##### 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 JUNE 30, 2006

OR



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

FOR THE TRANSITION PERIOD FROM  TO

COMMISSION FILE NUMBER 333124543



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EDGEN
CORPORATION

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Nevada                                                         |  | 13-3908690                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|18444 Highland Road Baton Rouge, Louisiana                     |  | 70809                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

225-756-9868

(Registrants telephone number, including area code)



---

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

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



|                         |  |                    |  |                         
|------------------------ |  | ------------------ |  | ------------------------
|Large accelerated filer ̈ |  | Accelerated filer ̈ |  | Non-accelerated filer  x

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

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

There were 2,681,564 shares of Common Stock outstanding as of August 14, 2006.



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##### Table of Contents

|                               |  |                                                                                                                                                                                                                |  |   
|------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --
|PART I 
FINANCIAL INFORMATION |  |                                                                                                                                                                                                               
|                               |  |                                                                                                                                                                                                               
|Item 1.                        |  | Financial Statements:                                                                                                                                                                                          |  |   
|                               |  |                                                                                                                                                                                                               
|                               |  | Condensed Consolidated Balance Sheets at June 30, 2006 and December 31, 2005 (unaudited)                                                                                                                       |  | 3 
|                               |  | Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2006, the period February 1, 2005 to June 30, 2005, and the period January 1, 2005 to January 31, 2005 (unaudited) |  | 4 
|                               |  | Condensed Consolidated Statement of Shareholders Equity as of June 30, 2006 and December 31, 2005 (unaudited)                                                                                                 |  | 5 
|                               |  | Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2006, the period February 1, 2005 to June 30, 2005, and the period January 1, 2005 to January 31, 2005 (unaudited)           |  | 6 
|                               |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                                                                                                                               |  | 7 
|                               |  |                                                                                                                                                                                                               
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                          |  | 19
|                               |  |                                                                                                                                                                                                               
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                                     |  | 34
|                               |  |                                                                                                                                                                                                               
|Item 4.                        |  | Controls and Procedures                                                                                                                                                                                        |  | 34
|                               | 
|PART II 
OTHER INFORMATION    |  |                                                                                                                                                                                                               
|                               |  |                                                                                                                                                                                                               
|Item 1.                        |  | Legal Proceedings                                                                                                                                                                                              |  | 35
|                               |  |                                                                                                                                                                                                               
|Item 1A.                       |  | Risk Factors                                                                                                                                                                                                   |  | 35
|                               |  |                                                                                                                                                                                                               
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                                    |  | 35
|                               |  |                                                                                                                                                                                                               
|Item 3.                        |  | Defaults Upon Senior Securities                                                                                                                                                                                |  | 35
|                               |  |                                                                                                                                                                                                               
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                                                                                                                                            |  | 35
|                               |  |                                                                                                                                                                                                               
|Item 5.                        |  | Other Information                                                                                                                                                                                              |  | 35
|                               |  |                                                                                                                                                                                                               
|Item 6.                        |  | Exhibits                                                                                                                                                                                                       |  | 35
|                               | 
|SIGNATURES                     |  | 36                                                                                                                                                                                                            
|                               | 
|EXHIBIT INDEX                  |  | 37                                                                                                                                                                                                            



2



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##### Table of Contents

PART I  FINANCIAL INFORMATION

Item 1. Financial Statements.

EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



|                                                                                                                                                                                                    |  |               |             |                   |   |            
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | ----------------- | - | -----------
|                                                                                                                                                                                                    |  | June 30, 2006 |             | December 31, 2005
|ASSETS                                                                                                                                                                                              |  |               |             |                   |   |            
|CURRENT ASSETS:                                                                                                                                                                                     |  |               |             |                   |   |            
|Cash and cash equivalents                                                                                                                                                                           |  | $             | 2,990,631   |                   | $ | 18,013,533 
|Accounts receivablenet of allowance for doubtful accounts of $199,539 and $128,573, respectively                                                                                                   |  |               | 57,811,471  |                   |   | 41,862,061 
|Accounts receivableaffiliated                                                                                                                                                                      |  |               | 117,557     |                   |   | 19,483     
|Inventory                                                                                                                                                                                           |  |               | 94,015,772  |                   |   | 81,003,469 
|Income tax receivable                                                                                                                                                                               |  |               | 248,224     |                   |   | 21,551     
|Prepaid expenses and other current assets                                                                                                                                                           |  |               | 1,960,855   |                   |   | 1,112,337  
|Deferred tax asset                                                                                                                                                                                  |  |               | 1,734,206   |                   |   | 1,670,166  
|                                                                                                                                                                                                    |  |               |             |                   |   |            
|Total current assets                                                                                                                                                                                |  |               | 158,878,716 |                   |   | 143,702,600
|PROPERTY, PLANT AND EQUIPMENT  net                                                                                                                                                                 |  |               | 11,041,830  |                   |   | 11,258,703 
|GOODWILL                                                                                                                                                                                            |  |               | 37,475,584  |                   |   | 37,126,769 
|OTHER INTANGIBLES                                                                                                                                                                                   |  |               | 21,696,974  |                   |   | 23,424,188 
|OTHER ASSETS                                                                                                                                                                                        |  |               | 143,443     |                   |   | 177,581    
|DEFERRED FINANCING COSTS                                                                                                                                                                            |  |               | 7,723,000   |                   |   | 8,345,417  
|                                                                                                                                                                                                    |  |               |             |                   |   |            
|TOTAL                                                                                                                                                                                               |  | $             | 236,959,547 |                   | $ | 224,035,258
|                                                                                                                                                                                                    |  |               |             |                   |   |            
|LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS EQUITY                                                                                                                                    |  |               |             |                   |   |            
|CURRENT LIABILITIES:                                                                                                                                                                                |  |               |             |                   |   |            
|Managed cash overdrafts                                                                                                                                                                             |  | $             | 3,336,458   |                   | $ | 488,748    
|Accounts payable                                                                                                                                                                                    |  |               | 45,307,006  |                   |   | 41,213,411 
|Accounts payableaffiliated                                                                                                                                                                         |  |               | 643,483     |                   |   | 218,094    
|Accrued expenses and other current liabilities                                                                                                                                                      |  |               | 7,917,229   |                   |   | 9,382,103  
|Accrued interest payable                                                                                                                                                                            |  |               | 5,647,045   |                   |   | 5,600,278  
|Current portion of long-term debt                                                                                                                                                                   |  |               | 153,938     |                   |   | 160,984    
|                                                                                                                                                                                                    |  |               |             |                   |   |            
|Total current liabilities                                                                                                                                                                           |  |               | 63,005,159  |                   |   | 57,063,618 
|DEFERRED TAX LIABILITY                                                                                                                                                                              |  |               | 2,707,593   |                   |   | 2,775,879  
|LONG-TERM DEBT                                                                                                                                                                                      |  |               | 136,700,296 |                   |   | 134,807,164
|                                                                                                                                                                                                    |  |               |             |                   |   |            
|Total liabilities                                                                                                                                                                                   |  |               | 202,413,048 |                   |   | 194,646,661
|                                                                                                                                                                                                    |  |              
|Redeemable preferred stockSeries A Cumulative Compounding, $.01 par value, 40,000 shares authorized and designated, 21,600 shares issued
and outstanding as of June 30, 2006 and December 31, 2005 |  |               | 24,226,500  |                   |   | 23,303,400 
|                                                                                                                                                                                                    |  |              
|COMMITMENTS AND CONTINGENCIES                                                                                                                                                                       |  |               |            |                   |   |           
|                                                                                                                                                                                                    |  |              
|SHAREHOLDERS EQUITY:                                                                                                                                                                               |  |               |             |                   |   |            
|Common stock$.01 par value, 5,000,000 shares authorized; 2,681,564 shares issued and outstanding as of June 30, 2006 and
December 31, 2005                                                         |  |               | 26,816      |                   |   | 26,816     
|Paid-in capital                                                                                                                                                                                     |  |               | 2,877,151   |                   |   | 2,654,749  
|Accumulated comprehensive income                                                                                                                                                                    |  |               | 134,743     |                   |   | 77,971     
|Retained earnings                                                                                                                                                                                   |  |               | 7,281,289   |                   |   | 3,325,661  
|                                                                                                                                                                                                    |  |               |             |                   |   |            
|Total shareholders equity                                                                                                                                                                          |  |               | 10,319,999  |                   |   | 6,085,197  
|                                                                                                                                                                                                    |  |               |             |                   |   |            
|TOTAL                                                                                                                                                                                               |  | $             | 236,959,547 |                   | $ | 224,035,258
|                                                                                                                                                                                                    |  |               |             |                   |   |            

