Samuel Manu-Tech Inc. - Fourth quarter results



    TORONTO, Feb. 28 /CNW/ -

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    RESULTS OF OPERATIONS
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    In order to conform to the current year presentation, the comparative
figures have been restated due to the discontinuance of the Company's U.S.
distribution operations as a result of selling its subsidiary, Energy Steel
Products, Inc.
    Effective for the quarter ending September 30, 2007, the segment formerly
known as Distribution has been combined with the Packaging segment. The change
is the result of the completion of the sale of Energy Steel Products Inc. on
July 31, 2007. Comparative figures have been restated accordingly.

    Samuel Manu-Tech Inc. ("SMT") did not post strong results in the fourth
quarter of 2007 due to a number of factors including negative market
conditions, extraordinary operating costs, in part due to start ups at certain
locations, a continued strong Canadian dollar and compressed margins.

    Net Sales

    Sales for the fourth quarter ended December 31, 2007 were $209.4 million,
which represents a decrease of $2.0 million or 1.0% from the $211.4 million
achieved in the comparable quarter of the prior year. Sales for the year to
December 31, 2007 were $899.9 million which represents an increase of
$41.5 million or 4.8% over the $858.4 million achieved in 2006.
    Carbon steel pricing levels decreased in the fourth quarter as real
demand remained relatively weak in certain key sectors including the forestry,
automotive, construction and housing markets. Sales levels also continued to
be negatively impacted by the relative strength of the Canadian dollar which
increased compared to the U.S. dollar during the year. The average exchange
rate of the U.S. dollar in 2007 was Cdn. $1.07 compared to $1.13 in 2006.
    Sales of the Packaging segment in the fourth quarter, at $98.8 million,
were down $14.8 million or 13.0% compared to the prior year due mainly to
lower volumes and selling prices reflecting increased competition and the
continued slowdown in the forestry and construction sectors. In addition, the
change in the exchange rate continued to negatively impact Canadian exports
and U.S. based sales. Metal Processing sales for the fourth quarter were
$110.6 million, which was up $12.8 million or 13.1% compared to the prior
year. This was primarily due to higher sales of stainless steel tubular
products and steel pressure vessels reflecting the recent acquisitions of
Dofasco Elizabethtown, Inc. (now operating as Associated Tube USA Inc.) and
Northland Stainless, Inc. Pickling sales and sales of roll formed products
remained relatively flat in the quarter compared to the prior year.

    Earnings

    Net earnings from continuing operations for the fourth quarter were
$3.3 million or $0.10 per share compared to $9.8 million or $0.30 per share in
the prior year. Net earnings from continuing operations for the year were
$21.3 million or $0.66 per share compared to $44.2 million or $1.38 per share
in 2006.
    On July 31, 2007, the Company sold the operations and net assets of its
subsidiary, Energy Steel Products, Inc. for consideration of U.S. $26 million.
The results from this subsidiary, which were previously included in the
Distribution segment, have been reclassified as discontinued operations in the
accompanying interim consolidated financial statements. Included in net
earnings from discontinued operations for the year is an after tax gain of
U.S. $3.3 million or $0.11 per share. Additional details are outlined in
Note 6 - Discontinued Operations to the interim consolidated financial
statements.
    Net earnings for the fourth quarter were $3.3 million or $0.10 per share
compared to $11.3 million or $0.35 per share in the prior year. Net earnings
for the year were $27.3 million or $0.85 per share compared to $46.7 million
or $1.46 per share in 2006. The fourth quarter results this year include a
restructuring gain of $4.4 million consisting primarily of the gain on the
sale of the land and building at the Scarborough, Ontario manufacturing
facility as outlined in Note 4 - Restructuring (Gain) Charge to the interim
consolidated financial statements. This restructuring gain of $3.8 million
after tax positively impacted earnings in the fourth quarter by $0.12 per
share. This compares to the full year results which includes a net
restructuring charge of $1.6 million to cover the closure of the Scarborough,
Ontario strapping manufacturing facility and which had no net effect on
earnings per share for the year.
    Operating profit (see below for cautionary language regarding non-GAAP
measures) for the fourth quarter amounted to $0.3 million compared to
$12.9 million in the prior year with decreases in both the Packaging and Metal
Processing segments.
    The Packaging segment had an operating loss of $3.0 million compared to
an operating profit of $7.1 million earned in 2006 with decreases occurring in
both Canada and the U.S. The decreased profitability reflects the continued
slowdown in the forestry and construction sectors in North America, increased
competition and the negative impact of the stronger Canadian dollar. The U.S.
operations were also negatively impacted by certain start-up and ongoing
operational costs incurred related to the new steel strapping facility in
Heath County, Ohio. This facility became operational during the fourth quarter
of 2007 and is expected to achieve targeted production levels by the third
quarter of 2008. The Canadian operations also incurred additional costs
associated with workforce reductions as a result of lower demand levels.
    Operating profits of the Metal Processing segment in the fourth quarter
were $5.2 million, which was $3.4 million lower than the $8.6 million earned
in 2006. Profits from roll formed products were down reflecting a less
favourable product mix compared to the prior year as well as the start-up
costs related to the new manufacturing facility in Iuka, Mississippi. Profits
from stainless steel tubular products were down reflecting lower stainless
steel pricing and surcharge levels and the negative impact of the stronger
Canadian dollar. In addition, profits were negatively affected by the
write-off of certain acquisition related costs. These decreases were offset in
part by increased profits from steel pressure vessels reflecting the positive
contribution from the Northland Stainless acquisition, as well as higher
profits from steel pickling operations.

