Samuel Manu-Tech Inc. - Second quarter results



    TORONTO, July 30 /CNW/ -

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    RESULTS OF OPERATIONS
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    Effective for the quarter ending September 30, 2007, the segment formerly
known as Distribution was combined with the Packaging segment. The change was
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. achieved significantly improved results as compared
to the first quarter of 2008.

    Net Sales

    Sales for the second quarter ended June 30, 2008 were $259.8 million,
which represents an increase of $30.6 million or 13.4% over the $229.2 million
achieved in the comparable period of last year. Sales for the six months to
June 30, 2008 were $487.5 million which represents an increase of
$23.7 million or 5.1% over the $463.8 million achieved in the comparable
period of last year. In both cases, the increase results primarily from the
contribution from recent acquisitions and start-up operations as well as
increased selling prices. These positive factors more than offset continued
weaker end user demand in certain key sectors resulting from the economic
slowdown in North America, increased competition and the negative impact of
the strong Canadian dollar.
    Compared to the first quarter of this year sales are up 14.1%.
    Sales of the Packaging segment in the second quarter, at $121.2 million,
were up $2.6 million or 2.2% compared to last year with increased sales in the
U.S. reflecting higher volumes and selling prices which more than offset
decreases in Canada. Sales in Canada continued to be negatively impacted by
the continued softening in the forestry and construction sectors and increased
competition due to exchange. Compared to the first quarter of this year sales
of the Packaging segment are up 10.7%.
    Metal Processing sales for the second quarter were $138.6 million, which
is up $28.0 million or 25.3% compared to last year. This was primarily due to
higher sales of roll formed products reflecting the ramp up of the U.S.
operations in Iuka, Mississippi as well as the acquisition of Omega Joists
Inc. in February 2008. Sales of steel pressure vessels and stainless and
carbon steel tubular products were also higher in the second quarter
reflecting increased volumes and selling prices and the acquisitions of
Northland Stainless, Inc., Associated Tube USA Inc. in August 2007, and
Tubular Products Company in January 2008. These increases were offset in part
by lower steel pickling and existing welded tubular assembly sales reflecting
lower volume levels. Compared to the first quarter of this year, sales of the
Metal Processing segment are up 17.2%.

    Earnings

    Net earnings from continuing operations for the second quarter were
$12.1 million or $0.37 per share compared to $8.0 million or $0.25 per share
in the comparable quarter of last year. Net earnings from continuing
operations for the six months to June 30, 2008 were $15.1 million or $0.47 per
share compared to $14.0 million or $0.44 per share last year. On
July 31, 2007, the Company sold the operations and net assets of its
subsidiary, Energy Steel Products, Inc. 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. Additional details are outlined in Note 6 -
Discontinued Operations to the interim consolidated financial statements. Net
earnings for the second quarter were $12.1 million or $0.37 per share compared
to $9.2 million or $0.29 per share in the comparable quarter of last year. Net
earnings for the six months to June 30, 2008 were $15.1 million or $0.47 per
share compared to $16.2 million or $0.51 per share last year. The results for
the second quarter this year include a pre-tax restructuring gain of
$0.5 million ($0.3 million after tax) related to the closure of the
Scarborough, Ontario strapping manufacturing facility as outlined in Note 5 to
the interim consolidated financial statements and positively impacted earnings
by $0.01 per share. For the six months in 2008 the net restructuring charge
had no impact on earnings. This compares to the second quarter and six months
results last year which included a restructuring charge of $1.3 million
($0.9 million after tax) and $5.0 million ($3.3 million after tax) and which
negatively impacted earnings in the second quarter and first six months last
year by $0.03 and $0.10 per share respectively.
    Operating profit (see below for cautionary language regarding non-GAAP
measures) for the second quarter amounted to $19.1 million compared to
$15.1 million in the comparable quarter of last year with increases in both
the Packaging and Metal Processing segments.
    The Packaging segment had an operating profit of $8.1 million, which was
$2.9 million higher than the $5.2 million earned last year with all of the
increase occurring in the U.S. reflecting increased volumes and higher pricing
levels. In addition, increased operating efficiencies were realized as the new
steel strapping facility in Heath County, Ohio started to achieve targeted
production levels. Operating profit in Canada remained relatively unchanged
with the benefits from certain cost reduction measures and increased pricing
levels offsetting the continued slowdown in the forestry and construction
sectors and the negative effects from increased competition and the stronger
Canadian dollar. Compared to the first quarter of this year, operating profit
for the Packaging segment increased by over 300%.
    The Metal Processing segment generated operating profits of
$13.9 million, which was $1.4 million higher than the $12.5 million earned in
the comparable quarter of last year. Operating profits from roll formed
products were up reflecting increased sales levels and the positive
contribution from the U.S. operations. Operating profits from steel pressure
vessels and tubular operations were also higher reflecting increased sales and
the acquisitions of Northland Stainless, Inc. and Tubular Products Company.
These increases were offset in part by decreased operating profits from
stainless steel tubular products reflecting a less favourable product mix and
slowdowns at the U.S. and Mexican operations. Operating profits from steel
pickling operations were also down reflecting lower overall volumes primarily
as a result of reduced demand for pickling from our major Southern Ontario
customer relating mainly to reduced automotive parts production. Compared to
the first quarter of this year, operating profit for the Metal Processing
segment was up 103%.