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



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##### Table of Contents

EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                                           |  |                                  |            |   |                                  |   |            |                                |  |   |                                          |   |  |                                          |             |   |  |   |             |  
|---------------------------------------------------------- |  | -------------------------------- | ---------- | - | -------------------------------- | - | ---------- | ------------------------------ |  | - | ---------------------------------------- | - |  | ---------------------------------------- | ----------- | - |  | - | ----------- | -
|                                                           |  | Successor                        |            |   | Successor                        |   |            | Successor                      |  |   | Successor                                |   |  | Predecessor                              |            
|                                                           |  | Three Months Ended June
30, 2006 |            |   | Three Months Ended June 30,
2005 |   |            | Six Months Ended June
30, 2006 |  |   | Period February 1, 2005 to June 30, 2005 |   |  | PeriodJanuary 1, 2005 toJanuary 31, 2005 |            
|SALES                                                      |  | $                                | 98,159,218 |   |                                  | $ | 74,393,557 |                                |  | $ | 187,865,378                              |   |  | $                                        | 120,288,283 |   |  | $ | 18,944,787  |  
|OPERATING EXPENSES:                                        |  |                                  |            |   |                                  |   |            |                                |  |   |                                          |   |  |                                          |             |   |  |   |             |  
|Cost of sales (exclusive of depreciation and amortization) |  |                                  | 79,461,138 |   |                                  |   | 57,828,189 |                                |  |   | 151,961,785                              |   |  |                                          | 93,626,875  |   |  |   | 14,153,065  |  
|Yard and shop expense                                      |  |                                  | 1,300,557  |   |                                  |   | 1,234,242  |                                |  |   | 2,582,216                                |   |  |                                          | 2,002,757   |   |  |   | 389,928     |  
|Selling, general, and administrative expense               |  |                                  | 7,545,667  |   |                                  |   | 6,840,948  |                                |  |   | 14,692,397                               |   |  |                                          | 11,032,158  |   |  |   | 13,974,331  |  
|Depreciation and amortization expense                      |  |                                  | 1,511,568  |   |                                  |   | 608,711    |                                |  |   | 3,003,519                                |   |  |                                          | 1,086,650   |   |  |   | 200,644     |  
|                                                           |  |                                  |            |   |                                  |   |            |                                |  |   |                                          |   |  |                                          |             |   |  |   |             |  
|Total operating expenses                                   |  |                                  | 89,818,930 |   |                                  |   | 66,512,090 |                                |  |   | 172,239,917                              |   |  |                                          | 107,748,440 |   |  |   | 28,717,968  |  
|OPERATING INCOME (LOSS)                                    |  |                                  | 8,340,288  |   |                                  |   | 7,881,467  |                                |  |   | 15,625,461                               |   |  |                                          | 12,539,843  |   |  |   | (9,773,181  | )
|OTHER INCOME (EXPENSE):                                    |  |                                  |            |   |                                  |   |            |                                |  |   |                                          |   |  |                                          |             |   |  |   |             |  
|Other income (expense)                                     |  |                                  | (264,793   | ) |                                  |   | 67,808     |                                |  |   | 185,256                                  |   |  |                                          | 74,520      |   |  |   | (49,886     | )
|Interest expense, net                                      |  |                                  | (3,837,698 | ) |                                  |   | (3,022,985 | )                              |  |   | (7,573,848                               | ) |  |                                          | (4,958,409  | ) |  |   | (333,288    | )
|                                                           |  |                                  |            |   |                                  |   |            |                                |  |   |                                          |   |  |                                          |             |   |  |   |             |  
|INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAX EXPENSE    |  |                                  | 4,237,797  |   |                                  |   | 4,926,290  |                                |  |   | 8,236,869                                |   |  |                                          | 7,655,954   |   |  |   | (10,156,355 | )
|INCOME TAX EXPENSE (BENEFIT)                               |  |                                  | 1,633,536  |   |                                  |   | 1,737,909  |                                |  |   | 3,358,141                                |   |  |                                          | 2,747,885   |   |  |   | (1,916,508  | )
|                                                           |  |                                  |            |   |                                  |   |            |                                |  |   |                                          |   |  |                                          |             |   |  |   |             |  
|NET INCOME (LOSS)                                          |  |                                  | 2,604,261  |   |                                  |   | 3,188,381  |                                |  |   | 4,878,728                                |   |  |                                          | 4,908,069   |   |  |   | (8,239,847  | )
|PREFERRED DIVIDEND REQUIREMENT                             |  |                                  | (464,100   | ) |                                  |   | (464,100   | )                              |  |   | (923,100                                 | ) |  |                                          | (765,000    | ) |  |   | (189,949    | )
|                                                           |  |                                  |            |   |                                  |   |            |                                |  |   |                                          |   |  |                                          |             |   |  |   |             |  
|NET INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDER         |  | $                                | 2,140,161  |   |                                  | $ | 2,724,281  |                                |  | $ | 3,955,628                                |   |  | $                                        | 4,143,069   |   |  | $ | (8,429,796  | )
|                                                           |  |                                  |            |   |                                  |   |            |                                |  |   |                                          |   |  |                                          |             |   |  |   |             |  