    Outlook

    Carbon steel pricing levels weakened in the fourth quarter, and the North
American steel market ended 2007 with producers announcing higher prices
driven mainly by a lack of imports, increased raw material costs and the
decision by certain major steel mills to restrict supply. With imports and
inventory levels continuing at relatively low levels, the expectation is for
carbon steel pricing levels to increase in the first and second quarters of
2008. Actual steel demand in the North American market however shows little
sign of improvement. Demand from certain key sectors continues to be
negatively affected by the slowdown in the housing markets, the sub prime
mortgage problem, and the resulting credit crunch. These factors are all
reflected in depressed steel demand from the forestry, automotive,
construction and housing sectors. Stainless steel nickel and other surcharges
also continued to decrease in the fourth quarter before showing some
strengthening early into 2008.
    In addition, the Canadian dollar continued strong in the fourth quarter
relative to its U.S. counterpart and is anticipated to have a continuing
negative impact on the Company's results.
    The Company has faced significant unusual costs in 2007 to bolster its
long-term competitiveness. While these challenging conditions are expected to
continue into the first half of 2008, the Company believes that its businesses
are increasingly well-positioned to address the anticipated business
environment as we go forward. SMT will continue its focus on reducing costs
and improving productivity as well as pursuing growth opportunities in the
marketplace. The Company's recent announcements in February of the
acquisitions of Tubular Products Company and Omega Joists represent the type
of strategic expansions that will help to improve margins and profitability in
the future.

    Mark C. Samuel
    Chairman
    & CEO

    February 28, 2008

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    The "Fourth 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
    from continuing operations before restructuring (gain) 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.
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    CONSOLIDATED STATEMENTS OF EARNINGS
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    Twelve Months ended December 31, 2007 and 2006
    (in thousands of dollars except per share amounts)

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                                   4TH QUARTER             TWELVE MONTHS
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                                    2007        2006        2007        2006
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                              (unaudited) (unaudited)   (audited)   (audited)
    NET SALES                  $ 209,360   $ 211,434   $ 899,866   $ 858,350
    COSTS AND EXPENSES
     (INCOME):
    Cost of sales, selling &
     administration              203,464     193,117     837,759     767,253
      Depreciation and
       amortization                6,075       6,083      22,747      22,943
      Foreign exchange loss
       (gain)                       (434)       (674)      1,057         421
      Interest on long-term debt   1,964       1,404       7,199       3,132
      Interest on short-term debt    184         168       1,080         467
      Interest income               (125)       (172)       (181)       (215)
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                                 211,128     199,926     869,661     794,001
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    EARNINGS (LOSS) FROM
     CONTINUING OPERATIONS
     BEFORE RESTRUCTURING (GAIN)
     CHARGE AND INCOME TAXES      (1,768)     11,508      30,205      64,349

    RESTRUCTURING (GAIN) CHARGE
     (note 4)                     (4,427)          -       1,562           -
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    EARNINGS FROM CONTINUING
     OPERATIONS BEFORE INCOME
     TAXES                         2,659      11,508      28,643      64,349

