##### 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, 2005



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 ̈No  x



Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act

Rule 12b2).    Yes ̈No  x



Indicate by check mark whether
the Registrant is a shell company (as defined in Exchange Act Rule 12b2).    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 Class A Common Stock outstanding as of November 11, 2005.



There were no shares of Class B Common Stock outstanding as of November 11, 2005.



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##### Table of Contents

|                               |  |                                                                                                                                                                                                                                                                     |  |   
|------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --
|PART I 
FINANCIAL INFORMATION |  | 1                                                                                                                                                                                                                                                                  
|                               |  |                                                                                                                                                                                                                                                                    
|Item 1.                        |  | Financial Statements:                                                                                                                                                                                                                                               |  | 1 
|                               |  | Condensed Consolidated Balance Sheets at September 30, 2005 (unaudited) and December 31, 2004                                                                                                                                                                       |  | 1 
|                               |  | Condensed Consolidated Statements of Operations for the three months ended September 30, 2005 and 2004, the period February 1, 2005 to September 30, 2005, the period January 1, 2005 to January 31, 2005, and the nine months
ended September 30, 2004 (unaudited) |  | 2 
|                               |  | Condensed Consolidated Statement of Shareholders Equity (Deficit) as of September 30, 2005 (unaudited) and December 31, 2004                                                                                                                                       |  | 3 
|                               |  | Condensed Consolidated Statements of Cash Flows for the period February 1, 2005 to September 30, 2005, the period January 1, 2005 to January 31, 2005, and the nine months ended September 30, 2004 (unaudited)                                                     |  | 4 
|                               |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                                                                                                                                                                                    |  | 5 
|                               |  |                                                                                                                                                                                                                                                                    
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                                                                               |  | 16
|                               |  |                                                                                                                                                                                                                                                                    
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                                                                                          |  | 29
|                               |  |                                                                                                                                                                                                                                                                    
|Item 4.                        |  | Disclosure Controls and Procedures                                                                                                                                                                                                                                  |  | 30
|                               | 
|PART II  OTHER INFORMATION    |  | 30                                                                                                                                                                                                                                                                 
|                               |  |                                                                                                                                                                                                                                                                    
|Item 1.                        |  | Legal Proceedings                                                                                                                                                                                                                                                   |  | 30
|                               |  |                                                                                                                                                                                                                                                                    
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                                         |  | 30
|                               |  |                                                                                                                                                                                                                                                                    
|Item 3.                        |  | Defaults Upon Senior Securities                                                                                                                                                                                                                                     |  | 30
|                               |  |                                                                                                                                                                                                                                                                    
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                                                                                                                                                                                                 |  | 30
|                               |  |                                                                                                                                                                                                                                                                    
|Item 5.                        |  | Other Information                                                                                                                                                                                                                                                   |  | 30
|                               |  |                                                                                                                                                                                                                                                                    
|Item 6.                        |  | Exhibits                                                                                                                                                                                                                                                            |  | 30
|                               | 
|SIGNATURES                     |  | 31                                                                                                                                                                                                                                                                 
|                               | 
|EXHIBIT INDEX                  |  | 32                                                                                                                                                                                                                                                                 



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##### Table of Contents

PART I  FINANCIAL INFORMATION



Item 1. Financial Statements.



EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



|                                                                                                                                                                          |  |                    |             |   |                  |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                                                          |  | Successor          |             |   | Predecessor      |  
|                                                                                                                                                                          |  | September 30, 2005 |             |   | December 31,2004 |  
|ASSETS                                                                                                                                                                    |  |                    |             |   |                  |   |             |  
|                                                                                                                                                                          |  |                   
|CURRENT ASSETS:                                                                                                                                                           |  |                    |             |   |                  |   |             |  
|Cash and cash equivalents                                                                                                                                                 |  | $                  | 752,562     |   |                  | $ | 134,299     |  
|Accounts receivablenet of allowance for doubtful accounts of $129,095 and $658,675                                                                                       |  |                    | 46,760,060  |   |                  |   | 31,750,990  |  
|Inventory                                                                                                                                                                 |  |                    | 80,549,111  |   |                  |   | 57,960,261  |  
|Income tax receivable                                                                                                                                                     |  |                    | 66,388      |   |                  |   | 2,601,312   |  
|Prepaid expenses and other current assets                                                                                                                                 |  |                    | 1,108,081   |   |                  |   | 1,049,274   |  
|Deferred tax asset                                                                                                                                                        |  |                    | 8,576,826   |   |                  |   | 9,280,850   |  
|                                                                                                                                                                          |  |                    |             |   |                  |   |             |  
|Total current assets                                                                                                                                                      |  |                    | 137,813,028 |   |                  |   | 102,776,986 |  
|PROPERTY, PLANT AND EQUIPMENTnet                                                                                                                                         |  |                    | 11,609,401  |   |                  |   | 10,422,777  |  
|GOODWILL AND OTHER INTANGIBLES                                                                                                                                            |  |                    | 38,785,545  |   |                  |   | 6,518,093   |  
|DEFERRED FINANCING COSTS                                                                                                                                                  |  |                    | 6,468,858   |   |                  |   | 35,272      |  
|                                                                                                                                                                          |  |                    |             |   |                  |   |             |  
|TOTAL                                                                                                                                                                     |  | $                  | 194,676,832 |   |                  | $ | 119,753,128 |  
|                                                                                                                                                                          |  |                    |             |   |                  |   |             |  
|LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS EQUITY (DEFICIT)                                                                                    |  |                    |             |   |                  |   |             |  
|                                                                                                                                                                          |  |                   
|CURRENT LIABILITIES:                                                                                                                                                      |  |                    |             |   |                  |   |             |  
|Managed cash overdrafts                                                                                                                                                   |  | $                  | 6,898,464   |   |                  | $ | 1,361,404   |  
|Accounts payable                                                                                                                                                          |  |                    | 26,796,392  |   |                  |   | 19,017,837  |  
|Accrued expenses and other current liabilities                                                                                                                            |  |                    | 10,071,881  |   |                  |   | 6,375,597   |  
|Current portion of long-term debt                                                                                                                                         |  |                    | 141,258     |   |                  |   | 7,229,553   |  
|                                                                                                                                                                          |  |                    |             |   |                  |   |             |  
|Total current liabilities                                                                                                                                                 |  |                    | 43,907,995  |   |                  |   | 33,984,391  |  
|DEFERRED TAX LIABILITY                                                                                                                                                    |  |                    | 936,872     |   |                  |   | 890,980     |  
|LONG-TERM DEBT                                                                                                                                                            |  |                    | 119,181,450 |   |                  |   | 40,653,230  |  
|                                                                                                                                                                          |  |                    |             |   |                  |   |             |  
|Total liabilities                                                                                                                                                         |  |                    | 164,026,317 |   |                  |   | 75,528,601  |  
|                                                                                                                                                                          |  |                    |             |   |                  |   |             |  
|Mandatorily redeemable preferred stock, $.01 par value, 372,644 shares authorized and designated; 367,644 shares plus accrued dividends issued
and outstanding, Series A  |  |                    |            |   |                  |   | 51,978,809  |  
|Mandatorily redeemable preferred stock, $.01 par value, 10,000 shares authorized, issued and outstanding, Series B                                                        |  |                    |            |   |                  |   | 4,000,000   |  
|                                                                                                                                                                          |  |                    |             |   |                  |   |             |  
|Total mandatorily redeemable preferred stock                                                                                                                              |  |                    |            |   |                  |   | 55,978,809  |  
|                                                                                                                                                                          |  |                   
|COMMITMENTS AND CONTINGENCIES                                                                                                                                             |  |                    |            |   |                  |   |            |  
|                                                                                                                                                                          |  |                   
|SHAREHOLDERS EQUITY (DEFICIT):                                                                                                                                           |  |                    |             |   |                  |   |             |  
|Preferred stock  Series A Cumulative Compounding, $.01 par value, 40,000 shares authorized and designated; 21,600 shares issued and
outstanding as of September 30, 2005 |  |                    | 1,234,416   |   |                  |   |            |  
|Common stockClass A, $.01 par value, 5,000,000 shares authorized; 2,681,564 and 4,307,880 shares issued and outstanding as of September
30, 2005 and December 31, 2004   |  |                    | 26,816      |   |                  |   | 43,079      |  
|Common stockClass B, $.01 par value, 505,512 shares authorized, issued and outstanding at December 31, 2004                                                              |  |                    |            |   |                  |   | 5,055       |  
|Paid-in capital                                                                                                                                                           |  |                    | 24,254,533  |   |                  |   | 22,578,191  |  
|Unearned stock-based compensation                                                                                                                                         |  |                    | (262,793    | ) |                  |   |            |  
|Accumulated other comprehensive income (loss)                                                                                                                             |  |                    | 83,402      |   |                  |   |            |  
|Retained earnings (deficit)                                                                                                                                               |  |                    | 5,314,141   |   |                  |   | (31,742,997 | )
|Less treasury stock 570,300 sharesat cost at December 31, 2004                                                                                                           |  |                    |            |   |                  |   | (2,637,610  | )
|                                                                                                                                                                          |  |                    |             |   |                  |   |             |  
|Total shareholders equity (deficit)                                                                                                                                      |  |                    | 30,650,515  |   |                  |   | (11,754,282 | )
|                                                                                                                                                                          |  |                    |             |   |                  |   |             |  
|TOTAL                                                                                                                                                                     |  | $                  | 194,676,832 |   |                  | $ | 119,753,128 |  
|                                                                                                                                                                          |  |                    |             |   |                  |   |             |  



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



1



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##### Table of Contents

EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                                                   |  |                                      |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|------------------------------------------------------------------ |  | ------------------------------------ | ---------- | - | ------------------------------------ | - | ---------- | ------------------------------------------- |  | - | ----------------------------------------- | - |  | ----------------------------------- | ----------- | - |  | - | ----------- | -
|                                                                   |  | Successor                            |            |   | Predecessor                          |   |            | Successor                                   |  |   | Predecessor                               |   |  | Predecessor                         |            
|                                                                   |  | Three MonthsEnded September 30, 2005 |            |   | Three MonthsEnded September 30, 2004 |   |            | PeriodFebruary 1, 2005 toSeptember 30, 2005 |  |   | Period January 1, 2005 toJanuary 31, 2005 |   |  | Nine MonthsEnded September 30, 2004 |            
|SALES                                                              |  | $                                    | 75,711,770 |   |                                      | $ | 53,054,090 |                                             |  | $ | 196,000,053                               |   |  | $                                   | 18,944,787  |   |  | $ | 149,926,559 |  
|COST OF SALES                                                      |  |                                      | 61,765,558 |   |                                      |   | 38,187,691 |                                             |  |   | 155,392,433                               |   |  |                                     | 14,153,065  |   |  |   | 112,024,665 |  
|                                                                   |  |                                      |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|Gross profit                                                       |  |                                      | 13,946,212 |   |                                      |   | 14,866,399 |                                             |  |   | 40,607,620                                |   |  |                                     | 4,791,722   |   |  |   | 37,901,894  |  
|OPERATING EXPENSES:                                                |  |                                      |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|Yard and shop expense                                              |  |                                      | 1,299,244  |   |                                      |   | 1,254,409  |                                             |  |   | 3,302,001                                 |   |  |                                     | 389,928     |   |  |   | 3,429,890   |  
|Selling, general, and administrative expense                       |  |                                      | 6,246,805  |   |                                      |   | 7,003,233  |                                             |  |   | 17,278,963                                |   |  |                                     | 13,974,331  |   |  |   | 18,216,743  |  
|Depreciation and amortization expense                              |  |                                      | 602,620    |   |                                      |   | 592,135    |                                             |  |   | 1,689,270                                 |   |  |                                     | 200,644     |   |  |   | 1,796,111   |  
|                                                                   |  |                                      |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|Total operating expenses                                           |  |                                      | 8,148,669  |   |                                      |   | 8,849,777  |                                             |  |   | 22,270,234                                |   |  |                                     | 14,564,903  |   |  |   | 23,442,744  |  
|INCOME (LOSS) FROM OPERATIONS                                      |  |                                      | 5,797,543  |   |                                      |   | 6,016,622  |                                             |  |   | 18,337,386                                |   |  |                                     | (9,773,181  | ) |  |   | 14,459,150  |  
|OTHER INCOME (EXPENSE):                                            |  |                                      |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|Other income (expense)                                             |  |                                      | 69,634     |   |                                      |   | (72,204    | )                                           |  |   | 144,154                                   |   |  |                                     | (49,886     | ) |  |   | (37,053     | )
|Interest expense                                                   |  |                                      | (3,164,459 | ) |                                      |   | (1,551,041 | )                                           |  |   | (8,122,868                                | ) |  |                                     | (333,288    | ) |  |   | (3,179,066  | )
|                                                                   |  |                                      |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE |  |                                      | 2,702,718  |   |                                      |   | 4,393,377  |                                             |  |   | 10,358,672                                |   |  |                                     | (10,156,355 | ) |  |   | 11,243,031  |  
|INCOME TAX EXPENSE (BENEFIT)                                       |  |                                      | 1,062,446  |   |                                      |   | 632,175    |                                             |  |   | 3,810,331                                 |   |  |                                     | (1,916,508  | ) |  |   | 3,372,037   |  
|                                                                   |  |                                      |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|INCOME (LOSS) FROM CONTINUING OPERATIONS                           |  |                                      | 1,640,272  |   |                                      |   | 3,761,202  |                                             |  |   | 6,548,341                                 |   |  |                                     | (8,239,847  | ) |  |   | 7,870,994   |  
|PREFERRED DIVIDEND REQUIREMENT                                     |  |                                      | 469,200    |   |                                      |   | 575,975    |                                             |  |   | 1,234,200                                 |   |  |                                     | 189,949     |   |  |   | 1,678,908   |  
|                                                                   |  |                                      |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|NET INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDERS                |  | $                                    | 1,171,072  |   |                                      | $ | 3,185,227  |                                             |  | $ | 5,314,141                                 |   |  | $                                   | (8,429,796  | ) |  | $ | 6,192,086   |  
|                                                                   |  |                                      |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  