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    FINANCIAL CONDITION
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    Liquidity and Capital Resources

    Cash flow from continuing operations before changes in non-cash working
capital for the first six months of 2008 amounted to $28.1 million which was
up $5.1 million from $23.0 million in the comparable period last year with the
increase attributable to higher earnings and increased levels of depreciation
and amortization. Overall, cash flow generated from operating activities from
continuing operations was $2.7 million compared to $11.4 million used last
year. This reflects increased levels of profitability and decreased
requirements for non-cash working capital.
    Cash used in investing activities from continuing operations at
$67.5 million was above last year's $19.0 million and is due to increased
spending on business acquisitions offset in part by decreased spending on
capital assets. Cash flow generated from financing activities amounted to
$67.4 million in the six months compared to $15.9 million last year with the
increase in cash this year due to the net increase in long-term debt.
Dividends paid on common shares for the six months amounted to $6.4 million or
$0.20 per share which was the same as last year. In aggregate, the cash
position increased by $2.7 million compared to a $17.0 million decrease last
year. The Company continues to maintain credit facilities with various banks
and at June 30, 2008 had available unused credit facilities of approximately
$86.5 million.

    Capital Expenditures

    Capital expenditures in the six months to June 30, 2008 were $8.4 million
compared to $19.1 million during the comparable period last year. Expenditures
in the current six months related primarily to new and replacement machinery
and equipment at several locations.

    Business Acquisitions

    On February 27, 2008, the Company acquired the assets and all business
operations of Omega Joists Inc. for consideration of $27 million subject to
certain adjustments for working capital items. On January 31, 2008, the
Company acquired 100% of the outstanding shares of Tubular Products Company
for consideration of U.S. $33 million plus an earn-out payment, subject to
certain adjustments for working capital items. The Company is pleased with the
performance of both acquisitions to date. Both of these strategic acquisitions
are reported under the Metal Processing segment, and have been accounted for
under the purchase method of accounting. Additional details are outlined in
Note 7 - Business Acquisitions to the interim consolidated financial
statements.

    Joint Venture

    On April 8, 2008, the Company announced that its majority owned steel
pickling operations in Ohio, Samuel Steel Pickling Company, had entered into a
letter of intent with respect to a strategic alliance with Viking &
Worthington Steel Enterprises, LLC. Additional details are outlined in Note 12
- Joint Venture to the interim consolidated financial statements.

    Discontinued Operations

    On July 31, 2007, the Company sold the operations and net assets of its
U.S. distribution business, Energy Steel Products, Inc., as discussed above
under Earnings. Additional details are outlined in Note 6 - Discontinued
Operations to the interim consolidated financial statements.

    Subsequent Event

    On July 30, 2008 the Company announced the signing of a non-binding
letter of intent to sell all of its Nanticoke, Ontario steel pickling
operations. Additional details are outlined in Note 13 - Subsequent Event to
the interim consolidated financial statements.

    Working Capital

    Working capital at June 30, 2008 was $281.9 million, an increase of
$41.6 million from the year-end position due to higher receivables and
inventories offset in part by higher bank indebtedness and payables. Overall,
the working capital ratio decreased slightly to 3.7 from the year-end position
of 3.9 but increased compared to the end of the second quarter last year when
it was 3.1.

    Net Borrowings to Capitalization

    The Company's net borrowings as at June 30, 2008 amounted to
$208.5 million, an increase of $75.0 million from $133.5 million at December
31, 2007. This increase reflects the increased spending on business
acquisitions during the first six months as well as a higher investment in
working capital, offset in part by higher profits and decreased spending on
capital assets. The net debt to capitalization ratio at the end of the quarter
increased to 37.3% compared to 28.3% at year-end and 29.0% at the end of the
second quarter last year.

    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 32,123,445. During the quarter
ended June 30, 3008, no stock options were issued or exercised; however,
7,000 stock options were forfeited and cancelled.

    Outlook

    Carbon steel pricing levels, which increased in the first quarter,
continued to increase at a more significant pace in the second quarter. Price
increases for carbon steel during the first half of this year have been driven
by reduced imports as well as higher raw material, scrap, energy and freight
costs. Domestic inventories continued at relatively low levels which in turn
kept supplies tight. End user demand, however, in certain key sectors remained
relatively soft particularly in the automotive, residential construction and
forestry sectors. The outlook for the third quarter is for underlying demand
in North America to remain soft. However, low imports and a continuation of
high input costs should lead to carbon steel prices remaining relatively
stable.
    In addition, after increasing somewhat in the first quarter, stainless
steel surcharges continued to increase in the second quarter driven by higher
nickel, chrome and natural gas costs. The forecast however is for nickel
surcharges and base prices to decrease in the third quarter driven in part by
lower demand.
    Furthermore, the strength of the Canadian dollar relative to the U.S.
dollar continued to have a negative impact on the Company's results in the
second quarter as compared to last year.
    The Company is pleased with the results for the second quarter, which was
a marked improvement over the first quarter. While challenging conditions are
anticipated to continue for the balance of the year, including soft demand in
certain key sectors, increased competition, and margin compression, the
Company anticipates a relatively strong performance for the balance of the
year compared to the second half of 2007.

    
    Quarterly Results

    (in thousands of dollars except per share amounts)

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                                          2008      2008      2007      2007
                                            Q2        Q1        Q4        Q3
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    Net Sales from continuing
     operations                       $259,771  $227,764  $209,360  $226,663

    Net Earnings from continuing
     operations                         12,070     3,078     3,278     4,104
    Basic Earnings per Share              0.37      0.10      0.10      0.12
    Diluted Earnings per Share            0.37      0.10      0.10      0.12

    Net Earnings                        12,070     3,078     3,278     7,800
    Basic Earnings per Share              0.37      0.10      0.10      0.24
    Diluted Earnings per Share            0.37      0.10      0.10      0.24


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                                          2007      2007      2006      2006
                                            Q2        Q1        Q4        Q3
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    Net Sales from continuing
     operations                       $229,235  $234,608  $211,434  $226,126

    Net Earnings from continuing
     operations                          8,028     5,938     9,763    11,820
    Basic Earnings per Share              0.25      0.19      0.30      0.37
    Diluted Earnings per Share            0.24      0.19      0.29      0.37