    INCOME TAXES:
      Current (recovery)          (1,986)      4,340       6,381      21,364
      Future (recovery)            1,367      (2,595)        914      (1,221)
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                                    (619)      1,745       7,295      20,143
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    NET EARNINGS FROM CONTINUING
     OPERATIONS                    3,278       9,763      21,348      44,206
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    NET EARNINGS FROM
     DISCONTINUED OPERATIONS
     (note 6)                          -       1,491       5,951       2,510
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    NET EARNINGS               $   3,278   $  11,254   $  27,299   $  46,716
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    BASIC EARNINGS PER SHARE
      From continuing operations    0.10        0.30        0.66        1.38
      From discontinued
       operations                   0.00        0.05        0.19        0.08
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                               $    0.10   $    0.35   $    0.85   $    1.46
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    DILUTED EARNINGS PER SHARE
      From continuing
       operations                   0.10        0.29        0.65        1.36
      From discontinued
       operations                   0.00        0.05        0.19        0.08
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                               $    0.10   $    0.34   $    0.84   $    1.44
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    See accompanying notes to consolidated financial statements.



    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
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    Twelve Months ended December 31, 2007 and 2006 (audited)
    (in thousands of dollars)

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                                                          4TH QUARTER
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                                                        2007        2006
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    RETAINED EARNINGS, BEGINNING OF PERIOD             $ 327,472   $ 293,533
    NET EARNINGS                                          27,299      46,716
    DIVIDENDS PAID ON COMMON SHARES                      (12,846)    (12,777)
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    RETAINED EARNINGS, END OF PERIOD                   $ 341,925   $ 327,472
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    See accompanying notes to consolidated financial statements.



    CONSOLIDATED BALANCE SHEETS
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    December 31, 2007 and December 31, 2006 (audited)
    (in thousands of dollars)
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                                                      Dec. 31,    Dec. 31,
                                                        2007        2006
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    ASSETS

    CURRENT ASSETS:
      Cash and cash equivalents                        $   1,876   $   5,744
      Accounts receivable                                123,801     117,068
      Inventories                                        180,555     184,134
      Prepaid expenses and sundry                          3,260       5,663
      Income taxes receivable                              6,475           -
      Future income taxes                                  5,500       7,046
      Assets held for sale                                   345           -
      Current assets of discontinued operations
       (note 6)                                                -      20,824
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                                                         321,812     340,479

    CAPITAL ASSETS                                       173,150     150,343
    ACCRUED PENSION ASSET                                  9,335       7,394
    FUTURE INCOME TAXES                                    1,260         489
    GOODWILL                                              50,008      51,631
    INTANGIBLE ASSETS                                     11,396      15,460
    OTHER ASSETS                                           1,294       2,600
    LONG-TERM ASSETS OF DISCONTINUED OPERATIONS
     (note 6)                                                  -       1,244
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                                                       $ 568,255   $ 569,640
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    LIABILITIES AND SHAREHOLDERS' EQUITY

    CURRENT LIABILITIES:
      Bank indebtedness                                $   3,915   $  10,011
      Accounts payable and accrued liabilities
       (note 1)                                           68,462      79,993
      Deferred revenue                                     5,880       4,508
      Dividends payable                                    3,245       3,234
      Income taxes payable                                     -       1,486
      Current liabilities of discontinued operations
       (note 6)                                                -       4,935
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                                                          81,502     104,167

    LONG-TERM DEBT                                       131,414     104,164
    POST-RETIREMENT BENEFITS OTHER THAN PENSIONS           2,326       2,285
    FUTURE INCOME TAXES                                   15,285      15,033
    OTHER LONG-TERM LIABILITIES (note 1)                     366           -
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                                                         230,893     225,649
    SHAREHOLDERS' EQUITY:
      Capital stock (note 2)                              29,891      29,464
      Contributed surplus                                    216         162
      Retained earnings                                  341,925     327,472
      Accumulated other comprehensive loss (note 3)      (34,670)    (13,107)

    SUBSEQUENT EVENTS (note 10)
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                                                         337,362     343,991
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                                                       $ 568,255   $ 569,640
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    See accompanying notes to consolidated financial statements.



