##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549



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FORM 10Q



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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

FOR THE TRANSITION PERIOD FROM  TO

COMMISSION FILE NUMBER 333124543



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EDGEN
CORPORATION

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Nevada                                                         |  | 13-3908690                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                           |  |           
|------------------------------------------ |  | ----------
|18444 Highland Road Baton Rouge, Louisiana |  | 70809     
|(Address of principal executive offices)   |  | (Zip Code)

225-756-9868

(Registrants telephone number, including area code)



---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.     Yes   x     No ̈

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

Large accelerated filer ̈Accelerated
filer ̈Non-accelerated filer  x

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Securities Exchange Act of
1934).    Yes ̈No  x

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the
latest practicable date:

There were 2,681,564 shares of Common Stock outstanding as of November 20, 2006.



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##### Table of Contents

|                               |  |                                                                                                                                                                                                                                                                      |  |   
|------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --
|PART I 
FINANCIAL INFORMATION |  |                                                                                                                                                                                                                                                                     
|                               |  |                                                                                                                                                                                                                                                                     
|Item 1.                        |  | Financial Statements:                                                                                                                                                                                                                                                |  |   
|                               |  |                                                                                                                                                                                                                                                                     
|                               |  | Condensed Consolidated Balance Sheets at September 30, 2006 and December 31, 2005 (unaudited)                                                                                                                                                                        |  | 3 
|                               |  | Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2006, the three months ended September 30, 2005, the period February 1, 2005 to September 30, 2005, and the period January 1, 2005
to January 31, 2005 (unaudited) |  | 4 
|                               |  | Condensed Consolidated Statement of Shareholders Equity for the nine months ended September 30, 2006 (unaudited)                                                                                                                                                    |  | 5 
|                               |  | Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2006, the period February 1, 2005 to September 30, 2005, and the period January 1, 2005 to January 31, 2005 (unaudited)                                                      |  | 6 
|                               |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                                                                                                                                                                                     |  | 7 
|                               |  |                                                                                                                                                                                                                                                                     
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                                                                                |  | 20
|                               |  |                                                                                                                                                                                                                                                                     
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                                                                                           |  | 34
|                               |  |                                                                                                                                                                                                                                                                     
|Item 4.                        |  | Controls and Procedures                                                                                                                                                                                                                                              |  | 35
|                               | 
|PART II 
OTHER INFORMATION    |  |                                                                                                                                                                                                                                                                     
|                               |  |                                                                                                                                                                                                                                                                     
|Item 1.                        |  | Legal Proceedings                                                                                                                                                                                                                                                    |  | 35
|                               |  |                                                                                                                                                                                                                                                                     
|Item 1A.                       |  | Risk Factors                                                                                                                                                                                                                                                         |  | 35
|                               |  |                                                                                                                                                                                                                                                                     
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                                          |  | 35
|                               |  |                                                                                                                                                                                                                                                                     
|Item 3.                        |  | Defaults Upon Senior Securities                                                                                                                                                                                                                                      |  | 35
|                               |  |                                                                                                                                                                                                                                                                     
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                                                                                                                                                                                                  |  | 35
|                               |  |                                                                                                                                                                                                                                                                     
|Item 5.                        |  | Other Information                                                                                                                                                                                                                                                    |  | 35
|                               |  |                                                                                                                                                                                                                                                                     
|Item 6.                        |  | Exhibits                                                                                                                                                                                                                                                             |  | 35
|                               | 
|SIGNATURES                     |  | 36                                                                                                                                                                                                                                                                  
|                               | 
|EXHIBIT INDEX                  |  | 37                                                                                                                                                                                                                                                                  



2



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##### Table of Contents

PART I  FINANCIAL INFORMATION

Item 1.
Financial Statements.

EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



|                                                                                                                                                                                  |  |                    |             |                   |   |            
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----------- | ----------------- | - | -----------
|                                                                                                                                                                                  |  | September 30, 2006 |             | December 31, 2005
|ASSETS                                                                                                                                                                            |  |                    |             |                   |   |            
|CURRENT ASSETS:                                                                                                                                                                   |  |                    |             |                   |   |            
|Cash and cash equivalents                                                                                                                                                         |  | $                  | 2,393,317   |                   | $ | 18,013,533 
|Accounts receivablenet of allowance for doubtful accounts of $941,482 and $128,573, respectively                                                                                 |  |                    | 54,880,800  |                   |   | 41,862,061 
|Accounts receivableaffiliated                                                                                                                                                    |  |                    | 451,200     |                   |   | 19,483     
|Inventory                                                                                                                                                                         |  |                    | 106,877,545 |                   |   | 81,003,469 
|Income tax receivable                                                                                                                                                             |  |                    | 177,451     |                   |   | 21,551     
|Prepaid expenses and other current assets                                                                                                                                         |  |                    | 2,649,198   |                   |   | 1,112,337  
|Deferred tax asset                                                                                                                                                                |  |                    | 1,987,779   |                   |   | 1,670,166  
|                                                                                                                                                                                  |  |                    |             |                   |   |            
|Total current assets                                                                                                                                                              |  |                    | 169,417,290 |                   |   | 143,702,600
|PROPERTY, PLANT AND EQUIPMENT  net                                                                                                                                               |  |                    | 10,747,434  |                   |   | 11,258,703 
|GOODWILL                                                                                                                                                                          |  |                    | 32,792,185  |                   |   | 37,126,769 
|OTHER INTANGIBLES                                                                                                                                                                 |  |                    | 26,775,145  |                   |   | 23,424,188 
|OTHER ASSETS                                                                                                                                                                      |  |                    | 143,440     |                   |   | 177,581    
|DEFERRED FINANCING COSTS                                                                                                                                                          |  |                    | 7,429,274   |                   |   | 8,345,417  
|                                                                                                                                                                                  |  |                    |             |                   |   |            
|TOTAL                                                                                                                                                                             |  | $                  | 247,304,768 |                   | $ | 224,035,258
|                                                                                                                                                                                  |  |                    |             |                   |   |            
|LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS EQUITY                                                                                                                  |  |                    |             |                   |   |            
|CURRENT LIABILITIES:                                                                                                                                                              |  |                    |             |                   |   |            
|Managed cash overdrafts                                                                                                                                                           |  | $                  | 3,452,478   |                   | $ | 488,748    
|Accounts payable                                                                                                                                                                  |  |                    | 50,951,909  |                   |   | 41,213,411 
|Accounts payableaffiliated                                                                                                                                                       |  |                    | 117,922     |                   |   | 218,094    
|Accrued expenses and other current liabilities                                                                                                                                    |  |                    | 9,176,691   |                   |   | 9,382,103  
|Accrued interest payable                                                                                                                                                          |  |                    | 2,306,080   |                   |   | 5,600,278  
|Current portion of long-term debt                                                                                                                                                 |  |                    | 151,886     |                   |   | 160,984    
|                                                                                                                                                                                  |  |                    |             |                   |   |            
|Total current liabilities                                                                                                                                                         |  |                    | 66,156,966  |                   |   | 57,063,618 
|DEFERRED TAX LIABILITY                                                                                                                                                            |  |                    | 4,767,845   |                   |   | 2,775,879  
|LONG-TERM DEBT                                                                                                                                                                    |  |                    | 138,991,458 |                   |   | 134,807,164
|                                                                                                                                                                                  |  |                    |             |                   |   |            
|Total liabilities                                                                                                                                                                 |  |                    | 209,916,269 |                   |   | 194,646,661
|Redeemable preferred stockSeries A Cumulative Compounding, $.01 par value, 40,000 shares authorized and designated, 21,600 shares issued
and outstanding as of December 31, 2005 |  |                    |            |                   |   | 23,303,400 
|                                                                                                                                                                                  |  |                   
|COMMITMENTS AND CONTINGENCIES                                                                                                                                                     |  |                    |             |                   |   |            
|                                                                                                                                                                                  |  |                   
|SHAREHOLDERS EQUITY:                                                                                                                                                             |  |                    |             |                   |   |            
|Common stock$.01 par value, 5,000,000 shares authorized; 2,681,564 shares issued and outstanding as of September 30, 2006 and
December 31, 2005                                  |  |                    | 26,816      |                   |   | 26,816     
|Paid-in capital                                                                                                                                                                   |  |                    | 27,769,198  |                   |   | 2,654,749  
|Accumulated comprehensive income                                                                                                                                                  |  |                    | 175,209     |                   |   | 77,971     
|Retained earnings                                                                                                                                                                 |  |                    | 9,417,276   |                   |   | 3,325,661  
|                                                                                                                                                                                  |  |                    |             |                   |   |            
|Total shareholders equity                                                                                                                                                        |  |                    | 37,388,499  |                   |   | 6,085,197  
|                                                                                                                                                                                  |  |                    |             |                   |   |            
|TOTAL                                                                                                                                                                             |  | $                  | 247,304,768 |                   | $ | 224,035,258
|                                                                                                                                                                                  |  |                    |             |                   |   |            

The accompanying notes are an integral part of the condensed consolidated financial statements.



3



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##### Table of Contents

EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                                                                   |  |                                       |             |   |                                       |   |            |                                      |  |   |                                               |   |  |                                            |             |   |  |   |             |  
|---------------------------------------------------------------------------------- |  | ------------------------------------- | ----------- | - | ------------------------------------- | - | ---------- | ------------------------------------ |  | - | --------------------------------------------- | - |  | ------------------------------------------ | ----------- | - |  | - | ----------- | -
|                                                                                   |  | Successor                             |             |   | Successor                             |   |            | Successor                            |  |   | Successor                                     |   |  | Predecessor                                |            
|                                                                                   |  | Three Months Ended September 30, 2006 |             |   | Three Months Ended September 30, 2005 |   |            | Nine Months Ended September 30, 2006 |  |   | Period February 1, 2005 to September 30, 2005 |   |  | Period January 1, 2005 to January 31, 2005 |            
|SALES                                                                              |  | $                                     | 105,593,972 |   |                                       | $ | 75,711,770 |                                      |  | $ | 293,459,350                                   |   |  | $                                          | 196,000,053 |   |  | $ | 18,944,787  |  
|OPERATING EXPENSES:                                                                |  |                                       |             |   |                                       |   |            |                                      |  |   |                                               |   |  |                                            |             |   |  |   |             |  
|Cost of sales (exclusive of depreciation and amortization, shown separately below) |  |                                       | 84,297,401  |   |                                       |   | 61,765,558 |                                      |  |   | 236,259,186                                   |   |  |                                            | 155,392,433 |   |  |   | 14,153,065  |  
|Selling, general, and administrative expense                                       |  |                                       | 10,246,354  |   |                                       |   | 7,546,049  |                                      |  |   | 27,520,967                                    |   |  |                                            | 20,580,964  |   |  |   | 14,364,259  |  
|Depreciation and amortization expense                                              |  |                                       | 3,081,022   |   |                                       |   | 602,620    |                                      |  |   | 6,084,541                                     |   |  |                                            | 1,689,270   |   |  |   | 200,644     |  
|                                                                                   |  |                                       |             |   |                                       |   |            |                                      |  |   |                                               |   |  |                                            |             |   |  |   |             |  
|Total operating expenses                                                           |  |                                       | 97,624,777  |   |                                       |   | 69,914,227 |                                      |  |   | 269,864,694                                   |   |  |                                            | 177,662,667 |   |  |   | 28,717,968  |  
|OPERATING INCOME (LOSS)                                                            |  |                                       | 7,969,195   |   |                                       |   | 5,797,543  |                                      |  |   | 23,594,656                                    |   |  |                                            | 18,337,386  |   |  |   | (9,773,181  | )
|OTHER INCOME (EXPENSE):                                                            |  |                                       |             |   |                                       |   |            |                                      |  |   |                                               |   |  |                                            |             |   |  |   |             |  
|Other income (expense)                                                             |  |                                       | 187,917     |   |                                       |   | 69,634     |                                      |  |   | 373,173                                       |   |  |                                            | 144,154     |   |  |   | (49,886     | )
|Interest expense, net                                                              |  |                                       | (3,958,268  | ) |                                       |   | (3,164,459 | )                                    |  |   | (11,532,116                                   | ) |  |                                            | (8,122,868  | ) |  |   | (333,288    | )
|                                                                                   |  |                                       |             |   |                                       |   |            |                                      |  |   |                                               |   |  |                                            |             |   |  |   |             |  
|INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAX EXPENSE (BENEFIT)                  |  |                                       | 4,198,844   |   |                                       |   | 2,702,718  |                                      |  |   | 12,435,713                                    |   |  |                                            | 10,358,672  |   |  |   | (10,156,355 | )
|INCOME TAX EXPENSE (BENEFIT)                                                       |  |                                       | 1,593,657   |   |                                       |   | 1,062,446  |                                      |  |   | 4,951,798                                     |   |  |                                            | 3,810,331   |   |  |   | (1,916,508  | )
|                                                                                   |  |                                       |             |   |                                       |   |            |                                      |  |   |                                               |   |  |                                            |             |   |  |   |             |  
|NET INCOME (LOSS)                                                                  |  |                                       | 2,605,187   |   |                                       |   | 1,640,272  |                                      |  |   | 7,483,915                                     |   |  |                                            | 6,548,341   |   |  |   | (8,239,847  | )
|PREFERRED DIVIDEND REQUIREMENT                                                     |  |                                       | (469,200    | ) |                                       |   | (469,200   | )                                    |  |   | (1,392,300                                    | ) |  |                                            | (1,234,200  | ) |  |   | (189,949    | )
|                                                                                   |  |                                       |             |   |                                       |   |            |                                      |  |   |                                               |   |  |                                            |             |   |  |   |             |  
|NET INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDER                                 |  | $                                     | 2,135,987   |   |                                       | $ | 1,171,072  |                                      |  | $ | 6,091,615                                     |   |  | $                                          | 5,314,141   |   |  | $ | (8,429,796  | )
|                                                                                   |  |                                       |             |   |                                       |   |            |                                      |  |   |                                               |   |  |                                            |             |   |  |   |             |  

The accompanying notes are an integral part of the condensed consolidated financial statements.



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##### Table of Contents

EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY

(Unaudited)



|                                            |  |              |        |                 |   |                                        |  |                   |         |  |       |            |   |  |   |            |  
|------------------------------------------- |  | ------------ | ------ | --------------- | - | -------------------------------------- |  | ----------------- | ------- |  | ----- | ---------- | - |  | - | ---------- | -
|                                            |  | Common Stock |        | Paid-In Capital |   | Accumulated Other Comprehensive Income |  | Retained Earnings |         |  | Total |           
|BalanceDecember 31, 2005                   |  | $            | 26,816 |                 | $ | 2,654,749                              |  | $                 | 77,971  |  | $     | 3,325,661  |   |  | $ | 6,085,197  |  
|Net income                                  |  |              |       |                 |   |                                       |  |                   |        |  |       | 7,483,915  |   |  |   | 7,483,915  |  
|Other comprehensive income:                 |  |              |        |                 |   |                                        |  |                   |         |  |       |            |   |  |   |            |  
|Foreign translation adjustments, net of tax |  |              |       |                 |   |                                       |  |                   | 97,238  |  |       |           |   |  |   | 97,238     |  
|                                            |  |              |        |                 |   |                                        |  |                   |         |  |       |            |   |  |   |            |  
|Comprehensive income                        |  |              |       |                 |   |                                       |  |                   |        |  |       |           |   |  |   | 7,581,153  |  
|Contributed capital by Edgen/Murray, L.P:.  |  |              |        |                 |   |                                        |  |                   |         |  |       |            |   |  |   |            |  
|Redeemable preferred stock                  |  |              |       |                 |   | 24,695,700                             |  |                   |        |  |       |           |   |  |   | 24,695,700 |  
|Stock-based compensation                    |  |              |       |                 |   | 418,749                                |  |                   |        |  |       |           |   |  |   | 418,749    |  
|Preferred dividend requirement              |  |              |       |                 |   |                                       |  |                   |        |  |       | (1,392,300 | ) |  |   | (1,392,300 | )
|                                            |  |              |        |                 |   |                                        |  |                   |         |  |       |            |   |  |   |            |  
|BalanceSeptember 30, 2006                  |  | $            | 26,816 |                 | $ | 27,769,198                             |  | $                 | 175,209 |  | $     | 9,417,276  |   |  | $ | 37,388,499 |  
|                                            |  |              |        |                 |   |                                        |  |                   |         |  |       |            |   |  |   |            |  

The accompanying notes are an integral part of the condensed consolidated financial statements.