    Net Earnings                         9,197     7,024    11,254    12,384
    Basic Earnings per Share              0.29      0.22      0.35      0.39
    Diluted Earnings per Share            0.28      0.22      0.34      0.39
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    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
    Chairman & CEO

    July 30, 2008

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    The "Second 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 charge (gain), 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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    Six Months ended June 30, 2008 and 2007 (unaudited)
    (in thousands of dollars except per share amounts)

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                                  2ND QUARTER               SIX MONTHS
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                               2008         2007         2008         2007
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    NET SALES             $   259,771  $   229,235  $   487,535  $   463,843
    COSTS AND EXPENSES
     (INCOME):
      Cost of sales,
       selling &
       administration         233,254      207,559      447,718      422,615
      Depreciation and
       amortization             7,479        5,430       14,160       11,189
      Foreign exchange loss
       (gain)                    (104)       1,136         (380)         830
      Interest on long-term
       debt                     2,148        1,799        4,115        3,391
      Interest on short-
       term debt                   26          334           94          545
      Interest income             (24)         (21)         (32)         (33)
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                              242,779      216,237      465,675      438,537
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    EARNINGS FROM CONTINUING
     OPERATIONS BEFORE
     RESTRUCTURING CHARGE
     (GAIN) AND INCOME
     TAXES                     16,992       12,998       21,860       25,306

    RESTRUCTURING CHARGE
     (GAIN) (note 5)             (478)       1,328           12        4,992
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    EARNINGS FROM CONTINUING
     OPERATIONS BEFORE
     INCOME TAXES              17,470       11,670       21,848       20,314

    INCOME TAXES (RECOVERY):
      Current                   5,495        3,732        7,305        6,557
      Future                      (95)         (90)        (605)        (209)
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                                5,400        3,642        6,700        6,348
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    NET EARNINGS FROM
     CONTINUING OPERATIONS     12,070        8,028       15,148       13,966
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    NET EARNINGS FROM
     DISCONTINUED OPERATIONS
     (note 6)                       -        1,169            -        2,255
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    NET EARNINGS          $    12,070  $     9,197  $    15,148  $    16,221
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    BASIC EARNINGS PER SHARE
      From continuing
       operations                0.37         0.25         0.47         0.44
      From discontinued
       operations                0.00         0.04         0.00         0.07
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                          $      0.37  $      0.29  $      0.47  $      0.51
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    DILUTED EARNINGS PER SHARE
      From continuing
       operations                0.37         0.24         0.47         0.43
      From discontinued
       operations                0.00         0.04         0.00         0.07
    -------------------------------------------------------------------------
                          $      0.37  $      0.28  $      0.47  $      0.50
    -------------------------------------------------------------------------
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    See accompanying notes to consolidated financial statements.


    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
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    Six Months ended June 30, 2008 and 2007 (unaudited)
    (in thousands of dollars)

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                                                           2ND QUARTER
    -------------------------------------------------------------------------
                                                        2008         2007
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    RETAINED EARNINGS, BEGINNING OF PERIOD          $   341,925  $   327,472
    NET EARNINGS                                         15,148       16,221
    DIVIDENDS PAID ON COMMON SHARES                      (6,425)      (6,421)
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    RETAINED EARNINGS, END OF PERIOD                $   350,648  $   337,272
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    See accompanying notes to consolidated financial statements.



    CONSOLIDATED BALANCE SHEETS
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    June 30, 2008 (unaudited) and December 31, 2007 (audited)
    (in thousands of dollars)

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                                                      June 30,      Dec. 31,
                                                         2008          2007
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    ASSETS

    CURRENT ASSETS:
      Cash and cash equivalents                     $     6,191  $     1,876
      Accounts receivable                               160,863      123,801
      Inventories (note 1)                              208,126      180,555
      Prepaid expenses and sundry                         3,925        3,260
      Income taxes receivable                             1,687        6,475
      Future income taxes                                 5,789        5,500
      Assets held for sale                                    -          345
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                                                        386,581      321,812

    CAPITAL ASSETS                                      182,312      173,150
    ACCRUED PENSION ASSET                                 9,906        9,335
    FUTURE INCOME TAXES                                     328        1,260
    GOODWILL                                             81,859       50,008
    INTANGIBLE ASSETS                                    20,417       11,396
    OTHER ASSETS                                          1,905        1,294
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                                                    $   683,308  $   568,255
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    LIABILITIES AND SHAREHOLDERS' EQUITY

    CURRENT LIABILITIES:
      Bank indebtedness                             $     5,498  $     3,915
      Accounts payable and accrued liabilities           91,663       68,462
      Deferred revenue                                    4,237        5,880
      Dividends payable                                   3,251        3,245
    -------------------------------------------------------------------------
                                                        104,649       81,502

    LONG-TERM DEBT                                      209,201      131,414
    POST-RETIREMENT BENEFITS OTHER THAN PENSIONS          2,411        2,326
    FUTURE INCOME TAXES                                  14,200       15,285
    OTHER LONG-TERM LIABILITIES                             718          366
    -------------------------------------------------------------------------
                                                        331,179      230,893

    SHAREHOLDERS' EQUITY:
      Capital stock (note 2)                             29,891       29,891
      Contributed surplus                                   216          216
      Retained earnings                                 350,648      341,925
      Accumulated other comprehensive loss (note 3)     (28,626)     (34,670)
    -------------------------------------------------------------------------
                                                        352,129      337,362
    SUBSEQUENT EVENT (note 13)
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                                                    $   683,308  $   568,255
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to consolidated financial statements.