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



2



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##### Table of Contents

EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY (DEFICIT)

(Unaudited)



|                                         |  |                        |           |                    |   |                    |  |                |       |                                 |   |            |                                              |   |                           |   |  |               |        |  |       |             |   |  |   |            |   |  |   |             |  
|---------------------------------------- |  | ---------------------- | --------- | ------------------ | - | ------------------ |  | -------------- | ----- | ------------------------------- | - | ---------- | -------------------------------------------- | - | ------------------------- | - |  | ------------- | ------ |  | ----- | ----------- | - |  | - | ---------- | - |  | - | ----------- | -
|                                         |  | Series APreferredStock |           | Class ACommonStock |   | Class BCommonStock |  | Paid-InCapital |       | UnearnedStock-basedCompensation |   |            | Accumulated OtherComprehensive Income (Loss) |   | RetainedEarnings(Deficit) |   |  | TreasuryStock |        |  | Total |            
|PREDECESSOR                              |  |                        |           |                    |   |                    |  |                |       |                                 |   |            |                                              |   |                           |   |  |               |        |  |       |             |   |  |   |            |   |  |   |             |  
|Balance - December 31, 2004              |  | $                      |          |                    | $ | 43,079             |  | $              | 5,055 |                                 | $ | 22,578,191 |                                              | $ |                          |   |  | $             |       |  | $     | (31,742,997 | ) |  | $ | (2,637,610 | ) |  | $ | (11,754,282 | )
|Preferred dividend requirement           |  |                        |          |                    |   |                   |  |                |      |                                 |   |           |                                              |   |                          |   |  |               |       |  |       | (189,949    | ) |  |   |           |   |  |   | (189,949    | )
|Net loss                                 |  |                        |          |                    |   |                   |  |                |      |                                 |   |           |                                              |   |                          |   |  |               |       |  |       | (8,239,847  | ) |  |   |           |   |  |   | (8,239,847  | )
|                                         |  |                        |           |                    |   |                    |  |                |       |                                 |   |            |                                              |   |                           |   |  |               |        |  |       |             |   |  |   |            |   |  |   |             |  
|Balance - January 1, 2005                |  | $                      |          |                    | $ | 43,079             |  | $              | 5,055 |                                 | $ | 22,578,191 |                                              | $ |                          |   |  | $             |       |  | $     | (40,172,793 | ) |  | $ | (2,637,610 | ) |  | $ | (20,184,078 | )
|                                         |  |                        |           |                    |   |                    |  |                |       |                                 |   |            |                                              |   |                           |   |  |               |        |  |       |             |   |  |   |            |   |  |   |             |  
|SUCCESSOR                                |  |                        |           |                    |   |                    |  |                |       |                                 |   |            |                                              |   |                           |   |  |               |        |  |       |             |   |  |   |            |   |  |   |             |  
|Balance - February 1, 2005               |  | $                      |          |                    | $ |                   |  | $              |      |                                 | $ |           |                                              | $ |                          |   |  | $             |       |  | $     |            |   |  | $ |           |   |  | $ |            |  
|Comprehensive income:                    |  |                        |           |                    |   |                    |  |                |       |                                 |   |            |                                              |   |                           |   |  |               |        |  |       |             |   |  |   |            |   |  |   |             |  
|Net income                               |  |                        |          |                    |   |                   |  |                |      |                                 |   |           |                                              |   |                          |   |  |               |       |  |       | 6,548,341   |   |  |   |           |   |  |   | 6,548,341   |  
|Other comprehensive income-              |  |                        |           |                    |   |                    |  |                |       |                                 |   |            |                                              |   |                           |   |  |               |        |  |       |             |   |  |   |            |   |  |   |             |  
|Foreign translation adjustments          |  |                        |          |                    |   |                   |  |                |      |                                 |   |           |                                              |   |                          |   |  |               | 83,402 |  |       |            |   |  |   |           |   |  |   | 83,402      |  
|                                         |  |                        |           |                    |   |                    |  |                |       |                                 |   |            |                                              |   |                           |   |  |               |        |  |       |             |   |  |   |            |   |  |   |             |  
|Comprehensive income                     |  |                        |           |                    |   |                    |  |                |       |                                 |   |            |                                              |   |                           |   |  |               |        |  |       |             |   |  |   |            |   |  |   | 6,631,743   |  
|Issuance of Class A common stock         |  |                        |          |                    |   | 24,000             |  |                |      |                                 |   | 2,376,000  |                                              |   |                          |   |  |               |       |  |       |            |   |  |   |           |   |  |   | 2,400,000   |  
|Issuance of Series A preferred stock     |  |                        | 216       |                    |   |                   |  |                |      |                                 |   | 21,599,784 |                                              |   |                          |   |  |               |       |  |       |            |   |  |   |           |   |  |   | 21,600,000  |  
|Issuance of stock based compensation     |  |                        |          |                    |   | 2,816              |  |                |      |                                 |   | 278,749    |                                              |   | (281,565                  | ) |  |               |       |  |       |            |   |  |   |           |   |  |   |            |  
|Amortization of stock-based compensation |  |                        |          |                    |   |                   |  |                |      |                                 |   |           |                                              |   | 18,772                    |   |  |               |       |  |       |            |   |  |   |           |   |  |   | 18,772      |  
|Preferred dividend requirement           |  |                        | 1,234,200 |                    |   |                   |  |                |      |                                 |   |           |                                              |   |                          |   |  |               |       |  |       | (1,234,200  | ) |  |   |           |   |  |   |            |  
|                                         |  |                        |           |                    |   |                    |  |                |       |                                 |   |            |                                              |   |                           |   |  |               |        |  |       |             |   |  |   |            |   |  |   |             |  
|Balance - September 30, 2005             |  | $                      | 1,234,416 |                    | $ | 26,816             |  | $              |      |                                 | $ | 24,254,533 |                                              | $ | (262,793                  | ) |  | $             | 83,402 |  | $     | 5,314,141   |   |  | $ |           |   |  | $ | 30,650,515  |  
|                                         |  |                        |           |                    |   |                    |  |                |       |                                 |   |            |                                              |   |                           |   |  |               |        |  |       |             |   |  |   |            |   |  |   |             |  



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 CASH FLOWS

(Unaudited)



|                                                                                         |  |                                               |              |   |                                            |   |            |                                      |  |   |             |  
|---------------------------------------------------------------------------------------- |  | --------------------------------------------- | ------------ | - | ------------------------------------------ | - | ---------- | ------------------------------------ |  | - | ----------- | -
|                                                                                         |  | Successor                                     |              |   | Predecessor                                |   |            | Predecessor                          | 
|                                                                                         |  | Period February 1, 2005 to September 30, 2005 |              |   | Period January 1, 2005 to January 31, 2005 |   |            | Nine Months Ended September 30, 2004 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |  |                                               |              |   |                                            |   |            |                                      |  |   |             |  
|Net income (loss)                                                                        |  | $                                             | 6,548,341    |   |                                            | $ | (8,239,847 | )                                    |  | $ | 7,870,994   |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                                               |              |   |                                            |   |            |                                      |  |   |             |  
|Depreciation and amortization                                                            |  |                                               | 1,689,270    |   |                                            |   | 200,644    |                                      |  |   | 1,796,111   |  
|Amortization of deferred financing costs                                                 |  |                                               | 819,040      |   |                                            |   | 35,272     |                                      |  |   | 263,569     |  
|Provision for doubtful accounts                                                          |  |                                               | 213,600      |   |                                            |   | 26,700     |                                      |  |   | (745,803    | )
|Stock-based compensation expense                                                         |  |                                               | 18,772       |   |                                            |   |           |                                      |  |   |            |  
|Inventory fair value purchase price adjustment                                           |  |                                               | 1,544,468    |   |                                            |   |           |                                      |  |   |            |  
|Deferred income tax expense                                                              |  |                                               | 32,389       |   |                                            |   |           |                                      |  |   | 2,805,968   |  
|Gain on foreign currency transactions                                                    |  |                                               | 45,645       |   |                                            |   |           |                                      |  |   |            |  
|(Gain) loss on sale/disposal of property, plant and equipment                            |  |                                               | 50,021       |   |                                            |   |           |                                      |  |   | (333        | )
|Changes in operating assets and liabilities, net                                         |  |                                               | (28,820,621  | ) |                                            |   | 12,226,056 |                                      |  |   | (14,061,553 | )
|                                                                                         |  |                                               |              |   |                                            |   |            |                                      |  |   |             |  
|Net cash (used in) provided by operating activities                                      |  |                                               | (17,859,075  | ) |                                            |   | 4,248,825  |                                      |  |   | (2,071,047  | )
|                                                                                         |  |                                               |              |   |                                            |   |            |                                      |  |   |             |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |  |                                               |              |   |                                            |   |            |                                      |  |   |             |  
|Purchase of Edgen Corporation, net of cash acquired                                      |  |                                               | (121,137,705 | ) |                                            |   |           |                                      |  |   |            |  
|Purchase of Western Flow Products, Inc., net of cash acquired                            |  |                                               | (1,746,201   | ) |                                            |   |           |                                      |  |   |            |  
|Purchase of property, plant and equipment                                                |  |                                               | (1,073,210   | ) |                                            |   | (4,079     | )                                    |  |   | (551,058    | )
|Proceeds from the sale of capital assets                                                 |  |                                               |             |   |                                            |   | 3,000      |                                      |  |   | 800         |  
|                                                                                         |  |                                               |              |   |                                            |   |            |                                      |  |   |             |  
|Net cash used in investing activities                                                    |  |                                               | (123,957,116 | ) |                                            |   | (1,079     | )                                    |  |   | (550,258    | )
|                                                                                         |  |                                               |              |   |                                            |   |            |                                      |  |   |             |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |  |                                               |              |   |                                            |   |            |                                      |  |   |             |  
|Principal payments on notes payable and long-term debt                                   |  |                                               | (28,945      | ) |                                            |   | (232,072   | )                                    |  |   | (2,468,760  | )
|Proceeds from issuance of long-term debt                                                 |  |                                               | 105,000,000  |   |                                            |   |           |                                      |  |   | 1,500,000   |  
|Proceeds from debt issuancenet of payments under revolving credit agreement             |  |                                               | 13,981,857   |   |                                            |   | 116,438    |                                      |  |   | 901,472     |  
|Deferred financing costs                                                                 |  |                                               | (7,287,897   | ) |                                            |   |           |                                      |  |   | (1,398,938  | )
|Issuance of common stock                                                                 |  |                                               | 2,400,000    |   |                                            |   |           |                                      |  |   |            |  
|Issuance of preferred stock                                                              |  |                                               | 21,600,000   |   |                                            |   |           |                                      |  |   |            |  
|Purchase of common stock for treasury                                                    |  |                                               |             |   |                                            |   |           |                                      |  |   | (1,313,561  | )
|Proceeds from repayment of shareholder notes                                             |  |                                               |             |   |                                            |   |           |                                      |  |   | 1,089,082   |  
|Redemption of preferred stock                                                            |  |                                               |             |   |                                            |   |           |                                      |  |   | (145,141    | )
|Increase (decrease) in managed cash overdraft                                            |  |                                               | 6,898,464    |   |                                            |   | (1,361,404 | )                                    |  |   | 1,494,603   |  
|                                                                                         |  |                                               |              |   |                                            |   |            |                                      |  |   |             |  
|Net cash provided by (used in) financing activities                                      |  |                                               | 142,563,479  |   |                                            |   | (1,477,038 | )                                    |  |   | (341,243    | )
|                                                                                         |  |                                               |             
|Effect of foreign currency exchange rates on cash                                        |  |                                               | 5,274        |   |                                            |   |           |                                      |  |   |            |  
|                                                                                         |  |                                               |              |   |                                            |   |            |                                      |  |   |             |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                     |  |                                               | 752,562      |   |                                            |   | 2,770,708  |                                      |  |   | (2,962,548  | )
|CASH AND CASH EQUIVALENTS (Beginning of period)                                          |  |                                               |             |   |                                            |   | 134,299    |                                      |  |   | 3,124,606   |  
|                                                                                         |  |                                               |              |   |                                            |   |            |                                      |  |   |             |  
|CASH AND CASH EQUIVALENTS (End of period)                                                |  | $                                             | 752,562      |   |                                            | $ | 2,905,007  |                                      |  | $ | 162,058     |  
|                                                                                         |  |                                               |              |   |                                            |   |            |                                      |  |   |             |  



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), formerly TPS Holdings, Inc. 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), and Edgen Canada
Inc. (Edgen Canada), Edgen distributes and sells prime carbon steel pipe, alloy grade pipe, fittings and flanges, and provides services for the applications of such pipe and steel products. The Company has no assets or operations
independent of its wholly owned subsidiaries.