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##### Table of Contents

EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                                  |  |                                     |             |   |                                               |   |              |                                            |  |   |            |  
|------------------------------------------------------------------------------------------------- |  | ----------------------------------- | ----------- | - | --------------------------------------------- | - | ------------ | ------------------------------------------ |  | - | ---------- | -
|                                                                                                  |  | Successor                           |             |   | Successor                                     |   |              | Predecessor                                | 
|                                                                                                  |  | Nine Months EndedSeptember 30, 2006 |             |   | Period February 1, 2005 to September 30, 2005 |   |              | Period January 1, 2005 to January 31, 2005 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                             |  |                                     |             |   |                                               |   |              |                                            |  |   |            |  
|Net cash (used in) provided by operating activities                                               |  | $                                   | (20,607,255 | ) |                                               | $ | (17,859,075  | )                                          |  | $ | 4,248,825  |  
|                                                                                                  |  |                                     |             |   |                                               |   |              |                                            |  |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                             |  |                                     |             |   |                                               |   |              |                                            |  |   |            |  
|Purchase of Edgen Corporation, net of cash acquired                                               |  |                                     |            |   |                                               |   | (121,137,705 | )                                          |  |   |           |  
|Purchase of Western Flow Products, Inc.  purchase price and additional contingent purchase price |  |                                     | (451,469    | ) |                                               |   | (1,746,201   | )                                          |  |   |           |  
|Purchase of property, plant and equipment                                                         |  |                                     | (1,238,750  | ) |                                               |   | (1,073,210   | )                                          |  |   | (4,079     | )
|Proceeds from the sale of capital assets                                                          |  |                                     | 36,145      |   |                                               |   |             |                                            |  |   | 3,000      |  
|                                                                                                  |  |                                     |             |   |                                               |   |              |                                            |  |   |            |  
|Net cash used in investing activities                                                             |  |                                     | (1,654,074  | ) |                                               |   | (123,957,116 | )                                          |  |   | (1,079     | )
|                                                                                                  |  |                                     |             |   |                                               |   |              |                                            |  |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                             |  |                                     |             |   |                                               |   |              |                                            |  |   |            |  
|Principal payments on notes payable and long-term debt                                            |  |                                     | (162,657    | ) |                                               |   | (28,945      | )                                          |  |   | (232,072   | )
|Proceeds from issuance of long-term debt                                                          |  |                                     |            |   |                                               |   | 105,000,000  |                                            |  |   |           |  
|Proceeds from debt issuancenet of payments under revolving credit agreement                      |  |                                     | 4,164,059   |   |                                               |   | 13,981,857   |                                            |  |   | 116,438    |  
|Deferred financing costs                                                                          |  |                                     | (335,538    | ) |                                               |   | (7,287,897   | )                                          |  |   |           |  
|Issuance of common stock                                                                          |  |                                     |            |   |                                               |   | 2,400,000    |                                            |  |   |           |  
|Issuance of preferred stock                                                                       |  |                                     |            |   |                                               |   | 21,600,000   |                                            |  |   |           |  
|Increase (decrease) in managed cash overdraft                                                     |  |                                     | 2,963,730   |   |                                               |   | 6,898,464    |                                            |  |   | (1,361,404 | )
|                                                                                                  |  |                                     |             |   |                                               |   |              |                                            |  |   |            |  
|Net cash provided by (used in) financing activities                                               |  |                                     | 6,629,594   |   |                                               |   | 142,563,479  |                                            |  |   | (1,477,038 | )
|Effect of foreign currency exchange rate on cash                                                  |  |                                     | 11,519      |   |                                               |   | 5,274        |                                            |  |   |           |  
|                                                                                                  |  |                                     |            
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                              |  |                                     | (15,620,216 | ) |                                               |   | 752,562      |                                            |  |   | 2,770,708  |  
|CASH AND CASH EQUIVALENTS (Beginning of period)                                                   |  |                                     | 18,013,533  |   |                                               |   |             |                                            |  |   | 134,299    |  
|                                                                                                  |  |                                     |             |   |                                               |   |              |                                            |  |   |            |  
|CASH AND CASH EQUIVALENTS (End of period)                                                         |  | $                                   | 2,393,317   |   |                                               | $ | 752,562      |                                            |  | $ | 2,905,007  |  
|                                                                                                  |  |                                     |             |   |                                               |   |              |                                            |  |   |            |  
|                                                                                                  |  |                                     |            
|Cash paid for income taxes                                                                        |  | $                                   | 7,678,086   |   |                                               | $ | 195,525      |                                            |  | $ | 114        |  
|                                                                                                  |  |                                     |             |   |                                               |   |              |                                            |  |   |            |  
|Cash paid for interest                                                                            |  | $                                   | 6,860,388   |   |                                               | $ | 5,568,366    |                                            |  | $ | 1,314,743  |  
|                                                                                                  |  |                                     |             |   |                                               |   |              |                                            |  |   |            |  
|                                                                                                  |  |                                     |            
|NON-CASH FINANCING ACTIVITIES-                                                                    |  |                                     |             |   |                                               |   |              |                                            |  |   |            |  
|Contribution of redeemable preferred stock                                                        |  | $                                   | 24,695,700  |   |                                               | $ |             |                                            |  | $ |           |  
|                                                                                                  |  |                                     |             |   |                                               |   |              |                                            |  |   |            |  
|Contribution of stock-based compensation related to Edgen/Murray, L.P. restricted common units    |  | $                                   | 418,749     |   |                                               | $ |             |                                            |  | $ |           |  
|                                                                                                  |  |                                     |             |   |                                               |   |              |                                            |  |   |            |  
|Issuance of Edgen restricted common stock                                                         |  | $                                   |            |   |                                               | $ | 281,565      |                                            |  | $ |           |  
|                                                                                                  |  |                                     |             |   |                                               |   |              |                                            |  |   |            |  
|Dividend on redeemable preferred stock                                                            |  | $                                   | 1,392,000   |   |                                               | $ | 1,234,200    |                                            |  | $ | 189,949    |  
|                                                                                                  |  |                                     |             |   |                                               |   |              |                                            |  |   |            |  

The accompanying notes are an integral part of the condensed consolidated financial statements.



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EDGEN CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

Description of BusinessEdgen Corporation (Edgen or the
Company), a Nevada corporation, was formed on November 30, 2000. Through its wholly owned subsidiaries, Edgen Alloy Products Group, L.L.C. (Edgen Alloy), Edgen Carbon Products Group, L.L.C. (Edgen
Carbon), Murray International Metals, Inc. (MIM US) and Edgen Canada Inc. (Edgen Canada), Edgen distributes and sells specialty carbon and alloy pipe and components, and high grade structural
products including plates, sections and tubulars to the energy infrastructure market. The Company has no assets or operations independent of its wholly owned subsidiaries. In July 2005, the Company acquired Western Flow Products, Inc.
(Western Flow), which was subsequently merged with Edgen Canada, and in December 2005, the Company acquired MIM US (see note 2), which merged with Edgen Carbon Products Group, L.L.C. during the third quarter 2006.

On February 1, 2005, Edgen Acquisition Corporation, a corporation newly formed by Jefferies Capital Partners (JCP) and certain
members of Edgen management, purchased all of the outstanding capital stock of Edgen from its existing stockholders for an aggregate purchase price of approximately $124.0 million, which included the assumption or repayment of indebtedness of
Edgen but excluded the payment of fees and expenses. The acquisition was funded with proceeds to Edgen Acquisition Corporation from the issuance and sale of $105.0 million aggregate principal amount of 97/8% Senior Secured Notes due 2011 (Notes) and from an equity investment from funds managed by JCP and certain members of Edgen
management. Concurrently with the purchase, Edgen entered into a new $20.0 million senior secured revolving credit facility.

Simultaneously with the acquisition and the related financing transactions, Edgen Acquisition Corporation was merged with and into Edgen Corporation, which survived the merger and became liable for all obligations under the Notes and
borrowings under the new revolving credit facility. We refer to the acquisition of Edgen Corporation, the offering and issuance of the Notes, the equity investment, the related financing transactions and the merger collectively as the
Buy-out Transaction. Edgen Corporation following the merger is referred to as the Successor. Edgen Corporation prior to the merger is referred to as the Predecessor.

On December 16, 2005, our stockholders organized a new holding company, Edgen/Murray, L.P., to hold all of the outstanding equity interests of Edgen
and in a separate but related transaction, Edgen acquired MIM US, the U.S. subsidiary of Murray International Metals, Ltd. (MIM UK). Edgen/Murray, L.P. is a Delaware limited partnership and is controlled by funds managed by JCP.
Additionally, certain members of Edgens management are officers of Edgen/Murray, L.P.

Edgen Murray Plc, a newly incorporated public
limited company incorporated under the laws of England and Wales, is anticipated to become the successor to Edgen/Murray, L.P., in connection with the proposed initial public offering of Edgen Murray Plc. On November 13, 2006, Edgen Murray Plc
filed a registration statement on Form S-1 with the Securities and Exchange Commission (SEC) to register the equity securities it expects to offer to the public. Such registration statement has not yet become effective. The securities
may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This report does not constitute an offer of any securities for sale or the solicitation of an offer to buy any securities.

Basis of PresentationThe consolidated financial statements and notes are presented in accordance with accounting principles
generally accepted in the United States of America (generally accepted accounting principles or GAAP). The consolidated financial statements include the accounts of Edgen and its wholly owned subsidiaries. All
intercompany transactions are eliminated in consolidation.

Our foreign subsidiary, Edgen Canada, maintains its accounting records in its
local currency, the Canadian dollar (CAD). All of the assets and liabilities of this subsidiary (including long-term assets, such as goodwill) are converted to U.S. dollars with the effect of the foreign currency translation
reflected in accumulated other comprehensive income, a component of shareholders equity, in accordance with the Financial Accounting Standards Boards (FASB) Statement of Financial Accounting Standards No.
(SFAS No.) 52, Foreign Currency Translation, and SFAS No. 130, Reporting Comprehensive Income. Foreign transaction gains or losses are charged to income in the period the transactions are
settled.

In accordance with GAAP, we have separated our historical financial results for the Predecessor and the Successor. The separate
presentation is required under GAAP in situations when there is a change in accounting basis, which occurred when purchase accounting was applied to the acquisition of the Predecessor. Purchase accounting requires that the historical carrying value
of assets acquired and liabilities assumed be adjusted to fair value, which may yield results that are not comparable on a period-to-period basis due to the different, and sometimes higher, cost basis associated with the allocation of



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the purchase price. In addition, at the time of the acquisition of the Predecessor, we experienced changes in our
business as a result of the other transactions that were consummated in connection with the acquisition of the Predecessor. There were no material changes to the operations or customer relationships of the business as a result of the acquisition of
the Predecessor.

Interim Financial InformationCertain information and footnote disclosures normally included in
financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations promulgated by the SEC. However, management believes that the disclosures contained herein are adequate to make the
information presented not misleading. The unaudited financial statements should be read in conjunction with the audited financial statements and accompanying notes as of and for the year ended December 31, 2005 included in the Companys
amended Annual Report on Form 10-K/A as filed with the SEC on June 23, 2006.

Use of EstimatesThe preparation of
the Companys consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are primarily made in relation to the valuation of accounts receivable and inventory, the recoverability of
goodwill and other intangible assets, and deferred tax assets in establishing a valuation allowance, if any. Actual results could differ from those estimates. If actual amounts are ultimately different from these estimates, the revisions are
included in our results of operations for the period in which the actual amounts become known. Actual results could differ from our estimates. Refer to our amended Annual Report on Form 10-K/A as filed with the SEC on June 23, 2006 for a
discussion of our accounting policies and estimates.

New Accounting Standards From time to time, new accounting
pronouncements are issued by the Financial Accounting Standards Board (FASB) which are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes the impact of recently issued standards
which are not yet effective will not have a material impact on the companys consolidated financial statements upon adoption.

In
February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instrumentsan amendment of FASB Statements No. 133 and 140, (SFAS 155). SFAS 155 amends FASB Statements No. 133,
Accounting for Derivative Instruments and Hedging Activities, and No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. SFAS 155 resolves issues addressed
in FASB Statement No. 133 Implementation Issue No. D1, Application of Statement 133 to Beneficial Interests in Securitized Financial Assets. SFAS 155 is effective for fiscal years beginning after September 15, 2006. The
adoption of SFAS 155 is not expected to have any impact on the Companys reported results of operations.

In June 2006, the FASB
issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (FIN 48), which clarifies the accounting for uncertainty in income taxes recognized in an
enterprises financial statements in accordance with SFAS No. 109, Accounting for Income Taxes. FIN 48 is effective for fiscal years beginning after December 15, 2006. FIN 48 will be adopted during the first quarter of 2007,
and it is not expected to have a material impact on the Companys consolidated financial statements.

In September 2006, the FASB
issued SFAS No. 157, Fair Value Measurements, (SFAS 157) which establishes a single authoritative definition of fair value, set out a frame-work for measuring fair value, and required additional disclosures about
fair-value measurements. SFAS 157 applied to fair value measurements that are already required or permitted by existing standards except for measurements of share-based payments and measurements that are similar to, but not intended to be, fair
value. SFAS 157 does not impose any additional fair value measurements in financial statements and is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The adoption of SFAS 157 is not
expected to have a material impact on the Companys consolidated financial statements.

In September 2006, the SEC issued Staff
Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements(SAB 108). SAB 108 establishes a single quantification framework wherein the
significance measurement is based on the effects of the misstatements on each of the financial statements as well as the related financial statement disclosures. SAB 108 is effective for the first annual period ending after November 15, 2006.
The Company does not expect that the adoption of SAB 108 will have a material effect on its results of operations or financial position.



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2. ACQUISITIONS

Murray International Metals, Inc.

On November 29, 2005, our subsidiary, Edgen Carbon Products Group,
L.L.C., entered into a purchase agreement with MIM UK to acquire all of the equity interests of MIM UKs U.S. subsidiary, MIM US, for an aggregate purchase price, including assumption of debt, of approximately $20,600,000. The assumption of
debt included a 2,900,000 GBP (approximately 5,000,000 USD) note payable to MIM UK which was funded and paid by Edgen upon closing.

MIM
US, a leading supplier of high yield and special grade structural steel to oil and gas projects being engineered and managed by leading operators, engineering houses and offshore fabricators in the oil and gas industry primarily in North and South
America (the Americas), offering a complete range of high yield steel plate, sections, and tubulars, merged into Edgen Carbon Products Group, L.L.C. during the third quarter 2006.

During the third quarter 2006, the Company finalized its purchase price allocation related to the MIM US acquisition. As of September 30, 2006, the
purchase price allocation included the identification of other intangible assets, including customer relationships, tradenames, and backlog for which amortization related to these other intangibles was recorded during the three and nine months ended
September 30, 2006. The purchase price allocation as of September 30, 2006 includes the following:



|                                                       |  |   |            |  
|------------------------------------------------------ |  | - | ---------- | -
|Accounts receivable                                    |  | $ | 5,180,054  |  
|Inventory                                              |  |   | 7,413,860  |  
|Other current assets                                   |  |   | 1,319      |  
|Property, plant and equipment                          |  |   | 77,469     |  
|Goodwill                                               |  |   | 9,523,200  |  
|Customer relationships, tradenames, and backlog        |  |   | 7,659,000  |  
|Other assets                                           |  |   | 33,318     |  
|Deferred tax asset                                     |  |   | 146,290    |  
|Accounts payable                                       |  |   | (9,689,915 | )
|Accrued expenses and other current liabilities         |  |   | (1,172,268 | )
|Current portion of long-term debt                      |  |   | (16,806    | )
|Deferred tax liability                                 |  |   | (2,959,794 | )
|Note payable due to Murray International Holdings Ltd. |  |   | (5,146,630 | )
|                                                       |  |   |            |  
|Purchase price (net of cash received of $10,847,763)   |  | $ | 11,049,097 |  
|                                                       |  |   |            |  

The following table reflects the pro forma revenue and net income for the periods presented as
though the Buy-out transaction and the acquisitions of Western Flow and MIM US had taken place on January 1, 2005:



|                  |  |                                               |             |                                            |   |            |  
|----------------- |  | --------------------------------------------- | ----------- | ------------------------------------------ | - | ---------- | -
|                  |  | (Unaudited)                                   |            
|                  |  | Successor                                     |             | Predecessor                                |  
|                  |  | Period February 1, 2005
to September 30, 2005 |             | Period January 1, 2005
to January 31, 2005 |  
|Revenue           |  | $                                             | 213,699,000 |                                            | $ | 24,403,000 |  
|Net income (loss) |  |                                               | 7,733,000   |                                            |   | (8,162,000 | )

3. GOODWILL AND OTHER INTANGIBLES

The following table reflects goodwill and changes to goodwill by reportable segment as follows:



|                                                 |  |             |           |              |   |            |              |  |   |            |  
|------------------------------------------------ |  | ----------- | --------- | ------------ | - | ---------- | ------------ |  | - | ---------- | -
|                                                 |  | Edgen Alloy |           | Edgen Carbon |   |            | Consolidated | 
|Balance at December 31, 2005                     |  | $           | 5,034,942 |              | $ | 32,091,827 |              |  | $ | 37,126,769 |  
|Purchase price adjustments:                      |  |             |           |              |   |            |              |  |   |            |  
|Acquisition of Western Flow Products, Inc.       |  |             | 451,469   |              |   |           |              |  |   | 451,469    |  
|Acquisition of Murray International Metals, Inc. |  |             |          |              |   | (4,839,447 | )            |  |   | (4,839,447 | )
|Foreign currency translation adjustment          |  |             | 53,394    |              |   |           |              |  |   | 53,394     |  
|                                                 |  |             |           |              |   |            |              |  |   |            |  
|Balance at September 30, 2006                    |  | $           | 5,539,805 |              | $ | 27,252,380 |              |  | $ | 32,792,185 |  
|                                                 |  |             |           |              |   |            |              |  |   |            |  



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As a result of finalizing the purchase price allocation related to the MIM US acquisition during the
third quarter 2006, goodwill was reduced by $4.8 million, and customer relationships, tradenames, and backlog were increased by $7.6 million, and deferred tax liability was increased by $3 million. Additionally, amortization of these intangible
assets was recorded in the third quarter 2006 in the amount of $1.7 million, which included the full amortization of backlog.

Intangible
assets as of September 30, 2006 and December 31, 2005 consist of the following:



|                       |  |                    |            |                   |   |           
|---------------------- |  | ------------------ | ---------- | ----------------- | - | ----------
|                       |  | September 30, 2006 |            | December 31, 2005
|Customer relationships |  | $                  | 22,671,397 |                   | $ | 21,014,440
|Tradenames             |  |                    | 4,090,000  |                   |   | 2,396,000 
|Trademarks             |  |                    | 13,748     |                   |   | 13,748    
|                       |  |                    |            |                   |   |           
|                       |  | $                  | 26,775,145 |                   | $ | 23,424,188
|                       |  |                    |            |                   |   |           

Amortization expense was $2,579,830 and $4,307,044 for the three and nine months ended
September 30, 2006, respectively. Amortization expense was $4,999, $34,167 and $10,832 for the three months ended September 30, 2005, the period February 1, 2005 to September, 30, 2005, and the period January 1, 2005 to
January 31, 2005, respectively. Accumulated amortization of intangible assets at September 30, 2006 and December 31, 2005 was $7,473,604 and $3,416,560, respectively. Scheduled annual amortization expense for each of the next five
years is approximately $4.1 million.

4. LONG-TERM DEBT AND CREDIT ARRANGEMENTS

Long-term debt consisted of the following at September 30, 2006 and December 31, 2005:



|                                                                                                                                                                                                     |  |                    |             |   |                   |   |             |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----------- | - | ----------------- | - | ----------- | -
|                                                                                                                                                                                                     |  | September 30, 2006 |             |   | December 31, 2005 |  
|97/8%
Senior Secured Notes due 2011, net of discount of $1,227,523 and $1,386,086 at September 30, 2006 and December 31, 2005, respectively                                                          |  | $                  | 134,772,477 |   |                   | $ | 134,613,914 |  
|Revolving credit facility at September 30, 2006 and December 31, 2005, respectively                                                                                                                  |  |                    | 4,164,059   |   |                   |   |            |  
|Note payable to sellers of Western Flow Products, Inc. (CAD 300,000), interest accrues at 6%, due in July 2007                                                                                       |  |                    | 134,626     |   |                   |   | 257,290     |  
|Various capital leases to a corporation; monthly payments range from $356 to $1,388; at an interest rate of 7.5% per annum, commencing
July 2005 through maturity in June 2010; secured by equipment |  |                    | 72,182      |   |                   |   | 96,944      |  
|                                                                                                                                                                                                     |  |                    |             |   |                   |   |             |  
|Total                                                                                                                                                                                                |  |                    | 139,143,344 |   |                   |   | 134,968,148 |  
|Less current portion                                                                                                                                                                                 |  |                    | (151,886    | ) |                   |   | (160,984    | )
|                                                                                                                                                                                                     |  |                    |             |   |                   |   |             |  
|Long-term debt                                                                                                                                                                                       |  | $                  | 138,991,458 |   |                   | $ | 134,807,164 |  
|                                                                                                                                                                                                     |  |                    |             |   |                   |   |             |  

Senior Secured Notes

On February 1, 2005, the Company issued $105.0 million aggregate principal amount of 97/8% Senior Secured Notes due 2011. The proceeds from the issuance of the Notes were used to
retire substantially all of the Companys long-term debt under its existing revolving credit facility and certain other notes and loans on February 1, 2005. Subsequently, on December 16, 2005, the Company issued an additional
$31.0 million aggregate principal amount of 97/8% Senior Secured Notes due 2011 with the proceeds funding the acquisition of MIM US (see note 2).