    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------------------------------------------
    Six Months ended June 30, 2008 and 2007 (unaudited)
    (in thousands of dollars)

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                                 2ND QUARTER               SIX MONTHS
    -------------------------------------------------------------------------
                              2008         2007         2008         2007
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    CASH FLOWS FROM (USED
     IN) OPERATING ACTIVITIES:
      Net earnings from
       continuing
       operations         $    12,070  $     8,028  $    15,148  $    13,966
      Items not involving
       cash:
        Depreciation and
         amortization           7,479        5,430       14,160       11,189
        Loss (gain) on
         disposal of
         capital assets          (506)          33          (61)          56
        Future income taxes       (95)         (90)        (605)        (209)
        Increase in accrued
         pension asset           (259)      (1,477)        (558)      (2,301)
        Decrease in post-
         retirement benefits
         other than pensions       15          235           34          288
    -------------------------------------------------------------------------
                               18,704       12,159       28,118       22,989
      Change in non-cash
       operating working
       capital:
        Decrease (increase)
         in accounts
         receivable          (22,830)       (4,165)     (25,970)     (14,809)
        Decrease (increase)
         in inventories      (11,165)       (7,320)     (20,136)     (20,074)
        Decrease (increase)
         in prepaid expenses
         and sundry           (1,030)       (2,091)        (604)         544
        Decrease (increase)
         in income taxes
         receivable            4,817             -        4,924            -
        Increase (decrease)
         in accounts payable
         and accrued
         liabilities           8,352        (8,418)      18,141        1,290
        Increase (decrease)
         in deferred revenue  (1,150)          857       (1,732)        (100)
        Increase (decrease)
         in income taxes
         payable                   -           754            -       (1,196)
    -------------------------------------------------------------------------
                              (4,302)       (8,224)       2,741      (11,356)
    CASH FLOWS FROM (USED IN)
     INVESTING ACTIVITIES:
      Proceeds on sale of
       capital assets          1,154            39        1,089           91
      Purchase of capital
       assets                 (5,122)       (9,686)      (8,430)     (19,101)
      Business acquisitions
       (note 7)                  (25)            -      (60,130)           -
    -------------------------------------------------------------------------
                              (3,993)       (9,647)     (67,471)     (19,010)
    CASH FLOWS FROM (USED IN)
     FINANCING ACTIVITIES:
      Increase in other
       assets                   (741)         (425)        (566)        (354)
      Issuance of common
       shares (note 2)             -           180            -          359
      Increase in long-term
       debt                   14,478        13,624       74,429       24,168
      Repayment of long-term
       debt                        -          (271)           -       (1,809)
      Dividends paid on
       common shares          (3,213)       (3,212)      (6,425)      (6,421)
    -------------------------------------------------------------------------
                              10,524         9,896       67,438       15,943
    CASH FLOWS FROM (USED IN)
     DISCONTINUED OPERATIONS
      Operating activities         -         1,062            -       (2,557)
      Investing activities         -            (2)           -          (46)
    -------------------------------------------------------------------------
                                   -         1,060            -       (2,603)

    EFFECT OF EXCHANGE RATE
     CHANGES ON CASH POSITION     62            (2)          24           35
    -------------------------------------------------------------------------
    INCREASE (DECREASE) IN
     CASH POSITION             2,291        (6,917)       2,732      (16,991)
    CASH POSITION, BEGINNING
     OF PERIOD                (1,598)      (14,341)      (2,039)      (4,267)
    -------------------------------------------------------------------------
    CASH POSITION, END OF
     PERIOD               $      693  $    (21,258)  $      693  $   (21,258)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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
    -------------------------------------------------------------------------
    Six Months ended June 30, 2008 and 2007 (unaudited)
    (in thousands of dollars)
    -------------------------------------------------------------------------
                                    2ND QUARTER                SIX MONTHS
    -------------------------------------------------------------------------
    NET SALES                    2008         2007         2008         2007
    -------------------------------------------------------------------------
    Packaging             $   121,207  $   118,654  $   230,706  $   239,164
    Metal Processing          138,564      110,581      256,829      224,679
    -------------------------------------------------------------------------
    Consolidated          $   259,771  $   229,235  $   487,535  $   463,843
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                    2ND QUARTER                SIX MONTHS
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    EARNINGS FROM CONTINUING
     OPERATIONS BEFORE
     RESTRUCTURING CHARGE
     (GAIN), INTEREST AND
     INCOME TAXES                2008         2007         2008         2007
    -------------------------------------------------------------------------
    Packaging             $     8,097  $     5,200  $     9,881  $    11,193
    Metal Processing           13,895       12,526       20,736       23,242
    Corporate                  (2,850)      (2,616)      (4,580)      (5,226)
    -------------------------------------------------------------------------
    Earnings from
     continuing operations
     before restructuring
     charge (gain),
     interest and income
     taxes                     19,142       15,110       26,037       29,209
    Restructuring charge
     (gain)                      (478)       1,328           12        4,992
    Interest on long-term
     debt                       2,148        1,799        4,115        3,391
    Interest on short-term
     debt                          26          334           94          545
    Interest income               (24)         (21)         (32)         (33)
    -------------------------------------------------------------------------
    Earnings from
     continuing operations
     before income taxes  $    17,470  $    11,670  $    21,848  $    20,314
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to consolidated financial statements.


    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
    -------------------------------------------------------------------------
    Six Months ended June 30, 2008 and 2007 (unaudited)
    (in thousands of dollars)
    -------------------------------------------------------------------------
                                    2ND QUARTER                SIX MONTHS
    -------------------------------------------------------------------------
                                 2008         2007         2008         2007
    -------------------------------------------------------------------------
    NET EARNINGS          $    12,070  $     9,197  $    15,148  $    16,221

    OTHER COMPREHENSIVE
     INCOME (LOSS):
      Unrealized gain
       (loss) on
       translation of net
       foreign operations         995      (10,378)       6,110      (11,260)
      Change in unrealized
       gain (loss) on
       derivatives
       designated as cash
       flow hedges              1,234           21         (310)         114
      Income taxes on
       change in unrealized
       gains (losses)            (422)          (7)         106          (39)
      Reclassification of
       realized loss on
       cash flow hedges            70           43          210          643
      Income taxes on
       reclassification of
       unrealized loss            (24)         (15)         (72)        (220)
    -------------------------------------------------------------------------
    TOTAL OTHER
     COMPREHENSIVE INCOME
     (LOSS)                     1,853      (10,336)       6,044      (10,762)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    COMPREHENSIVE INCOME
     (LOSS)               $    13,923  $    (1,139)  $   21,192  $     5,459
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying notes to consolidated financial statements.