On February 1,
2005, Edgen Acquisition Corporation, a corporation newly formed by Jefferies Capital Partners 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 million aggregate principal amount of 97/8% Senior Secured Notes (Notes) due 2011 and
from an equity investment from funds managed by Jefferies Capital Partners and certain members of Edgen management. Concurrently with the purchase, Edgen entered into a new $20 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 old notes and borrowings under the new revolving credit facility. We refer to the acquisition of
Edgen Corporation, the offering and issuance of the old notes, the equity investment, the related financing transactions and the merger collectively as the Transactions. Edgen Corporation following the merger is referred to as the
Successor. Edgen Corporation prior to the merger is referred to as the Predecessor.



Basis of PresentationThe condensed consolidated financial statements and notes are presented in accordance with accounting principles
generally accepted in the United States of America (GAAP). The condensed consolidated financial statements include the accounts of Edgen and its wholly owned subsidiaries. All intercompany accounts and 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 shareholders equity (deficit), in accordance with the Financial Accounting Standards Boards (FASB) Statement of Financial
Accounting Standards (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 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, which were
consummated simultaneously 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 United States Securities and Exchange Commission. However,
management believes that the disclosures contained herein are adequate to make the information presented not misleading. Certain reclassifications of prior period amounts have been made to conform to the current period presentation. 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, 2004 included in Amendment No. 1 to the Companys Registration Statement on Form S-4 (File
No. 333-124543) as filed with the Securities and Exchange Commission on June 14, 2005.



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Use of Estimates and AssumptionsThe preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America 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. Actual results could differ from those estimates.



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



2. ACQUISITION OF
EDGEN CORPORATION AND OTHER ACQUISITIONS



As described in
Note 1, on February 1, 2005, Edgen Acquisition Corporation 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 certain fees and expenses. The acquisition was funded with (i) 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 ( the Notes), (ii) from an equity investment from funds managed
by Jefferies Capital Partners and certain members of Edgen management and (iii) an estimated payable to the sellers of approximately $2,276,839 based upon receipt of certain income tax refunds for the remainder of the purchase price.



As of September 30, 2005, the purchase price allocation
is preliminary as we have not completed our review and valuation procedures of the assets acquired and the liabilities assumed on February 1, 2005. The preliminary purchase price allocation as of September 30, 2005 includes the following:



|                                                    |  |   |             |  
|--------------------------------------------------- |  | - | ----------- | -
|Accounts receivable                                 |  | $ | 29,733,590  |  
|Inventory                                           |  |   | 63,097,410  |  
|Other current assets                                |  |   | 17,961,925  |  
|Property, plant and equipment                       |  |   | 12,110,055  |  
|Goodwill                                            |  |   | 38,092,865  |  
|Other assets                                        |  |   | 68,334      |  
|Accounts payable                                    |  |   | (25,335,643 | )
|Accrued expenses and other current liabilities      |  |   | (12,959,496 | )
|Deferred tax liability                              |  |   | (1,608,507  | )
|Long-term debt                                      |  |   | (22,828     | )
|                                                    |  |   |             |  
|Purchase price (net of cash received of $3,582,737) |  | $ | 121,137,705 |  
|                                                    |  |   |             |  



If the acquisition and
related transactions would have taken place at the beginning of each period, net income would have been reduced by approximately $374,000, $853,000 and $4,114,000 for the period January 1, 2005 to January 31, 2005 and the three and nine months ended
September 30, 2004, respectively, as a result of interest expense associated with the $105.0 million in Notes issued in connection with the acquisition and the impact of a purchase price allocation adjustment that increased the value of inventory as
of the acquisition date. There would have been no impact to revenue for the period January 1, 2005 to January 31, 2005 and the three and nine months ended September 30, 2004.



On July 15, 2005, our subsidiary, Edgen Canada, Inc., acquired the common stock of Western Flow Products Inc. (Western
Flow) for a purchase price of approximately $1,971,000 (2,400,000 CAD) consisting of a cash payment of approximately $1,725,000 (2,100,000 CAD) and the issuance of a note payable to the sellers for approximately $246,000 (300,000 CAD). Western
Flow is located in Edmonton, Alberta and is a specialty alloy pipe and components distributor primarily to the oil and gas, processing and power generation industries. The operations of this acquisition will be merged into the Companys
subsidiary, Edgen Canada and are included in our operating results from the date of the acquisition.



As of September 30, 2005, the purchase price allocation is preliminary as we have not completed our review and valuation procedures of the assets acquired
and the liabilities assumed on July 15, 2005. The preliminary purchase price allocation as of September 30, 2005 includes the following (in U.S. dollars):



|                                               |  |   |           |  
|---------------------------------------------- |  | - | --------- | -
|Accounts receivable                            |  | $ | 1,214,760 |  
|Inventory                                      |  |   | 875,256   |  
|Other current assets                           |  |   | 2,229     |  
|Property, plant and equipment                  |  |   | 31,647    |  
|Goodwill                                       |  |   | 653,168   |  
|Accounts payable                               |  |   | (693,560  | )
|Accrued expenses and other current liabilities |  |   | (90,893   | )
|                                               |  |   |           |  
|Purchase price (net of cash received of $83)   |  | $ | 1,992,607 |  
|                                               |  |   |           |  



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If the Western Flow acquisition had occurred at the beginning of each period, revenue and net income
would not have been materially different than reported in the statement of operations for each respective period.



3. LONG-TERM DEBT AND CREDIT ARRANGEMENTS



Long-term debt and credit arrangements consisted of the following at September 30, 2005 and December 31, 2004:



|                                                      |  |                    |             |   |                  |   |            |  
|----------------------------------------------------- |  | ------------------ | ----------- | - | ---------------- | - | ---------- | -
|                                                      |  | Successor          |             |   | Predecessor      |  
|                                                      |  | September 30, 2005 |             |   | December 31,2004 |  
|97/8%
Senior Secured Notes                            |  | $                  | 105,000,000 |   |                  | $ |           |  
|Revolving credit facility                             |  |                    | 13,981,857  |   |                  |   |           |  
|Note payable to sellers of Western Flow Products, Inc |  |                    | 256,126     |   |                  |   |           |  
|Previous revolving credit loans                       |  |                    |            |   |                  |   | 39,608,998 |  
|Various notes and capital leases                      |  |                    | 84,725      |   |                  |   | 8,273,785  |  
|                                                      |  |                    |             |   |                  |   |            |  
|Total                                                 |  |                    | 119,322,708 |   |                  |   | 47,882,783 |  
|Less current portion                                  |  |                    | (141,258    | ) |                  |   | (7,229,553 | )
|                                                      |  |                    |             |   |                  |   |            |  
|Long-term debt                                        |  | $                  | 119,181,450 |   |                  | $ | 40,653,230 |  
|                                                      |  |                    |             |   |                  |   |            |  



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. 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 | %



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 the date the Notes were issued 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. 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 in including
inventory, accounts receivable, lockboxes, deposit accounts, securities accounts and financial assets and certain related assets. The Notes are subordinate to our new 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 Transactions, Edgen entered into a new $20 million senior secured revolving credit facility (the New Credit Agreement)
with GMAC Commercial Finance LLC (GMAC CF), replacing its $55.5 million revolving



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credit agreement. The New Credit Agreement is subject to certain borrowing limitations and matures on February 1, 2010.
Under the New Credit Agreement, interest accrues on borrowings (at the option of the Company) at either (i) the prime rate of interest announced by GMAC CF less 0.50% per annum (6.25% of September 30, 2005), or (ii) a Eurodollar rate based on LIBOR
plus 1.50% per annum (5.31% as of September 30, 2005). The Company must also pay a monthly facility fee of 0.05% per annum on the unused portion of the maximum revolving amount.



The New 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 domestic subsidiaries working capital assets and a second priority security interest in all of the Companys domestic subsidiaries other assets (other than certain excluded assets such as our
leasehold interests and the capital stock of our subsidiaries).



In addition, the New 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.



Western Flow Note Payable



In connection with the acquisition of Western Flow, the Companys
subsidiary, Edgen Canada, issued a note payable of approximately $246,000 (300,000 CAD) to the sellers as a portion of the total purchase price (see Note 2). The note accrues interest at 6% per annum with scheduled principal payments of
approximately $123,000 (150,000 CAD), plus accrued interest, on each of July 15, 2006 and 2007.



4. MANDATORILY REDEEMABLE PREFERRED STOCK



In connection with the Transactions on February 1, 2005, all mandatorily redeemable preferred stock was redeemed (See Note 1).



5. SHAREHOLDERS EQUITY



Common StockThe Class B Common Stock is identical to Class A Common Stock, except that the Class B Common Stock is non-voting. The
Class B Common Stock is exchangeable at any time at the option of the holder thereof, pursuant to terms of a certain agreement between such holder and Edgen, into shares of Class A Common Stock on a one-for-one basis.



Preferred StockThe holders of Series A Preferred Stock,
$.01 par value, 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, the Series A Preferred Stock can be
redeemed by the Company at a price of $1,000 per share, plus accrued and unpaid dividends.



Stock OptionsIn December 1998, the shareholders of the Company approved a stock option plan to provide stock options as incentives and rewards for employees of the Company. Under the stock option
plan, a maximum of 500,000 shares of the Companys Class A Common Stock could be granted. In connection with the Transactions, the Companys stock option plan and all outstanding stock options were cancelled on February 1, 2005.



On February 1, 2005, 281,565 shares of restricted 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 (the Plan). Vesting of the restricted
stock is based on either time or a combination of performance and time. The time-based vesting schedule is generally 20% per year over a five year period subject to the holders continued employment with the Company. Restricted stock grants
that use a vesting schedule that combines performance and time will generally vest 10% per year over five years subject to continued employment with the Company plus an additional 10% or more per year for each year that the Company achieves certain
performance goals as determined by the board of directors. Performance based restricted stock is cumulative so if the performance goals are achieved in any year of the five year period, all restricted stock subject to the performance criteria for
that year and prior years will vest. If the performance goals are not achieved within five years of the grant date, the restricted stock subject to the performance goals is forfeited. Upon a change in control, all restricted stock subject to time
based vesting will fully and immediately vest. For the three months ended September 30, 2005 and the period February 1, 2005 to September 30, 2005, the statement of operations includes $7,040 and $18,772 of stock-based compensation expense,
respectively. As of September 30, 2005, $262,793 of unearned compensation is reflected as a contra-equity account on the statement of shareholders equity (deficit).



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6. SEGMENT INFORMATION



Edgen markets and distributes specialty pipe, fittings and flanges made of highly engineered prime carbon and alloy steel. Edgen distributes its
products primarily to companies operating within the oil and gas production and transmission, the process/petrochemical and the power generation industries. Edgen aggregates its operations into two reportable segments: alloy products and carbon
products.



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 alloy
products segment includes the operating results of the Western Flow acquisition since the acquisition date (see Note 2).



The carbon products segment distributes specialty carbon steel pipe and components primarily for use in high pressure and/or abrasive environments. The
primary industries served are natural gas transmission and distribution, offshore fabrication and mining.



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 not including nonrecurring gains or losses and discontinued operations.