Interest accrues on the Notes at the stated rate semi-annually and is payable in arrears on each February 1 and August 1, beginning on
August 1, 2005.

The Company may redeem some or all of the Notes at any time prior to February 1, 2008 at a make-whole redemption
price set forth in the terms of the Notes. On or after February 1, 2008, the Company may at its option, redeem some or all of the Notes at the following redemption prices, plus accrued and unpaid interest to the date of redemption:



|                 |  |         |  
|---------------- |  | ------- | -
|On or after:     |  |         |  
|February 1, 2008 |  | 104.938 | %
|February 1, 2009 |  | 102.469 | %
|February 1, 2010 |  | 100.000 | %



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In addition, at any time prior to February 1, 2007, the Company may redeem up to 35% of the
aggregate principal amounts of the Notes issued under the indenture at a price equal to 109.875% of their principal amount, plus accrued and unpaid interest, to the date of redemption with the net cash proceeds of certain equity offerings. The terms
of the Notes also contain certain change in control and sale of asset provisions where the holders of the Notes have the right to require the Company to repurchase all or any part of the Notes at an offer price in cash equal to 101% and 100%,
respectively, of their principal amount, plus accrued and unpaid interest, to the date of the repurchase.

The indenture governing the
Notes contains various covenants that limit our discretion in the operation of our business. It, among other things: (i) limits our ability and the ability of our subsidiaries to incur additional indebtedness, issue shares of preferred stock,
incur liens and enter into certain transactions with affiliates; (ii) places restrictions on our ability to pay dividends or make certain other restricted payments; and (iii) places restrictions on our ability and the ability of our
subsidiaries to merge or consolidate with any other person or sell, assign, transfer, convey or otherwise dispose of all or substantially all of our assets. The indenture provides for a restricted payment pool out of which we are permitted to make
certain restricted payments, including cash dividends, provided that no event of default has occurred and we would be able to incur additional indebtedness under the applicable restrictive covenant. The restricted payment pool is generally an amount
calculated based on 50% of our consolidated net income, as defined in the indenture, and earned during the period beginning on February 1, 2005 and ending on the last day of the most recent fiscal quarter prior to the restricted payment, as
adjusted and subject to certain exceptions as provided in the indenture.

All of the Companys domestic subsidiaries fully and
unconditionally guarantee the Notes on a joint and several basis. Edgen/Murray, L.P. does not, and Edgen Murray Plc is not expected to, guarantee the Notes. The Notes and the related guarantees are secured by a lien on substantially all of the
Companys assets and the assets of our existing and future domestic restricted subsidiaries (other than certain excluded assets such as our existing and future subsidiaries leasehold interests and the capital stock of our existing and
future subsidiaries), subject to certain permitted liens and other limitations. Under an intercreditor agreement, the security interest in those assets consisting of inventory, accounts receivable, lockboxes, deposit accounts, securities accounts
and financial assets credited thereto, and certain related assets that secure the Notes and the related guarantees, are subordinated to a lien thereon that secures our revolving credit facility. As a result of such lien subordination, the Notes are
effectively subordinated to our revolving credit facility to the extent of the value of such assets.

There are no significant restrictions
on the Companys ability and the ability of the subsidiary guarantors to obtain funds from the Companys and the subsidiary guarantors respective subsidiaries by dividend or loan.

Revolving Credit Facility

In connection with the
Buy-out Transaction, Edgen entered into a new $20 million senior secured revolving credit facility (the Credit Agreement) with GMAC Commercial Finance LLC (GMAC CF), replacing its $55.5 million
revolving credit agreement. The Credit Agreement is subject to certain borrowing limitations and matures on February 1, 2010. Under the Credit Agreement, interest accrues on borrowings (at the option of the Company) at either (i) the prime
rate of interest announced by GMAC CF (8.25% and 7.25% at September 30, 2006 and December 31, 2005, respectively), or (ii) a Eurodollar rate based on LIBOR plus 2.00% per annum (7.32% and 6.16% at September 30, 2006 and
December 31, 2005, respectively). The Company must also pay a monthly facility fee of 0.50% per annum on the unused portion of the maximum revolving amount. As of September 30, 2006, the Company had $4,164,059 in borrowings under the
Credit Agreement. As of December 31, 2005, there were no borrowings under the Credit Agreement.

The Credit Agreement is guaranteed by
all of our domestic subsidiaries and is secured by a first priority security interest in all of the Companys and its domestic subsidiaries working capital assets and a second priority security interest in all of the Companys and
its domestic subsidiaries other assets (other than certain excluded assets such as the Companys leasehold interests and the capital stock of its subsidiaries). Pursuant to the terms of the intercreditor agreement described above, the
security interest on the collateral consisting of working capital assets that secures the Notes and related guarantees is contractually subordinated to the liens thereon securing the Credit Agreement, and the security interest, if any, on
substantially all of the Companys and its domestic subsidiaries other assets (other than certain excluded assets such as the Companys leasehold interests and the capital stock of its subsidiaries) that secure the Credit Agreement
are contractually subordinated to the liens thereon securing the Notes and related guarantees.

In addition, the Credit Agreement contains
various affirmative and negative covenants, including limitations on additional indebtedness, the making of distributions, loans and advances, transactions with affiliates, dispositions or mergers, and the sale of assets.



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5. REDEEMABLE PREFERRED STOCK

For the period January 1, 2005 to January 31, 2005, the Predecessor Company had $189,949 in accrued dividends related to its mandatorily redeemable preferred stock which was cancelled on February 1,
2005 in connection with the Buy-out Transaction. On February 1, 2005, the Company issued Series A 81/2% Cumulative
Compounding Preferred Stock, $0.01 par value (Series A Preferred Stock), in connection with the Buy-out Transaction. The holders of Series A Preferred Stock are entitled to receive annual dividends when, as and if,
declared. The dividends are cumulative, whether or not earned or declared, and accrue at a rate of 8.5%, compounding annually, and are payable in cash or shares of Series A Preferred Stock, at the discretion of the board of directors. Upon the
occurrence of certain events, including a public offering, the sale of substantially all the assets of the Company or a change in control, and the approval of the board of directors, which is controlled by JCP, the Series A Preferred Stock can
be redeemed by the Company at a price of $1,000 per share, plus accrued and unpaid dividends. For the three and nine months ended September 30, 2006 and the three months ended September 30, 2005 and the period February 1, 2005 to
September 30, 2005, the Company accrued dividends of $469,200, $1,392,300 and $469,200 and $1,234,200, respectively on the shares of outstanding Series A Preferred Stock. As of September 30, 2006, all of the outstanding shares of the
Series A Preferred Stock are held by Edgen/Murray, L.P., which is controlled by JCP.

The Notes indenture restricts the payment
of dividends to preferred stock holders as well as the redemption of the Series A Preferred Stock, subject to an incurrence test based on a consolidated net income threshold, and subject to available amounts as defined by the indenture.

On September 29, 2006, Edgen/Murray, L.P., contributed all of the outstanding shares of Series A Preferred Stock to Paid-in capital,
included in the statement of shareholders equity (deficit). As a result, the redeemable preferred stock line item was reduced to zero and a corresponding increase in Paid-in capital was made within shareholders equity.

6. SHAREHOLDERS EQUITY

Common
Stock The Company has a single class of common stock, $0.01 par value, which is entitled to vote. As of September 30, 2006 and December 31, 2005, all outstanding common shares were held by Edgen/Murray, L.P.

Non-vested Stock On February 1, 2005, 281,565 shares of non-vested stock were granted to certain employees of the Company,
including the Chief Executive Officer, the Chief Financial Officer and the two Operating Segment Presidents under a new incentive compensation plan. Effective December 15, 2005, the Companys equity incentive plan was cancelled; however,
the Companys new parent company, Edgen/Murray, L.P., exchanged all outstanding awards for awards issued under its equity incentive plan with substantially equivalent terms. The Edgen/Murray, L.P. incentive plan authorizes the granting of
awards to Edgen employees of up to 550,000 common units of Edgen/Murray, L.P. that are subject to restrictions on transfer until such time as they are vested. Vesting is based on either time or a combination of performance and time.

During 2006 and 2005, Edgen/Murray, L.P. granted approximately 56,155 and 10,000 shares of non-vested common units, respectively, with vesting terms
ranging from one to five years, of which all were outstanding at September 30, 2006. During the three and nine months ended September 30, 2006, there were no forfeitures. The estimated weighted average grant date fair value of the
non-vested common units as of September 30, 2006 was $6.04. The fair value price of the awards is a calculated value based on the grant date of each of the respective grants using a combination of a share-based pricing model and financial
metrics from recent transactions of companies with similar characteristics of Edgen/Murray, L.P. As of September 30, 2006, there was $1,120,990 of total unrecognized compensation cost at Edgen/Murray, L.P. related to these non-vested common
units to be recognized through August 2010.

Stock-based compensation expense related to the granting of the Edgen/Murray, L.P. non-vested
common units to Edgen employees is allocated to Edgen and expensed within its condensed consolidated statement of operations. For the three and nine months ended September 30, 2006, the condensed consolidated statement of operations reflects
$184,101 and $406,053, respectively, of stock-based compensation expense related to Edgen/Murray, L.P. non-vested common units issued since December 16, 2005. For the three months ended September 30, 2005 and the period February 1,
2005 to September 30, 2005, the condensed consolidated statement of operations reflects $7,040 and $18,772, respectively, of stock-based compensation expense related to the outstanding restricted stock shares which were exchanged on
December 15, 2005.

7. SEGMENT INFORMATION

Edgen markets and distributes specialty pipe and components made of highly engineered prime carbon and alloy steel and high grade structural steel products including plates, sections and tubulars to the energy infrastructure market. Edgen
distributes its products in North America and South America, referred to as the Americas, primarily to companies operating within the oil and gas production and transmission, the process/petrochemical and the power generation industries.
Edgen manages its operations into two reportable segments: alloy products and carbon products.



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The alloy products segment distributes specialty steel pipe and components for use in environments that
are highly corrosive, extremely high or low temperature and/or involve high pressures. These products are sold primarily to the process/petrochemical and power generation industries.

The carbon products segment distributes specialty carbon steel pipe and components primarily for use in high pressure and/or abrasive environments and
high grade structural steel products primarily for use in high-pressure environments. The primary industries served are oil and gas production, transmission and distribution, offshore fabrication and mining. The carbon products segment includes the
operating results of the MIM US acquisition (see note 2).

The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. Edgen evaluates performance based on profit or losses from operations before income taxes.

The
following table presents the financial information for each reportable segment:



|                               |  |                                       |             |   |                                       |   |            |  
|------------------------------ |  | ------------------------------------- | ----------- | - | ------------------------------------- | - | ---------- | -
|                               |  | Successor                             |             |   | Successor                             |  
|                               |  | Three Months Ended September 30, 2006 |             |   | Three Months Ended September 30, 2005 |  
|Sales:                         |  |                                       |             |   |                                       |   |            |  
|Alloy Products                 |  | $                                     | 33,531,387  |   |                                       | $ | 20,669,426 |  
|Carbon Products                |  |                                       | 72,062,585  |   |                                       |   | 55,042,344 |  
|                               |  |                                       |             |   |                                       |   |            |  
|                               |  | $                                     | 105,593,972 |   |                                       | $ | 75,711,770 |  
|                               |  |                                       |             |   |                                       |   |            |  
|Operating Income (Loss):       |  |                                       |             |   |                                       |   |            |  
|Alloy Products                 |  | $                                     | 3,922,877   |   |                                       | $ | 2,854,399  |  
|Carbon Products                |  |                                       | 6,437,503   |   |                                       |   | 4,775,261  |  
|General Corporate              |  |                                       | (2,391,185  | ) |                                       |   | (1,832,117 | )
|                               |  |                                       |             |   |                                       |   |            |  
|                               |  | $                                     | 7,969,195   |   |                                       | $ | 5,797,543  |  
|                               |  |                                       |             |   |                                       |   |            |  
|Capital Expenditures:          |  |                                       |             |   |                                       |   |            |  
|Alloy Products                 |  | $                                     | 213,127     |   |                                       | $ | 302,997    |  
|Carbon Products                |  |                                       | 26,748      |   |                                       |   | 43,471     |  
|General Corporate              |  |                                       | (31,930     | ) |                                       |   | 144,756    |  
|                               |  |                                       |             |   |                                       |   |            |  
|                               |  | $                                     | 207,945     |   |                                       | $ | 491,224    |  
|                               |  |                                       |             |   |                                       |   |            |  
|Depreciation and Amortization: |  |                                       |             |   |                                       |   |            |  
|Alloy Products                 |  | $                                     | 361,053     |   |                                       | $ | 57,173     |  
|Carbon Products                |  |                                       | 2,526,368   |   |                                       |   | 237,232    |  
|General Corporate              |  |                                       | 193,601     |   |                                       |   | 308,215    |  
|                               |  |                                       |             |   |                                       |   |            |  
|                               |  | $                                     | 3,081,022   |   |                                       | $ | 602,620    |  
|                               |  |                                       |             |   |                                       |   |            |  



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|                               |  |                                      |             |   |                                               |   |             |                                            |  |   |             |  
|------------------------------ |  | ------------------------------------ | ----------- | - | --------------------------------------------- | - | ----------- | ------------------------------------------ |  | - | ----------- | -
|                               |  | Successor                            |             |   | Successor                                     |   |             | Predecessor                                | 
|                               |  | Nine Months Ended September 30, 2006 |             |   | Period February 1, 2005 to September 30, 2005 |   |             | Period January 1, 2005 to January 31, 2005 | 
|Sales:                         |  |                                      |             |   |                                               |   |             |                                            |  |   |             |  
|Alloy Products                 |  | $                                    | 82,731,650  |   |                                               | $ | 53,629,843  |                                            |  | $ | 4,214,009   |  
|Carbon Products                |  |                                      | 210,727,700 |   |                                               |   | 142,370,210 |                                            |  |   | 14,730,778  |  
|                               |  |                                      |             |   |                                               |   |             |                                            |  |   |             |  
|                               |  | $                                    | 293,459,350 |   |                                               | $ | 196,000,053 |                                            |  | $ | 18,944,787  |  
|                               |  |                                      |             |   |                                               |   |             |                                            |  |   |             |  
|Operating Income (Loss):       |  |                                      |             |   |                                               |   |             |                                            |  |   |             |  
|Alloy Products                 |  | $                                    | 11,550,844  |   |                                               | $ | 8,563,255   |                                            |  | $ | 959,632     |  
|Carbon Products                |  |                                      | 19,189,208  |   |                                               |   | 15,270,956  |                                            |  |   | 1,980,553   |  
|General Corporate              |  |                                      | (7,145,396  | ) |                                               |   | (5,496,825  | )                                          |  |   | (12,713,366 | )
|                               |  |                                      |             |   |                                               |   |             |                                            |  |   |             |  
|                               |  | $                                    | 23,594,656  |   |                                               | $ | 18,337,386  |                                            |  | $ | (9,773,181  | )
|                               |  |                                      |             |   |                                               |   |             |                                            |  |   |             |  
|Capital Expenditures:          |  |                                      |             |   |                                               |   |             |                                            |  |   |             |  
|Alloy Products                 |  | $                                    | 594,226     |   |                                               | $ | 544,814     |                                            |  | $ |            |  
|Carbon Products                |  |                                      | 75,857      |   |                                               |   | 201,606     |                                            |  |   | 4,079       |  
|General Corporate              |  |                                      | 613,499     |   |                                               |   | 326,790     |                                            |  |   |            |  
|                               |  |                                      |             |   |                                               |   |             |                                            |  |   |             |  
|                               |  | $                                    | 1,283,582   |   |                                               | $ | 1,073,210   |                                            |  | $ | 4,079       |  
|                               |  |                                      |             |   |                                               |   |             |                                            |  |   |             |  
|Depreciation and Amortization: |  |                                      |             |   |                                               |   |             |                                            |  |   |             |  
|Alloy Products                 |  | $                                    | 1,071,895   |   |                                               | $ | 272,899     |                                            |  | $ | 14,935      |  
|Carbon Products                |  |                                      | 4,149,103   |   |                                               |   | 648,262     |                                            |  |   | 80,338      |  
|General Corporate              |  |                                      | 863,543     |   |                                               |   | 768,109     |                                            |  |   | 105,371     |  
|                               |  |                                      |             |   |                                               |   |             |                                            |  |   |             |  
|                               |  | $                                    | 6,084,541   |   |                                               | $ | 1,689,270   |                                            |  | $ | 200,644     |  
|                               |  |                                      |             |   |                                               |   |             |                                            |  |   |             |  

The Companys sales to external customers and total assets are attributed to the following countries based
upon the Companys selling location:



|              |  |                                      |             |                                               |   |                                            |  |   |           
|------------- |  | ------------------------------------ | ----------- | --------------------------------------------- | - | ------------------------------------------ |  | - | ----------
|              |  | Successor                            |             | Successor                                     |   | Predecessor                               
|              |  | Nine Months Ended September 30, 2006 |             | Period February 1, 2005 to September 30, 2005 |   | Period January 1, 2005 to January 31, 2005
|Sales:        |  |                                      |             |                                               |   |                                            |  |   |           
|United States |  | $                                    | 282,505,926 |                                               | $ | 195,055,324                                |  | $ | 18,944,787
|Canada        |  |                                      | 10,953,424  |                                               |   | 944,729                                    |  |   |          
|              |  |                                      |             |                                               |   |                                            |  |   |           
|              |  | $                                    | 293,459,350 |                                               | $ | 196,000,053                                |  | $ | 18,944,787
|              |  |                                      |             |                                               |   |                                            |  |   |           



|              |  |                    |             |                   |   |            
|------------- |  | ------------------ | ----------- | ----------------- | - | -----------
|              |  | Successor         
|              |  | As of             
|              |  | September 30, 2006 |             | December 31, 2005
|Total Assets: |  |                    |             |                   |   |            
|United States |  | $                  | 236,900,371 |                   | $ | 219,921,568
|Canada        |  |                    | 10,404,397  |                   |   | 4,113,690  
|              |  |                    |             |                   |   |            
|              |  | $                  | 247,304,768 |                   | $ | 224,035,258
|              |  |                    |             |                   |   |            

8. RELATED PARTY TRANSACTIONS

With the acquisition of MIM US by the Company and the acquisition of MIM UK by Pipe Acquisition Limited, an affiliate of the Company, on December 16, 2005, certain related party transactions commenced. During the
three and nine months ended September 30, 2006, the Company allocated $0.2 million and $0.7 million, respectively, of selling, general and administrative expenses to MIM UK related to payroll and related benefits including stock-based
compensation, travel and other administrative expenses.