    CONSOLIDATED STATEMENTS OF CASH FLOWS
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    Twelve Months ended December 31, 2007 and 2006
    (in thousands of dollars)

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                                   4TH QUARTER             TWELVE MONTHS
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                                    2007        2006        2007        2006
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                              (unaudited) (unaudited)   (audited)   (audited)
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    CASH FLOWS FROM (USED IN)
     OPERATING ACTIVITIES:
      Net earnings from
       continuing operations   $   3,278   $   9,763   $  21,348   $  44,206
      Items not involving cash:
        Depreciation and
         amortization              6,075       6,083      22,747      22,943
        Loss (gain) on disposal
         of capital assets        (4,146)         23      (4,092)         62
        Compensation costs for
         stock options                54          54          54          54
        Future income taxes        1,367      (2,595)        914      (1,221)
        Decrease (increase) in
         accrued pension asset     1,049      (2,092)     (2,008)     (2,636)
        Increase in
         post-retirement benefits
         other than pensions          28          34         324         103
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                                   7,705      11,270      39,287      63,511
      Change in non-cash operating
       working capital:
        Decrease (increase) in
         accounts receivable      16,731      20,534      (5,772)     (2,187)
        Decrease (increase) in
         inventories              10,617     (11,562)      5,008     (36,387)
        Decrease (increase) in
         prepaid expenses and
         sundry                      955      (1,371)      1,904      (1,549)
        Increase (decrease) in
         accounts payable and
         accrued liabilities      (8,946)     (8,349)    (12,875)      7,792
        Increase (decrease) in
         deferred revenue           (555)     (2,681)     (2,387)        301
        Increase (decrease) in
         income taxes payable     (8,743)     (1,522)     (8,529)     (5,573)
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                                  17,764       6,319      16,636      25,908

    CASH FLOWS FROM (USED IN)
     INVESTING ACTIVITIES:
      Proceeds on sale of
       capital assets              5,820         118       5,940         265
      Purchase of capital assets  (4,988)     (3,785)    (32,199)    (26,559)
      Business acquisitions
       (note 7)                   (2,394)    (27,133)    (44,058)    (72,698)
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                                  (1,562)    (30,800)    (70,317)    (98,992)

    CASH FLOWS FROM (USED IN)
     FINANCING ACTIVITIES:
      Decrease in other assets     1,456       1,485         994         828
      Issuance of common shares
       (note 2)                        6         884         427       2,089
      Increase in long-term debt  13,630      35,364      41,765      83,392
      Repayment of long-term debt      -           -           -         (60)
      Dividends paid on common
       shares                     (3,213)     (3,207)    (12,846)    (12,777)
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                                  11,879      34,526      30,340      73,472
    CASH FLOWS FROM (USED IN)
     DISCONTINUED OPERATIONS
      Operating activities           661        (941)       (255)        108
      Investing activities           (62)        (53)     26,102        (197)
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                                     599        (994)     25,847         (89)
    EFFECT OF EXCHANGE RATE
     CHANGES ON CASH POSITION       (499)         14        (278)        241
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    INCREASE (DECREASE) IN CASH
     POSITION                     28,181       9,065       2,228         540
    CASH POSITION, BEGINNING OF
     PERIOD                      (30,220)    (13,332)     (4,267)     (4,807)
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    CASH POSITION, END OF
     PERIOD                    $  (2,039)  $  (4,267)  $  (2,039)  $  (4,267)
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    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.



    SEGMENTED INFORMATION
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    Twelve Months ended December 31, 2007 and 2006
    (in thousands of dollars)

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                                   4TH QUARTER             TWELVE MONTHS
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                                    2007        2006        2007        2006
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                              (unaudited) (unaudited)   (audited)   (audited)

    Packaging                  $  98,764   $ 113,585   $ 451,741   $ 473,109
    Metal Processing             110,596      97,849     448,125     385,241
    Consolidated               $ 209,360   $ 211,434   $ 899,866   $ 858,350
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                                   4TH QUARTER             TWELVE MONTHS
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    EARNINGS FROM CONTINUING
     OPERATIONS BEFORE
     RESTRUCTURING (GAIN)
     CHARGE, INTEREST AND
     INCOME TAXES                   2007        2006        2007        2006
    -------------------------------------------------------------------------