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



|                               |  |                                     |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|------------------------------ |  | ----------------------------------- | ---------- | - | ------------------------------------ | - | ---------- | ------------------------------------------- |  | - | ----------------------------------------- | - |  | ----------------------------------- | ----------- | - |  | - | ----------- | -
|                               |  | Successor                           |            |   | Predecessor                          |   |            | Successor                                   |  |   | Predecessor                               |   |  | Predecessor                         |            
|                               |  | Three MonthsEnded September 30,2005 |            |   | Three MonthsEnded September 30, 2004 |   |            | PeriodFebruary 1, 2005 toSeptember 30, 2005 |  |   | Period January 1, 2005 toJanuary 31, 2005 |   |  | Nine MonthsEnded September 30, 2004 |            
|Sales:                         |  |                                     |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|Alloy Products                 |  | $                                   | 20,669,426 |   |                                      | $ | 13,877,771 |                                             |  | $ | 53,629,843                                |   |  | $                                   | 4,214,009   |   |  | $ | 39,472,521  |  
|Carbon Products                |  |                                     | 55,042,344 |   |                                      |   | 39,176,319 |                                             |  |   | 142,370,210                               |   |  |                                     | 14,730,778  |   |  |   | 110,454,038 |  
|                               |  |                                     |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|                               |  | $                                   | 75,711,770 |   |                                      | $ | 53,054,090 |                                             |  | $ | 196,000,053                               |   |  | $                                   | 18,944,787  |   |  | $ | 149,926,559 |  
|                               |  |                                     |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|Operating Income (Loss):       |  |                                     |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|Alloy Products                 |  | $                                   | 2,854,399  |   |                                      | $ | 1,852,042  |                                             |  | $ | 8,563,255                                 |   |  | $                                   | 959,632     |   |  | $ | 4,776,489   |  
|Carbon Products                |  |                                     | 4,775,261  |   |                                      |   | 6,426,329  |                                             |  |   | 15,270,956                                |   |  |                                     | 1,980,553   |   |  |   | 15,714,937  |  
|General Corporate              |  |                                     | (1,832,117 | ) |                                      |   | (2,261,749 | )                                           |  |   | (5,496,825                                | ) |  |                                     | (12,713,366 | ) |  |   | (6,032,276  | )
|                               |  |                                     |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|                               |  | $                                   | 5,797,543  |   |                                      | $ | 6,016,622  |                                             |  | $ | 18,337,386                                |   |  | $                                   | (9,773,181  | ) |  | $ | 14,459,150  |  
|                               |  |                                     |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|Capital Expenditures:          |  |                                     |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|Alloy Products                 |  | $                                   | 302,997    |   |                                      | $ | 50,229     |                                             |  | $ | 544,814                                   |   |  | $                                   |            |   |  | $ | 206,177     |  
|Carbon Products                |  |                                     | 43,471     |   |                                      |   | 109,979    |                                             |  |   | 201,606                                   |   |  |                                     | 4,079       |   |  |   | 175,836     |  
|General Corporate              |  |                                     | 144,756    |   |                                      |   | 9,164      |                                             |  |   | 326,790                                   |   |  |                                     |            |   |  |   | 169,045     |  
|                               |  |                                     |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|                               |  | $                                   | 491,224    |   |                                      | $ | 169,372    |                                             |  | $ | 1,073,210                                 |   |  | $                                   | 4,079       |   |  | $ | 551,058     |  
|                               |  |                                     |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|Depreciation and Amortization: |  |                                     |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|Alloy Products                 |  | $                                   | 57,173     |   |                                      | $ | 44,966     |                                             |  | $ | 272,899                                   |   |  | $                                   | 14,935      |   |  | $ | 131,460     |  
|Carbon Products                |  |                                     | 237,232    |   |                                      |   | 236,892    |                                             |  |   | 648,262                                   |   |  |                                     | 80,338      |   |  |   | 710,864     |  
|General Corporate              |  |                                     | 308,215    |   |                                      |   | 310,277    |                                             |  |   | 768,109                                   |   |  |                                     | 105,371     |   |  |   | 953,787     |  
|                               |  |                                     |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  
|                               |  | $                                   | 602,620    |   |                                      | $ | 592,135    |                                             |  | $ | 1,689,270                                 |   |  | $                                   | 200,644     |   |  | $ | 1,796,111   |  
|                               |  |                                     |            |   |                                      |   |            |                                             |  |   |                                           |   |  |                                     |             |   |  |   |             |  



|                  |  |                    |             |                  |   |                    |  |   |            
|----------------- |  | ------------------ | ----------- | ---------------- | - | ------------------ |  | - | -----------
|                  |  | Successor          |             | Predecessor      |   | Predecessor       
|                  |  | As of             
|                  |  | September 30, 2005 |             | December 31,2004 |   | September 30, 2004
|Total Assets:     |  |                    |             |                  |   |                    |  |   |            
|Alloy Products    |  | $                  | 37,442,146  |                  | $ | 26,324,510         |  | $ | 28,495,448 
|Carbon Products   |  |                    | 101,387,984 |                  |   | 79,177,069         |  |   | 76,852,358 
|General Corporate |  |                    | 55,846,702  |                  |   | 14,251,549         |  |   | 7,305,992  
|                  |  |                    |             |                  |   |                    |  |   |            
|                  |  | $                  | 194,676,832 |                  | $ | 119,753,128        |  | $ | 112,653,798
|                  |  |                    |             |                  |   |                    |  |   |            



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7. INCOME TAXES



For the period February 1, 2005 to September 30, 2005 and the period January 1, 2005 to January 31, 2005, the Companys effective tax rate was approximately 37% and
(19%), respectively, as compared to approximately 14% and 30% for the three and nine months ended September 30, 2004, respectively. The income tax payable and effective tax rate for the period February 1, 2005 to September 30, 2005 was impacted by a
deferred tax liability related to a purchase price allocation adjustment to inventory which is being reduced in the period the inventory is sold. The income tax benefit and effective tax rate for the period January 1, 2005 to January 31, 2005
reflects the net loss incurred in that period as a result of Transaction-related expenses, which may not be fully deductible for income tax purposes.



8. EFFECTS OF HURRICANES KATRINA AND RITA



In August and September 2005, Hurricanes Katrina and Rita struck the gulf coast of Louisiana, Mississippi, Alabama and Texas and caused extensive and catastrophic
physical damage to those market areas. Our facilities in Louisiana and Texas sustained minor physical damage. Additionally, we experienced a negative impact to our sales order backlog during the weeks following Hurricanes Katrina and Rita as carbon
sales orders at our gulf coast facilities declined by approximately one-third when compared to sales orders received in the eight weeks prior to the hurricanes. At this time, we cannot predict whether, for how long, or to what extent these
hurricanes will affect our operations or the operations of our customers and suppliers in those market areas affected by the storms.



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 subsidiaries which have not issued guarantees for the Notes (our Canadian foreign subsidiaries including Edgen Canada and its subsidiary Western Flow) are referred to as the Non-Guarantor Subsidiaries. Prior
to the acquisition of Western Flow on July 15, 2005, the Non-Guarantor Subsidiaries were considered to be minor as that term is defined in Rule 3-10 of Regulation S-X promulgated by the Securities and Exchange Commission.



The following presents the unaudited condensed consolidating financial
information with respect to our financial position as of September 30, 2005, the results of our operations for the period January 1, 2005 to January 31, 2005, and the period Ferbuary 1, 2005 to September 30, 2005 and our cash flows for the period
January 1, 2005 to January 31, 2005, and the period February 1, 2005 to September 30, 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, 2005
|                                           |  | Parent Only              |             | GuarantorSubsidiaries |   | Non-GuarantorSubsidiaries |  | Elimination andConsolidationEntries |           |  | Consolidated
|Current assets                             |  | $                        | 9,167,954   |                       | $ | 127,022,556               |  | $                                   | 2,155,693 |  | $            | (533,175     | ) |  | $ | 137,813,028
|Intercompany long-term receivables         |  |                          | 9,925,014   |                       |   |                          |  |                                     |          |  |              | (9,925,014   | ) |  |   |           
|Investments in subsidiaries                |  |                          | 136,774,148 |                       |   |                          |  |                                     |          |  |              | (136,774,148 | ) |  |   |           
|Property, plant and equipment, net         |  |                          |            |                       |   | 11,168,122                |  |                                     | 441,279   |  |              |             |   |  |   | 11,609,401 
|Other assets                               |  |                          | 44,412,233  |                       |   | 163,239                   |  |                                     | 678,931   |  |              |             |   |  |   | 45,254,403 
|                                           |  |                          |             |                       |   |                           |  |                                     |           |  |              |              |   |  |   |            
|Total Assets                               |  | $                        | 200,279,349 |                       | $ | 138,353,917               |  | $                                   | 3,275,903 |  | $            | (147,232,337 | ) |  | $ | 194,676,832
|                                           |  |                          |             |                       |   |                           |  |                                     |           |  |              |              |   |  |   |            
|                                           |  |                          |             |                       |  
|Current liabilities                        |  | $                        | 2,488,065   |                       | $ | 41,221,524                |  | $                                   | 598,591   |  | $            | (400,185     | ) |  | $ | 43,907,995 
|Intercompany long-term debt                |  |                          | 65,150,542  |                       |   | 53,467,476                |  |                                     | 445,155   |  |              | (122,958,920 | ) |  |   |           
|Long-term debt and capital leases          |  |                          | 105,000,000 |                       |   | 33,135,871                |  |                                     | 1,199,593 |  |              | (20,154,014  | ) |  |   | 119,181,450
|Other non-current liabilities              |  |                          | 936,872     |                       |   |                          |  |                                     |          |  |              |             |   |  |   | 936,872    
|Shareholders equity                       |  |                          | 26,703,870  |                       |   | 10,529,046                |  |                                     | 1,032,564 |  |              | (3,719,218   | ) |  |   | 30,650,515 
|                                           |  |                          |             |                       |   |                           |  |                                     |           |  |              |              |   |  |   |            
|Total Liabilities and Shareholders Equity |  | $                        | 200,279,349 |                       | $ | 138,353,917               |  | $                                   | 3,275,903 |  | $            | (147,232,337 | ) |  | $ | 194,676,832
|                                           |  |                          |             |                       |   |                           |  |                                     |           |  |              |              |   |  |   |            



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EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)



|                                                            |  |                                               |           |   |                       |   |            |                            |  |   |                                     |   |  |              |            |   |  |   |            |  
|----------------------------------------------------------- |  | --------------------------------------------- | --------- | - | --------------------- | - | ---------- | -------------------------- |  | - | ----------------------------------- | - |  | ------------ | ---------- | - |  | - | ---------- | -
|                                                            |  | Successor                                     |          
|                                                            |  | For the Three Months Ended September 30, 2005 |          
|                                                            |  | Parent Only                                   |           |   | GuarantorSubsidiaries |   |            | Non-Guarantor Subsidiaries |  |   | Elimination andConsolidationEntries |   |  | Consolidated |           
|Sales                                                       |  | $                                             |          |   |                       | $ | 74,767,041 |                            |  | $ | 944,729                             |   |  | $            |           |   |  | $ | 75,711,770 |  
|Cost of sales                                               |  |                                               |          |   |                       |   | 61,099,899 |                            |  |   | 647,008                             |   |  |              | 18,651     |   |  |   | 61,765,558 |  
|                                                            |  |                                               |           |   |                       |   |            |                            |  |   |                                     |   |  |              |            |   |  |   |            |  
|Gross profit                                                |  |                                               |          |   |                       |   | 13,667,142 |                            |  |   | 297,721                             |   |  |              | (18,651    | ) |  |   | 13,946,212 |  
|Operating expenses                                          |  |                                               | 7,039     |   |                       |   | 7,839,923  |                            |  |   | 301,707                             |   |  |              |           |   |  |   | 8,148,669  |  
|                                                            |  |                                               |           |   |                       |   |            |                            |  |   |                                     |   |  |              |            |   |  |   |            |  
|Income (loss) from continuing operations                    |  |                                               | (7,039    | ) |                       |   | 5,827,219  |                            |  |   | (3,986                              | ) |  |              | (18,651    | ) |  |   | 5,797,543  |  
|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 from continuing operations 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  |  
|                                                            |  |                                               |           |   |                       |   |            |                            |  |   |                                     |   |  |              |            |   |  |   |            |  
|Income from continuing operations                           |  |                                               | 1,640,272 |   |                       |   | 1,687,850  |                            |  |   | 35,570                              |   |  |              | (1,723,420 | ) |  |   | 1,640,272  |  
|Preferred dividend requirement                              |  |                                               | 469,200   |   |                       |   |           |                            |  |   |                                    |   |  |              |           |   |  |   | 469,200    |  
|                                                            |  |                                               |           |   |                       |   |            |                            |  |   |                                     |   |  |              |            |   |  |   |            |  
|Net income applicable to common shareholders                |  | $                                             | 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 Period February 1, 2005 to September 30, 2005 |          
|                                                                             |  | ParentOnly                                            |           |   | GuarantorSubsidiaries |   |             | Non-Guarantor Subsidiaries |  |   | Elimination andConsolidationEntries |   |  | Consolidated |           
|Sales                                                                        |  | $                                                     |          |   |                       | $ | 195,055,324 |                            |  | $ | 944,729                             |   |  | $            |           |   |  | $ | 196,000,053 |  
|Cost of sales                                                                |  |                                                       |          |   |                       |   | 154,725,230 |                            |  |   | 647,008                             |   |  |              | 20,195     |   |  |   | 155,392,433 |  
|                                                                             |  |                                                       |           |   |                       |   |             |                            |  |   |                                     |   |  |              |            |   |  |   |             |  
|Gross profit                                                                 |  |                                                       |          |   |                       |   | 40,330,094  |                            |  |   | 297,721                             |   |  |              | (20,195    | ) |  |   | 40,607,620  |  
|Operating expenses                                                           |  |                                                       | 18,828    |   |                       |   | 21,808,146  |                            |  |   | 443,260                             |   |  |              |           |   |  |   | 22,270,234  |  
|                                                                             |  |                                                       |           |   |                       |   |             |                            |  |   |                                     |   |  |              |            |   |  |   |             |  
|Income (loss) from continuing operations                                     |  |                                                       | (18,828   | ) |                       |   | 18,521,948  |                            |  |   | (145,539                            | ) |  |              | (20,195    | ) |  |   | 18,337,386  |  
|                                                                             |  |                                                       |           |   |                      
|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) from continuing operations before income tax expense (benefit) |  |                                                       | 6,495,430 |   |                       |   | 10,529,047  |                            |  |   | (83,346                             | ) |  |              | (6,582,459 | ) |  |   | 10,358,672  |  
|Income tax expense (benefit)                                                 |  |                                                       | (52,911   | ) |                       |   | 3,895,747   |                            |  |   | (32,505                             | ) |  |              |           |   |  |   | 3,810,331   |  
|                                                                             |  |                                                       |           |   |                       |   |             |                            |  |   |                                     |   |  |              |            |   |  |   |             |  
|Income (loss) from continuing operations                                     |  |                                                       | 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 shareholders                          |  | $                                                     | 5,314,141 |   |                       | $ | 6,633,300   |                            |  | $ | (50,841                             | ) |  | $            | (6,582,459 | ) |  | $ | 5,314,141   |  
|                                                                             |  |                                                       |           |   |                       |   |             |                            |  |   |                                     |   |  |              |            |   |  |   |             |  