14



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Purchases from MIM UK and its subsidiaries were $114,491 and $1,247,093 for the three and nine months
ended September 30, 2006. Sales to MIM UK and its subsidiaries were $92,065 and $462,182 for the three and nine months ended September 30, 2006. As of September 30, 2006 and December 31, 2005, amounts due to MIM UK were $117,922
and $218,094, respectively. As of September 30, 2006 and December 31, 2005, amounts due from MIM UK were $451,200 and $19,483, respectively.

9. UNAUDITED CONDENSED CONSOLIDATING FINANCIAL INFORMATION

In connection with the issuance of our 97/8% Senior Secured Notes due 2011, our domestic subsidiaries issued joint and several guarantees of the Notes. These
subsidiaries are referred to as the Guarantor Subsidiaries in the unaudited condensed consolidating financial information which is presented below. Our subsidiary which has not issued guarantees for the Notes (our Canadian foreign subsidiary) is
referred to as the Non-Guarantor Subsidiary. Prior to the acquisition of Western Flow on July 15, 2005, the Non-Guarantor Subsidiary was considered to be minor as that term is defined in Rule 3-10 of Regulation S-X promulgated
by the SEC.

The following presents the unaudited condensed consolidating financial information with respect to our financial position as
of September 30, 2006 and December 31, 2005, the results of our operations for the three and nine months ended September 30, 2006, the period February 1, 2005 to September 30, 2005, and the period January 1, 2005 to
January 31, 2005 and cash flows for the nine months September 30, 2006, the period February 1, 2005 to September 30, 2005, and the period January 1, 2005 to January 31, 2005. The principal eliminating entries eliminate
investment in subsidiaries, intercompany balances and intercompany revenues and expenses.



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EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

(Unaudited)



|                                           |  |                          |             |                        |   |                          |  |                                       |            |  |              |              |   |  |   |            
|------------------------------------------ |  | ------------------------ | ----------- | ---------------------- | - | ------------------------ |  | ------------------------------------- | ---------- |  | ------------ | ------------ | - |  | - | -----------
|                                           |  | As of September 30, 2006
|                                           |  | Parent Only              |             | Guarantor Subsidiaries |   | Non-Guarantor Subsidiary |  | Elimination and Consolidation Entries |            |  | Consolidated
|Current assets                             |  | $                        | 2,654,920   |                        | $ | 158,539,725              |  | $                                     | 8,766,477  |  | $            | (543,832     | ) |  | $ | 169,417,290
|Intercompany long-term receivables         |  |                          | 38,826,722  |                        |   |                         |  |                                       |           |  |              | (38,826,722  | ) |  |   |           
|Investments in subsidiaries                |  |                          | 194,339,050 |                        |   |                         |  |                                       |           |  |              | (194,339,050 | ) |  |   |           
|Property, plant and equipment, net         |  |                          |            |                        |   | 10,329,820               |  |                                       | 417,614    |  |              |             |   |  |   | 10,747,434 
|Goodwill and other intangibles             |  |                          |            |                        |   | 58,347,025               |  |                                       | 1,220,305  |  |              |             |   |  |   | 59,567,330 
|Other assets                               |  |                          | 7,429,274   |                        |   | 143,440                  |  |                                       |           |  |              |             |   |  |   | 7,572,714  
|                                           |  |                          |             |                        |   |                          |  |                                       |            |  |              |              |   |  |   |            
|Total Assets                               |  | $                        | 243,249,966 |                        | $ | 227,360,010              |  | $                                     | 10,404,396 |  | $            | (233,709,604 | ) |  | $ | 247,304,768
|                                           |  |                          |             |                        |   |                          |  |                                       |            |  |              |              |   |  |   |            
|Current liabilities                        |  | $                        | 3,400,930   |                        | $ | 61,304,052               |  | $                                     | 1,968,324  |  | $            | (516,340     | ) |  | $ | 66,156,966 
|Intercompany long-term debt                |  |                          | 69,188,914  |                        |   | 95,931,218               |  |                                       | 6,789,010  |  |              | (171,909,142 | ) |  |   |           
|Long-term debt and capital leases          |  |                          | 134,772,477 |                        |   | 4,164,059                |  |                                       | 54,922     |  |              |             |   |  |   | 138,991,458
|Other non-current liabilities              |  |                          | 4,756,381   |                        |   | 11,464                   |  |                                       |           |  |              |             |   |  |   | 4,767,845  
|Redeemable preferred stock                 |  |                          |            |                        |   |                         |  |                                       |           |  |              |             |   |  |   |           
|Shareholders equity                       |  |                          | 31,131,264  |                        |   | 65,949,217               |  |                                       | 1,592,140  |  |              | (61,284,122  | ) |  |   | 37,388,499 
|                                           |  |                          |             |                        |   |                          |  |                                       |            |  |              |              |   |  |   |            
|Total Liabilities and Shareholders Equity |  | $                        | 243,249,966 |                        | $ | 227,360,010              |  | $                                     | 10,404,396 |  | $            | (233,709,604 | ) |  | $ | 247,304,768
|                                           |  |                          |             |                        |   |                          |  |                                       |            |  |              |              |   |  |   |            
|                                           | 
|                                           |  | As of December 31, 2005 
|                                           |  | Parent Only              |             | Guarantor Subsidiaries |   | Non-Guarantor Subsidiary |  | Elimination and Consolidation Entries |            |  | Consolidated
|Current assets                             |  | $                        | 2,244,836   |                        | $ | 139,052,795              |  | $                                     | 2,943,532  |  | $            | (538,563     | ) |  | $ | 143,702,600
|Intercompany long-term receivables         |  |                          | 38,826,722  |                        |   |                         |  |                                       |           |  |              | (38,826,722  | ) |  |   |           
|Investments in subsidiaries                |  |                          | 182,301,610 |                        |   |                         |  |                                       |           |  |              | (182,301,610 | ) |  |   |           
|Property, plant and equipment, net         |  |                          |            |                        |   | 10,803,987               |  |                                       | 454,716    |  |              |             |   |  |   | 11,258,703 
|Goodwill and other intangibles             |  |                          |            |                        |   | 59,835,515               |  |                                       | 715,442    |  |              |             |   |  |   | 60,550,957 
|Other assets                               |  |                          | 8,345,417   |                        |   | 177,581                  |  |                                       |           |  |              |             |   |  |   | 8,522,998  
|                                           |  |                          |             |                        |   |                          |  |                                       |            |  |              |              |   |  |   |            
|Total Assets                               |  | $                        | 231,718,585 |                        | $ | 209,869,878              |  | $                                     | 4,113,690  |  | $            | (221,666,895 | ) |  | $ | 224,035,258
|                                           |  |                          |             |                        |   |                          |  |                                       |            |  |              |              |   |  |   |            
|Current liabilities                        |  | $                        | 8,902,638   |                        | $ | 47,518,222               |  | $                                     | 1,162,889  |  | $            | (520,131     | ) |  | $ | 57,063,618 
|Intercompany long-term debt                |  |                          | 54,354,979  |                        |   | 115,989,362              |  |                                       | 1,555,744  |  |              | (171,900,085 | ) |  |   |           
|Long-term debt and capital leases          |  |                          | 134,613,915 |                        |   |                         |  |                                       | 193,249    |  |              |             |   |  |   | 134,807,164
|Other non-current liabilities              |  |                          | 2,764,415   |                        |   | 11,464                   |  |                                       |           |  |              |             |   |  |   | 2,775,879  
|Redeemable preferred stock                 |  |                          | 23,303,400  |                        |   |                         |  |                                       |           |  |              |              |   |  |   | 23,303,400 
|Shareholders equity                       |  |                          | 7,779,238   |                        |   | 46,350,830               |  |                                       | 1,201,808  |  |              | (49,246,679  | ) |  |   | 6,085,197  
|                                           |  |                          |             |                        |   |                          |  |                                       |            |  |              |              |   |  |   |            
|Total Liabilities and Shareholders Equity |  | $                        | 231,718,585 |                        | $ | 209,869,878              |  | $                                     | 4,113,690  |  | $            | (221,666,895 | ) |  | $ | 224,035,258
|                                           |  |                          |             |                        |   |                          |  |                                       |            |  |              |              |   |  |   |            



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EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)



|                                                   |  |                                               |            |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|-------------------------------------------------- |  | --------------------------------------------- | ---------- | - | ---------------------- | - | ----------- | ------------------------ |  | - | ------------------------------------- | - |  | ------------ | ---------- | - |  | - | ----------- | -
|                                                   |  | Successor                                     |           
|                                                   |  | For the Three Months Ended September 30, 2006 |           
|                                                   |  | Parent Only                                   |            |   | Guarantor Subsidiaries |   |             | Non-Guarantor Subsidiary |  |   | Elimination and Consolidation Entries |   |  | Consolidated |           
|Sales                                              |  | $                                             |           |   |                        | $ | 101,153,071 |                          |  | $ | 4,440,901                             |   |  | $            |           |   |  | $ | 105,593,972 |  
|Operating expenses                                 |  |                                               | (116,167   | ) |                        |   | 93,349,569  |                          |  |   | 4,869,211                             |   |  |              | (477,836   | ) |  |   | 97,624,777  |  
|                                                   |  |                                               |            |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Operating income (loss)                            |  |                                               | 116,167    |   |                        |   | 7,803,502   |                          |  |   | (428,310                              | ) |  |              | 477,836    |   |  |   | 7,969,195   |  
|Interest expense and other income (loss)           |  |                                               | (2,398,704 | ) |                        |   | (1,080,056  | )                        |  |   | 186,245                               |   |  |              | (477,836   | ) |  |   | (3,770,351  | )
|Equity in earnings of subsidiaries                 |  |                                               | 3,698,038  |   |                        |   |            |                          |  |   |                                      |   |  |              | (3,698,038 | ) |  |   |            |  
|                                                   |  |                                               |            |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Income (loss) before income tax (benefit) expense  |  |                                               | 1,415,501  |   |                        |   | 6,723,446   |                          |  |   | (242,065                              | ) |  |              | (3,698,038 | ) |  |   | 4,198,844   |  
|Income tax (benefit) expense                       |  |                                               | (1,189,688 | ) |                        |   | 2,848,758   |                          |  |   | (65,413                               | ) |  |              |           |   |  |   | 1,593,657   |  
|                                                   |  |                                               |            |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Net income (loss)                                  |  |                                               | 2,605,189  |   |                        |   | 3,874,688   |                          |  |   | (176,652                              | ) |  |              | (3,698,038 | ) |  |   | 2,605,187   |  
|Preferred dividend requirement                     |  |                                               | (469,200   | ) |                        |   |            |                          |  |   |                                      |   |  |              |           |   |  |   | (469,200    | )
|                                                   |  |                                               |            |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Net income applicable to common shareholder        |  | $                                             | 2,135,989  |   |                        | $ | 3,874,688   |                          |  | $ | (176,652                              | ) |  | $            | (3,698,038 | ) |  | $ | 2,135,987   |  
|                                                   |  |                                               |            |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|                                                   | 
|                                                   |  | Successor                                     |           
|                                                   |  | For the Three Months Ended September 30, 2005 |           
|                                                   |  | Parent Only                                   |            |   | Guarantor Subsidiaries |   |             | Non-Guarantor Subsidiary |  |   | Elimination and Consolidation Entries |   |  | Consolidated |           
|Sales                                              |  | $                                             |           |   |                        | $ | 74,767,041  |                          |  | $ | 944,729                               |   |  | $            |           |   |  | $ | 75,711,770  |  
|Operating expenses                                 |  |                                               | 7,039      |   |                        |   | 68,939,822  |                          |  |   | 948,715                               |   |  |              | 18,651     |   |  |   | 69,914,227  |  
|                                                   |  |                                               |            |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Operating income (loss)                            |  |                                               | (7,039     | ) |                        |   | 5,827,219   |                          |  |   | (3,986                                | ) |  |              | (18,651    | ) |  |   | 5,797,543   |  
|Interest expense and other income (loss)           |  |                                               | (27,681    | ) |                        |   | (3,148,092  | )                        |  |   | 62,297                                |   |  |              | 18,651     |   |  |   | (3,094,825  | )
|Equity in earnings of subsidiaries                 |  |                                               | 1,723,420  |   |                        |   |            |                          |  |   |                                      |   |  |              | (1,723,420 | ) |  |   |            |  
|                                                   |  |                                               |            |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Income (loss) before income tax expense            |  |                                               | 1,688,700  |   |                        |   | 2,679,127   |                          |  |   | 58,311                                |   |  |              | (1,723,420 | ) |  |   | 2,702,718   |  
|Income tax expense                                 |  |                                               | 48,428     |   |                        |   | 991,277     |                          |  |   | 22,741                                |   |  |              |           |   |  |   | 1,062,446   |  
|                                                   |  |                                               |            |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Net income (loss)                                  |  |                                               | 1,640,272  |   |                        |   | 1,687,850   |                          |  |   | 35,570                                |   |  |              | (1,723,420 | ) |  |   | 1,640,272   |  
|Preferred dividend requirement                     |  |                                               | (469,200   | ) |                        |   |            |                          |  |   |                                      |   |  |              |           |   |  |   | (469,200    | )
|                                                   |  |                                               |            |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Net income (loss) applicable to common shareholder |  | $                                             | 1,171,072  |   |                        | $ | 1,687,850   |                          |  | $ | 35,570                                |   |  | $            | (1,723,420 | ) |  | $ | 1,171,072   |  
|                                                   |  |                                               |            |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  



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EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)