    Packaging                  $  (3,008)  $   7,092   $  11,098   $  36,835
    Metal Processing               5,201       8,608      37,255      41,991
    Corporate                     (1,938)     (2,792)    (10,050)    (11,093)
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    Earnings from continuing
     operations before
     restructuring (gain)
     charge, interest and
     income taxes                    255       12,908      38,303     67,733
    Restructuring (gain) charge   (4,427)           -       1,562          -
    Interest on long-term debt     1,964        1,404       7,199      3,132
    Interest on short-term debt      184          168       1,080        467
    Interest income                 (125)        (172)       (181)      (215)
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    Earnings from continuing
     operations before income
     taxes                     $   2,659   $   11,508  $   28,643  $  64,349
    -------------------------------------------------------------------------
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    See accompanying notes to consolidated financial statements.



    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
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    Twelve Months ended December 31, 2007 and 2006
    (in thousands of dollars)

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                                   4TH QUARTER             TWELVE MONTHS
    -------------------------------------------------------------------------
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
                              (unaudited) (unaudited)   (audited)   (audited)

    NET EARNINGS               $   3,278   $  11,254   $  27,299   $  46,716

    OTHER COMPREHENSIVE INCOME
     (LOSS), net of tax:
      Unrealized gain (loss) on
       translation of net
       foreign operations           (959)      5,967     (21,184)      1,234
      Change in unrealized
       derivative gain (loss)
       on derivatives designated
       as cash flow hedges (net
       of taxes of $199 for the
       4th Quarter; $107 for the
       twelve months)               (379)          -         207           -
      Reclassification of
       earnings on cash flow
       loss (net of taxes of
       $256 for the 4th Quarter;
       $54 for the twelve
       months)                      (492)          -        (104)          -
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    TOTAL OTHER COMPREHENSIVE
     INCOME (LOSS)                (1,830)      5,967     (21,081)      1,234
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    COMPREHENSIVE INCOME       $   1,448   $  17,221   $   6,218   $  47,950
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    See accompanying notes to consolidated financial statements.


    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Twelve Months ended December 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, 2007.
    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

    (i) Comprehensive Income, Equity, Financial Instruments - Recognition
    and Measurement, Financial Instruments - Disclosure and Presentation,
    and Hedges

    On January 1, 2007, the Company retrospectively adopted without
    restatement, The Canadian Institute of Chartered Accountants' ("CICA")
    Handbook Section 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 reclassify 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 assets 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. Transaction costs are expensed as incurred for financial
    instruments classified or designated as held-for-trading. For other
    financial instruments, transaction costs are capitalized on initial
    recognition if significant.

    Upon 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.

    The Company uses derivative financial instruments to manage risks from
    fluctuations in exchange rates. These instruments include forward
    exchange contracts and interest rate swaps. All such instruments are used
    for risk management purposes only, as the Company does not enter into
    derivatives for speculative purposes.

    All derivative instruments are recorded in the consolidated statement of
    earnings at fair value unless the derivative instrument is a contract to
    buy or sell a non-financial item in accordance with the Company's
    expected purchase, sale or usage requirements referred to as "normal
    purchase or normal sale". All changes in their fair value are recorded in
    earnings unless the derivative instrument is a contract to buy or sell a
    non-financial item in accordance with the Company's expected purchase,
    sale or usage requirements referred to as "normal purchase or normal
    sale". Normal purchase and normal sales are exempt from the application
    of the standard and are accounted for as executory contracts. Changes in
    the fair value of a derivative instrument designated as an effective cash
    flow hedge are recorded in accumulated other comprehensive income, a
    component of equity. 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. As a
    result of the adoption of the new standards, the Company remeasured its
    cash flow hedge derivatives at fair value. The fair value of the hedging
    items as at January 1, 2007 was an unrealized loss of $732 ($482 net of
    tax). The fair value of the contracts as at December 31, 2007 was an
    unrealized loss of $210 ($138 net of tax) and is recorded within accounts
    payable on the consolidated balance sheet.

    At December 31, 2007, the Company was committed to the sale of
    U.S. $3,000 under forward exchange contracts at rates of exchange ranging
    from Cdn. $0.9578 to Cdn. $1.0098 maturing from January 2, 2008 to
    June 20, 2008.