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EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)



|                                                                             |  |                                                    |             |   |                       |   |            |                            |  |   |                                     |   |  |              |            |   |  |   |             |  
|---------------------------------------------------------------------------- |  | -------------------------------------------------- | ----------- | - | --------------------- | - | ---------- | -------------------------- |  | - | ----------------------------------- | - |  | ------------ | ---------- | - |  | - | ----------- | -
|                                                                             |  | Predecessor                                        |            
|                                                                             |  | For the Period January 1, 2005 to January 31, 2005 |            
|                                                                             |  | Parent Only                                        |             |   | GuarantorSubsidiaries |   |            | Non-Guarantor Subsidiaries |  |   | Elimination andConsolidationEntries |   |  | Consolidated |           
|Sales                                                                        |  | $                                                  |            |   |                       | $ | 18,944,787 |                            |  | $ |                                    |   |  | $            |           |   |  | $ | 18,944,787  |  
|Cost of sales                                                                |  |                                                    |            |   |                       |   | 14,153,729 |                            |  |   |                                    |   |  |              | (664       | ) |  |   | 14,153,065  |  
|                                                                             |  |                                                    |             |   |                       |   |            |                            |  |   |                                     |   |  |              |            |   |  |   |             |  
|Gross profit                                                                 |  |                                                    |            |   |                       |   | 4,791,058  |                            |  |   |                                    |   |  |              | 664        |   |  |   | 4,791,722   |  
|                                                                             |  |                                                    |             |   |                      
|Operating expenses                                                           |  |                                                    | 11,998,000  |   |                       |   | 2,543,400  |                            |  |   | 23,503                              |   |  |              |           |   |  |   | 14,564,903  |  
|                                                                             |  |                                                    |             |   |                       |   |            |                            |  |   |                                     |   |  |              |            |   |  |   |             |  
|Income (loss) from continuing operations                                     |  |                                                    | (11,998,000 | ) |                       |   | 2,247,658  |                            |  |   | (23,503                             | ) |  |              | 664        |   |  |   | (9,773,181  | )
|                                                                             |  |                                                    |             |   |                      
|Other income (loss)                                                          |  |                                                    | 69,632      |   |                       |   | (452,142   | )                          |  |   |                                    |   |  |              | (664       | ) |  |   | (383,174    | )
|Equity in earnings of subsidiaries                                           |  |                                                    | 1,116,838   |   |                       |   |           |                            |  |   |                                    |   |  |              | (1,116,838 | ) |  |   |            |  
|                                                                             |  |                                                    |             |   |                       |   |            |                            |  |   |                                     |   |  |              |            |   |  |   |             |  
|Income (loss) from continuing operations before income tax expense (benefit) |  |                                                    | (10,811,530 | ) |                       |   | 1,795,516  |                            |  |   | (23,503                             | ) |  |              | (1,116,838 | ) |  |   | (10,156,355 | )
|Income tax expense (benefit)                                                 |  |                                                    | (2,571,683  | ) |                       |   | 664,341    |                            |  |   | (9,166                              | ) |  |              |           |   |  |   | (1,916,508  | )
|                                                                             |  |                                                    |             |   |                       |   |            |                            |  |   |                                     |   |  |              |            |   |  |   |             |  
|Income (loss) from continuing operations                                     |  |                                                    | (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 shareholders                          |  | $                                                  | (8,429,796  | ) |                       | $ | 1,131,175  |                            |  | $ | (14,337                             | ) |  | $            | (1,116,838 | ) |  | $ | (8,429,796  | )
|                                                                             |  |                                                    |             |   |                       |   |            |                            |  |   |                                     |   |  |              |            |   |  |   |             |  



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EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)



|                                                    |  |                                                       |              |   |                       |   |             |                           |  |   |                                     |   |              |   |   |  |   |              |  
|--------------------------------------------------- |  | ----------------------------------------------------- | ------------ | - | --------------------- | - | ----------- | ------------------------- |  | - | ----------------------------------- | - | ------------ | - | - |  | - | ------------ | -
|                                                    |  | Successor                                             |             
|                                                    |  | For the Period February 1, 2005 to September 30, 2005 |             
|                                                    |  | Parent Only                                           |              |   | GuarantorSubsidiaries |   |             | Non-GuarantorSubsidiaries |  |   | Elimination andConsolidationEntries |   | Consolidated |  
|Net cash provided by (used in) operating activities |  | $                                                     | 2,171,803    |   |                       | $ | (20,045,439 | )                         |  | $ | 14,561                              |   |              | $ |  |  | $ | (17,859,075  | )
|Net cash provided by (used in) investing activities |  |                                                       | (122,883,906 | ) |                       |   | 1,019,525   |                           |  |   | (2,092,735                          | ) |              |   |  |  |   | (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                             |   |              | $ |  |  | $ | 752,562      |  
|                                                    |  |                                                       |              |   |                       |   |             |                           |  |   |                                     |   |              |   |   |  |   |              |  
|                                                    | 
|                                                    |  | Predecessor                                           |             
|                                                    |  | For the Period January 1, 2005 to January 31, 2005    |             
|                                                    |  | Parent Only                                           |              |   | GuarantorSubsidiaries |   |             | Non-GuarantorSubsidiaries |  |   | Elimination andConsolidationEntries |   | Consolidated |  
|Net cash provided by (used in) 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 provided by (used in) financing activities |  |                                                       | (1,018,316   | ) |                       |   | (513,168    | )                         |  |   | 54,446                              |   |              |   |  |  |   | (1,477,038   | )
|Effects of foreign exchange rate changes on cash    |  |                                                       |             |   |                       |   |            |                           |  |   |                                    |   |              |   |  |  |   |             |  
|                                                    |  |                                                       |              |   |                       |   |             |                           |  |   |                                     |   |              |   |   |  |   |              |  
|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 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, fittings and flanges for use in niche applications, 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 offer our customers significant
breadth in our product offering and consistently provide products that may not otherwise be available on a quick-response basis in quantities that are usable by customers. The depth and breadth of our inventory positions us as a leading distributor
of difficult-to-find, specialty products.



The Company has two
operating segmentsour alloy products group and our carbon products group. 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 that are principally used in high-yield, high-tensile applications in the
oil and gas, offshore construction and mining industries.



We
were founded in 1983 as Thomas Pipe and Steel, Inc. and since 1996, we have grown significantly from one location to our current 17 locations through seven add-on acquisitions and three greenfield start-up locations. As of September 30, 2005, we
operate in 17 locations, including 15 in the United States, and two in Canada. We also conduct European operations through an exclusive full-time sales agent in Scotland.



Predecessor and Successor



On December 31, 2004, Edgen Acquisition Corporation, a corporation newly formed by Jefferies Capital Partners, 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 new 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 Transactions. 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. 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 nine months ended September 30, 2005 as a single measurement period. Due to the Transactions, we believe that comparisons between the nine months ended September 30, 2004 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 on a combined basis for the nine month period ended September 30, 2005. This combined presentation for the nine month period ended September 30, 2005 simply represents the
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 Transactions occurred at the beginning of the period. A reconciliation showing the mathematical combination of our operating results for such periods is included below
under Results of Operations.



Critical Accounting Policies



The preparation of our financial statements requires us
to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to
accounts receivable, inventory, impairment of goodwill and other intangible assets, and income taxes. We base our estimates on historical experience and on various other assumptions and factors that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Based on our ongoing review, we plan to make adjustments to our judgments
and estimates where facts and circumstances dictate. Actual results could differ from our estimates. Refer to Amendment No. 1 to our Registration Statement on Form S-4 (File No. 333-124543) as filed with the Securities and Exchange Commission (the
SEC) on June 14, 2005 for a discussion of our accounting policies and estimates.



In addition, we believe the following critical accounting policies are important to the portrayal of our financial condition and results 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.



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 trade accounts 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.



Inventories



We state our inventories at the lower of cost or market. We account for our inventories using the weighted average cost
method of accounting. 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.



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Goodwill and Other Intangible Assets



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. In accordance with the FASBs, SFAS No. 142, Accounting for Goodwill and Other Intangibles, we perform annual
impairment testing or more frequently if changes in events or circumstances trigger an impairment test. We estimate future cash flows at the reporting unit level. A key assumption that we make is that our business will grow at approximately 10% per
year, adjusted for the current economic outlook. 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.



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.



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.





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##### Table of Contents

Results of Operations



The following tables provide our statements of operations, selected segment information including our sales, operating profits and gross margins as a
percentage of sales and international sales. The segment information is presented as it is reported to management, and is consistent with the segment reporting in Note 6 to our notes to the 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.





|                                                                   |  |                                     |        |   |                                     |   |        |                                             |  |   |                                          |   |  |                                    |         |   |                                     |   |         |   |  |   |         |  
|------------------------------------------------------------------ |  | ----------------------------------- | ------ | - | ----------------------------------- | - | ------ | ------------------------------------------- |  | - | ---------------------------------------- | - |  | ---------------------------------- | ------- | - | ----------------------------------- | - | ------- | - |  | - | ------- | -
|                                                                   |  | (dollars in thousands)              |       
|                                                                   |  | Successor                           |        |   | Predecessor                         |   |        | Successor                                   |  |   | Predecessor                              |   |  | Non-GAAPCombined                   |         |   | Predecessor                         |  
|                                                                   |  | Three MonthsEnded September 30,2005 |        |   | Three MonthsEnded September 30,2004 |   |        | PeriodFebruary 1, 2005 toSeptember 30, 2005 |  |   | PeriodJanuary 1, 2005 toJanuary 31, 2005 |   |  | Nine MonthsEndedSeptember 30, 2005 |         |   | Nine MonthsEnded September 30, 2004 |  
|SALES                                                              |  | $                                   | 75,712 |   |                                     | $ | 53,054 |                                             |  | $ | 196,000                                  |   |  | $                                  | 18,945  |   |                                     | $ | 214,945 |   |  | $ | 149,927 |  
|COST OF SALES                                                      |  |                                     | 61,766 |   |                                     |   | 38,188 |                                             |  |   | 155,392                                  |   |  |                                    | 14,153  |   |                                     |   | 169,545 |   |  |   | 112,025 |  
|                                                                   |  |                                     |        |   |                                     |   |        |                                             |  |   |                                          |   |  |                                    |         |   |                                     |   |         |   |  |   |         |  
|Gross profit                                                       |  |                                     | 13,946 |   |                                     |   | 14,866 |                                             |  |   | 40,608                                   |   |  |                                    | 4,792   |   |                                     |   | 45,400  |   |  |   | 37,902  |  
|OPERATING EXPENSES:                                                |  |                                     |        |   |                                     |   |        |                                             |  |   |                                          |   |  |                                    |         |   |                                     |   |         |   |  |   |         |  
|Yard and shop expense                                              |  |                                     | 1,299  |   |                                     |   | 1,254  |                                             |  |   | 3,302                                    |   |  |                                    | 390     |   |                                     |   | 3,692   |   |  |   | 3,430   |  
|Selling, general, and administrative expense                       |  |                                     | 6,247  |   |                                     |   | 7,003  |                                             |  |   | 17,279                                   |   |  |                                    | 13,974  |   |                                     |   | 31,253  |   |  |   | 18,217  |  
|Depreciation and amortization expense                              |  |                                     | 603    |   |                                     |   | 592    |                                             |  |   | 1,689                                    |   |  |                                    | 201     |   |                                     |   | 1,890   |   |  |   | 1,796   |  
|                                                                   |  |                                     |        |   |                                     |   |        |                                             |  |   |                                          |   |  |                                    |         |   |                                     |   |         |   |  |   |         |  
|Total operating expenses                                           |  |                                     | 8,149  |   |                                     |   | 8,849  |                                             |  |   | 22,270                                   |   |  |                                    | 14,565  |   |                                     |   | 36,835  |   |  |   | 23,443  |  
|INCOME (LOSS) FROM OPERATIONS                                      |  |                                     | 5,797  |   |                                     |   | 6,017  |                                             |  |   | 18,338                                   |   |  |                                    | (9,773  | ) |                                     |   | 8,565   |   |  |   | 14,459  |  
|OTHER INCOME (EXPENSE):                                            |  |                                     |        |   |                                     |   |        |                                             |  |   |                                          |   |  |                                    |         |   |                                     |   |         |   |  |   |         |  
|Other income (expense)                                             |  |                                     | 70     |   |                                     |   | (73    | )                                           |  |   | 143                                      |   |  |                                    | (50     | ) |                                     |   | 93      |   |  |   | (37     | )
|Interest expense                                                   |  |                                     | (3,164 | ) |                                     |   | (1,551 | )                                           |  |   | (8,123                                   | ) |  |                                    | (333    | ) |                                     |   | (8,456  | ) |  |   | (3,179  | )
|                                                                   |  |                                     |        |   |                                     |   |        |                                             |  |   |                                          |   |  |                                    |         |   |                                     |   |         |   |  |   |         |  
|INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE |  |                                     | 2,703  |   |                                     |   | 4,393  |                                             |  |   | 10,358                                   |   |  |                                    | (10,156 | ) |                                     |   | 202     |   |  |   | 11,243  |  
|INCOME TAX EXPENSE (BENEFIT)                                       |  |                                     | 1,063  |   |                                     |   | 632    |                                             |  |   | 3,810                                    |   |  |                                    | (1,916  | ) |                                     |   | 1,894   |   |  |   | 3,372   |  
|                                                                   |  |                                     |        |   |                                     |   |        |                                             |  |   |                                          |   |  |                                    |         |   |                                     |   |         |   |  |   |         |  
|INCOME (LOSS) FROM CONTINUING OPERATIONS                           |  |                                     | 1,640  |   |                                     |   | 3,761  |                                             |  |   | 6,548                                    |   |  |                                    | (8,240  | ) |                                     |   | (1,692  | ) |  |   | 7,871   |  
|PREFERRED DIVIDEND REQUIREMENT                                     |  |                                     | 469    |   |                                     |   | 576    |                                             |  |   | 1,234                                    |   |  |                                    | 190     |   |                                     |   | 1,424   |   |  |   | 1,679   |  
|                                                                   |  |                                     |        |   |                                     |   |        |                                             |  |   |                                          |   |  |                                    |         |   |                                     |   |         |   |  |   |         |  
|NET INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDERS                |  | $                                   | 1,171  |   |                                     | $ | 3,185  |                                             |  | $ | 5,314                                    |   |  | $                                  | (8,430  | ) |                                     | $ | (3,116  | ) |  | $ | 6,192   |  
|                                                                   |  |                                     |        |   |                                     |   |        |                                             |  |   |                                          |   |  |                                    |         |   |                                     |   |         |   |  |   |         |  