|                                                   |  |                                                       |             |   |                        |   |             |                          |  |   |                                       |   |  |              |             |   |  |   |             |  
|-------------------------------------------------- |  | ----------------------------------------------------- | ----------- | - | ---------------------- | - | ----------- | ------------------------ |  | - | ------------------------------------- | - |  | ------------ | ----------- | - |  | - | ----------- | -
|                                                   |  | Successor                                             |            
|                                                   |  | For the Nine Months Ended September 30, 2006          |            
|                                                   |  | Parent Only                                           |             |   | Guarantor Subsidiaries |   |             | Non-Guarantor Subsidiary |  |   | Elimination and Consolidation Entries |   |  | Consolidated |            
|Sales                                              |  | $                                                     |            |   |                        | $ | 282,505,927 |                          |  | $ | 10,953,423                            |   |  | $            |            |   |  | $ | 293,459,350 |  
|Operating expenses                                 |  |                                                       | 350,894     |   |                        |   | 259,473,058 |                          |  |   | 10,518,578                            |   |  |              | (477,836    | ) |  |   | 269,864,694 |  
|                                                   |  |                                                       |             |   |                        |   |             |                          |  |   |                                       |   |  |              |             |   |  |   |             |  
|Operating income (loss)                            |  |                                                       | (350,894    | ) |                        |   | 23,032,869  |                          |  |   | 434,845                               |   |  |              | 477,836     |   |  |   | 23,594,656  |  
|Interest expense and other income (loss)           |  |                                                       | (7,215,131  | ) |                        |   | (3,370,869  | )                        |  |   | (95,107                               | ) |  |              | (477,836    | ) |  |   | (11,158,943 | )
|Equity in earnings of subsidiaries                 |  |                                                       | 12,037,440  |   |                        |   |            |                          |  |   |                                      |   |  |              | (12,037,440 | ) |  |   |            |  
|                                                   |  |                                                       |             |   |                        |   |             |                          |  |   |                                       |   |  |              |             |   |  |   |             |  
|Income (loss) before income tax (benefit) expense  |  |                                                       | 4,471,415   |   |                        |   | 19,662,000  |                          |  |   | 339,738                               |   |  |              | (12,037,440 | ) |  |   | 12,435,713  |  
|Income tax (benefit) expense                       |  |                                                       | (3,012,500  | ) |                        |   | 7,830,102   |                          |  |   | 134,196                               |   |  |              |            |   |  |   | 4,951,798   |  
|                                                   |  |                                                       |             |   |                        |   |             |                          |  |   |                                       |   |  |              |             |   |  |   |             |  
|Net income (loss)                                  |  |                                                       | 7,483,915   |   |                        |   | 11,831,898  |                          |  |   | 205,542                               |   |  |              | (12,037,440 | ) |  |   | 7,483,915   |  
|Preferred dividend requirement                     |  |                                                       | (1,392,300  | ) |                        |   |            |                          |  |   |                                      |   |  |              |            |   |  |   | (1,392,300  | )
|                                                   |  |                                                       |             |   |                        |   |             |                          |  |   |                                       |   |  |              |             |   |  |   |             |  
|Net income applicable to common shareholder        |  | $                                                     | 6,091,615   |   |                        | $ | 11,831,898  |                          |  | $ | 205,542                               |   |  | $            | (12,037,440 | ) |  | $ | 6,091,615   |  
|                                                   |  |                                                       |             |   |                        |   |             |                          |  |   |                                       |   |  |              |             |   |  |   |             |  
|                                                   | 
|                                                   |  | Successor                                             |            
|                                                   |  | For the Period February 1, 2005 to September 30, 2005 |            
|                                                   |  | Parent Only                                           |             |   | Guarantor Subsidiaries |   |             | Non-Guarantor Subsidiary |  |   | Elimination and Consolidation Entries |   |  | Consolidated |            
|Sales                                              |  | $                                                     |            |   |                        | $ | 195,055,324 |                          |  | $ | 944,729                               |   |  | $            |            |   |  | $ | 196,000,053 |  
|Operating expenses                                 |  |                                                       | 18,828      |   |                        |   | 176,533,376 |                          |  |   | 1,090,268                             |   |  |              | 20,195      |   |  |   | 177,662,667 |  
|                                                   |  |                                                       |             |   |                        |   |             |                          |  |   |                                       |   |  |              |             |   |  |   |             |  
|Operating income (loss)                            |  |                                                       | (18,828     | ) |                        |   | 18,521,948  |                          |  |   | (145,539                              | ) |  |              | (20,195     | ) |  |   | 18,337,386  |  
|Interest expense and other income (loss)           |  |                                                       | (68,201     | ) |                        |   | (7,992,901  | )                        |  |   | 62,193                                |   |  |              | 20,195      |   |  |   | (7,978,714  | )
|Equity in earnings of subsidiaries                 |  |                                                       | 6,582,459   |   |                        |   |            |                          |  |   |                                      |   |  |              | (6,582,459  | ) |  |   |            |  
|                                                   |  |                                                       |             |   |                        |   |             |                          |  |   |                                       |   |  |              |             |   |  |   |             |  
|Income (loss) before income tax (benefit) expense  |  |                                                       | 6,495,430   |   |                        |   | 10,529,047  |                          |  |   | (83,346                               | ) |  |              | (6,582,459  | ) |  |   | 10,358,672  |  
|Income tax (benefit) expense                       |  |                                                       | (52,911     | ) |                        |   | 3,895,747   |                          |  |   | (32,505                               | ) |  |              |            |   |  |   | 3,810,331   |  
|                                                   |  |                                                       |             |   |                        |   |             |                          |  |   |                                       |   |  |              |             |   |  |   |             |  
|Net income (loss)                                  |  |                                                       | 6,548,341   |   |                        |   | 6,633,300   |                          |  |   | (50,841                               | ) |  |              | (6,582,459  | ) |  |   | 6,548,341   |  
|Preferred dividend requirement                     |  |                                                       | (1,234,200  | ) |                        |   |            |                          |  |   |                                      |   |  |              |            |   |  |   | (1,234,200  | )
|                                                   |  |                                                       |             |   |                        |   |             |                          |  |   |                                       |   |  |              |             |   |  |   |             |  
|Net income (loss) applicable to common shareholder |  | $                                                     | 5,314,141   |   |                        | $ | 6,633,300   |                          |  | $ | (50,841                               | ) |  | $            | (6,582,459  | ) |  | $ | 5,314,141   |  
|                                                   |  |                                                       |             |   |                        |   |             |                          |  |   |                                       |   |  |              |             |   |  |   |             |  
|                                                   | 
|                                                   |  | Predecessor                                           |            
|                                                   |  | For the Period January 1, 2005 to January 31, 2005    |            
|                                                   |  | Parent Only                                           |             |   | Guarantor Subsidiaries |   |             | Non-Guarantor Subsidiary |  |   | Elimination and Consolidation Entries |   |  | Consolidated |            
|Sales                                              |  | $                                                     |            |   |                        | $ | 18,944,787  |                          |  | $ |                                      |   |  | $            |            |   |  | $ | 18,944,787  |  
|Operating expenses                                 |  |                                                       | 11,998,000  |   |                        |   | 16,697,129  |                          |  |   | 23,503                                |   |  |              | (664        | ) |  |   | 28,717,968  |  
|                                                   |  |                                                       |             |   |                        |   |             |                          |  |   |                                       |   |  |              |             |   |  |   |             |  
|Operating income (loss)                            |  |                                                       | (11,998,000 | ) |                        |   | 2,247,658   |                          |  |   | (23,503                               | ) |  |              | 664         |   |  |   | (9,733,181  | )
|Interest expense and other income (loss)           |  |                                                       | 69,632      |   |                        |   | (452,142    | )                        |  |   |                                      |   |  |              | (664        | ) |  |   | (383,174    | )
|Equity in earnings of subsidiaries                 |  |                                                       | 1,116,838   |   |                        |   |            |                          |  |   |                                      |   |  |              | (1,116,838  | ) |  |   |            |  
|                                                   |  |                                                       |             |   |                        |   |             |                          |  |   |                                       |   |  |              |             |   |  |   |             |  
|Income (loss) before income tax (benefit) expense  |  |                                                       | (10,811,530 | ) |                        |   | 1,795,516   |                          |  |   | (23,503                               | ) |  |              | (1,116,838  | ) |  |   | (10,156,355 | )
|Income tax (benefit) expense                       |  |                                                       | (2,571,683  | ) |                        |   | 664,341     |                          |  |   | (9,166                                | ) |  |              |            |   |  |   | (1,916,508  | )
|                                                   |  |                                                       |             |   |                        |   |             |                          |  |   |                                       |   |  |              |             |   |  |   |             |  
|Net income (loss)                                  |  |                                                       | (8,239,847  | ) |                        |   | 1,131,175   |                          |  |   | (14,337                               | ) |  |              | (1,116,838  | ) |  |   | (8,239,847  | )
|Preferred dividend requirement                     |  |                                                       | (189,949    | ) |                        |   |            |                          |  |   |                                      |   |  |              |            |   |  |   | (189,949    | )
|                                                   |  |                                                       |             |   |                        |   |             |                          |  |   |                                       |   |  |              |             |   |  |   |             |  
|Net income (loss) applicable to common shareholder |  | $                                                     | (8,429,796  | ) |                        | $ | 1,131,175   |                          |  | $ | (14,337                               | ) |  | $            | (1,116,838  | ) |  | $ | (8,429,796  | )
|                                                   |  |                                                       |             |   |                        |   |             |                          |  |   |                                       |   |  |              |             |   |  |   |             |  



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##### Table of Contents

EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)



|                                                     |  |                                                       |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|---------------------------------------------------- |  | ----------------------------------------------------- | ------------ | - | ---------------------- | - | ----------- | ------------------------ |  | - | ------------------------------------- | - | ------------ | - | - |  | - | ------------ | -
|                                                     |  | Successor                                             |             
|                                                     |  | For the Nine Months Ended September 30, 2006          |             
|                                                     |  | Parent Only                                           |              |   | Guarantor Subsidiaries |   |             | Non-Guarantor Subsidiary |  |   | Elimination and Consolidation Entries |   | Consolidated |  
|Net cash provided by (used in) operating activities  |  | $                                                     | 11,666,859   |   |                        | $ | (33,815,952 | )                        |  | $ | 1,541,838                             |   |              | $ |  |  | $ | (20,607,255  | )
|Net cash used in investing activities                |  |                                                       |             |   |                        |   | (1,191,885  | )                        |  |   | (462,189                              | ) |              |   |  |  |   | (1,654,074   | )
|Net cash provided by (used in) financing activities  |  |                                                       |             |   |                        |   | 7,043,473   |                          |  |   | (413,879                              | ) |              |   |  |  |   | 6,629,594    |  
|Effects of foreign exchange rate changes on cash     |  |                                                       |             |   |                        |   |            |                          |  |   | 11,519                                |   |              |   |  |  |   | 11,519       |  
|                                                     |  |                                                       |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|Net increase (decrease) in cash and cash equivalents |  |                                                       | 11,666,859   |   |                        |   | (27,964,364 | )                        |  |   | 677,289                               |   |              |   |  |  |   | (15,620,216  | )
|Cash and cash equivalents(Beginning of period)      |  |                                                       | (11,663,955  | ) |                        |   | 29,517,820  |                          |  |   | 159,668                               |   |              |   |  |  |   | 18,013,533   |  
|                                                     |  |                                                       |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|Cash and cash equivalents(End of period)            |  | $                                                     | 2,904        |   |                        | $ | 1,553,456   |                          |  | $ | 836,957                               |   |              | $ |  |  | $ | 2,393,317    |  
|                                                     |  |                                                       |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|                                                     | 
|                                                     |  | Successor                                             |             
|                                                     |  | For the Period February 1, 2005 to September 30, 2005 |             
|                                                     |  | Parent Only                                           |              |   | Guarantor Subsidiaries |   |             | Non-Guarantor Subsidiary |  |   | Elimination and Consolidation Entries |   | Consolidated |  
|Net cash (used in) provided by operating activities  |  | $                                                     | 2,171,803    |   |                        | $ | (20,045,439 | )                        |  | $ | 14,561                                |   |              | $ |  |  | $ | (17,859,075  | )
|Net cash (used in) provided by investing activities  |  |                                                       | (122,883,906 | ) |                        |   | 1,019,525   |                          |  |   | (2,092,835                            | ) |              |   |  |  |   | (123,957,116 | )
|Net cash provided by financing activities            |  |                                                       | 120,712,103  |   |                        |   | 19,383,898  |                          |  |   | 2,467,478                             |   |              |   |  |  |   | 142,563,479  |  
|                                                     |  |                                                       |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|Effects of foreign exchange rate changes on cash     |  |                                                       |             |   |                        |   |            |                          |  |   | 5,274                                 |   |              |   |  |  |   | 5,274        |  
|Net increase in cash and cash equivalents            |  |                                                       |             |   |                        |   | 357,984     |                          |  |   | 394,578                               |   |              |   |  |  |   | 752,562      |  
|Cash and cash equivalents(Beginning of period)      |  |                                                       |             |   |                        |   |            |                          |  |   |                                      |   |              |   |  |  | $ |             |  
|                                                     |  |                                                       |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|Cash and cash equivalents(End of period)            |  | $                                                     |             |   |                        | $ | 357,984     |                          |  | $ | 394,578                               |   |              | $ |  |  | $ | 752,652      |  
|                                                     |  |                                                       |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|                                                     | 
|                                                     |  | Predecessor                                           |             
|                                                     |  | For the Period January 1, 2005 to January 31, 2005    |             
|                                                     |  | Parent Only                                           |              |   | Guarantor Subsidiaries |   |             | Non-Guarantor Subsidiary |  |   | Elimination and Consolidation Entries |   | Consolidated |  
|Net cash provided by operating activities            |  | $                                                     | 1,018,316    |   |                        | $ | 3,284,955   |                          |  | $ | (54,446                               | ) |              | $ |  |  | $ | 4,248,825    |  
|Net cash used in investing activities                |  |                                                       |             |   |                        |   | (1,079      | )                        |  |   |                                      |   |              |   |  |  |   | (1,079       | )
|Net cash used in financing activities                |  |                                                       | (1,018,316   | ) |                        |   | (513,168    | )                        |  |   | 54,446                                |   |              |   |  |  |   | (1,477,038   | )
|                                                     |  |                                                       |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|Net increase in cash and cash equivalents            |  |                                                       |             |   |                        |   | 2,770,708   |                          |  |   |                                      |   |              |   |  |  |   | 2,770,708    |  
|Cash and cash equivalents(Beginning of period)      |  |                                                       | 62,476       |   |                        |   | 68,815      |                          |  |   | 3,008                                 |   |              |   |  |  | $ | 134,299      |  
|                                                     |  |                                                       |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|Cash and cash equivalents(End of period)            |  | $                                                     | 62,476       |   |                        | $ | 2,839,523   |                          |  | $ | 3,008                                 |   |              | $ |  |  | $ | 2,905,007    |  
|                                                     |  |                                                       |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  



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ITEM 2.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read
the following discussion together with our condensed consolidated financial statements and related notes thereto included elsewhere in this report. The following discussion and analysis of our financial condition and results of operations contains
forward looking statements within the meaning of the federal securities laws. See Forward-Looking Statements below.

Overview

Background

We are a leading
global distributor of specialty steel pipe and components and high grade structural steel products for use in niche applications to the energy infrastructure market, primarily in the oil and gas, processing and power generation industries. The
products we distribute are highly specialized and are used in environments that require high performance characteristics, such as the ability to withstand highly corrosive or abrasive materials, extremely high or low temperatures, or high-pressure.
These products are principally used in maintenance and repair projects as well as expansions of infrastructure and development projects.

We have two operating segmentsour alloy products group and our carbon products group, which are included within the Americas geographical segment of our parent, Edgen/Murray, L.P. Our alloy products group primarily distributes alloy
based specialty pipes, fittings and flanges that are principally used in high-pressure, extreme temperature and high-corrosion applications in the process and power generation industries. Our carbon products group primarily distributes prime carbon
specialty pipes, fittings and flanges and high grade structural steel products that are principally used in high-yield, high-tensile applications in the oil and gas, offshore construction and mining industries. As of September 30, 2006, we
operate in 17 locations, including 15 in the United States, and two in Canada.

Predecessor and Successor

On December 31, 2004, Edgen Acquisition Corporation, a corporation newly formed by Jefferies Capital Partners(JCP), entered into a stock
purchase agreement with Edgen Corporation and the stockholders of Edgen Corporation to purchase all of the outstanding capital stock of Edgen Corporation from its then existing stockholders for an aggregate purchase price of approximately $124.0
million, which included the assumption or repayment of indebtedness of Edgen Corporation but excluded payment of fees and expenses. The acquisition closed on February 1, 2005 and was funded with proceeds to Edgen Acquisition Corporation from
the issuance and sale of 97/8% Senior Secured Notes due 2011, which we refer to as the Notes as
well as an equity investment from funds managed by Jefferies Capital Partners and certain members of management of Edgen Corporation.

Concurrently with the acquisition and the issuance of the Notes, Edgen Corporation also entered into a new $20.0 million senior secured revolving credit facility, which we refer to as the revolving credit facility, and borrowed
$2.7 million in loans thereunder.

Simultaneously with the acquisition and the related financing transactions, Edgen Acquisition
Corporation was merged with and into Edgen Corporation, which survived the merger and became liable for all obligations under the Notes and borrowings under the new revolving credit facility. We refer to the acquisition of Edgen Corporation, the
offering and issuance of the Notes, the equity investment, the related financing transactions and the merger collectively as the Buy-out Transaction. Edgen Corporation following the merger is referred to as the Successor.
Edgen Corporation prior to the merger is referred to as the Predecessor.

In accordance with GAAP, we have separated our
historical financial results for the Predecessor and the Successor. The separate presentation is required under GAAP in situations when there is a change in accounting basis, which occurred when purchase accounting was applied to the acquisition of
the Predecessor. Purchase accounting requires that the historical carrying value of assets acquired and liabilities assumed be adjusted to fair value, which may yield results that are not comparable on a period-to-period basis due to the different,
and sometimes higher, cost basis associated with the allocation of the purchase price. Fair value purchase price adjustments consisted of a $2.0 million increase in inventory related to our alloy segment, a $1.9 million increase in land and
buildings, a $24.2 million increase in customer relationships, a $2.4 million increase in tradenames, and a $22.0 million increase in goodwill. In addition, at the time of the acquisition of the Predecessor, we experienced changes in our business as
a result of the other transactions, which were consummated simultaneously with the acquisition of the Predecessor. There have been no material changes to the operations or customer relationships of our business as a result of the acquisition of the
Predecessor.



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##### Table of Contents

In evaluating our results of operations and financial performance, our management has used combined
results for the three and nine months ended September 30, 2005 as a single measurement period. Due to the Buy-out Transaction, we believe that comparisons between the three and nine months ended September 30, 2006 and either the
Predecessors results for the period from January 1, 2005 to January 31, 2005 or the Successors results for the period from February 1, 2005 to September 30, 2005 may impede the ability of users of our financial
information to understand our operating and cash flow performance.

Consequently, to enhance an analysis of our operating results and cash
flows, we have presented our operating results and cash flows of the Successor for the three and nine months ended September 30, 2006 and of the Predecessor and Successor on a combined basis for the three and nine month periods ended
September 30, 2006. This combined presentation for the three and nine months ended September 30, 2005 simply represents a Non-GAAP mathematical addition of the pre-merger results of operations of the Predecessor for the period from
January 1, 2005 to January 31, 2005 and the results of operations of the Successor for the period from February 1, 2005 to September 30, 2005. The Successor conducted no operations from the date of formation of Edgen Acquisition
Corporation until the merger on February 1, 2005. We believe the combined presentation provides relevant information for investors. These combined results, however, are not intended to represent what our operating results would have been had
the Buy-out Transaction occurred at the beginning of the period. A reconciliation showing the mathematical combination of our operating results for such periods is included below under the heading Results of Operations.

Principal factors that affect our business

Our business is substantially dependent upon conditions in the energy industry and, in particular, capital expenditures by customers in the oil and gas exploration and production, gathering and transmission, and crude oil refining markets
and the energy processing and power generation industries. The level of energy-related capital expenditures generally depends on prevailing views of future oil, natural gas, refined products, electric power and petrochemical prices, which are
influenced by numerous factors, including but not limited to:



| |  |  | changes in US and international economic conditions;
| | - |  | ----------------------------------------------------



| |  |  | demand for oil, natural gas, refined products, petrochemicals and electric power, particularly in the developed OECD markets and rapidly developing markets such as China and India;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | worldwide political conditions, particularly in significant oil-producing regions such as the Middle East, West Africa and Latin America;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | actions taken by OPEC;
| | - |  | ----------------------



| |  |  | the availability and discovery rate of new oil and natural gas reserves in offshore areas;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | the cost of offshore exploration for, and production and transportation of, oil and natural gas;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | the ability of oil and natural gas companies to generate funds or otherwise obtain external capital for exploration, development and production operations;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | technological advances affecting energy exploration, production, transportation, storage and refining;
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | the availability of offshore drilling rigs for exploration, appraisal and developmental drilling;
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | the availability of infrastructure to efficiently transport natural gas from remote regions to points of consumption;
| | - |  | ---------------------------------------------------------------------------------------------------------------------



| |  |  | the existence of capacity to process or upgrade heavy and sour grades of crude oil and bitumen;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | increases in power generation capacity in the US and international markets;
| | - |  | ---------------------------------------------------------------------------



| |  |  | weather conditions;
| | - |  | -------------------



| |  |  | environmental or other government regulations; and
| | - |  | --------------------------------------------------



| |  |  | tax policies.
| | - |  | -------------

Fluctuations in the costs of the products
we supply are largely driven by changes in the condition of the general economy, changes in product inventories held by our customers, our vendors and other distributors and prevailing steel prices around the world. We have historically managed to
successfully defend our profit margins by adjusting the prices we charge our customers to reflect variances in the cost of our products.

Critical
Accounting Policies

The preparation of financial statements, in conformity with accounting principles generally accepted in the United
States of America, requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses in our consolidated financial statements. We base our estimates on historical
experience and other assumptions that we believe are reasonable under the circumstances, the results of which form the basis



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for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Our actual results may differ from these estimates under different circumstances or conditions. If actual amounts are ultimately different from these estimates, the revisions are included in our results of operations for the period in which the
actual amounts become known. Refer to our amended Annual Report on Form 10-K/A as filed with the Securities and Exchange Commission (the SEC) on June 23, 2006 for a discussion of our accounting policies and estimates.