    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Six Months ended June 30, 2008 and 2007 (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) Financial Instruments - Disclosures and Presentation
    On January 1, 2008, the Company adopted The Canadian Institute of
    Chartered Accountants ("CICA") Handbook Section 3862, "Financial
    Instruments - Disclosures" and Section 3863, "Financial Instruments -
    Presentation". The adoption of these new standards resulted in additional
    disclosures with regard to financial instruments and their impact on the
    Company's financial position and performance, including disclosures
    identifying the nature and extent of risks arising from financial
    instruments to which the Company is exposed during the period and at the
    balance sheet date, and how the Company manages those risks. These new
    standards relate to disclosure and presentation only and did not have an
    impact on the Company's consolidated financial results. Please refer to
    note 8 for further details.

    (ii) Capital Management
    On January 1, 2008, the Company adopted CICA Handbook Section 1535,
    "Capital Disclosures". Adoption of this new standard resulted in
    additional disclosures with regard to the Company's objectives, policies
    and processes for the management of its capital. This new standard
    relates to disclosure and presentation only and did not have an impact on
    the Company's consolidated financial results. Please refer to note 9 for
    further details.

    (iii) Inventories
    On January 1, 2008, the Company adopted CICA Handbook Section 3031,
    "Inventories". Section 3031 establishes standards for the measurement and
    disclosure of inventories. This new standard requires the measurement of
    inventories at the lower of cost and net realizable value and provides
    guidance on the determination of cost, including allocation of overheads
    and other costs to inventory. Adoption of Section 3031 did not have a
    significant impact on the Company's consolidated financial statements.

    The Company values raw materials, work in process and finished goods at
    the lower of cost and net realizable value. The cost of inventories
    comprises all costs of purchasing, costs of conversion and other costs
    incurred in bringing the inventories to their present location and
    condition. Net realizable value is the estimated selling price in the
    ordinary course of business less the estimated costs of completion and
    the estimated costs necessary to make the sale. The Company applies the
    first-in, first-out (FIFO) cost formula. There have been no reversals in
    the period of any previously recorded inventory write-downs.

    Future Changes in Accounting Policy

    (i) Goodwill and Intangible Assets
    In February 2008, the CICA issued Handbook Section 3064 "Goodwill and
    Intangible Assets", which replaces Section 3062, "Goodwill and Other
    Intangible Assets" and Section 3450 "Research and Development Costs".
    This Section establishes standards for the recognition, measurement, and
    disclosure of goodwill and intangible assets. The provisions relating to
    the definition and initial recognition of intangible assets, including
    internally generated intangible assets, are equivalent to the
    corresponding International Financial Reporting Standard, IAS 38
    "Intangible Assets". Standards pertaining to goodwill are unchanged from
    the previous Section 3062. This new Section applies to financial
    statements relating to fiscal years beginning on or after October 1,
    2008. The adoption of this accounting standard is not expected to have a
    significant impact on the Company's consolidated financial statements.

    (ii) International Financial Reporting Standards (IFRS)
    In February 2008, the Canadian Accounting Standards Board confirmed that
    publicly accountable enterprises will be required to report under IFRS
    effective for fiscal periods beginning on or after January 1, 2011.
    Initial IFRS training has begun and the Company is in the process of
    developing a plan to convert its consolidated financial statements to
    IFRS. Upon adoption of IFRS, it is likely that changes in accounting
    policies will be required that may materially impact the Company's
    consolidated financial statements. The Company will assess the impact of
    the conversion to IFRS and will continue to invest in training and
    resources required throughout the transition period.

    2.  CAPITAL STOCK:

                                                        June 30, December 31,
                                                           2008         2007
    -------------------------------------------------------------------------

    Number of common shares outstanding              32,123,445   32,123,445
    Number of options outstanding                       423,700      430,700
    -------------------------------------------------------------------------

    The Company did not issue any stock options during the three and six
    months ended June 30, 2008, nor were any stock options exercised. During
    the quarter ended June 30, 2008, 7,000 stock options were forfeited and
    cancelled.

    Weighted average number of shares:
    -------------------------------------------------------------------------
                                    2ND QUARTER                SIX MONTHS
    -------------------------------------------------------------------------
                                 2008         2007         2008         2007
    -------------------------------------------------------------------------
    Basic Shares           32,123,445   32,109,112   32,123,445   32,094,978
    Effect of dilutive
     stock options             74,138      191,372       94,203      170,228
    Diluted shares         32,197,583   32,300,484   32,217,648   32,265,206
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    3.  ACCUMULATED OTHER COMPREHENSIVE LOSS:

                                    2ND QUARTER                SIX MONTHS
    -------------------------------------------------------------------------
                                 2008         2007         2008         2007
    -------------------------------------------------------------------------
    CUMULATIVE TRANSLATION
     ADJUSTMENT
      Balance, beginning
       of period          $   (29,176) $   (13,989) $   (34,291) $   (13,107)
      Unrealized gain
       (loss) on
       translation of net
       foreign operations         995      (10,378)       6,110      (11,260)
    -------------------------------------------------------------------------
    Balance, end of period    (28,181)     (24,367)     (28,181)     (24,367)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    UNREALIZED DERIVATIVE
     GAIN (LOSS) ON CASH
     FLOW HEDGES, net
      Balance, beginning
       of period               (1,303)         (26)        (379)           -
      Impact of new cash
       flow hedge
       accounting rules
       on January 1, 2007
       (net of taxes of
       $250)                        -            -            -         (482)
      Changes in
       unrealized gain or
       loss on derivatives
       designated as cash
       flow hedges              1,234           21         (310)         114
      Income taxes on
       change in unrealized
       gains/losses              (422)          (7)         106          (39)
      Reclassification of
       realized loss on
       cash flow hedges            70           43          210          643
      Income taxes on
       reclassification of
       unrealized loss            (24)         (15)         (72)        (220)
    -------------------------------------------------------------------------
    Balance, end of period       (445)          16         (445)          16
    -------------------------------------------------------------------------
    ACCUMULATED OTHER
     COMPREHENSIVE LOSS   $   (28,626)  $  (24,351)  $  (28,626)  $  (24,351)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    4.  FUTURE BENEFIT COSTS:

    The Company has incurred pension and other post-retirement benefit costs
    as noted below.
    -------------------------------------------------------------------------
                                    2ND QUARTER                SIX MONTHS
    -------------------------------------------------------------------------
                                 2008         2007         2008         2007
    -------------------------------------------------------------------------
    Defined benefit
     pension plans        $       904  $     1,146  $     1,809  $     3,420
    Defined contribution
     pension plans                486          565          925        1,120
    Other benefit plans            55           62          108          129
    -------------------------------------------------------------------------
    Total                 $     1,445  $     1,773  $     2,842  $     4,669
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    5. RESTRUCTURING CHARGE:

    On January 5, 2007, the Company announced the approval of a formal plan
    to close its Warden Avenue manufacturing facility in Scarborough,
    Ontario. The Company estimates it will incur costs of $4,190 ($1,643
    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 (gain) line within the consolidated statements of
    earnings. As of June 30, 2008, $1,574 of cumulative restructuring costs
    has been recorded net of a gain on sale of $4,797.

    The following table highlights the activity and balance of the
    restructuring charge for the period ended June 30, 2008:
    -------------------------------------------------------------------------
                                                          Costs
                                                   incurred six
                                             Costs       months
                                Total  incurred to        ended   Cumulative
                                Costs  December 31,     June 30,       costs
    Restructuring Charge     Expected         2007         2008     incurred
    -------------------------------------------------------------------------
    Severance, termination
     costs, benefits,
     retention bonuses    $     2,974  $     2,972  $         2  $     2,974
    Pension curtailment
     and settlement             4,327        1,127            -        1,127
    Gain on sale of
     machinery and
     equipment                 (1,488)           -         (683)        (683)
    Gain on sale of land
     and building              (4,114)      (4,114)           -       (4,114)
    Other                       2,491        1,577          693        2,270
    -------------------------------------------------------------------------
    Total                 $     4,190  $     1,562  $        12  $     1,574
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Other restructuring costs include facility closure costs, capital asset
    dismantling and write down, and inventory write down.

    -------------------------------------------------------------------------
                                                  Less
                                                 costs
                                       Less   incurred
                                      costs        and
                         Balance,   paid or    charged               Balance
    Restructuring       March 31, otherwise         to     Adjust-   June 30,
     Accrual                2008    settled    expense      ments       2008
    -------------------------------------------------------------------------
    Severance,
     termination costs,
     benefits, retention
     bonuses            $    753   $    349   $      -   $      -   $    404
    Pension curtailment
     and settlement        1,127          -          -          -      1,127
    Other                     72         25          -          -         47
    -------------------------------------------------------------------------
    Total               $  1,952   $    374   $      -   $      -   $  1,578
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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. 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:

    -------------------------------------------------------------------------
                                    2ND QUARTER                SIX MONTHS
    -------------------------------------------------------------------------
                                 2008         2007         2008         2007
    -------------------------------------------------------------------------
    Net sales             $         -  $    12,704  $         -  $    26,213
    Cost of sales, selling
     & administration               -       10,787            -       22,516
    -------------------------------------------------------------------------
    Earnings before income
     taxes                          -        1,917            -        3,697
    Income taxes                    -          748            -        1,442
    -------------------------------------------------------------------------
    Net income from
     discontinued
     operations           $         -  $     1,169  $         -  $     2,255
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    7.  BUSINESS ACQUISITIONS:

    On February 27, 2008, the Company acquired the principle assets of Omega
    Joists Inc. ("Omega") for consideration of $27,000 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.

    On January 31, 2008, the Company acquired 100% of the outstanding shares
    of Tubular Products Company ("Tubular") for consideration of U.S. $33,000
    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.

    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.

    The process of valuing certain assets acquired has not been finalized,
    and, as such, the fair value allocation of the purchase prices is subject
    to refinement. On a preliminary basis, details of the consideration given
    and the fair value of net assets acquired are as follows, in Canadian
    dollars:

    Cash consideration                                               $59,624
    Acquisition costs                                                    506
    -------------------------------------------------------------------------
    Total purchase price                                             $60,130
    -------------------------------------------------------------------------
    Net assets acquired, at fair values:
      Accounts receivable                                            $ 6,513
      Inventories                                                      4,351
      Capital assets                                                   9,901
      Intangible assets (subject to amortization)                     11,091
      Goodwill                                                        30,641
      Accounts payable                                                (2,367)
    -------------------------------------------------------------------------
    Net assets acquired, net of cash of $50 (Tubular)                $60,130
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Of the total goodwill acquired, $27,560 is deductible for tax purpose.

    8.  FINANCIAL INSTRUMENTS:

    The Company has exposure to the following risks from its use of financial
    instruments: credit risk, market risk and liquidity risk.