    In addition, the Company was committed to the sale of EUR 141 under
    forward exchange contracts. The contracts are at rates of exchange
    ranging from Cdn. $1.4200 to Cdn. $1.4665 maturing from January 16, 2008
    to April 11, 2008. The Company was also committed to the sale of GBP 191
    under forward exchange contracts. The contracts are at rates of exchange
    ranging from Cdn. $2.0242 to Cdn. $2.1390 maturing from January 9, 2008
    to May 9, 2008.

    The Company enters into interest rate swaps to hedge interest rate
    exposure on anticipated operational cash flow. The effective portion of
    the change in the fair value of the interest rate swap that is designated
    and qualifies as a cash flow hedge 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
    market value of the swaps at December 31, 2007 was an unrealized loss of
    $366 ($241 net of tax) based on the amount quoted by the Company's banker
    and has been recognized in other comprehensive income and is recorded
    within other long-term liabilities on the consolidated balance sheet.

    (ii) Inventories

    The CICA has issued new recommendations effective January 1, 2008 which
    establishes standards for the measurement and disclosure of inventories.
    The main features of the new recommendation include the measurement of
    inventories at the lower of cost and net realizable value, with guidance
    on the determination of cost, including allocation of overheads and other
    costs to inventory. The Company plans to comply with these
    recommendations; and is currently evaluating the impact of these new
    recommendations on its consolidated financial statements.


    2.  CAPITAL STOCK:

    -------------------------------------------------------------------------
                                                         Dec. 31,    Dec. 31,
                                                            2007        2006
    -------------------------------------------------------------------------
    Number of common shares outstanding               32,123,445  32,069,845
    Number of options outstanding                        430,700     484,300
    -------------------------------------------------------------------------


    The Company did not issue any stock options during the three months and
    twelve months ended December 31, 2007. During the quarter ended
    December 31, 2007, 600 stock options were exercised, resulting in the
    issuance of 600 common shares in exchange for proceeds of $6. During the
    twelve months ended December 31, 2007, 53,600 stock options were
    exercised, resulting in the issuance of 53,600 common shares in exchange
    for proceeds of $427.


    Weighted average number of shares:
    -------------------------------------------------------------------------
                                    4th QUARTER         TWELVE MONTHS
    -------------------------------------------------------------------------
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    Basic shares              32,123,445  32,042,178  32,107,962  31,918,695
    Effect of dilutive stock
     options                     150,665     246,040     185,811     470,461
    Diluted shares            32,274,110  32,288,218  32,293,773  32,389,156
    -------------------------------------------------------------------------


    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.


    -------------------------------------------------------------------------
                                     4th QUARTER           TWELVE MONTHS
    -------------------------------------------------------------------------
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    Net earnings as reported  $    3,278  $   11,254  $   27,299  $   46,716
    Pro forma net earnings         3,262      11,238      27,236      46,653
    Pro forma earnings
     per share
      - basic                 $     0.11  $     0.35  $     0.85  $     1.46
      - diluted               $     0.10  $     0.34  $     0.84  $     1.44
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    3. ACCUMULATED OTHER COMPREHENSIVE LOSS:

    -------------------------------------------------------------------------
                                     4th QUARTER           TWELVE MONTHS
    -------------------------------------------------------------------------
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    CUMULATIVE TRANSLATION
     ADJUSTMENT
      Balance, beginning of
       period                 $  (33,332) $  (19,074) $  (13,107) $  (14,341)
      Unrealized gain (loss)
       on translation of
       net foreign Operations       (959)      5,967     (21,184)      1,234
    -------------------------------------------------------------------------
    Balance, end of period       (34,291)    (13,107)    (34,291)    (13,107)


    UNREALIZED DERIVATIVE GAIN
     (LOSS) ON CASH FLOW
     HEDGES, net
      Balance, beginning of
       period                        492           -           -           -
      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 and
       interest rate swaps
       designated as cash
       flow hedges (net of
       taxes of $199 for the
       4th quarter; $107 for
       the twelve months)           (379)          -         207
      Reclassification of
       losses (earnings) on
       cash flow (net of
       taxes of $256 for the
       4th quarter; $54 for
       the twelve months)           (492)          -        (104)          -
    -------------------------------------------------------------------------
    Balance, end of period          (379)          -        (379)          -

    -------------------------------------------------------------------------
    ACCUMULATED OTHER
     COMPREHENSIVE LOSS       $  (34,670) $  (13,107) $  (34,670) $  (13,107)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    4.  RESTRUCTURING (GAIN) 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 $5,386 ($2,467 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 December 31,
    2007, $1,562 of restructuring costs have been recorded net of gain of
    sale of $4,114. Other restructuring costs include inventory impairment
    and facility closure costs.

