    financial statements should be read in conjunction with the Company's
    audited annual financial statements for the year ended December 31, 2006.
    All accounting policies and methods of their application used in the
    interim financial statements are consistent with the Company's annual
    financial statements except as noted below:

    Adoption of new accounting policies
    On January 1, 2007, the Company adopted CICA Handbook Sections 1530,
    "Comprehensive Income", Section 3251, "Equity", Section 3855, "Financial
    Instruments - Recognition and Measurement", Section 3861, "Financial
    Instruments - Disclosure and Presentation" and Section 3865, "Hedges".
    Section 1530 establishes standards for reporting and presenting
    comprehensive income, which is defined as the change in equity from
    transactions and other events from non-owner sources. Other comprehensive
    income refers to items recognized in comprehensive income that are
    excluded from net income calculated in accordance with generally accepted
    accounting principles.

    Section 3861 establishes standards for presentation of financial
    instruments and non-financial derivatives, and identifies the information
    that should be disclosed about them. Under the new standards, policies
    followed for periods prior to the effective date generally are not
    reversed and therefore, the comparative figures have not been restated
    except for the requirement to restate the currency translation adjustment
    as part of other comprehensive income. Section 3865 describes when and
    how hedge accounting can be applied as well as the disclosure
    requirements. Hedge accounting enables the recording of gains, losses,
    revenues and expenses from derivative financial instruments in the same
    period as for those related to the hedged item.

    Section 3855 prescribes when a financial asset, financial liability or
    non-financial derivative is to be recognized on the balance sheet and at
    what amount, requiring fair value or cost-based measures under different
    circumstances. Under Section 3855, financial instruments must be
    classified into one of these five categories: held-for-trading, held-to-
    maturity, loans and receivables, available-for-sale financial assets and
    other financial liabilities. All financial instruments, including
    derivatives, are measured on the balance sheet at fair value except for
    loans and receivables, held-to-maturity investments and other financial
    liabilities which are measured at amortized cost. Subsequent measurement
    and changes in fair value will depend on their initial classification, as
    follows: held-for-trading financial assets are measured at fair value and
    changes in fair value are recognized in net earnings; available-for-sale
    financial instruments are measured at fair value with changes in fair
    value recorded in other comprehensive income until the investment is
    derecognized or impaired at which time the amounts would be recorded in
    net earnings.

    Under adoption of these new standards, the Company designated its cash
    and bank indebtedness as held-for-trading, which is measured at fair
    value. Accounts receivable are classified as loans and receivables, which
    are measured at amortized cost. Accounts payable and accrued liabilities
    and long-term debt are classified as other financial liabilities, which
    are measured at amortized cost.

    All derivative instruments are recorded in the consolidated statement of
    earnings at fair value unless exempted from derivative treatment as a
    normal purchase and sale. All changes in their fair value are recorded in
    earnings unless cash flow hedge accounting is used, in which case changes
    in fair value are recorded in other comprehensive income. The Company has
    elected to apply this accounting treatment for all embedded derivatives
    in host contracts entered into on or after January 1, 2003. The impact of
    the change in accounting policy related to embedded derivatives was not
    material.

    The Company enters into foreign currency forward contracts to hedge
    foreign exchange exposure on anticipated operational cash flows. The
    effective portion of changes in the fair value of derivatives that are
    designated and qualify as cash flow hedges is recognized in other
    comprehensive income. Any gain or loss in fair value relating to the
    ineffective portion is recognized immediately in the statement of
    earnings. The impact on opening retained earnings was not material. Upon
    adoption of the new standards, the Company remeasured its cash flow hedge
    derivatives at fair value. The portion of the fair value of the hedged
    items was an unrealized loss of $732 ($482 net of tax). The fair value of
    the contracts as at March 31, 2007 was an unrealized loss of $39 ($26 net
    of tax) and is recorded within accounts payable and accrued liabilities
    on the consolidated balance sheet.

    At March 31, 2007, the Company was committed to the sale of U.S. $12,000
    under forward exchange contracts at rates of exchange ranging from Cdn.
    $1.1401 to Cdn. $1.162 maturing from April 2, 2007 to June 1, 2007.

    In addition, the Company was committed to the sale of EUR 985 under
    forward exchange contracts. The contracts are at rates of exchange
    ranging from Cdn. $1.5125 to Cdn. $1.5512 maturing from April 2, 2007 to
    September 24, 2007. The Company was also committed to the sale of GBP 72
    under forward exchange contracts. The contracts are at rates of exchange
    ranging from Cdn. $2.151 to Cdn. $2.2565 maturing from April 2, 2007 to
    July 10, 2007. The Company was also committed to the purchase of GBP 30
    under a foreign exchange contract at a rate of $1.3269 maturing between
    July 2, 2007 to August 1, 2007.

    2. CAPITAL STOCK:

    -------------------------------------------------------------------------
                                                       March 31,    March 31,
                                                           2007         2006
    -------------------------------------------------------------------------
    Number of common shares outstanding              32,094,845   31,849,445
    Number of options outstanding                       459,300      704,700
    -------------------------------------------------------------------------

    The Company did not issue any stock options during the three months ended
    March 31, 2007. During the quarter ended March 31, 2007, 25,000 stock
    options were exercised, resulting in the issuance of 25,000 common shares
    in exchange for proceeds of $179.