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



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##### Table of Contents

EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY

(Unaudited)



|                                                         |  |                      |        |                 |   |                                        |  |                   |         |  |       |           |   |  |   |            |  
|-------------------------------------------------------- |  | -------------------- | ------ | --------------- | - | -------------------------------------- |  | ----------------- | ------- |  | ----- | --------- | - |  | - | ---------- | -
|                                                         |  | Class A Common Stock |        | Paid-In Capital |   | Accumulated Other Comprehensive Income |  | Retained Earnings |         |  | Total |          
|BalanceDecember 31, 2005                                |  | $                    | 26,816 |                 | $ | 2,654,749                              |  | $                 | 77,971  |  | $     | 3,325,661 |   |  | $ | 6,085,197  |  
|Net income                                               |  |                      |       |                 |   |                                       |  |                   |        |  |       | 4,878,728 |   |  |   | 4,878,728  |  
|Other comprehensive income:                              |  |                      |        |                 |   |                                        |  |                   |         |  |       |           |   |  |   |            |  
|Foreign translation adjustments, net of tax of ($87,750) |  |                      |       |                 |   |                                       |  |                   | 56,772  |  |       |          |   |  |   | 56,772     |  
|                                                         |  |                      |        |                 |   |                                        |  |                   |         |  |       |           |   |  |   |            |  
|Comprehensive income                                     |  |                      |       |                 |   |                                       |  |                   |        |  |       |          |   |  |   | 4,935,500  |  
|                                                         |  |                      |        |                 |  
|Contributed capital by Edgen/Murray, L.P.                |  |                      |       |                 |   | 222,402                                |  |                   |        |  |       |          |   |  |   | 222,402    |  
|Preferred dividend requirement                           |  |                      |       |                 |   |                                       |  |                   |        |  |       | (923,100  | ) |  |   | (923,100   | )
|                                                         |  |                      |        |                 |   |                                        |  |                   |         |  |       |           |   |  |   |            |  
|BalanceJune 30, 2006                                    |  | $                    | 26,816 |                 | $ | 2,877,151                              |  | $                 | 134,743 |  | $     | 7,281,289 |   |  | $ | 10,319,999 |  
|                                                         |  |                      |        |                 |   |                                        |  |                   |         |  |       |           |   |  |   |            |  