    Credit Risk
    -----------
    Credit risk arises from the potential default of a customer in meeting
    its financial obligation to the Company. The Company has credit
    evaluation, approval and monitoring processes to mitigate potential
    credit risk.

    The Company evaluates the collectability of accounts receivable and
    records an allowance for doubtful accounts which reduces receivables to
    the amount management reasonably believes will be collected.

    Credit risk exists in the event of non-performance by a counterparty to
    forward exchange contracts and interest rate swaps. This risk is
    minimized as each contract is with a major chartered bank and represents
    an exchange between the same parties allowing for an offset in the event
    of non-performance.

    The carrying amount of financial assets represents the maximum credit
    exposure. The maximum exposure to credit risk at the reporting date was:

                                                       June 30,  December 31,
                                                          2008          2007
    -------------------------------------------------------------------------
    Cash and cash equivalents                      $     6,191   $     1,876
    Accounts receivable                                160,863       123,801
    Other assets                                         1,905         1,294
    -------------------------------------------------------------------------
    Total                                          $   168,959   $   126,971
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The aging of accounts receivable at the reporting date was:
    -------------------------------------------------------------------------
                                                       June 30,  December 31,
                                                          2008          2007
    -------------------------------------------------------------------------
    1 to 30 days                                   $    97,987   $    66,045
    30 to 60 days                                       44,939        39,291
    60 to 90 days                                       13,174        13,063
    Greater than 90 days                                 7,415         8,004
    -------------------------------------------------------------------------
    Gross accounts receivable                      $   163,515   $   126,403
    -------------------------------------------------------------------------
    Less: Allowance for doubtful accounts               (2,652)       (2,602)
    -------------------------------------------------------------------------
    Total accounts receivable, net                 $   160,863   $   123,801
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Market risk
    -----------
    Market risk is the risk that changes in market prices, such as foreign
    exchange rates and interest rates, will affect the Company's income or
    the value of its holding in financial instruments.

    Foreign exchange risk / Currency risk
    The Company is a net seller of U.S. dollars with U.S. dollar receipts
    from sales exceeding U.S. dollar denominated purchases of raw materials,
    supplies and equipment. As a net seller of U.S. funds, the Company is
    negatively affected by a strong Canadian currency. However, this is
    somewhat offset by the favourable effect of a strong Canadian dollar on
    the Company's purchase of raw materials, supplies and equipment in U.S.
    dollars. The Company enters into forward exchange contracts to hedge the
    cash flow risk associated with its estimated net foreign currency cash
    requirements and certain significant transactions. The Company also
    enters into forward exchange contracts to hedge the cash flow risk
    associated with specific transactions denominated in currencies other
    than U.S. dollars. Unrealized gains and losses on outstanding contracts
    are not recorded in the consolidated statement of earnings until maturity
    of the underlying transactions.

    The Company uses derivative financial instruments to manage risks from
    fluctuations in exchange rates. 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 a "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 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 consolidated
    statement of earnings.

    At June 30, 2008, the Company was committed to the sale of U.S. $12,000
    under forward exchange contracts at rates of exchange ranging from Cdn.
    $1.0166 to Cdn. $1.0316 maturing from July 9, 2008 to December 19, 2008.

    In addition, the Company was committed to the sale of EUR 885 under
    forward exchange contracts. The contracts are at rates of exchange
    ranging from Cdn. $1.5054 to Cdn. $1.6105 maturing from July 2, 2008 to
    Jan 9, 2009. The Company was also committed to the sale of GBP 716 under
    forward exchange contracts. The contracts are at rates of exchange
    ranging from Cdn. $1.9110 to Cdn. $2.0240 maturing from July 18, 2008 to
    November 14, 2008.

    The fair value of the contracts as at June 30, 2008 was an unrealized
    loss of $67 ($46 net of tax) and is recorded within accounts payable on
    the consolidated balance sheet.

    If the Canadian dollar had appreciated (depreciated) 1 percent against
    the U.S. dollar at June 30, 2008, with all other variables held constant,
    the impact of the foreign currency change on the Company's U.S. dollar
    denominated financial instruments would be to increase (decrease)
    earnings from continuing operations before taxes for the six months
    ending June 30, 2008 by $1,244. This analysis excludes the impact of
    hedging activities which mitigate the Company's exposure to changes in
    foreign exchange rates. The impact of changes in other currencies on the
    Company's earnings is not significant.

    Interest rate risk
    The Company is subject to floating interest rates on its long-term debt
    facilities and consequently, there is risk of cash flow exposure in the
    event that interest rates increase. The Company enters into interest rate
    swaps to hedge its exposure to changes in interest rates. At June 30,
    2008, the Company had U.S. $50,000 of interest rate swap agreements in
    place with the balance of long-term debt subject to floating interest
    rates.

    Any change in the fair value of the effective portion of an 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, if any, is recognized immediately in the
    statement of earnings. The fair value of the interest rate swaps at June
    30, 2008 was an unrealized loss of $609 ($415 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.

    A 1% increase (decrease) in the interest rate would have resulted in an
    approximately $380 decrease (increase) in the pre-tax earnings of the
    Company for the quarter ended June 30, 2008. This analysis assumes that
    all other variables, in particular foreign currency rates, and the level
    of interest rate swaps in place, remained constant.

    Liquidity risk
    --------------
    Liquidity risk is the risk that the Company will not be able to meet its
    financial obligations as they fall due. The Company's approach to
    managing liquidity risk is to ensure that it will always have sufficient
    liquidity to meet liabilities when due. The Company monitors sales and
    collection efforts to ensure sufficient cash flows are generated from
    operations to meet current debt servicing requirements. At June 30, 2008,
    the Company had cash and cash equivalents of $6,191 and revolving credit
    facilities that permitted the Company to borrow funds up to an aggregate
    of $296,414 of which $216,154 had been drawn.