    Weighted average number of shares:

    -------------------------------------------------------------------------
                                                              1st QUARTER
    -------------------------------------------------------------------------
                                                           2007         2006
    -------------------------------------------------------------------------
    Basic shares                                     32,080,845   31,820,778
    Effect of dilutive stock options                    216,581      280,458
    Diluted shares                                   32,297,426   32,101,236
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The Company applied the settlement method of accounting for stock options
    granted to employees and directors during the year ended December 31,
    2002. Accordingly no compensation cost has been recognized for the
    177,500 stock options issued during that period. For the purposes of pro
    forma disclosures, the weighted average estimated fair value for the
    177,500 stock options granted during the year ended December 31, 2002 was
    $1.77 per share, with a total compensation cost of $314, which is
    amortized to earnings over the options' vesting period. The following
    table outlines the pro forma disclosure provisions had the compensation
    costs for the Company's stock options been determined under the fair-
    value based method of accounting for awards granted from January 1, 2002
    through to December 31, 2002.

    -------------------------------------------------------------------------
                                                              1st QUARTER
    -------------------------------------------------------------------------
                                                           2007         2006
    -------------------------------------------------------------------------
    Net earnings as reported                         $    7,024   $   10,081
    Pro forma net earnings                                7,008       10,065
    Pro forma earnings per share
               - basic                               $     0.22   $     0.32
               - diluted                             $     0.22   $     0.31
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    3. ACCUMULATED OTHER COMPREHENSIVE LOSS:

    -------------------------------------------------------------------------
                                                              1st QUARTER
    -------------------------------------------------------------------------
                                                           2007         2006
    -------------------------------------------------------------------------

    CUMULATIVE TRANSLATION ADJUSTMENT
      Balance, beginning of period                   $  (13,107)  $  (14,341)
      Unrealized gain (loss) on translation
       of net foreign operations                           (882)       1,234
    -------------------------------------------------------------------------
      Balance, end of period                            (13,989)     (13,107)

    UNREALIZED DERIVATIVE GAIN (LOSS) ON
     CASH FLOW HEDGES, net
      Balance, beginning of period                            -            -
      Impact of new cash flow hedge accounting
       rules on January 1, 2007
       (net of taxes of $250)                              (482)           -
      Changes in unrealized derivative gain
       (loss) on derivatives designated as
       cash flow hedges (net of taxes of $32)                61            -
      Reclassification of earnings on cash flow
       loss (net of taxes of $205)                          395            -
    -------------------------------------------------------------------------
       Balance, end of period                               (26)           -

    -------------------------------------------------------------------------
    ACCUMULATED OTHER COMPREHENSIVE LOSS             $  (14,015)  $  (13,107)
    -------------------------------------------------------------------------

    4. RESTRUCTURING CHARGE:

    On January 5, 2007, the Company announced the approval of a formal plan
    to close its Warden Ave. manufacturing facility in Scarborough, Ontario.
    The Company estimates it will incur costs of $9,500 ($6,200 after income
    taxes) to provide for facility closure, disposal of certain assets,
    severance and other related items. The restructuring costs are associated
    with the Packaging segment, and are reported in the restructuring charge
    line within the consolidated statements of earnings. As of March 31,
    2007, $3,664 of restructuring cost has been recorded. The write-off of
    the machinery and equipment and other assets results from the closure of
    the facility scheduled in May 2007. Impairment of the capital assets was
    determined based on the excess of the carrying amount, over the fair
    value of the long-lived assets calculated using the estimated future cash
    flows directly related to the capital assets.

    The restructuring costs do not include any potential gain on the
    disposition of the associated land and building. The following table
    highlights the activity and balance of the restructuring charge for the
    period ended March 31, 2007.

    -------------------------------------------------------------------------
                          Total costs                                Accrued
                             expected         Costs                  Balance
    Restructuring               to be      incurred   Cumulative    at March
    Charge                   incurred  Year-to-date    Drawdown     31, 2007
    -------------------------------------------------------------------------
    Severance, termination
     costs & benefits, and
     retention bonuses          3,291        2,412           22        2,390
    -------------------------------------------------------------------------
    Pension settlement &
     curtailment                4,101        1,127            -        1,127
    -------------------------------------------------------------------------
    Write-off of machinery
     and equipment and
     other assets                 537            -            -            -
    -------------------------------------------------------------------------
    Other                       1,571          125          125            -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total Restructuring
     Charge                     9,500        3,664          147        3,517
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    5. FUTURE BENEFIT COSTS:

    The Company has incurred pension and other post-retirement benefit costs
    as noted below.

    -------------------------------------------------------------------------
                                                              1st QUARTER
    -------------------------------------------------------------------------
                                                           2007         2006
    -------------------------------------------------------------------------
    Defined benefit pension plans                    $    2,274   $    1,333
    Defined contribution pension plans                      555          451
    Other benefit plans                                      67           73
    -------------------------------------------------------------------------
    Total                                            $    2,896   $    1,857
    -------------------------------------------------------------------------
    

    %SEDAR: 00002004E




For further information:

For further information: John D. Amodeo, Vice-President and Chief
Financial Officer, Samuel Manu-Tech Inc., 185 The West Mall, Suite 1500,
Toronto, Ontario, M9C 5L5, Telephone: (416) 626-2190, Website:
www.samuelmanutech.com, Email address: smt@samuelmanutech.com

Organization Profile

SAMUEL MANU-TECH INC.

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