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



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##### Table of Contents

EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                               |  |                               |             |   |                                          |   |              |                                            |  |   |            |  
|------------------------------------------------------------------------------ |  | ----------------------------- | ----------- | - | ---------------------------------------- | - | ------------ | ------------------------------------------ |  | - | ---------- | -
|                                                                               |  | Successor                     |             |   | Successor                                |   |              | Predecessor                                | 
|                                                                               |  | Six Months EndedJune 30, 2006 |             |   | Period February 1, 2005 to June 30, 2005 |   |              | Period January 1, 2005 to January 31, 2005 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                          |  |                               |             |   |                                          |   |              |                                            |  |   |            |  
|                                                                               |  |                               |             |   |                                          |   |              |                                            |  |   |            |  
|Net cash (used in) provided by operating activities                            |  | $                             | (17,976,630 | ) |                                          | $ | (14,398,395  | )                                          |  | $ | 4,248,825  |  
|                                                                               |  |                               |             |   |                                          |   |              |                                            |  |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                          |  |                               |             |   |                                          |   |              |                                            |  |   |            |  
|Purchase of Edgen Corporation, net of cash acquired                            |  |                               |            |   |                                          |   | (120,952,320 | )                                          |  |   |           |  
|Purchase of Western Flow Products, Inc.  additional contingent purchase price |  |                               | (451,469    | ) |                                          |   |             |                                            |  |   |           |  
|Purchase of property, plant and equipment                                      |  |                               | (1,050,365  | ) |                                          |   | (581,986     | )                                          |  |   | (4,079     | )
|Proceeds from the sale of capital assets                                       |  |                               | 32,445      |   |                                          |   |             |                                            |  |   | 3,000      |  
|                                                                               |  |                               |             |   |                                          |   |              |                                            |  |   |            |  
|Net cash used in investing activities                                          |  |                               | (1,469,389  | ) |                                          |   | (121,534,306 | )                                          |  |   | (1,079     | )
|                                                                               |  |                               |             |   |                                          |   |              |                                            |  |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                          |  |                               |             |   |                                          |   |              |                                            |  |   |            |  
|Principal payments on notes payable and long-term debt                         |  |                               | (20,572     | ) |                                          |   | (22,837      | )                                          |  |   | (232,072   | )
|Proceeds from issuance of long-term debt                                       |  |                               |            |   |                                          |   | 105,000,000  |                                            |  |   |           |  
|Proceeds from debt issuancenet of payments under revolving credit agreement   |  |                               | 1,789,674   |   |                                          |   | 13,992,278   |                                            |  |   | 116,438    |  
|Deferred financing costs                                                       |  |                               | (204,784    | ) |                                          |   | (7,287,897   | )                                          |  |   |           |  
|Issuance of common stock                                                       |  |                               |            |   |                                          |   | 2,400,000    |                                            |  |   |           |  
|Issuance of preferred stock                                                    |  |                               |            |   |                                          |   | 21,600,000   |                                            |  |   |           |  
|Increase (decrease) in managed cash overdraft                                  |  |                               | 2,847,710   |   |                                          |   | 561,306      |                                            |  |   | (1,361,404 | )
|                                                                               |  |                               |             |   |                                          |   |              |                                            |  |   |            |  
|Net cash provided by (used in) financing activities                            |  |                               | 4,412,028   |   |                                          |   | 136,242,850  |                                            |  |   | (1,477,038 | )
|Effect of foreign currency exchange rate on cash                               |  |                               | 11,089      |   |                                          |   |             |                                            |  |   |           |  
|                                                                               |  |                               |            
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                           |  |                               | (15,022,902 | ) |                                          |   | 310,149      |                                            |  |   | 2,770,708  |  
|CASH AND CASH EQUIVALENTS (Beginning of period)                                |  |                               | 18,013,533  |   |                                          |   |             |                                            |  |   | 134,299    |  
|                                                                               |  |                               |             |   |                                          |   |              |                                            |  |   |            |  
|CASH AND CASH EQUIVALENTS (End of period)                                      |  | $                             | 2,990,631   |   |                                          | $ | 310,149      |                                            |  | $ | 2,905,007  |  
|                                                                               |  |                               |             |   |                                          |   |              |                                            |  |   |            |  
|                                                                               |  |                               |            
|Cash paid for income taxes                                                     |  | $                             | 3,140,711   |   |                                          | $ | 197,365      |                                            |  | $ | 114        |  
|                                                                               |  |                               |             |   |                                          |   |              |                                            |  |   |            |  
|Cash paid for interest                                                         |  | $                             | 6,742,980   |   |                                          | $ | 182,760      |                                            |  | $ | 1,314,743  |  
|                                                                               |  |                               |             |   |                                          |   |              |                                            |  |   |            |  
|                                                                               |  |                               |            
|NON-CASH FINANCING ACTIVITIES-                                                 |  |                               |             |   |                                          |   |              |                                            |  |   |            |  
|Contributed Capital by Parent                                                  |  | $                             | 222,402     |   |                                          | $ |             |                                            |  | $ |           |  
|                                                                               |  |                               |             |   |                                          |   |              |                                            |  |   |            |  

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



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##### Table of Contents

EDGEN CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

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

On February 1, 2005, Edgen Acquisition Corporation, a corporation newly formed by Jefferies Capital Partners (JCP) and certain
members of Edgen management, purchased all of the outstanding capital stock of Edgen from its existing stockholders for an aggregate purchase price of approximately $124.0 million, which included the assumption or repayment of indebtedness of
Edgen but excluded the payment of fees and expenses. The acquisition was funded with proceeds to Edgen Acquisition Corporation from the issuance and sale of $105.0 million aggregate principal amount of 97/8% Senior
Secured Notes due 2011 (Notes) and from an equity investment from funds managed by JCP and certain members of Edgen management. Concurrently with the purchase, Edgen entered into a new $20 million senior secured revolving
credit facility.

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

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

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

Our foreign subsidiary, Edgen Canada, maintains its accounting records in its
local currency, the Canadian dollar (CAD). All of the assets and liabilities of this subsidiary (including long-term assets, such as goodwill) are converted to U.S. dollars with the effect of the foreign currency translation
reflected in accumulated other comprehensive income, a component of shareholders equity, in accordance with the Financial Accounting Standards Boards (FASB) Statement of Financial Accounting Standards
(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 that were consummated in connection with the acquisition of the Predecessor. There were no material
changes to the operations or customer relationships of the business as a result of the acquisition of the Predecessor.