We believe the following critical accounting policies and estimates affect our more significant judgments and estimates used in preparing our
consolidated financial statements.

In addition, we believe the following critical accounting policies are important to the portrayal of
our financial condition and results of operations and require our managements most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Revenue Recognition

Revenue is
recognized on products sales when the customer takes title and assumes risk of loss. Revenue is recorded, net of discounts and sales incentives. We monitor and track the amount of rebates, returns and discounts to customers based on historical
experience to estimate the amount of reduction to revenue.

Accounts Receivable

We maintain an allowance for doubtful accounts to reflect our estimate of the uncollectibility of accounts receivable. Concentration of credit risk with
respect to accounts receivable is within several industries and is limited because of our broad customer base. We perform ongoing credit evaluations of customers and set credit limits based upon reviews of customers current credit information
and payment histories. We monitor customer payments and maintain a provision for estimated uncollectible accounts based on historical experience and specific customer collection issues that we have identified. Estimation of such losses requires
adjusting historical loss experience for current economic conditions and judgments about the probable effects of economic conditions on certain customers. The rate of future credit losses may not be similar to past experience.

We record the effect of any necessary adjustments prior to the publication of our consolidated financial statements. We consider all available
information when assessing the adequacy of the provision for allowances, claims and doubtful accounts. Adjustments made with respect to the allowance for doubtful accounts often relate to improved information not previously available. Uncertainties
with respect to the allowance for doubtful accounts are inherent in the preparation of financial statements. For example, in the third quarter 2006, our financial statements included a $0.7 million write-down of a customer receivable due to factors
unrelated to current market factors.

Inventories

We state our inventories at the lower of cost or market (net realizable value). We account for our inventories using the weighted average cost method of accounting. Cost includes all costs incurred in bringing the
product to its present location and condition, based on purchase cost on a weighted average cost basis. We maintain allowances for damaged, slow-moving and unmarketable inventory to reflect the difference between the cost of the inventory and the
estimated market value. We regularly review our inventory on hand and update our allowances based on historical and current sales trends. Changes in product demand and our customer base may affect the value of inventory on hand and may require
higher inventory allowances. Uncertainties with respect to the inventory valuation are inherent in the preparation of financial statements. For example, in 2003, our financial results included a $2.4 million write-down of inventory associated with
the collapse of the power generation construction market.

Goodwill and Other IntangibleAssets

Goodwill represents the excess of the amount we paid to acquire a company over the estimated fair value of tangible assets
and identifiable assets acquired, less liabilities assumed. As of September 30, 2006, the goodwill and other intangible assets with indefinite lives balance was $36.9 million, representing 15.0% of total assets.

We account for goodwill under the provisions of the Financial Accounting Standards Boards (FASB) Statement of Financial Accounting
Standards (SFAS No.) 142, Goodwill and Other Intangible Assets. Under these rules we test for goodwill and other intangibles with indefinite lives for impairment annually or at any other time when impairment indicators exist. As
of January 1, 2006, we performed our annual goodwill impairment test, which requires comparison of our estimated fair value to our book value including goodwill. As a result of the test, we believe the goodwill on our balance sheet is not



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impaired. In assessing the recoverability of our goodwill and other intangibles, we must make assumptions regarding
estimated future cash flows and other factors to determine the fair value of the respective assets. We estimate future cash flows at the reporting unit level. If these estimates or their related assumptions change in the future, we may be required
to record impairment charges not previously recorded for these assets.

Long-Lived Assets

We assess the impairment of long-lived assets, including customer relationships, when events or changes in circumstances indicate that the carrying value
of the assets or the asset group may not be recoverable. The asset impairment review assesses the fair value of the assets based on the future cash flows the assets are expected to generate. An impairment loss is recognized when estimated
undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from the disposition of the asset (if any) are less than the related assets carrying amount. Impairment losses are measured as the amount by
which the carrying amounts of the assets exceed their fair values. Estimates of future cash flows are judgments based on our experience and knowledge of our operations and the industries in which we operate. We also estimate the useful lives of
other intangible assets based on estimates of the economic benefit expected to be received from the acquired assets which could differ from actual results. These estimates can be significantly affected by future changes in market conditions, the
economic environment, and capital spending decisions of our customers and inflation.

As of September 30, 2006 and December 31,
2005, our long-lived assets were $33.4 million and $32.3 million, representing 13.6% and 14.5% of total assets, respectively. If the useful lives of our customer relationship intangible assets, our largest long-lived asset which is amortized over
approximately 7 years, were reduced by one year, operating income and net income would have been reduced by $0.7 million and $0.4 million, respectively, for the nine months ended September 30, 2006.

Share-Based Payments

Prior to January 1,
2006, we issued stock-based compensation in the form of restricted common partnership units to certain members of management and a director. We account for these restricted common units by applying the Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to Employees, which requires us to recognize compensation expense related to these employee stock-based compensation. We account for stock-based compensation grants after
January 1, 2006, using the fair value recognition provision of SFAS 123(R), Share-Based Payment (SFAS 123(R)).

The
fair value of restricted common units granted was estimated by management and/or our controlling shareholder, JCP, using an internal valuation methodology. A market approach was generally used to estimate our enterprise value using estimates of
EBITDA multiplied by relevant market multiples, adjusted to take into account particular characteristics of our businesses. We used market multiples of companies that we believed were the most comparable to our businesses.

Income Tax Expense Estimates and Policies

As
part of the income tax provision process of preparing our consolidated financial statements, we are required to estimate our income taxes. This process involves estimating our current tax exposure together with assessing temporary differences
resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable
income, and to the extent we believe the recovery is not likely, we must establish a valuation allowance. Further, to the extent that we establish a valuation allowance or increase this allowance in a financial accounting period, we must include a
tax provision, or reduce our tax benefit in our consolidated statement of operations. We use our judgment to determine our provision or benefit for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against our
net deferred tax assets.

We recorded a valuation allowance in 2002 against a portion of deferred tax assets because management believed
that the deferred tax assets related to goodwill impairment would not more than likely be realized in full through future operating results and the reversal of taxable timing differences. Based on operating results for year ended December 31,
2004 and projected operating results for the years ended December 31, 2005 and 2006, management believed this was no longer the case and the valuation allowance was reversed as of December 31, 2004. This resulted in an increase in the
deferred tax asset and a related decrease in income tax expense of $7.1 million.



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There are various factors that may cause our tax assumptions to change in the near term, and we may have
to record a valuation allowance against our deferred tax assets. We cannot predict whether future U.S. federal and state income tax laws and regulations might be passed that could have a material effect on our results of operations. We assess the
impact of significant changes to the U.S. federal and state income tax laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when new legislation and regulations are enacted.

Results of Operations

Overview

Our financial results for the three and nine months ended September 30, 2006 were positively impacted by various factors including:



| |  |  | sustained historically high oil and gas prices, which have driven increased capital expenditures by the customers we serve, predominantly in the oil and gas production and the
natural gas gathering and transmission sector ;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increases in the price of and demand for other natural resources, particularly phosphate;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | increased demand for alternative fuels in North America including ethanol; and
| | - |  | ------------------------------------------------------------------------------



| |  |  | increases in sales prices, particularly for our alloy products, because of limited availability of certain products and demand for specialty materials used in the energy
infrastructure industry.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following tables provide our statements of operations, selected segment information including
our sales and operating income (loss), and international sales. The segment information is presented as it is reported to management, and is consistent with the segment reporting in Note 7 to our notes to the condensed consolidated financial
statements included elsewhere in this document. The period-to-period comparisons of financial results are not necessarily indicative of future results, or results for a full year.



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STATEMENT OF OPERATIONS DATA:



|                                                                                      |  |                                       |         |   |                                      |   |        |  
|------------------------------------------------------------------------------------- |  | ------------------------------------- | ------- | - | ------------------------------------ | - | ------ | -
|                                                                                      |  | (dollars in thousands)                |        
|                                                                                      |  | Three Months Ended September 30, 2006 |         |   | Three MonthsEnded September 30, 2005 |  
|SALES                                                                                 |  | $                                     | 105,594 |   |                                      | $ | 75,712 |  
|                                                                                      |  |                                      
|OPERATING EXPENSES:                                                                   |  |                                       |         |   |                                      |   |        |  
|Cost of sales (exclusive of depreciation and amortization, as shown separately below) |  |                                       | 84,298  |   |                                      |   | 61,766 |  
|Selling, general, and administrative expense                                          |  |                                       | 10,246  |   |                                      |   | 7,546  |  
|Depreciation and amortization expense                                                 |  |                                       | 3,081   |   |                                      |   | 603    |  
|                                                                                      |  |                                       |         |   |                                      |   |        |  
|Total operating expenses                                                              |  |                                       | 97,625  |   |                                      |   | 69,915 |  
|                                                                                      |  |                                       |         |   |                                      |   |        |  
|OPERATING INCOME                                                                      |  |                                       | 7,969   |   |                                      |   | 5,797  |  
|OTHER INCOME (EXPENSE):                                                               |  |                                       |         |   |                                      |   |        |  
|Other income                                                                          |  |                                       | 188     |   |                                      |   | 70     |  
|Interest expense, net                                                                 |  |                                       | (3,958  | ) |                                      |   | (3,164 | )
|                                                                                      |  |                                       |         |   |                                      |   |        |  
|INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE                           |  |                                       | 4,199   |   |                                      |   | 2,703  |  
|INCOME TAX EXPENSE                                                                    |  |                                       | 1,594   |   |                                      |   | 1,063  |  
|                                                                                      |  |                                       |         |   |                                      |   |        |  
|NET INCOME                                                                            |  |                                       | 2,605   |   |                                      |   | 1,640  |  
|PREFERRED DIVIDEND REQUIREMENT                                                        |  |                                       | (469    | ) |                                      |   | (469   | )
|                                                                                      |  |                                       |         |   |                                      |   |        |  
|NET INCOME APPLICABLE TO COMMON SHAREHOLDER                                           |  | $                                     | 2,136   |   |                                      | $ | 1,171  |  
|                                                                                      |  |                                       |         |   |                                      |   |        |  
|Segment Sales                                                                         |  |                                       |         |   |                                      |   |        |  
|Alloy Products                                                                        |  | $                                     | 33,531  |   |                                      | $ | 20,670 |  
|Carbon Products                                                                       |  |                                       | 72,063  |   |                                      |   | 55,042 |  
|                                                                                      |  |                                       |         |   |                                      |   |        |  
|Total                                                                                 |  | $                                     | 105,594 |   |                                      | $ | 75,712 |  
|                                                                                      |  |                                       |         |   |                                      |   |        |  
|Segment Operating Income (Loss)                                                       |  |                                       |         |   |                                      |   |        |  
|Alloy Products                                                                        |  | $                                     | 3,922   |   |                                      | $ | 2,854  |  
|Carbon Products                                                                       |  |                                       | 6,438   |   |                                      |   | 4,775  |  
|General Corporate                                                                     |  |                                       | (2,391  | ) |                                      |   | (1,832 | )
|                                                                                      |  |                                       |         |   |                                      |   |        |  
|Total                                                                                 |  | $                                     | 7,969   |   |                                      | $ | 5,797  |  
|                                                                                      |  |                                       |         |   |                                      |   |        |  
|Segment Operating Income as a Percentage of Segment Sales                             |  |                                       |         |   |                                      |   |        |  
|Alloy Products                                                                        |  |                                       | 11.7    | % |                                      |   | 13.8   | %
|Carbon Products                                                                       |  |                                       | 8.9     | % |                                      |   | 8.7    | %
|Total                                                                                 |  |                                       | 7.5     | % |                                      |   | 7.7    | %
|                                                                                      |  |                                      
|International Sales                                                                   |  | $                                     | 16,822  |   |                                      | $ | 11,123 |  
|                                                                                      |  |                                      
|International Sales as a Percentage of Total Sales                                    |  |                                       | 15.9    | % |                                      |   | 14.7   | %



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|                                                                                      |  |                                      |         |   |                                               |   |         |                                            |  |   |                                      |   |  |   |         |  
|------------------------------------------------------------------------------------- |  | ------------------------------------ | ------- | - | --------------------------------------------- | - | ------- | ------------------------------------------ |  | - | ------------------------------------ | - |  | - | ------- | -
|                                                                                      |  | (dollars in thousands)               |        
|                                                                                      |  | Successor                            |         |   | Successor                                     |   |         | Predecessor                                |  |   | Non-GAAP Combined                    |  
|                                                                                      |  | Nine Months Ended September 30, 2006 |         |   | Period February 1, 2005 to September 30, 2005 |   |         | Period January 1, 2005 to January 31, 2005 |  |   | Nine Months Ended September 30, 2005 |  
|SALES                                                                                 |  | $                                    | 293,459 |   |                                               | $ | 196,000 |                                            |  | $ | 18,945                               |   |  | $ | 214,945 |  
|                                                                                      |  |                                      |         |  
|OPERATING EXPENSES:                                                                   |  |                                      |         |   |                                               |   |         |                                            |  |   |                                      |   |  |   |         |  
|Cost of sales (exclusive of depreciation and amortization, as shown separately below) |  |                                      | 236,259 |   |                                               |   | 155,392 |                                            |  |   | 14,153                               |   |  |   | 169,545 |  
|Selling, general, and administrative expense                                          |  |                                      | 27,521  |   |                                               |   | 20,581  |                                            |  |   | 14,364                               |   |  |   | 34,945  |  
|Depreciation and amortization expense                                                 |  |                                      | 6,084   |   |                                               |   | 1,689   |                                            |  |   | 201                                  |   |  |   | 1,890   |  
|                                                                                      |  |                                      |         |   |                                               |   |         |                                            |  |   |                                      |   |  |   |         |  
|Total operating expenses                                                              |  |                                      | 269,864 |   |                                               |   | 177,662 |                                            |  |   | 28,718                               |   |  |   | 206,380 |  
|OPERATING INCOME (LOSS)                                                               |  |                                      | 23,595  |   |                                               |   | 18,338  |                                            |  |   | (9,773                               | ) |  |   | 8,565   |  
|OTHER INCOME (EXPENSE):                                                               |  |                                      |         |   |                                               |   |         |                                            |  |   |                                      |   |  |   |         |  
|Other income (expense)                                                                |  |                                      | 373     |   |                                               |   | 143     |                                            |  |   | (50                                  | ) |  |   | 93      |  
|Interest expense, net                                                                 |  |                                      | (11,532 | ) |                                               |   | (8,123  | )                                          |  |   | (333                                 | ) |  |   | (8,456  | )
|                                                                                      |  |                                      |         |   |                                               |   |         |                                            |  |   |                                      |   |  |   |         |  
|INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE                    |  |                                      | 12,436  |   |                                               |   | 10,358  |                                            |  |   | (10,156                              | ) |  |   | 202     |  
|INCOME TAX EXPENSE (BENEFIT)                                                          |  |                                      | 4,952   |   |                                               |   | 3,810   |                                            |  |   | (1,916                               | ) |  |   | 1,894   |  
|                                                                                      |  |                                      |         |   |                                               |   |         |                                            |  |   |                                      |   |  |   |         |  
|NET INCOME (LOSS)                                                                     |  |                                      | 7,484   |   |                                               |   | 6,548   |                                            |  |   | (8,240                               | ) |  |   | (1,692  | )
|PREFERRED DIVIDEND REQUIREMENT                                                        |  |                                      | (1,392  | ) |                                               |   | (1,234  | )                                          |  |   | (190                                 | ) |  |   | (1,424  | )
|                                                                                      |  |                                      |         |   |                                               |   |         |                                            |  |   |                                      |   |  |   |         |  
|NET INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDER                                    |  | $                                    | 6,092   |   |                                               | $ | 5,314   |                                            |  | $ | (8,430                               | ) |  | $ | (3,116  | )
|                                                                                      |  |                                      |         |   |                                               |   |         |                                            |  |   |                                      |   |  |   |         |  



|                                                                |  |                                      |         |   |                                               |   |          |                                            |  |   |                                      |    |  |   |          |  
|--------------------------------------------------------------- |  | ------------------------------------ | ------- | - | --------------------------------------------- | - | -------- | ------------------------------------------ |  | - | ------------------------------------ | -- |  | - | -------- | -
|                                                                |  | (dollars in thousands)               |        
|                                                                |  | Successor                            |         |   | Successor                                     |   |          | Predecessor                                |  |   | Non-GAAP Combined                    |   
|                                                                |  | Nine Months Ended September 30, 2006 |         |   | Period February 1, 2005 to September 30, 2005 |   |          | Period January 1, 2005 to January 31, 2005 |  |   | Nine Months Ended September 30, 2005 |   
|Segment Sales                                                   |  |                                      |         |   |                                               |   |          |                                            |  |   |                                      |    |  |   |          |  
|Alloy Products                                                  |  | $                                    | 82,731  |   |                                               | $ | 53,630   |                                            |  | $ | 4,214                                |    |  | $ | 57,844   |  
|Carbon Products                                                 |  |                                      | 210,728 |   |                                               |   | 142,370  |                                            |  |   | 14,731                               |    |  |   | 157,101  |  
|                                                                |  |                                      |         |   |                                               |   |          |                                            |  |   |                                      |    |  |   |          |  
|Total                                                           |  | $                                    | 293,459 |   |                                               | $ | 196,000  |                                            |  | $ | 18,945                               |    |  | $ | 214,945  |  
|                                                                |  |                                      |         |   |                                               |   |          |                                            |  |   |                                      |    |  |   |          |  
|Segment Operating Income (Loss)                                 |  |                                      |         |   |                                               |   |          |                                            |  |   |                                      |    |  |   |          |  
|Alloy Products                                                  |  | $                                    | 11,551  |   |                                               | $ | 8,563    |                                            |  | $ | 960                                  |    |  | $ | 9,523    |  
|Carbon Products                                                 |  |                                      | 19,189  |   |                                               |   | 15,271   |                                            |  |   | 1,981                                |    |  |   | 17,252   |  
|General Corporate                                               |  |                                      | (7,145  | ) |                                               |   | (5,496   | )                                          |  |   | (12,714                              | )  |  |   | (18,210  | )
|                                                                |  |                                      |         |   |                                               |   |          |                                            |  |   |                                      |    |  |   |          |  
|Total                                                           |  | $                                    | 23,595  |   |                                               | $ | 18,338   |                                            |  | $ | (9,773                               | )  |  | $ | 8,565    |  
|                                                                |  |                                      |         |   |                                               |   |          |                                            |  |   |                                      |    |  |   |          |  
|Segment Operating Income(Loss) as a Percentage of Segment Sales |  |                                      |         |   |                                               |   |          |                                            |  |   |                                      |    |  |   |          |  
|Alloy Products                                                  |  |                                      | 14.0    | % |                                               |   | 16.0     | %                                          |  |   | 22.8                                 | %  |  |   | 16.5     | %
|Carbon Products                                                 |  |                                      | 9.1     | % |                                               |   | 10.7     | %                                          |  |   | 13.4                                 | %  |  |   | 11.0     | %
|Total                                                           |  |                                      | 8.0     | % |                                               |   | 9.4      | %                                          |  |   | (51.6                                | )% |  |   | 4.0      | %
|                                                                |  |                                      |         |  
|International Sales                                             |  | $                                    | 48,017  |   |                                               | $ | 25,946   |                                            |  | $ | 2,253                                |    |  | $ | 28,199   |  
|                                                                |  |                                      |         |  
|International Sales as a Percentage of Total Sales              |  |                                      | 16.4    | % |                                               |   | 13.3     | %                                          |  |   | 11.9                                 | %  |  |   | 13.1     | %
|                                                                |  |                                      |         |  
|Net cash (used in) provided by:                                 |  |                                      |         |   |                                               |   |          |                                            |  |   |                                      |    |  |   |          |  
|Cash flows - operating activities                               |  | $                                    | (20,607 | ) |                                               | $ | (17,859  | )                                          |  | $ | 4,249                                |    |  | $ | (13,610  | )
|Cash flows - investing activities                               |  |                                      | (1,654  | ) |                                               |   | (123,957 | )                                          |  |   | (1                                   | )  |  |   | (123,958 | )
|Cash flows - financing activities                               |  |                                      | 6,630   |   |                                               |   | 142,563  |                                            |  |   | (1,477                               | )  |  |   | 141,086  |  



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Revenue Sources

We generate substantially all of our revenues, net of returns and allowances, from the sale of our products to third parties. Additionally, sales are reduced by sales discounts and incentives provided to our
customers. We recognize revenue on products sales when the customer takes title and assumes risk of loss.