    All of the Company's financial liabilities, other than long-term debt,
    have contractual maturities of less than one year.

    The maturities of the Company's long-term debt credit facilities are as
    follows: $73,844 in 1 to 2 years; and $135,357 within 3 years. These
    amounts are the contractual undiscounted cash flows.

    Management monitors consolidated cash flow through quarterly forecasting
    and through the annual budget process. The Company expects to be able to
    re-negotiate credit facilities and to generate cash to meet the repayment
    requirements as noted above.

    Fair value
    ----------
    Under Canadian generally accepted accounting principles, financial
    instruments are classified into one of the following five categories:
    held-for-trading, held-to-maturity investments, loans and receivables,
    available-for-sale financial assets and other financial liabilities. The
    Company has also designated certain of its derivatives as effective
    hedges. The carrying values of the Company's financial instruments on the
    consolidated balance sheet are classified into the following categories:

                                                        June 30, December 31,
                                                           2008         2007
    -------------------------------------------------------------------------
    Held-for-trading                                $       693  $    (2,039)
    Loans and receivables                           $   160,863  $   123,801
    Other financial liabilities                     $  (300,864) $  (199,666)
    Loss on derivatives designated as effective
     hedge                                          $      (676) $      (576)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The Company's financial instruments consist of cash and cash equivalents,
    accounts receivable, accounts payable, long-term debt, foreign exchange
    contracts and interest rate swap contracts. The Company has 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 carrying value of the cash and cash equivalents, accounts receivable,
    and accounts payable approximates their fair values due to the immediate
    or short-term maturity of these financial instruments.

    The estimated fair value of the Company's variable-rate debt approximates
    the carrying value of such debt since the variable interest rates are
    market-based, and the Company believes such debt could be refinanced on
    materially similar terms.

    The fair value of the Company's derivative financial instruments used to
    manage exposure to increases in procurement costs arising from certain
    foreign currency denominated purchases are estimated based upon fair
    value estimates of the related cash-settled foreign currency forward
    agreement provided by the counterparty to the transactions. The fair
    value of the forward exchange contracts reflects the cash flows due to or
    from the Company if settlement had taken place on June 30, 2008.

    The fair value of interest rate swaps used by the Company to manage
    interest rate exposure is based upon fair value estimates of the
    agreement provided by the counterparty to the transactions. The fair
    value of the interest rate swaps reflects the cash flows due to or from
    the Company if settlement had taken place on June 30, 2008.

    9.  CAPITAL MANAGEMENT:

    The Company's objective when managing capital is to maintain a prudent
    capital base so as to maintain investor, creditor and market confidence
    and to sustain future development of the business. Management defines
    capital as the Company's total shareholders' equity, as well as long-term
    debt and bank indebtedness.

    The Board of Directors in conjunction with management has agreed to a
    quantitative targeted return for the Company and promotes year over year
    sustainable profitable growth. The Board of Directors also reviews on a
    quarterly basis whether any dividends should be paid with reference to
    the Company's Dividend Policy. Management considers such factors as
    consistency with the Company's capital financing strategy objectives,
    target yield to our shareholders, external benchmarks, and targeted
    percentage of average annual net earnings before recommending its
    quarterly dividend to be paid. In the six months ended June 30th, 2008,
    dividends totaling $6,425 have been declared payable to the Company's
    shareholders.

    In order to maintain or adjust the capital structure, the Company may
    provide dividends paid to shareholders, purchase shares for cancellation
    pursuant to normal course issuer bids, issue new shares, issue new debt,
    and issue new debt to replace existing debt with different
    characteristics.

    There were no changes in the Company's approach to capital management
    during the period compared to that of 2007. The Company's strategy for
    capital risk management is driven by the cost effectiveness of externally
    available debt, cash from operations and expectations for future
    acquisitions and capital expenditures. Financial covenants under the
    Company's existing credit facilities include net debt to capitalization,
    net debt to earnings before interest, taxes, depreciation and
    amortization (EBITDA) and current ratio covenants, all of which the
    Company was in compliance with at June 30, 2008.

    10. 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.

    11. COMPARATIVE FIGURES:

    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 10 to these interim consolidated financial statements.

    12. JOINT VENTURE:

    On April 8, 2008, the Company announced that its majority owned steel
    pickling operations in Ohio, Samuel Steel Pickling Company ("Samuel
    Pickling"), entered into a letter of intent with respect to a strategic
    alliance with Viking & Worthington Steel Enterprises, LLC ("V&W"). Under
    the terms of the letter of intent, V&W would shut down its steel pickling
    operations in Valley City, Ohio and have its Northeast Ohio pickling
    requirements processed at Samuel Pickling. V&W would obtain a minority
    ownership position in Samuel Pickling as a result. The new ownership
    structure would include Gibraltar Industries and V&W while Samuel Manu-
    Tech Inc. would remain the majority owner and operating manager of the
    new venture. The closing of this transaction, which was originally
    anticipated to occur in June 2008, has been delayed due to the non-
    completion of a number of pre-closing conditions.

    13. SUBSEQUENT EVENT:

    On July 30, 2008, the Company announced the signing of a non-binding
    letter of intent to sell all of its Nanticoke, Ontario steel pickling
    operations to its major customer, U.S. Steel Canada. The decision to sell
    the Nanticoke pickling lines reflects the company's expectations for
    reduced steel and pickling demand in the Ontario marketplace and the
    desire to reallocate capital into higher growth areas. The Company
    remains committed to servicing the Southern Ontario marketplace through
    its state-of-the-art steel pickling and slitting operations in Stoney
    Creek, Ontario. The transaction is anticipated to close in the third
    quarter of 2008 following the completion of due diligence and ongoing
    negotiations.
    

    %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

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SAMUEL MANU-TECH INC.

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