Interim
Financial InformationCertain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations promulgated by the United
States Securities and Exchange Commission. However, management believes that the disclosures contained herein are adequate to make the information presented not misleading. The unaudited financial statements should be read in



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conjunction with the audited financial statements and accompanying notes as of and for the year ended December 31, 2005 included in the Companys
amended Annual Report on Form 10-K/A as filed with the Securities and Exchange Commission on June 23, 2006.

Use of
EstimatesThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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

2. ACQUISITIONS

Western Flow
Products, Inc.

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). Under the purchase agreement, an additional $451,469 (527,000 CAD) of purchase price was contingent upon the achievement of a specified earnings threshold subsequent to the acquisition and as of January 31,
2006, the earnings threshold was met and paid. 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 have been merged into the Companys subsidiary, Edgen Canada, and are included in our operating results from the date of the acquisition.

The final purchase price allocation is summarized below:



|                                                                                                   |  |   |           |  
|-------------------------------------------------------------------------------------------------- |  | - | --------- | -
|Accounts receivable                                                                                |  | $ | 1,214,760 |  
|Inventory                                                                                          |  |   | 877,727   |  
|Other current assets                                                                               |  |   | 6,065     |  
|Property, plant and equipment                                                                      |  |   | 31,647    |  
|Goodwill                                                                                           |  |   | 1,137,907 |  
|Accounts payable                                                                                   |  |   | (680,759  | )
|Accrued expenses and other current liabilities                                                     |  |   | (95,876   | )
|                                                                                                   |  |   |           |  
|Purchase price (net of cash received of $83), including acquisition costs of approximately $69,000 |  | $ | 2,491,471 |  
|                                                                                                   |  |   |           |  

Murray International Metals, Inc.

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

MIM US is a leading supplier of high yield and special grade structural steel to oil and
gas projects being engineered and managed by leading operators, engineering houses and offshore fabricators in the oil and gas industry primarily in North and South America. MIM US offers a complete range of high yield steel plate, sections, and
tubulars. MIM US is based in Houston, Texas, and is presently a wholly owned subsidiary of Edgen Carbon Products Group, L.L.C. The Company intends to merge MIM US into Edgen Carbon Products Group, L.L.C. prior to year end.



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As of June 30, 2006, 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 December 16, 2005, including the identification of other intangible assets, if any. The preliminary purchase price allocation as of June 30, 2006
includes the following:



|                                                       |  |   |            |  
|------------------------------------------------------ |  | - | ---------- | -
|Accounts receivable                                    |  | $ | 5,180,054  |  
|Inventory                                              |  |   | 7,413,860  |  
|Other current assets                                   |  |   | 1,319      |  
|Property, plant and equipment                          |  |   | 77,469     |  
|Goodwill                                               |  |   | 14,213,870 |  
|Other assets                                           |  |   | 33,318     |  
|Deferred tax asset                                     |  |   | 146,290    |  
|Accounts payable                                       |  |   | (9,689,915 | )
|Accrued expenses and other current liabilities         |  |   | (1,152,268 | )
|Current portion of long-term debt                      |  |   | (16,806    | )
|Deferred tax liability                                 |  |   | (11,464    | )
|Note payable due to Murray International Holdings Ltd. |  |   | (5,146,630 | )
|                                                       |  |   |            |  
|Purchase price (net of cash received of $10,847,763)   |  | $ | 11,049,097 |  
|                                                       |  |   |            |  

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



|                  |  |                                          |             |                                            |   |            |  
|----------------- |  | ---------------------------------------- | ----------- | ------------------------------------------ | - | ---------- | -
|                  |  | (Unaudited)                              |            
|                  |  | Successor                                |             | Predecessor                                |  
|                  |  | Period February 1, 2005
to June 30, 2005 |             | Period January 1, 2005
to January 31, 2005 |  
|Revenue           |  | $                                        | 130,641,000 |                                            | $ | 24,403,000 |  
|Net income (loss) |  |                                          | 7,026,000   |                                            |   | (8,162,000 | )