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|                                                                    |  |                                      |        |   |                                      |   |        |                                              |  |   |                                           |   |  |                                    |         |    |                                     |   |         |   |  |   |         |  
|------------------------------------------------------------------- |  | ------------------------------------ | ------ | - | ------------------------------------ | - | ------ | -------------------------------------------- |  | - | ----------------------------------------- | - |  | ---------------------------------- | ------- | -- | ----------------------------------- | - | ------- | - |  | - | ------- | -
|                                                                    |  | (dollars in thousands)               |       
|                                                                    |  | Successor                            |        |   | Predecessor                          |   |        | Successor                                    |  |   | Predecessor                               |   |  | Non-GAAPCombined                   |         |    | Predecessor                         |  
|                                                                    |  | Three MonthsEnded September 30, 2005 |        |   | Three MonthsEnded September 30, 2004 |   |        | Period February 1, 2005 toSeptember 30, 2005 |  |   | Period January 1, 2005 toJanuary 31, 2005 |   |  | Nine MonthsEndedSeptember 30, 2005 |         |    | Nine MonthsEnded September 30, 2004 |  
|Segment Sales                                                       |  |                                      |        |   |                                      |   |        |                                              |  |   |                                           |   |  |                                    |         |    |                                     |   |         |   |  |   |         |  
|Alloy Products                                                      |  | $                                    | 20,670 |   |                                      | $ | 13,878 |                                              |  | $ | 53,630                                    |   |  | $                                  | 4,214   |    |                                     | $ | 57,844  |   |  | $ | 39,473  |  
|Carbon Products                                                     |  |                                      | 55,042 |   |                                      |   | 39,176 |                                              |  |   | 142,370                                   |   |  |                                    | 14,731  |    |                                     |   | 157,101 |   |  |   | 110,454 |  
|                                                                    |  |                                      |        |   |                                      |   |        |                                              |  |   |                                           |   |  |                                    |         |    |                                     |   |         |   |  |   |         |  
|Total                                                               |  | $                                    | 75,712 |   |                                      | $ | 53,054 |                                              |  | $ | 196,000                                   |   |  | $                                  | 18,945  |    |                                     | $ | 214,945 |   |  | $ | 149,927 |  
|                                                                    |  |                                      |        |   |                                      |   |        |                                              |  |   |                                           |   |  |                                    |         |    |                                     |   |         |   |  |   |         |  
|Segment Operating Profits (Losses)                                  |  |                                      |        |   |                                      |   |        |                                              |  |   |                                           |   |  |                                    |         |    |                                     |   |         |   |  |   |         |  
|Alloy Products                                                      |  | $                                    | 2,854  |   |                                      | $ | 1,852  |                                              |  | $ | 8,563                                     |   |  | $                                  | 960     |    |                                     | $ | 9,523   |   |  | $ | 4,776   |  
|Carbon Products                                                     |  |                                      | 4,775  |   |                                      |   | 6,426  |                                              |  |   | 15,271                                    |   |  |                                    | 1,981   |    |                                     |   | 17,252  |   |  |   | 15,715  |  
|General Corporate                                                   |  |                                      | (1,832 | ) |                                      |   | (2,261 | )                                            |  |   | (5,496                                    | ) |  |                                    | (12,714 | )  |                                     |   | (18,210 | ) |  |   | (6,032  | )
|                                                                    |  |                                      |        |   |                                      |   |        |                                              |  |   |                                           |   |  |                                    |         |    |                                     |   |         |   |  |   |         |  
|Total                                                               |  | $                                    | 5,797  |   |                                      | $ | 6,017  |                                              |  | $ | 18,338                                    |   |  | $                                  | (9,773  | )  |                                     | $ | 8,565   |   |  | $ | 14,459  |  
|                                                                    |  |                                      |        |   |                                      |   |        |                                              |  |   |                                           |   |  |                                    |         |    |                                     |   |         |   |  |   |         |  
|Segment Gross Margins as a Percentage of Segment Sales              |  |                                      |        |   |                                      |   |        |                                              |  |   |                                           |   |  |                                    |         |    |                                     |   |         |   |  |   |         |  
|Alloy Products                                                      |  |                                      | 28.0   | % |                                      |   | 33.6   | %                                            |  |   | 30.0                                      | % |  |                                    | 41.3    | %  |                                     |   | 30.8    | % |  |   | 30.5    | %
|Carbon Products                                                     |  |                                      | 14.8   | % |                                      |   | 26.0   | %                                            |  |   | 17.2                                      | % |  |                                    | 20.7    | %  |                                     |   | 17.6    | % |  |   | 23.4    | %
|Total                                                               |  |                                      | 18.4   | % |                                      |   | 28.0   | %                                            |  |   | 20.7                                      | % |  |                                    | 25.3    | %  |                                     |   | 21.1    | % |  |   | 25.3    | %
|                                                                    |  |                                      |        |   |                                      |  
|Segment Operating Profits (Losses) as a Percentage of Segment Sales |  |                                      |        |   |                                      |   |        |                                              |  |   |                                           |   |  |                                    |         |    |                                     |   |         |   |  |   |         |  
|Alloy Products                                                      |  |                                      | 13.8   | % |                                      |   | 13.3   | %                                            |  |   | 16.0                                      | % |  |                                    | 22.8    | %  |                                     |   | 16.5    | % |  |   | 12.1    | %
|Carbon Products                                                     |  |                                      | 8.7    | % |                                      |   | 16.4   | %                                            |  |   | 10.7                                      | % |  |                                    | 13.4    | %  |                                     |   | 11.0    | % |  |   | 14.2    | %
|Total                                                               |  |                                      | 7.7    | % |                                      |   | 11.3   | %                                            |  |   | 9.4                                       | % |  |                                    | (51.6   | )% |                                     |   | 4.0     | % |  |   | 9.6     | %
|                                                                    |  |                                      |        |   |                                      |  
|International Sales                                                 |  | $                                    | 11,123 |   |                                      | $ | 3,426  |                                              |  | $ | 22,937                                    |   |  | $                                  | 1,897   |    |                                     | $ | 24,834  |   |  | $ | 9,481   |  
|                                                                    |  |                                      |        |   |                                      |  
|International Sales as a Percentage of Total Sales                  |  |                                      | 14.7   | % |                                      |   | 6.5    | %                                            |  |   | 11.7                                      | % |  |                                    | 10.0    | %  |                                     |   | 11.6    | % |  |   | 6.3     | %



|                                  |  |                                               |          |   |                                            |   |        |                                      |  |   |                                      |   |  |   |        |  
|--------------------------------- |  | --------------------------------------------- | -------- | - | ------------------------------------------ | - | ------ | ------------------------------------ |  | - | ------------------------------------ | - |  | - | ------ | -
|                                  |  | Successor                                     |          |   | Predecessor                                |   |        | Non-GAAP Combined                    |  |   | Predecessor                          |  
|                                  |  | Period February 1, 2005 to September 30, 2005 |          |   | Period January 1, 2005 to January 31, 2005 |   |        | Nine Months Ended September 30, 2005 |  |   | Nine Months Ended September 30, 2004 |  
|Net cash (used in) provided by:   |  |                                               |          |   |                                            |   |        |                                      |  |   |                                      |   |  |   |        |  
|Cash flows - operating activities |  | $                                             | (17,859  | ) |                                            | $ | 4,249  |                                      |  | $ | (13,610                              | ) |  | $ | (2,071 | )
|Cash flows - investing activities |  |                                               | (123,957 | ) |                                            |   | (1     | )                                    |  |   | (123,958                             | ) |  |   | (550   | )
|Cash flows - financing activities |  |                                               | 142,563  |   |                                            |   | (1,477 | )                                    |  |   | 141,086                              |   |  |   | (341   | )



As used under this
Results of Operations section the terms listed below have the following meanings:



Sales. Our sales represent revenues from product sales to third parties net of returns and allowances.



Segment Operating Profits. Our segment operating profits are our revenues minus cost of sales and operating expenses (such as yard and shop
expenses) and depreciation and amortization, excluding general corporate expenses and interest expense.



Selling, General and Administrative Expenses. Our 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, management fees and other general corporate
expenses.



Yard and Shop Expenses. Our yard and shop
expenses include costs for warehouse personnel and benefits, supplies, equipment maintenance and rental and contract storage.



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##### Table of Contents

Gross Margin. Our gross margin is equal to our sales minus cost of sales expressed as a percentage
of sales. The primary components of our cost of sales are product costs, freight in and freight out and outsourced services to prepare the product for sale.



Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004



Sales



|                  |  |                                             |        |                                             |   |            |  |      |  
|----------------- |  | ------------------------------------------- | ------ | ------------------------------------------- | - | ---------- |  | ---- | -
|Reporting Segment |  | Three Months Ended September 30, 2005 Sales |        | Three Months Ended September 30, 2004 Sales |   | % Increase | 
|                  |  | (dollars in thousands)                      |       
|Alloy Products    |  | $                                           | 20,670 |                                             | $ | 13,878     |  | 48.9 | %
|Carbon Products   |  |                                             | 55,042 |                                             |   | 39,176     |  | 40.5 | %
|                  |  |                                             |        |                                             |   |            |  |      |  
|Total             |  | $                                           | 75,712 |                                             | $ | 53,054     |  | 42.7 | %
|                  |  |                                             |        |                                             |   |            |  |      |  



Overall. For
the three months ended September 30, 2005, our consolidated sales increased $22.7 million, or 42.7%, to $75.7 million as compared to the three months ended September 30, 2004. This increase in sales was primarily the result of commodity price
increases for alloy and carbon steel products, particularly chrome pipe, an increase in carbon pipe sales volume domestically and internationally, partially offset by a decrease in alloy pipe sales volume. The strong worldwide demand for iron ore,
nickel, chrome and copper has positively impacted pipe and component pricing and the demand for oil, gas and refined products has driven our carbon sales volume. Both of these factors have positively impacted our sales for the three months ended
September 30, 2005.



Sales order backlog decreased from $41.4
million at June 30, 2005 to $26.0 million at September 30, 2005. This decrease was primarily the result of the shipment of various large project orders to customers during the three months ended September 30, 2005. This decrease in backlog reflects
the impact project orders can have 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. Additionally, we believe our backlog was negatively impacted by Hurricanes Katrina and Rita as many of our gulf coast customers operations were disrupted. For the weeks following
Hurricanes Katrina and Rita, our carbon pipe sales orders from customers in the areas directly impacted by the hurricanes declined by approximately one-third, when compared to the sales orders received in the eight weeks prior to the hurricanes.



Alloy Products. For the three months ended September
30, 2005, alloy product sales increased $6.8 million, or 48.9%, to $20.7 million as compared to the three months ended September 30, 2004. This increase was the result of commodity price increases, particularly chrome pipe, partially offset by a
decline in alloy and stainless pipe sales volume. Alloy products sales order backlog decreased from $14.2 million at June 30, 2005 to $10.3 million at September 30, 2005.