    The gain on the disposition of the associated land and building which
    have a net book value of $1,612 is reflected against the restructuring
    charge. The following table highlights the activity and balance of the
    restructuring charge for the period ended December 31, 2007.

    -------------------------------------------------------------------------
                                                                     Accrued
                                                                  Balance at
    Restructuring                    Costs incurred  Cumulative  December 31,
    Charge                             Year-to-date    Drawdown         2007
    -------------------------------------------------------------------------
    Severance, termination
     costs & benefits, and
     retention bonuses                    $    2,886  $    2,133  $      753
    -------------------------------------------------------------------------
    Pension settlement & curtailment           1,127           -       1,127
    -------------------------------------------------------------------------
    Other                                      1,663       1,591          72
    -------------------------------------------------------------------------
    Gain on land and building                 (4,114)     (4,114)          -
    -------------------------------------------------------------------------
    Total Restructuring Charge            $    1,562  $     (390) $    1,952
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                         Additions to    Charges
                                          Restructur-    against
                                Balance,  ing Accrual Restructur-    Balance,
    Restructuring              Sept. 30, (expensed in        ing     Dec. 31,
     Accrual                       2007  4th Quarter)    Accrual        2007
    -------------------------------------------------------------------------
    Severance, termination
     costs & benefits, and
     retention bonuses        $      786  $        -  $       33  $      753
    Pension settlement &
     curtailment                   1,127           -           -       1,127
    Other                            425         111         464          72
    -------------------------------------------------------------------------
                              $    2,338  $      111  $      497  $    1,952
    Gain on sale of land
     and building                      -      (4,114)     (4,114)          -
    -------------------------------------------------------------------------
                              $    2,338  $   (4,003) $   (3,617) $    1,952
    -------------------------------------------------------------------------


    5.  FUTURE BENEFIT COSTS:

    The Company has incurred pension and other post-retirement benefit costs
    as noted below.
    -------------------------------------------------------------------------
                                   4th QUARTER             TWELVE MONTHS
    -------------------------------------------------------------------------
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    Defined benefit pension
     plans                    $      584  $      957  $   5,150   $    4,954
    Defined contribution
     pension plans                    19         278      1,712        1,587
    Other benefit plans               49          59        237          273
    -------------------------------------------------------------------------
    Total                     $      652  $    1,294  $   7,099   $    6,814
    -------------------------------------------------------------------------


    6.  DISCONTINUED OPERATIONS:

    On July 31, 2007, the Company sold the operations and net assets of its
    U.S. subsidiary, Energy Steel Products, Inc. ("ESP"), for consideration
    of U.S. $26,006. The sale of ESP, which was previously included within
    the distribution segment, has generated an after tax gain in the third
    quarter of this year of U.S. $3,253. Accordingly, the results of
    operations and financial position of ESP have been segregated and
    presented separately as discontinued operations in the consolidated
    financial statements. The net income from the discontinued operations
    included in the consolidated financial statements is as follows:

                             ------------------------ -----------------------
                                     4th Quarter            TWELVE MONTHS
                             ------------------------ -----------------------
                                    2007        2006        2007        2006
                             ------------------------ -----------------------
    Net Sales                 $        -  $   10,374  $   29,561  $   46,854
    Cost of sales, selling
     & administration                  -       7,931      25,494      42,740
                             ------------------------ -----------------------
    Earnings before gain on
     sale and income taxes             -       2,443       4,067       4,114
    Gain on sale                       -           -       6,116           -
                             ------------------------ -----------------------
    Income before income taxes         -       2,443      10,183       4,114
    Income taxes                       -         952       4,232       1,604
                             ------------------------ -----------------------
    Net income from
     discontinued operations  $        -  $    1,491  $    5,951  $    2,510



    The assets and liabilities of the discontinued operations presented on
    the balance sheet are as follows:

                                                                -------------
                                                                 December 31,
                                                                -------------
                                                                        2006
                                                                -------------
    Accounts receivable                                           $    3,987
    Inventories                                                       16,748
    Prepaid expenses and sundry                                           89
                                                                -------------
    Total Current Assets                                              20,824

    Capital assets                                                     1,244
                                                                -------------
    Total Assets                                                  $   22,068
                                                                -------------

    Accounts payable and accrued liabilities                           4,935
                                                                -------------

    Net assets of discontinued operations                         $   17,133
                                                                -------------


    7.  BUSINESS ACQUISITIONS:

    On August 17, 2007, the Company acquired 100% of the outstanding voting
    shares of Dofasco Elizabethtown Inc. ("Elizabethtown") for consideration
    of U.S. $27,392. Elizabethtown is a leading manufacturer of stainless
    steel laser welded tubular products located in Elizabethtown, Kentucky.
    This company now operates as Associated Tube USA Inc.

    On August 14, 2007, the Company acquired 100% of the outstanding voting
    shares of Northland Stainless, Inc. ("Northland") for consideration of
    U.S. $10,664. Northland designs, engineers, manufactures and supplies
    stainless steel pressure vessels, tank heads and components primarily to
    the ethanol, pharmaceutical and chemical industries in North America.

    These strategic acquisitions will allow the Company to expand its product
    range and market share within the stainless steel tubular and steel
    pressure vessel industries. Both acquisitions are reported under the
    Metal Processing segment, and have been accounted for under the purchase
    method of accounting.

    Effective from the acquisition date, the results of operations have been
    included in the consolidated statements of earnings.


    -------------------------------------------------------------------------
    Cash Consideration                                            $   40,002
    Acquisition Costs                                                    372
    -------------------------------------------------------------------------
    Total Purchase Price                                          $   40,374
    -------------------------------------------------------------------------
    Net assets acquired, at fair values:
      Accounts receivable                                         $    9,507
      Inventories                                                     13,607
      Prepaid expenses and sundry                                         24
      Capital assets                                                  25,253
      Intangible assets (subject to amortization)                        819
      Accounts payable                                                (4,547)
      Deferred revenue                                                (4,289)
    -------------------------------------------------------------------------
    Net assets acquired, net of cash of $75 (Northland)           $   40,374
    -------------------------------------------------------------------------


    8. BUSINESS SEGMENTS:

    The Company, prior to July 31, 2007, operated in three business segments,
    Packaging, Metal Processing and Distribution, primarily within the North
    American market. Effective for the quarter ending September 30, 2007, the
    segment formerly known as Distribution has been combined with the
    Packaging segment. The change is the result of the completion of the sale
    of Energy Steel Products Inc. on July 31, 2007. Comparative figures have
    been restated accordingly.


    9. COMPARATIVE FIGURES:

    In order to conform to the current year presentation, the comparative
    figures have been restated due to the discontinuance of the Company's
    U.S. distribution operations as a result of selling its subsidiary,
    Energy Steel Products, Inc.; and the combining of the Company's
    Distribution segment into the Packaging segment, as indicated in notes 6
    and 8 to these interim financial statements.


    10. SUBSEQUENT EVENTS:

    (i) On February 27, 2008, the Company acquired the assets and all
    business operations of Omega Joists Inc. ("Omega") for consideration of
    $27 million, subject to certain adjustments for working capital items.
    Omega is a recognized leader in the design, engineering, manufacturing
    and supply of open web steel joists used primarily in the commercial and
    industrial building products industry in Western Canada.

    (ii) On January 31, 2008, the Company acquired Tubular Products Company
    ("Tubular") for consideration of U.S. $33 million plus an earn-out
    payment, subject to certain adjustments for working capital items.
    Tubular is a recognized leader in the design, engineering, manufacturing
    and supply of laser cut carbon steel tubing, fabricated tubular
    components and welded sub-assemblies used primarily in outdoor and power
    transmission equipment, all-terrain, automotive and other vehicles and
    reusable coil carriers in North America.

    (iii) Subsequent to year end, the Company entered into a new revolving
    term borrowing facility with one of its existing lenders. The amount of
    the new facility was $25 million, at a combination of Canadian bank
    prime, U.S. bank base rate, various bankers' acceptance rates and LIBOR
    plus stamping fees, with an expiry of October 16, 2010. The new credit
    facility is unsecured and is available for general corporate purposes.
    

    %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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