4. GOODWILL AND OTHER INTANGIBLES

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



|                                                 |  |             |           |              |   |            |              |  |   |            |  
|------------------------------------------------ |  | ----------- | --------- | ------------ | - | ---------- | ------------ |  | - | ---------- | -
|                                                 |  | Edgen Alloy |           | Edgen Carbon |   |            | Consolidated | 
|Balance at December 31, 2005                     |  | $           | 5,034,942 |              | $ | 32,091,827 |              |  | $ | 37,126,769 |  
|Purchase price adjustments:                      |  |             |           |              |   |            |              |  |   |            |  
|Acquisition of Western Flow Products, Inc.       |  |             | 451,469   |              |   |           |              |  |   | 451,469    |  
|Acquisition of Murray International Metals, Inc. |  |             |          |              |   | (149,776   | )            |  |   | (149,776   | )
|Foreign currency translation adjustment          |  |             | 47,122    |              |   |           |              |  |   | 47,122     |  
|                                                 |  |             |           |              |   |            |              |  |   |            |  
|Balance at June 30, 2006                         |  | $           | 5,533,533 |              | $ | 31,942,051 |              |  | $ | 37,475,584 |  
|                                                 |  |             |           |              |   |            |              |  |   |            |  

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



|                       |  |               |            |                   |   |           
|---------------------- |  | ------------- | ---------- | ----------------- | - | ----------
|                       |  | June 30, 2006 |            | December 31, 2005
|Customer relationships |  | $             | 19,287,226 |                   | $ | 21,014,440
|Tradenames             |  |               | 2,396,000  |                   |   | 2,396,000 
|Trademarks             |  |               | 13,748     |                   |   | 13,748    
|                       |  |               |            |                   |   |           
|                       |  | $             | 21,696,974 |                   | $ | 23,424,188
|                       |  |               |            |                   |   |           

Amortization expense was $863,607 and $1,727,214 for the three and six months ended June 30,
2006, respectively. Amortization expense was $21,668, $29,168 and $10,832 for the three months ended June 30, 2005, the period February 1, 2005 to June, 30, 2005, and the period January 1, 2005 to January 31, 2005, respectively.
Accumulated amortization of intangible assets at June 30, 2006 and December 31, 2005 was $4,893,774 and $3,416,560, respectively. Scheduled annual amortization expense for the next five years is approximately $3.5 million.



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5. LONG-TERM DEBT AND CREDIT ARRANGEMENTS

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



|                                                                                                                                                                                                     |  |               |             |   |                   |   |             |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ----------------- | - | ----------- | -
|                                                                                                                                                                                                     |  | June 30, 2006 |             |   | December 31, 2005 |  
|97/8% Senior Secured Notes due 2011, net of discount of $1,282,416 and $1,386,086 at June 30, 2006 and
December 31, 2005, respectively                                                               |  | $             | 134,717,584 |   |                   | $ | 134,613,914 |  
|Revolving credit facility at June 30, 2006 and December 31, 2005, respectively                                                                                                                       |  |               | 1,789,674   |   |                   |   |            |  
|Note payable to sellers of Western Flow Products, Inc. (CAD 300,000), interest accrues at 6%, due with semi-annual payments scheduled in July
2006 and 2007                                          |  |               | 267,834     |   |                   |   | 257,290     |  
|Various capital leases to a corporation; monthly payments range from $356 to $1,388; at an interest rate of 7.5% per annum, commencing
July 2005 through maturity in June 2010; secured by equipment |  |               | 79,142      |   |                   |   | 96,944      |  
|                                                                                                                                                                                                     |  |               |             |   |                   |   |             |  
|Total                                                                                                                                                                                                |  |               | 136,854,234 |   |                   |   | 134,968,148 |  
|Less current portion                                                                                                                                                                                 |  |               | (153,938    | ) |                   |   | (160,984    | )
|                                                                                                                                                                                                     |  |               |             |   |                   |   |             |  
|Long-term debt                                                                                                                                                                                       |  | $             | 136,700,296 |   |                   | $ | 134,807,164 |  
|                                                                                                                                                                                                     |  |               |             |   |                   |   |             |  

Senior Secured Notes

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

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

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



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

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

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

All of the Companys domestic subsidiaries fully and
unconditionally guarantee the Notes on a joint and several basis. Edgen/Murray, L.P. does not guarantee the Notes. The Notes and the related guarantees are secured by a lien on substantially all of the Companys assets and the assets of our
existing and future domestic restricted subsidiaries (other than certain



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excluded assets such as our existing and future subsidiaries leasehold interests and the capital stock of our existing and future subsidiaries),
subject to certain permitted liens and other limitations. Under an intercreditor agreement, the security interest in those assets consisting of inventory, accounts receivable, lockboxes, deposit accounts, securities accounts and financial assets
credited thereto, and certain related assets that secure the Notes and the related guarantees, are subordinated to a lien thereon that secures our revolving credit facility. As a result of such lien subordination, the Notes are effectively
subordinated to our revolving credit facility to the extent of the value of such assets.