Principal costs and expenses

Our principal costs and expenses consist of the following: cost of sales (exclusive of depreciation and amortization), selling,
general and administrative expenses, depreciation and amortization, and interest expense.

Our most significant cost is cost of sales
(exclusive of depreciation and amortization) which includes the cost of the products we distribute, freight in and freight out and services provided by third parties to prepare the product for sale. Our product costs are reduced by vendor discounts
and purchase incentives. We buy and pay for most of our products on standard commercial terms (e.g., payment typically due within 30 to 60 days).

Selling, general and administrative expenses include sales and administrative employee compensation and benefit costs, as well as travel expenses for sales representatives, information technology infrastructure and communication costs,
office rent and supplies, professional services, and other general corporate expenses. Selling, general and administrative expenses also include costs for warehouse personnel and benefits, supplies, equipment maintenance and rental and contract
storage and distribution expenses.

Depreciation and amortization consists of amortization of acquired other intangible assets, including
customer relationships and backlog, and the depreciation of property, plant and equipment including leasehold improvement, capitalized leases, and picking and lifting equipment.

Interest expense includes interest incurred on our indebtedness and amortization of deferred financing costs associated with such indebtedness.

Three Months Ended September 30, 2006 Compared to Three Months Ended September 30, 2005

Sales



|                  |  |                                             |         |                                             |   |            |  |      |  
|----------------- |  | ------------------------------------------- | ------- | ------------------------------------------- | - | ---------- |  | ---- | -
|Reporting Segment |  | Three Months Ended September 30, 2006 Sales |         | Three Months Ended September 30, 2005 Sales |   | % Increase | 
|                  |  | (dollars in thousands)                      |        
|Alloy Products    |  | $                                           | 33,531  |                                             | $ | 20,670     |  | 62.2 | %
|Carbon Products   |  |                                             | 72,063  |                                             |   | 55,042     |  | 30.9 | %
|                  |  |                                             |         |                                             |   |            |  |      |  
|Total             |  | $                                           | 105,594 |                                             | $ | 75,712     |  | 39.5 | %
|                  |  |                                             |         |                                             |   |            |  |      |  

Overall. For the three months ended September 30, 2006, our consolidated sales
increased $29.9 million, or 39.5%, to $105.6 million compared to the three months ended September 30, 2005. This increase in sales was primarily the result of continued growth in demand for the products we supply for use in capital expenditures
and maintenance projects related to oil and gas production, natural gas gathering and transmission, ethanol production and phosphate mining, and increases in sales prices, particularly for our alloy products, due to limited vendor availability which
is driven by demand for specialty materials used in the energy infrastructure industry.

Sales order backlog increased from $97.1 million
at June 30, 2006 to $109.9 million at September 30, 2006. Because of increased new project and expansion spending by the energy infrastructure market and as a result of the acquisition of MIM US in late 2005, our backlog has expanded to
include sales orders which typically have a longer term from the date of sales order to shipment, as opposed to maintenance and repair orders which tend to ship quickly. As a result, project orders may have a significant impact on our backlog, and
ultimately our sales, from period to period. Project orders are driven by scheduled shipment dates and planned major capital expenditures, as opposed to quick-ship inventory orders used primarily for daily customer repair and maintenance activity.



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Alloy Products. For the three months ended September 30, 2006, alloy product sales increased
$12.9 million, or 62.2%, to $33.5 million compared to the three months ended September 30, 2005. This increase was the result of the Western Flow acquisition which contributed $4.4 million in the third quarter 2006 compared to $0.9 million in
the third quarter 2005. Also contributing to increases for Alloy products was consistent sales growth in the power generation, refining, and ethanol plant fabrication markets.

Carbon Products. For the three months ended September 30, 2006, carbon product sales increased $17.0 million, or 30.9%, to $72.1 million
compared to the three months ended September 30, 2005. This increase was primarily driven by increased sales volume of high yield pipe and fittings to the gas transmission market. The increase was also fueled by capital expenditures in the
phosphate mining industry to meet demand for agricultural products.

Operating Income (Loss)



|                  |                        |                                                               |        |   |                                                               |   |        |  
|----------------- | ---------------------- | ------------------------------------------------------------- | ------ | - | ------------------------------------------------------------- | - | ------ | -
|Reporting Segment |                        | Three Months Ended September 30,
2006 Operating Income (Loss) |        |   | Three Months Ended September 30,
2005 Operating Income (Loss) |  
|                  | (dollars in thousands) |                                                              
|Alloy Products    |                        | $                                                             | 3,922  |   |                                                               | $ | 2,854  |  
|Carbon Products   |                        |                                                               | 6,438  |   |                                                               |   | 4,775  |  
|General Corporate |                        |                                                               | (2,391 | ) |                                                               |   | (1,832 | )
|                  |                        |                                                               |        |   |                                                               |   |        |  
|Total             |                        | $                                                             | 7,969  |   |                                                               | $ | 5,797  |  
|                  |                        |                                                               |        |   |                                                               |   |        |  

Overall. Our consolidated operating income for the three months ended September 30,
2005 increased $2.2 million to operating income of $8.0 million for the three months ended September 30, 2006. The increase in consolidated operating income was the result of increased volume and improved product mix to higher margin alloy
products and high yield pipe, partially offset by an increase in amortization expense of other intangible assets related to the Buy-out Transaction and MIM US acquisition of $2.5 million, an increase in general corporate expenses, and a $0.7 million
addition to our allowance for uncollectible accounts as a result of the bankruptcy of a significant customer.

Alloy Products. Our
alloy products operating income for the three months ended September 30, 2006 was $3.9 million, a $1.1 million increase from the three months ended September 30, 2005. The increase was primarily the result of increased sales volumes,
steady margins in the maintenance sector and significant sales volume increases in sales to the alternative energy sector, partially offset by higher product costs, by a $0.8 million increase in amortization of other intangible assets, and by an
increase in selling, general and administrative expenses related to the operations of the Western Flow acquisition. Operating income was also negatively impacted by a $0.7 million increase in our allowance for uncollectable accounts as the result of
the bankruptcy of a significant customer.

Carbon Products. Our carbon products operating income for the three months ended
September 30, 2006 was $6.4 million, an increase of $1.7 million from the three months ended September 30, 2005. The increase in operating income was driven primarily by gross profit from increased sales to the gas gathering and
transmission industry, improved margins as a result of extended mill delivery times, and consistent demand for our carbon products. This increase was partially offset by an increase in selling, general and administrative expenses and amortization of
$1.7 million of other intangibles acquired in connection with the MIM US acquisition which were not recorded until the third quarter 2006 when the Company completed its purchase accounting valuation procedures.

General Corporate. General corporate operating loss increased from $1.8 million for the three months ended September 30, 2005 to $2.4 million
for the three months ended September 30, 2006 and was primarily attributable to an increase in travel expenses related to business development efforts, and an increase in our employee bonus plan accrual which has been supported by the current
year growth and performance of the Company.

Other income (expense)

Other income (expense) for the three months ended September 30, 2006 of $0.2 million includes ($0.1 million) related to recognized losses on foreign
currency exchange forward contracts.



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Interest Expense, net

Interest expense, net for the three months ended September 30, 2006 increased $0.8 million, or 25.0%, to $4.0 million from $3.2 million for the three months ended September 30, 2005. The increase in interest
expense was the result of the issuance of an additional $31 million Notes in December 2005 in conjunction with the acquisition of MIM US. Interest expense for the three months ended September 30, 2006 includes $0.4 million of deferred financing
costs amortization compared to $0.3 million of deferred financing costs amortization for the three months ended September 30, 2005.

Income Tax
Expense

Income tax expense was $1.6 million for the three months ended September 30, 2006 compared to income tax expense of
$1.1 million for the three months ended September 30, 2005. The effective tax rate was approximately 38% for the three months ended September 30, 2006, compared to approximately 39% for the three months ended September 30, 2005.

Nine Months Ended September 30, 2006 Compared to Combined Nine Months Ended September 30, 2005

Sales



|                  |  |                                            |                        |                                                             |   |            |  |      |  
|----------------- |  | ------------------------------------------ | ---------------------- | ----------------------------------------------------------- | - | ---------- |  | ---- | -
|Reporting Segment |  | Nine Months Ended September 30, 2006 Sales |                        | Non-GAAPCombined Nine Months Ended
September 30, 2005 Sales |   | % Increase | 
|                  |  |                                            | (dollars in thousands) |                                                             |   |           
|Alloy Products    |  | $                                          | 82,731                 |                                                             | $ | 57,844     |  | 43.0 | %
|Carbon Products   |  |                                            | 210,728                |                                                             |   | 157,101    |  | 34.1 | %
|                  |  |                                            |                        |                                                             |   |            |  |      |  
|Total             |  | $                                          | 293,459                |                                                             | $ | 214,945    |  | 36.5 | %
|                  |  |                                            |                        |                                                             |   |            |  |      |  

Overall. For the nine months ended September 30, 2006, our consolidated sales
increased $78.5 million, or 36.5%, to $293.5 million compared to the combined nine months ended September 30, 2005. The increase in sales was primarily the result of continued growth in demand for the products we supply for use in capital
expenditures and maintenance projects related to oil and gas production, natural gas gathering and transmission, and ethanol production, and increases in sales prices, particularly for our alloy products because of limited product availability
driven by demand for specialty materials used in the energy infrastructure industry. The increase in sales reflects the operating results of the acquisition of Western Flow and MIM US which contributed a combined $38.3 million in sales.

Sales order backlog increased from $88.6 million at December 31, 2005 to $109.9 million at September 30, 2006. Because of
increased new project and expansion spending by the energy infrastructure market and as a result of the acquisition of MIM US in late 2005, our backlog has expanded to include sales orders which typically have a longer term from the date of sales
order to shipment, as opposed to maintenance and repair orders which tend to ship quickly. As a result, project orders may have a significant impact on our backlog, and ultimately our sales, from period to period. Project orders are driven by
scheduled shipment dates and planned major capital expenditures, as opposed to quick-ship inventory orders used primarily for daily customer repair and maintenance activity.

Alloy Products. For the nine months ended September 30, 2006, alloy product sales increased $24.9 million, or 43.0%, to $82.7 million
compared to the combined nine months ended September 30, 2005. This increase was the result of the Western Flow acquisition which contributed $10.9 million in sales driven by energy infrastructure projects in Canada, of increased demand for
products for construction of alternative fuel refining capacity, of increased demand in the petrochemical sector and sales price increases, particularly stainless steel pipe.

Carbon Products. For the nine months ended September 30, 2006, carbon product sales increased $53.6 million, or 34.1%, to $210.7 million
compared to the combined nine months ended September 30, 2005. This increase was driven by $27.4 million in sales contributed by the MIM US acquisition, by an increase in sales volume of high yield pipe and fittings to the gas transmission
market, by increased activity in the alternative energy sector, by an increase in demand for our products supplied to the phosphate mining industry and by sales price increases.



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Operating Income (Loss)



|                  |                        |                                                              |        |   |                                                                                |   |         |  
|----------------- | ---------------------- | ------------------------------------------------------------ | ------ | - | ------------------------------------------------------------------------------ | - | ------- | -
|Reporting Segment |                        | Nine Months Ended September 30,
2006 Operating Income (Loss) |        |   | Non-GAAP Combined Nine Months
Ended September 30,
2005 Operating Income (Loss) |  
|                  | (dollars in thousands) |                                                             
|Alloy Products    |                        | $                                                            | 11,551 |   |                                                                                | $ | 9,523   |  
|Carbon Products   |                        |                                                              | 19,189 |   |                                                                                |   | 17,252  |  
|General Corporate |                        |                                                              | (7,145 | ) |                                                                                |   | (18,210 | )
|                  |                        |                                                              |        |   |                                                                                |   |         |  
|Total             |                        | $                                                            | 23,595 |   |                                                                                | $ | 8,565   |  
|                  |                        |                                                              |        |   |                                                                                |   |         |  

Overall. Our consolidated operating income for the nine months ended September 30,
2006 increased $15.0 million to operating income of $23.6 million for the combined nine months ended September 30, 2006. The increase in consolidated operating income was primarily the result of increased volumes and higher margins for carbon
products, of improved product mix and of increased operating income from the acquisitions of Western Flow and MIM US and by approximately $12.0 million in Buy-out Transaction related expenses incurred in the combined nine months ended
September 30, 2005 which did not occur in the same period in 2006, partially offset by increased amortization expense of other intangible assets of $4.3 million related to the Buy-out Transaction and the MIM US acquisition and by an increase in
general corporate expenses related to employee and facility costs and to business development efforts.

Alloy Products. Our alloy
products operating income for the nine months ended September 30, 2006 was $11.6 million, a $2.0 million increase from the combined nine months ended September 30, 2005. The increase was primarily the result of increased sales volumes and
the resulting gross profit increase, and margin increases related to sales driven by the Western Flow acquisition, partially offset by a $0.8 million increase in amortization related to other intangible assets and by an increase in selling, general
and administrative expenses related to the acquisition of Western Flow. Operating income was also negatively impacted by a $0.7 million increase in our allowance for uncollectible accounts as the result of the bankruptcy of a significant customer.

Carbon Products. Our carbon products operating income for the nine months ended September 30, 2006 was $19.2 million, an
increase of $1.9 million from the combined nine months ended September 30, 2005. The increase in operating income was driven by the acquisition of MIM US, gross profit increases from increased sales to the gas gathering and transmission
industry, and improved overall margins as a result of extended mill delivery times, and improved product mix. This increase in operating income was partially offset by a $3.5 million increase in amortization related to other intangible assets and by
an increase in selling, general and administrative expenses related to the acquisition of MIM US.

General Corporate. General
corporate operating loss decreased from $18.2 million for the combined nine months ended September 30, 2005 to $7.1 million for the nine months ended September 30, 2006 as a result of the Buy-out Transaction related expenses incurred in
the combined nine months ended September 30, 2005 which did not occur in the same period in 2006, offset by an increase in employee and facility expenses related to the Western Flow and MIM US acquisitions, an increase in travel expenses
related to business development efforts, and an increase in our employee bonus plan accrual which has been supported by the current year growth and performance of the Company.

Other income (expense)

Other income (expense) for the nine months ended September 30,
2006 of $0.4 million includes $0.2 million related to recognized gains on foreign currency exchange forward contracts.

Interest Expense, net

Interest expense, net for the nine months ended September 30, 2006 increased $3.1 million, or 36.4%, to $11.5 million from
$8.5 million for the combined nine months ended September 30, 2005. The increase in interest expense was the result of the issuance of an additional $31.0 million of Notes in December 2005 which were not outstanding in the same period in 2005,
and of outstanding borrowings under our revolving line of credit during the second and third quarters in 2006, partially offset by the retirement of $47.7 million of revolving line of credit and term loan debt on February 1, 2005. Interest
expense for the nine months ended September 30, 2006 includes $0.4 million of deferred financing costs amortization compared to $0.3 million of deferred financing costs amortization for the combined nine months ended September 30, 2005.



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Income Tax Expense

Income tax expense was $4.9 million for the nine months ended September 30, 2006 compared to income tax expense of $1.9 million for the combined nine months ended September 30, 2005. The effective tax rate
was approximately 39.8% for the nine months ended September 30, 2006, and was approximately 36.8% for the period February 1, 2005 to September 30, 2005 and (18.9%) for the period January 1, 2005 to January 31,
2005. The increase for the nine months ended September 30 2006 is primarily the result of an increase in our state income taxes. The effective tax rate for the period January 1, 2005 to January 31, 2005 was impacted by Buy-out
Transaction related expenses, which are non-deductible for income tax purposes.

Liquidity and Capital Resources

Future Capital Needs

We finance our operations
principally through cash flows generated from operations and borrowings under our revolving credit facility. Our principal liquidity requirements are to meet debt service requirements, finance our capital expenditures and provide working capital. In
addition, we may need capital to fund strategic business acquisitions. Our primary source of acquisition funds has historically been the issuance of preferred and common equity and debt securities and cash flow from operations.

Our ability to make payments on and to refinance our indebtedness, and to fund planned capital expenditures will depend on our ability to generate cash
in the future, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Our total indebtedness, excluding any related discount, was $140.4 million and
$136.4 million at September 30, 2006 and December 31, 2005, respectively. Under our credit facility, we had approximately $15.8 million available for borrowings and other commitments as of September 30, 2006.