Carbon Products. For the three months ended September 30, 2005, carbon product sales increased $15.9 million, or
40.5%, to $55.0 million as compared to the three months ended September 30, 2004. This increase was driven by an increase in carbon pipe sales unit volume primarily through several large project orders to natural gas transmission and distribution
customers, and by commodity price increases for our carbon pipe and fittings. Carbon products sales order backlog decreased from $27.2 million at June 30, 2005 to $15.7 million at September 30, 2005. The decrease in carbon product sales backlog is
due primarily to the completion of several large projects, as previously discussed, partially offset by new sales orders.



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##### Table of Contents

Gross Profit



|                  |  |                                                    |        |                                                    |   |                       |  |       |   
|----------------- |  | -------------------------------------------------- | ------ | -------------------------------------------------- | - | --------------------- |  | ----- | --
|Reporting Segment |  | Three Months Ended September 30, 2005 Gross Profit |        | Three Months Ended September 30, 2004 Gross Profit |   | % Increase (Decrease) | 
|                  |  |                                                    |        | (dollars in thousands)                             |   |                       | 
|Alloy Products    |  | $                                                  | 5,793  |                                                    | $ | 4,667                 |  | 24.1  | % 
|Carbon Products   |  |                                                    | 8,153  |                                                    |   | 10,199                |  | (20.1 | )%
|                  |  |                                                    |        |                                                    |   |                       |  |       |   
|Total             |  | $                                                  | 13,946 |                                                    | $ | 14,866                |  | (6.2  | )%
|                  |  |                                                    |        |                                                    |   |                       |  |       |   



|                  |  |                                                           |   |  |                                                           |  
|----------------- |  | --------------------------------------------------------- | - |  | --------------------------------------------------------- | -
|Reporting Segment |  | Three Months Ended September 30, 2005 Gross Profit Margin |   |  | Three Months Ended September 30, 2004 Gross Profit Margin |  
|Alloy Products    |  | 28.0                                                      | % |  | 33.6                                                      | %
|Carbon Products   |  | 14.8                                                      | % |  | 26.0                                                      | %
|Total             |  | 18.4                                                      | % |  | 28.0                                                      | %



Overall. Our
consolidated gross profit for the three months ended September 30, 2005 was $13.9 million, a decrease of approximately $0.9 million, or 6.2%, from the three months ended September 30, 2004. Our gross profit margin (gross profit as a percentage of
sales) for the three months ended September 30, 2005 decreased to 18.4% as compared to 28.0% for the three months ended September 30, 2004. The decrease in gross profit and gross profit margin for the three months ended September 30, 2005 is due
primarily to commodity price increases for our alloy and carbon products, which increased average inventory costs, to reduced gross profit margins on several large, lower margin carbon product sales to customers, and to a change in our carbon
product sales mix. The decrease in total gross profit and gross profit margin was partially offset by an increase in sales prices for our alloy and carbon products.



In addition, gross profit and gross profit margin for the three months ended September 30, 2005 was negatively impacted by
$0.3 million related to a purchase price allocation adjustment that increased the value of our alloy inventory as of February 1, 2005. This purchase price allocation adjustment will continue to impact gross profit margins until all of the acquired
alloy inventory is sold. As of September 30, 2005, $0.4 million of the purchase price adjustment remained on our Companys balance sheet. We cannot predict the exact timing of these inventory sales, which we expect will fluctuate from period to
period.



Alloy Products. Gross profit for our alloy
products for the three months ended September 30, 2005 increased $1.1 million, or 24.1%, to $5.8 million as compared to the three months ended September 30, 2004 while the gross profit margin decreased to 28.0% for the three months ended September
30, 2005 as compared to 33.6% for the three months ended September 30, 2004. The increase in gross profit is attributable to an increase in alloy product sales when compared to the same period in 2004 while the decrease in gross profit margin for
the three months ended September 30, 2005 is primarily due to a large, lower margin alloy product sale to one of our customers during the three months ended September 30, 2005 and the impact of a purchase price allocation adjustment of $0.3 million
discussed above.



Carbon Products. Gross profit for our
carbon products for the three months ended September 30, 2005 decreased $2.0 million, or 20.1%, to $8.2 million as compared to the three months ended September 30, 2004. Gross profit margin decreased to 14.8% for the three months ended September 30,
2005 as compared to 26.0% for the three months ended September 30, 2004. The decrease in gross profit and gross profit margin for the three months ended September 30, 2005 is due primarily to an increase in inventory costs for carbon steel as
compared to the same period for 2004, reduced gross profit margins on several large, lower margin carbon product sales to customers, and a change in our carbon product sales mix related to increased sales of lower margin products.





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##### Table of Contents

Operating Income (Loss)



|                  |  |                                                               |        |   |                                                               |   |        |  
|----------------- |  | ------------------------------------------------------------- | ------ | - | ------------------------------------------------------------- | - | ------ | -
|Reporting Segment |  | Three Months Ended September 30, 2005 Operating Income (Loss) |        |   | Three Months Ended September 30, 2004 Operating Income (Loss) |  
|                  |  | (dollars in thousands)                                        |       
|Alloy Products    |  | $                                                             | 2,854  |   |                                                               | $ | 1,852  |  
|Carbon Products   |  |                                                               | 4,775  |   |                                                               |   | 6,426  |  
|General Corporate |  |                                                               | (1,832 | ) |                                                               |   | (2,261 | )
|                  |  |                                                               |        |   |                                                               |   |        |  
|Total             |  | $                                                             | 5,797  |   |                                                               | $ | 6,017  |  
|                  |  |                                                               |        |   |                                                               |   |        |  



Overall. Our
consolidated operating income for the three months ended September 30, 2005 decreased $0.2 million from operating income of $6.0 million for the three months ended September 30, 2004. The decrease in consolidated operating income was primarily the
result of the $2.0 million decline in carbon products segment gross profit discussed above, which was partially offset by the growth in alloy products gross profit and by reduced company operating expenses of approximately $0.7 million. Expense
reductions were driven primarily by lower employee costs and related payroll taxes.



Alloy Products. Our alloy products operating income for the three months ended September 30, 2005 was $2.9 million, an increase of $1.0 million from the three months ended September 30, 2004. The majority of
the increase was the result of sales and gross margin increases as described above, partially offset by a slight increase in segment operating expenses.



Carbon Products. Our carbon products operating income for the three months ended September 30, 2005 was $4.8 million, a decrease of $1.7 million
from the three months ended September 30, 2004. The decrease in operating income was driven primarily by lower gross profit margins as a result of increased inventory costs for carbon steel products and various larger, lower margin carbon product
sales to customers.



Yard and Shop Expenses



Yard and shop expenses were 1.7% and 2.4% of sales for the three months
ended September 30, 2005 and the three months ended September 30, 2004, respectively. Yard and shop expenses remained relatively consistent for the three months ended September 30, 2004 compared to the three months ended September 30, 2005.



Selling, General and Administrative Expenses



Selling, general and administrative expenses for the three months ended
September 30, 2005 decreased approximately $0.8 million, or 10.8%, for the three months ended September 30, 2005 as compared to the three months ended September 30, 2004. The decrease is primarily attributable to a reduction in the employee bonus
pool accrual and related payroll taxes and a decrease in legal and accounting expenses for the three months ended September 30, 2005 as compared to the same period in 2004. This decrease was partially offset by increases in employee salaries and
related payroll taxes, and increases in travel and selling expenses associated with business development efforts.



Interest Expense



Interest expense, net, for the three months ended September 30, 2005 increased $1.6 million, or 100.0%, to $3.2 million from $1.6 million for the three
months ended September 30, 2004. The increase in interest expense was the result of the issuance of $105 million of Notes on February 1, 2005 and borrowings under the Companys new revolving line of credit during the three months ended
September 30, 2005, 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 three months ended September 30, 2005 included $0.3 million of deferred financing
costs amortization compared to zero deferred financing costs for the three months ended September 30, 2004.



Income Tax Expense



Income tax expense was $1.1 million for the three months ended September 30, 2005 as compared to income tax expense of $0.6 million for the three months ended September 30, 2004. The effective tax rate of approximately 39% for the three
months ended September 30, 2005, as compared to approximately 14% for the three months ended September 30, 2004 is primarily due to the reduction of a deferred tax liability that was related to the fair value purchase price allocation adjustment to
inventory and was recognized in the period the inventory was sold while the effective tax rate for the three months ended September 30, 2004 was reduced by asset impairment charges and the establishment of reserves.



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##### Table of Contents

Preferred Stock Dividends and Related Charges



Preferred stock dividends and related charges were $0.5 million for the
three months ended September 30, 2005 as compared to $0.6 million for the three months ended September 30, 2004. The decrease resulted from our repurchase of all outstanding shares of our mandatorily redeemable preferred stock partially offset by
the issuance of our Series A cumulative compounding preferred stock.



Combined Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004



Sales



|                  |  |                                                              |         |                                            |   |            |  |      |  
|----------------- |  | ------------------------------------------------------------ | ------- | ------------------------------------------ | - | ---------- |  | ---- | -
|Reporting Segment |  | Non-GAAP Combined Nine Months Ended September 30, 2005 Sales |         | Nine Months Ended September 30, 2004 Sales |   | % Increase | 
|                  |  | (dollars in thousands)                                       |        
|Alloy Products    |  | $                                                            | 57,844  |                                            | $ | 39,473     |  | 46.5 | %
|Carbon Products   |  |                                                              | 157,101 |                                            |   | 110,454    |  | 42.2 | %
|                  |  |                                                              |         |                                            |   |            |  |      |  
|Total             |  | $                                                            | 214,945 |                                            | $ | 149,927    |  | 43.4 | %
|                  |  |                                                              |         |                                            |   |            |  |      |  



Overall. For
the combined nine months ended September 30, 2005, our consolidated sales increased $65.0 million, or 43.4%, to $214.9 million as compared to the nine months ended September 30, 2004. This increase in sales was primarily the result of commodity
price increases for alloy and carbon products, particularly chrome pipe, and an increase in carbon pipe sales volume, domestically and internationally, partially offset by a decrease in alloy pipe sales volume. The strong worldwide demand for iron
ore, nickel, chrome and copper has positively impacted pipe and component pricing and has positively impacted our sales pricing for the combined nine months ended September 30, 2005 while demand for oil, gas and refined products has driven sales
volume. Our sales order backlog decreased from $36.7 million at December 31, 2004 to $26.0 million at September 30, 2005 due to several large project order shipments to various customers in the second and third quarters of 2005. Additionally, we
believe our backlog was negatively impacted by Hurricanes Katrina and Rita as many of our gulf coast customers operations were disrupted. For the weeks following Hurricanes Katrina and Rita, our carbon pipe sales orders from customers in the
areas directly impacted by the hurricanes declined by approximately one-third, when compared to the sales orders received in the eight weeks prior to the hurricanes.



Alloy Products. For the combined nine months ended September 30, 2005, our alloy products sales increased $18.4
million, or 46.5%, to $57.8 million as compared to the nine months ended September 30, 2004. This increase was primarily the result of higher commodity price increases offset by a decrease in alloy pipe and stainless unit sales volume. For the
combined nine months ended September 30, 2005, our alloy products sales order backlog decreased from $18.5 million at December 31, 2004 to $10.3 million at September 30, 2005. This decrease reflects the completion of several large project orders
since December 31, 2004.



Carbon Products. For the
combined nine months ended September 30, 2005, our carbon products sales increased $46.6 million, or 42.2%, to $157.1 million as compared to the nine months ended September 30, 2004. This increase was driven by an increase in carbon pipe sales
volume which included several large project order shipments primarily to natural gas transmission and distribution customers, and by commodity price increases for our carbon pipe and fittings. Carbon products sales order backlog decreased from $18.2
million at December 31, 2004 to $15.7 million at September 30, 2005. The decrease in carbon products sales order backlog is due to the shipment of several large project orders since December 31, 2004 partially offset by new project orders.



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##### Table of Contents

Gross Profit



|                  |  |                                                                     |        |                                                   |   |            |  |      |  
|----------------- |  | ------------------------------------------------------------------- | ------ | ------------------------------------------------- | - | ---------- |  | ---- | -
|Reporting Segment |  | Non-GAAP Combined Nine Months Ended September 30, 2005 Gross Profit |        | Nine Months Ended September 30, 2004 Gross Profit |   | % Increase | 
|                  |  | (dollars in thousands)                                              |       
|Alloy Products    |  | $                                                                   | 17,818 |                                                   | $ | 12,027     |  | 48.1 | %
|Carbon Products   |  |                                                                     | 27,582 |                                                   |   | 25,875     |  | 6.6  | %
|                  |  |                                                                     |        |                                                   |   |            |  |      |  
|Total             |  | $                                                                   | 45,400 |                                                   | $ | 37,902     |  | 19.8 | %
|                  |  |                                                                     |        |                                                   |   |            |  |      |  



|                  |  |                                                                            |   |  |                                                          |  
|----------------- |  | -------------------------------------------------------------------------- | - |  | -------------------------------------------------------- | -
|Reporting Segment |  | Non-GAAP Combined Nine Months Ended September 30, 2005 Gross Profit Margin |   |  | Nine Months Ended September 30, 2004 Gross Profit Margin |  
|Alloy Products    |  | 30.8                                                                       | % |  | 30.5                                                     | %
|Carbon Products   |  | 17.6                                                                       | % |  | 23.4                                                     | %
|Total             |  | 21.1                                                                       | % |  | 25.3                                                     | %



Overall. Our
consolidated gross profit for the combined nine months ended September 30, 2005 was $45.4 million, an increase of $7.5 million, or 19.8%, from the nine months ended September 30, 2004. The increase in gross profit is due primarily to the increase in
overall alloy and carbon sales when compared to the same period in 2004. Our gross profit margin (gross profit as a percentage of sales) for the combined nine months ended September 30, 2005 decreased to 21.1% as compared to 25.3% for the nine
months ended September 30, 2004. The decrease in gross profit margin is due primarily to an increase in inventory costs associated with our alloy and carbon products and the impact of several large, lower margin shipments to customers. The decrease
in gross profit margin was partially offset by an increase in sales prices for both our alloy and carbon products.