Based on our current level of operations, we believe our cash flow from operations, available cash and available borrowings under our revolving credit
facility will be adequate to meet our liquidity needs for at least the next twelve months. Additionally, we continue to evaluate appropriate growth strategies for the Company including possible acquisition opportunities. These growth strategies may
require us to use cash on hand, make additional borrowings under our revolving credit facility, or enter into other financing arrangements in order to support these growth strategies. We cannot assure you, however, that our business will generate
sufficient cash flow from operations or that future borrowings will be available to us under our revolving credit facility in an amount sufficient to enable us to service our indebtedness or to fund our other liquidity needs.



|                                  |  |                                      |         |   |                                               |   |          |                                            |  |   |                                      |   |  |   |          |  
|--------------------------------- |  | ------------------------------------ | ------- | - | --------------------------------------------- | - | -------- | ------------------------------------------ |  | - | ------------------------------------ | - |  | - | -------- | -
|                                  |  | (dollars in thousands)               |        
|                                  |  | Successor                            |         |   | Successor                                     |   |          | Predecessor                                |  |   | Non-GAAP Combined                    |  
|                                  |  | Nine Months Ended September 30, 2006 |         |   | Period February 1, 2005 to September 30, 2005 |   |          | Period January 1, 2005 to January 31, 2005 |  |   | Nine Months Ended September 30, 2005 |  
|Net cash (used in) provided by:   |  |                                      |         |   |                                               |   |          |                                            |  |   |                                      |   |  |   |          |  
|Cash flows - operating activities |  | $                                    | (20,607 | ) |                                               | $ | (17,859  | )                                          |  | $ | 4,249                                |   |  | $ | (13,610  | )
|Cash flows - investing activities |  |                                      | (1,654  | ) |                                               |   | (123,957 | )                                          |  |   | (1                                   | ) |  |   | (123,958 | )
|Cash flows - financing activities |  |                                      | 6,630   |   |                                               |   | 142,563  |                                            |  |   | (1,477                               | ) |  |   | 141,086  |  

Nine Months Ended September 30, 2006 Compared to Combined Nine Months
Ended September 30, 2005

Operating Activities. Net cash outflows from operating activities were $20.6 million for the
nine months ended September 30, 2006 and $13.6 million for the combined nine months ended September 30, 2005. The $7.9 million increase in net cash outflows from operating activities is primarily the result of increased working capital
requirements as a result of sales increases to customers and higher product costs.

Investing Activities. Net cash outflows from
investing activities were $1.7 million for the nine months ended September 30, 2006 compared with net cash outflows from investing activities of $123.9 million for the combined nine months ended September 30, 2005. The reduction in cash
outflows is the result of no acquisitions made during the nine months ended September 30, 2006 compared to the acquisitions of Edgen Corporation and Western Flow for a combined cash purchase price of approximately $123.6 million during the
combined nine months ended September 30, 2005. Capital expenditures increased to $1.2 million for the nine months ended September 30, 2006 compared to $1.1 million for the same period in 2005 in support of increased facilities and
equipment related to our Canadian operations, and corporate expenditures related to information technology infrastructure.



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Financing Activities. Net cash inflows from financing activities were $6.6 million for the nine
months ended September 30, 2006 compared with net cash inflows of $141.1 million from financing activities during the combined nine months ended September 30, 2005. The decrease in cash inflows from financing activities is due primarily to
the issuance of Senior Secured Notes, and common and preferred stock in connection with the Buy-out Transaction for the combined nine months ended September 30, 2005, which did not occur during the nine months ended September 30, 2006.

Preferred stock dividends

Preferred stock dividends were $0.5 million and $1.4 million for the three and nine months ended September 30, 2006 as compared to $0.5 million and $1.2 million for the three months ended September 30, 2005 and the period
February 1, 2005 to September 30, 2005. As of December 17, 2005, all of the redeemable preferred stock was held by Edgen/Murray, L.P. and on September 30, 2006, the redeemable preferred stock and accumulated accrued dividends
with a combined value of approximately $24.7 million was contributed to Edgen Corporation. This transaction resulted in a decrease in redeemable preferred stock and a corresponding increase in additional paid in capital included within
shareholders equity.

Indebtedness

Senior Secured Notes. We have outstanding $136.0 million aggregate principal amount of 97/8% Secured Senior Notes due 2011. Total cash interest payments required under the Notes are in excess of $13.4 million on an annual basis. The indenture governing the Notes contains various covenants that limit our
discretion in the operation of our business. It, among other things: (i) limits our ability and the ability of our subsidiaries to incur additional indebtedness, issue shares of preferred stock, incur liens and enter into certain transactions
with affiliates; (ii) places restrictions on our ability to pay dividends or make certain other restricted payments; and (iii) places restrictions on our ability and the ability of our subsidiaries to merge or consolidate with any other
person or sell, assign, transfer, convey or otherwise dispose of all or substantially all of our assets. The indenture provides for a restricted payment pool out of which we are permitted to make certain restricted payments, including cash
dividends, provided that no event of default has occurred and we would be able to incur additional indebtedness under the applicable restrictive covenant. The restricted payment pool is generally an amount calculated based on 50% of our consolidated
net income, as defined in the indenture, and earned during the period beginning February 1, 2005 and ending on the last day of the most recent fiscal quarter prior to the restricted payment, as adjusted and subject to certain exceptions as
provided in the indenture. All of our domestic subsidiaries fully and unconditionally guarantee the Notes on a joint and several basis. The Notes and the related guarantees are secured by liens on substantially all of our assets and the assets of
our existing and future domestic restricted subsidiaries (other than certain excluded assets such as our leasehold interests and the capital stock of our existing and future subsidiaries). These liens, in the case of assets consisting of inventory,
accounts receivable and certain related assets, are contractually subordinated to liens thereon that secure our revolving credit facility.

Senior Credit Facility. On February 1, 2005, we entered into a five-year $20.0 million senior secured revolving credit facility, with a $5.0 million sublimit for letters of credit. Interest is determined based on several
alternative rates as stipulated in the revolving credit facility, including the base lending rate per annum plus an applicable margin, or LIBOR plus an applicable margin. The revolving credit facility contains various affirmative and negative
covenants, including limitation on additional indebtedness and liens, the making of distributions, loans and advances, transactions with affiliates, dispositions or mergers, and the sale of assets. We borrowed approximately $2.7 million under the
revolving credit facility in connection with the consummation of the Buy-out Transaction. As of September 30, 2006, we had $4.2 million in outstanding borrowings under the revolving credit facility. As of December 31, 2005, we had no
borrowings outstanding under the revolving credit facility. The revolving credit facility is secured by a first priority security interest in all of our and our domestic subsidiaries working capital assets, which is contractually senior to the
liens on such assets securing the Notes, and by a second priority security interest in substantially all of our and our domestic subsidiaries other assets (other than certain excluded assets such as our leasehold interests and the capital
stock of our existing and future subsidiaries), which is contractually subordinated to the liens on such assets securing the Notes.

Commitments and
Contractual Obligations

Our contractual obligations and commitments principally include obligations associated with our outstanding
indebtedness and future minimum operating lease obligations. There have been no material changes outside the ordinary course of our business in the specified contractual obligations from December 31, 2005 to September 30, 2006.



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Financial Instruments

In our business, we may enter into purchase and sales commitments that are denominated in a foreign currency (primarily the Euro). Our practices include entering into foreign currency forward exchange contracts to
minimize foreign currency exposure related to forecasted purchases and sales of certain inventories. As of September 30, 2006, we had one contract related to a purchase of inventory that matures in May 2007 to purchase a notional amount of $6.3
million of foreign currency. During the third quarter, we also had five contracts related to the purchases of inventory and five contracts related to the sale of inventory matured in varying increments.

As of September 30, 2006, the fair value of these foreign currency forward exchange contracts of $0.1 million was recorded as a liability on the
consolidated balance sheet. For the three months ended September 30, 2006, we recognized no gain or loss and for the nine months ended September 30, 2006, we recognized a gain of $0.2 million in gains (losses) on foreign currency forward
exchange contracts reflected in other income (expense) on the statement of operations. We did not enter into foreign currency forward exchange contracts for the three months ended September 30, 2005 and the combined nine months ended
September 30, 2005.

As of December 31, 2005, we had 13 contracts related to purchases of inventory, that mature in varying
increments through August 2006, to purchase an aggregate notional amount of $20.8 million of foreign currency. We also had three contracts related to the sale of inventory that mature in varying increments through August 2006, to
receive an aggregate notional amount of $2.1 million of foreign currency. As of December 31, 2005, the fair value of these foreign currency forward exchange contracts of $0.4 million was recorded as a liability on the consolidated balance
sheet. For the combined twelve months ended December 31, 2005, we recognized ($0.4 million) in losses on foreign currency forward exchange contracts reflected in other income (expense) on the statement of operations.

Off-Balance Sheet Arrangements

We did not have any
off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K as of September 30, 2006.

Recently Issued Accounting
Pronouncements

In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial
Instrumentsan amendment of FASB Statements No. 133 and 140, (SFAS 155). SFAS No. 155 amends FASB Statements No. 133, Accounting for Derivative Instruments and Hedging Activities, and
No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. SFAS 155 resolves issues addressed in FASB Statement No. 133 Implementation Issue No. D1, Application of
Statement 133 to Beneficial Interests in Securitized Financial Assets. SFAS 155 is effective for fiscal years beginning after September 15, 2006. The adoption of SFAS 155 is not expected to have any impact on our reported results of
operations.

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an
interpretation of FASB Statement No. 109 (FIN 48), which clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with SFAS No. 109, Accounting for
Income Taxes. FIN 48 is effective for fiscal years beginning after December 15, 2006. FIN 48 will be adopted during the first quarter of 2007, and it is not expected to have a material impact on our consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, (SFAS 157) which establishes
a single authoritative definition of fair value, set out a frame-work for measuring fair value, and required additional disclosures about fair-value measurements. SFAS 157 applied to fair value measurements that are already required or permitted by
existing standards except for measurements of share-based payments and measurements that are similar to, but not intended to be, fair value. SFAS 157 does not impose any additional fair value measurements in financial statements and is effective for
fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The adoption of SFAS 157 is not expected to have a material impact on our consolidated financial statements.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements(SAB 108). SAB 108 establishes a single quantification framework wherein the significance measurement is based on the effects of the misstatements on each of the financial statements
as well as the related financial statement disclosures. SAB 108 is effective for the first annual period ending after November 15, 2006. We do not expect that the adoption of SAB 108 will have a material effect on our results of operations or
financial position.



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Seasonality

Some of our customers may be in seasonal businesses, especially those customers who purchase our products for use in new capital expenditure projects at refineries, oil and gas rigs and processing and power generation plants. As a
consequence, our results of operations and working capital, including our accounts receivable, inventory and accounts payable, fluctuate during the year. However, because of our geographic, product and customer diversity, our operations have not
shown any material seasonal trends. We believe that our significant operations in more mild southern climates moderate our seasonality. In addition, our sales to maintenance repair and operations distributors, who tend not to be seasonal purchasers,
mitigate the overall effects of seasonality on our business. Sales in the months of November and December traditionally have been lower than in other months because of a reduced number of working days for shipments of our products and holiday
closures for some of our customers. We cannot assure you that period-to-period fluctuations will not occur in the future. Results of any one or more quarters are, therefore, not necessarily indicative of annual results.

Forward Looking Statements

This report includes
forward looking statements within the meaning of federal securities laws. Statements that are not historical facts, including statements about our beliefs and expectations, are forward looking statements. Forward-looking statements
include statements preceded by, followed by or that include the words, may, could, would, believe, expect, estimate, anticipate, plan,
target, project, and intend, and similar expressions. These statements include, among others, statements regarding our expected business outlook, anticipated financial and operating results, our business strategy
and means to implement the strategy, our objectives, the amount and timing of capital expenditures, the likelihood of our success in expanding our business, financing plans, budgets, working capital need and sources of liquidity.

These forward looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and
uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of our control, that may cause actual results to differ materially from trends, plans or expectations set forth in the forward
looking statements. A discussion of important factors that could cause our actual results of operations or financial condition to differ from expectations has been set forth in our amended Annual Report on Form 10-K/A as filed with the Securities
and Exchange Commission on June 23, 2006. Some of the factors are also discussed elsewhere in this Form 10-Q and have been, or may be, discussed from time to time in our SEC filings. Given these risks and uncertainties, we urge you to read this
report completely and with the understanding that actual future results may be materially different from what we plan or expect. Also, these forward looking statements present our estimates and assumptions only as of the date of this report. Except
for our ongoing obligation to disclose material information as required by federal securities laws, we do not intend to update you concerning any future revisions to any forward looking statements to reflect events or circumstances occurring after
the date of this report.

ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of operations, we are exposed
to market risks arising from adverse changes in interest rates and foreign exchange rates. Market risk is defined for these purposes as the potential change in the fair value of financial assets or liabilities resulting from an adverse movement in
interest rates or foreign exchange rates.

Interest Rate Risk. At September 30, 2006, we had $4.2 million in variable rate
borrowings under our revolving credit facility. A 100 basis point increase in interest rates, applied to our borrowings at September 30, 2006, would have increased our annual interest expense by less than $0.1 million.

Foreign Currency Risk. Substantially all of our net sales and expenses are denominated in U.S. dollars. However, in our business, we may enter
into purchase and sales commitments that are denominated in a foreign currency (primarily the Euro). Our practices include entering into foreign currency forward exchange contracts to minimize foreign currency exposure related to forecasted
purchases and sales of certain inventories. As of September 30, 2006, we had one contract related to a purchase of inventory that matures in May 2007 to purchase a notional amount of $6.3 million of foreign currency. During the third quarter,
we also had five contracts related to the purchases of inventory and five contracts related to the sale of inventory matured in varying increments.

As of September 30, 2006, the fair value of these foreign currency forward exchange contracts of $0.1 million was recorded as a liability on the consolidated balance sheet. For the three moths ended September 30, 2006, we
recognized no gain or loss and for the nine months ended September 30, 2006, we recognized a gain of $0.2 million in gains (losses) on foreign currency forward exchange contracts reflected in other income (expense) on the statement of
operations. We did not enter into foreign currency forward exchange contracts for the three months ended September 30, 2005 and the combined nine months ended September 30, 2005.



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ITEM 4.
CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we conducted an evaluation, under
the supervision and with the participation of our principal executive officer (CEO) and principal financial officer (CFO), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, the CEO and CFO concluded that, as of the end of the period ended September 30, 2006, our disclosure controls and procedures are effective to provide
reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission
rules and forms, and to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding
required disclosure. There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recently completed fiscal quarter that has materially affected, or is
reasonably likely to materially affect, our internal control over financial reporting.

PART II
OTHER INFORMATION

ITEM 1.
LEGAL PROCEEDINGS

We are from time to time a party to various claims and legal proceedings related to our
business. We do not believe that the resolution of any such threatened or pending legal proceedings will have a material adverse affect on our financial position, results of operations or liquidity.

ITEM 1A.
RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the
factors discussed in Part I, Item 1A. Risk Factors in the Companys amended Annual Report on Form 10-K/A as filed with the Securities and Exchange Commission on June 23, 2006, which could materially affect the Companys
business, financial condition or future operating results. The risks described in the Companys amended Annual Report on Form 10-K/A are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that
we currently deem to be immaterial also may materially adversely affect the Companys business, financial condition or future operating results.

ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.
DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5.
OTHER INFORMATION

None.

ITEM 6.
Exhibits



|         |  |                                                                                                                                                                                                                                                           
|-------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibits |  |                                                                                                                                                                                                                                                           
|4.1      |  | Third Supplemental Indenture, dated as of October 5, 2006, by and among Edgen Corporation, Edgen Louisiana Corporation, Edgen Alloy Products Group, L.L.C., Edgen Carbon Products Group, L.L.C.
and The Bank of New York, as trustee and collateral agent.
|         | 
|10.1     |  | Amendment No. 1 to Edgen/Murray, L.P. Incentive Plan effective as of September 29, 2006.                                                                                                                                                                  
|         | 
|31.1     |  | Certification of Chief Executive Officer pursuant to Rule 13a14(a) or 15d14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
SarbanesOxley Act of 2002.                                                            
|         | 
|31.2     |  | Certification of Chief Financial Officer pursuant to Rule 13a14(a) or 15d14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
SarbanesOxley Act of 2002.                                                            
|         | 
|32.1     |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the SarbanesOxley Act of 2002, executed by Daniel J. OLeary, President and Chief Executive
Officer of Edgen Corporation.                                        
|         | 
|32.2     |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the SarbanesOxley Act of 2002, executed by David L. Laxton, III, Chief Financial Officer of Edgen
Corporation.                                                   



35



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##### Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                        |  |                   |  |                                      
|----------------------- |  | ----------------- |  | -------------------------------------
|                        |  | EDGEN CORPORATION
|                        |  |                  
|Date: November 20, 2006 |  | By:               |  | /s/ DANIEL J. OLEARY                
|                        |  |                   |  | Daniel J. OLeary                    
|                        |  |                   |  | President and Chief Executive Officer
|                        |  |                  
|Date: November 20, 2006 |  | By:               |  | /s/ DAVID L. LAXTON, III             
|                        |  |                   |  | David L. Laxton, III                 
|                        |  |                   |  | Chief Financial Officer              



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##### Table of Contents

EXHIBIT INDEX



|            |  |                                                                                                                                                                                                                                                           
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                               
|4.1         |  | Third Supplemental Indenture, dated as of October 5, 2006, by and among Edgen Corporation, Edgen Louisiana Corporation, Edgen Alloy Products Group, L.L.C., Edgen Carbon Products Group, L.L.C.
and The Bank of New York, as trustee and collateral agent.
|            | 
|10.1        |  | Amendment No. 1 to Edgen/Murray, L.P. Incentive Plan effective as of September 29, 2006.                                                                                                                                                                  
|            | 
|31.1       |  | Certification of Chief Executive Officer pursuant to Rule 13a14(a) or 15d14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
SarbanesOxley Act of 2002.                                                            
|            | 
|31.2       |  | Certification of Chief Financial Officer pursuant to Rule 13a14(a) or 15d14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
SarbanesOxley Act of 2002.                                                            
|            | 
|32.1       |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the SarbanesOxley Act of 2002, executed by Daniel J. OLeary, President and Chief Executive
Officer of Edgen Corporation.                                        
|            | 
|32.2       |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the SarbanesOxley Act of 2002, executed by David L. Laxton, III, Chief Financial Officer of Edgen
Corporation.                                                   

---

| | Filed herewith.
|- | ---------------



37