The gross profit and gross profit margin for the combined nine months ended September 30, 2005 were also negatively impacted by additional cost of sales
of $1.5 million related to a purchase price allocation adjustment that increased the value of our alloy inventory as of February 1, 2005. This purchase price allocation adjustment will continue to impact gross profit margins until all of the
acquired alloy inventory is sold. As of September 30, 2005, $0.4 million of the purchase price adjustment remained on our Companys balance sheet. We cannot predict the exact timing of these inventory sales, which we expect will fluctuate from
period to period.



Alloy Products. Gross profit for our
alloy products for the combined nine months ended September 30, 2005 was $17.8 million, an increase of $5.8 million, or 48.1%, from the nine months ended September 30, 2004. The increase in gross profit is attributable to an increase in alloy
product sales when compared to the same period in 2004. Gross profit margin remained consistent for the combined nine months ended September 30, 2005 compared to the same period in 2004 despite a large, lower margin shipment to a customer in the
third quarter 2005 and the impact of the $1.5 million purchase price adjustment discussed above.



Carbon Products. Gross profit for our carbon products for the combined nine months ended September 30, 2005 was $27.6 million, an increase of $1.7
million, or 6.6%, from the nine months ended September 30, 2004. The increase is gross profit is attributable to an increase in carbon product sales while the decrease in gross profit margin is attributable to higher inventory costs as a result of
the current market price of steel when compared to the same period in 2004 and several large, lower margin shipments to customers in the second and third quarters of 2005.



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##### Table of Contents

Operating Income (Loss)



|                  |  |                                                                                |         |   |                                                              |   |        |  
|----------------- |  | ------------------------------------------------------------------------------ | ------- | - | ------------------------------------------------------------ | - | ------ | -
|Reporting Segment |  | Non-GAAP Combined Nine Months Ended September 30, 2005 Operating Income (Loss) |         |   | Nine Months Ended September 30, 2004 Operating Income (Loss) |  
|                  |  | (dollars in thousands)                                                         |        
|Alloy Products    |  | $                                                                              | 9,523   |   |                                                              | $ | 4,776  |  
|Carbon Products   |  |                                                                                | 17,252  |   |                                                              |   | 15,715 |  
|General Corporate |  |                                                                                | (18,210 | ) |                                                              |   | (6,032 | )
|                  |  |                                                                                |         |   |                                                              |   |        |  
|Total             |  | $                                                                              | 8,565   |   |                                                              | $ | 14,459 |  
|                  |  |                                                                                |         |   |                                                              |   |        |  



Overall. Our
consolidated operating income of $8.6 million for the combined nine months ended September 30, 2005 decreased $5.9 million from operating income of $14.5 million for the nine months ended September 30, 2004. The consolidated operating income for the
combined nine months ended September 30, 2005 includes Transaction-related expenses of approximately $12.0 million. Consolidated operating income as a percentage of consolidated sales for the periods January 1, 2005 to January 31, 2005, the period
February 1, 2005 to September 30, 2005, and the nine months ended September 30, 2005 was (51.6)%, 9.4% and 9.6%, respectively. Excluding the Transaction-related expenses, consolidated operating income as a percentage of consolidated sales for the
combined nine months ended September 30, 2005 remained consistent when compared to the operating income as a percentage of consolidated sales of 9.6% for the nine months ended September 30, 2004. Operating income for the periods January 1, 2005 to
January 31, 2005 and February 1, 2005 to September 30, 2005 was (5.2)% and 9.4%, respectively. Operating income was also reduced for the combined nine months ended September 30, 2005 by increases in employee salaries and related payroll taxes, and
increases in travel expenses associated with business development efforts.



Alloy Products. Our alloy products operating income for the combined nine months ended September 30, 2005 was $9.5 million, an increase of $4.7 million from the nine months ended September 30, 2004. The
majority of the increase was the result of sales and gross margin increases as described above and was partially offset by an increase in salaries and related payroll taxes, and travel and selling expenses associated with increased business
development efforts.



Carbon Products. Our carbon
products operating income for the combined nine months ended September 30, 2005 was $17.3 million, an increase of $1.5 million from the nine months ended September 30, 2004. Similar to the alloy product group results, the increase in operating
income was driven primarily by sales increases and was partially offset by an increase in salaries and related payroll taxes, and travel and selling expenses associated with increased business development efforts.



Yard and Shop Expenses



Yard and shop expenses were 1.7% and 2.3% of sales for the combined nine
months ended September 30, 2005 and the nine months ended September 30, 2004, respectively. Yard and shop expenses were $3.4 million for the nine months ended September 30, 2004 compared to $3.7 million for the combined nine months ended September
30, 2005.



Selling, General and Administrative Expenses



Selling, general and administrative expenses for the combined nine
months ended September 30, 2005 increased approximately $13.0 million, or 71.6%, as compared to the nine months ended September 30, 2004. The majority of the increase is related to the approximately $12.0 million in Transaction-related expenses
previously discussed above, increases in employee salaries and related payroll taxes, and increases in travel and selling expenses associated with increased business development efforts. The increase in selling, general and administrative expenses
was partially offset by a reduction in the employee bonus pool accrual and related payroll taxes, and legal and accounting expenses for the combined nine months ended September 30, 2005 compared to the same period in 2004.



Interest Expense



Interest expense, net, for the combined nine months ended September 30, 2005 increased $5.3 million, or 166.0%, to $8.5
million. Interest expense, net for the nine months ended September 30, 2004 was $3.2 million. The increase in interest expense was the result of the issuance of the Notes on February 1, 2005 and borrowings under the Companys new revolving line
of credit, partially offset by the retirement of $47.7 million of revolving line of credit and term loan debt as of February 1, 2005. Interest expense for the combined nine months ended September 30, 2005 included $0.8 million of deferred financing
costs amortization compared to less than $0.1 million for the nine months ended September 30, 2004.





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##### Table of Contents

Income Tax Expense



Income tax expense was $3.8 million for the period February 1, 2005 to September 30, 2005 as compared to an income tax
benefit of $1.9 million for the period January 1, 2005 to January 31, 2005 and income tax expense of $3.4 million for the nine months ended September 30, 2004. The effective tax rate was approximately 37% for the period February 1, 2005 to September
30, 2005, approximately (19%) for the period January 1, 2005 to January 31, 2005 and approximately 30% for the nine months ended September 30, 2004. The effective tax rate for the period February 1, 2005 to September 30, 2005 is primarily caused by
the reduction of the deferred tax liability related to the fair value purchase price allocation adjustment to inventory and is reduced in the period the inventory is sold. The income tax benefit and effective tax rate for the period January 1, 2005
to January 31, 2005 is due to the net loss incurred in the first quarter 2005 as a result of Transaction-related expenses, which may not be fully deductible for income tax purposes.



Preferred Stock Dividends and Related Charges



Preferred stock dividends and related charges were $1.4 million for the combined nine months ended September 30, 2005 as
compared to $1.7 million for the nine months ended September 30, 2004. The decrease resulted from our repurchase of all outstanding shares of our mandatorily redeemable preferred stock, partially offset by the issuance of our Series A cumulative
compounding preferred stock in connection with the Transactions.



Liquidity
and Capital Resources



Combined Nine
Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004



Operating Activities. Net cash outflows from operating activities were $13.6 million for the combined nine months ended September 30, 2005, when compared with net cash outflows from operating activities of $2.1
million for the nine months ended September 30, 2004. The increase in cash outflows from operating activities was due primarily to the payment of $12.0 million in Transaction-related expenses during the combined nine months ended September 30, 2005
as previously discussed. Excluding the $12.0 million in Transaction-related expenses, cash outflows from operations activities for the combined nine months ended September 30, 2005 would have declined slightly from the nine months ended September
30, 2004. Cash outflows from operating activities for the combined nine months ended September 30, 2005 also included a $5.2 million interest payment on the Notes and the receipt of approximately $0.6 million in income tax refunds.



Investing Activities. Net cash outflows from investing activities were
$124.0 million for the combined nine months ended September 30, 2005, compared with net cash outflows from investing activities of $0.6 million for the nine months ended September 30, 2004. The increase in cash outflows is due primarily to the
acquisitions of Edgen Corporation and Western Flow for a combined cash purchase price of approximately $122.9 million. Capital expenditures increased to $1.1 million for the nine months ended September 30, 2005 compared to $0.6 million for the same
period in 2004. The $0.5 million increase in capital expenditures reflects approximately $0.4 million of leasehold improvements, office equipment and machinery and equipment related to our expanded Canadian operations.



Financing Activities. Net cash inflows from financing activities were
$141.1 million for the combined nine months ended September 30, 2005 compared with net cash outflows of $0.3 million from financing activities in the nine months ended September 30, 2004. The increase in cash flows from financing activities of
$141.4 million is due primarily to the issuance of the Notes, additional borrowings under our new revolving credit facility and the issuance of common and preferred stock in connection with the Transactions.



Non-Cash Transactions. Non-cash transactions during the combined nine
months ended September 30, 2005 include the issuance of restricted stock of $0.3 million, assets acquired under capital lease obligations of $0.1 million and the issuance of a $0.3 million note payable to the previous owners of Western Flow. There
were no non-cash transactions during the nine months ended September 30, 2004.





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Indebtedness



Senior Secured Notes. We have outstanding $105.0 million aggregate principal amount of 9 7/8% Secured Senior Notes
due 2011. Total cash interest payments required under the Notes are in excess of $10.3 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 on the date the Notes were issued 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 covenants that restrict,
among other things, our ability to incur additional indebtedness, pay dividends and create certain liens. We borrowed approximately $2.7 million under the revolving credit facility in connection with the consummation of the Transactions. As of
September 30, 2005, we had $14.0 million 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.



Future Capital Needs



Our principal source of liquidity is cash flow generated from operations and borrowings under our new revolving credit facility. Our principal liquidity
requirements are to meet debt service requirements, finance our capital expenditures and provide working capital. 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. During the third quarter 2005, we made our first $5.2 million
interest payment under our Notes and our indebtedness increased from $119.0 million at June 30, 2005 to $119.3 million at September 30, 2005.



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 new revolving credit facility in an amount sufficient to enable us to service our indebtedness or to fund our other liquidity needs.



Commitments and Contractual Obligations



Our contractual obligations and commitments principally include obligations
associated with our outstanding indebtedness and future minimum operating lease obligations Other than in connection with the Transactions, there have been no material changes outside the ordinary course of our business in the specified contractual
obligations during the nine months ended September 30, 2005.





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Off-balance Sheet Arrangements



As of September 30, 2005, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation
S-K.



Recently Issued Accounting Pronouncements



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



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 MRO 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. 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, estimate, 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 Amendment No. 1 to our Registration Statement on Form S-4 (File No. 333-124543) as filed with the Securities and Exchange Commission on June 14,
2005. 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. As of September 30, 2005, our variable rate borrowings are $14.0 million under our new revolving
credit facility. A 100 basis point increase in interest rates, applied to our borrowings at September 30, 2005, would have resulted in an increase in interest expense and a corresponding reduction in cash-flow of approximately $0.1 million per
annum.



Foreign Currency Risk. Substantially all of our
net sales and expenses are denominated in U.S. dollars. Therefore, foreign currency fluctuations did not materially impact our financial statements for the three 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, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of our disclosure
controls and procedures (as defined by Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these
disclosure controls and procedures were effective. There has been no change in the Companys internal control over financial reporting that occurred during the Companys most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Companys 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 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 |  |                                                                                                                                                                                                                   
|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.           



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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 14, 2005 |  | By:               |  | /s/ DANIEL J. OLEARY                
|                        |  |                   |  | Daniel J. OLeary                    
|                        |  |                   |  | President and Chief Executive Officer
|                        |  |                  
|Date: November 14, 2005 |  | By:               |  | /s/ DAVID L. LAXTON, III             
|                        |  |                   |  | David L. Laxton, III                 
|                        |  |                   |  | Chief Financial Officer              



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INDEX TO EXHIBITS



|            |  |                                                                       
|----------- |  | ----------------------------------------------------------------------
|Exhibit No. |  | Description                                                           
|31.1       |  | Rule 15d-14(a) Certification of President and Chief Executive Officer.
|            | 
|31.2       |  | Rule 15d-14(a) Certification of Chief Financial Officer.              
|            | 
|32.1       |  | Section 1350 Certification of President and Chief Executive Officer.  
|            | 
|32.2       |  | Section 1350 Certification of Chief Financial Officer.                

---

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



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