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

Revolving Credit Facility

In connection with the
Buy-out Transaction, Edgen entered into a new $20 million senior secured revolving credit facility (the Credit Agreement) with GMAC Commercial Finance LLC (GMAC CF), replacing its $55.5 million
revolving credit agreement. The Credit Agreement is subject to certain borrowing limitations and matures on February 1, 2010. Under the Credit Agreement, interest accrues on borrowings (at the option of the Company) at either (i) the prime
rate of interest announced by GMAC CF (8.25% and 7.25% at June 30, 2006 and December 31, 2005, respectively), or (ii) a Eurodollar rate based on LIBOR plus 2.00% per annum (7.33% and 6.16% at June 30, 2006 and
December 31, 2005, respectively). The Company must also pay a monthly facility fee of 0.50% per annum on the unused portion of the maximum revolving amount. As of June 30, 2006, the Company had $1,789,674 in borrowings under the
Credit Agreement. As of December 31, 2005, there were no borrowings under the Credit Agreement.

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

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

6. REDEEMABLE PREFERRED STOCK

On February 1,
2005, the Company issued Series A 81/2% Cumulative Compounding Preferred Stock, $0.01 par value
(Series A Preferred Stock), in connection with the Buy-out Transaction. The holders of Series A Preferred Stock are entitled to receive annual dividends when, as and if, declared. The dividends are cumulative, whether or
not earned or declared, and accrue at a rate of 8.5%, compounding annually, and are payable in cash or shares of Series A Preferred Stock, at the discretion of the board of directors. Upon the occurrence of certain events, including a public
offering, the sale of substantially all the assets of the Company or a change in control, and the approval of the board of directors, which is controlled by JCP, the Series A Preferred Stock can be redeemed by the Company at a price of $1,000
per share, plus accrued and unpaid dividends. For the three and six months ended June 30, 2006 and the three months ended June 30, 2005 and the period February 1, 2005 to June 30, 2005, the Company accrued dividends of $464,100,
$923,100 and $464,100 and $765,000, respectively on the shares of outstanding Series A Preferred Stock. As of June 30, 2006, all of the outstanding shares of the Series A Preferred Stock are held by Edgen/Murray, L.P., which is
controlled by JCP. For the period January 1, 2005 to January 31, 2005, the Predecessor Company had $189,949 in accrued dividends related to its mandatorily redeemable preferred stock which was cancelled on February 1, 2005 in
connection with the Buy-out Transaction.

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

As of June 30, 2006, the holder of the preferred stock intends to contribute all of the shares of preferred stock to the capital of the issuer by year
end. As a result, the redeemable preferred stock line item will be reduced to zero and the paid in capital and shareholders equity line items will be increased by a corresponding amount on the balance sheet.

7. SHAREHOLDERS EQUITY

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



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



During 2006 and 2005, Edgen/Murray, L.P.
granted approximately 56,155 and 10,000 shares of non-vested common units, respectively, with vesting terms ranging from one to five years, of which all were outstanding at June 30, 2006. During the three and six months ended June 30, 2006, there
were no forfeitures. The estimated weighted average grant date fair value of the non-vested common units as of June 30, 2006 was $5.14. The fair value price of the awards is a calculated value based on the grant date of each of the respective grants
using a combination of a share-based pricing model and financial metrics from recent transactions of companies with similar characteristics of Edgen/Murray, L.P. As of June 30, 2006, there was $1,283,315 of total unrecognized compensation cost
related to non-vested common units to be recognized through August 2010.

Stock-based compensation expense related to the granting of the
Edgen/Murray, L.P. non-vested common units to Edgen employees is allocated to Edgen and expensed within its condensed consolidated statement of operations. For the three and six months ended June 30, 2006, the condensed consolidated statement
of operations reflects $151,006 and $222,402, respectively, of stock-based compensation expense related to Edgen/Murray, L.P. non-vested common units issued since December 16, 2005. For the three months ended June 30, 2005 and the period
February 1, 2005 to June 30, 2005, the condensed consolidated statement of operations reflects $7,039 and $11,732, respectively, of stock-based compensation expense related to the outstanding restricted stock shares which were exchanged on
December 15, 2005.

8. SEGMENT INFORMATION

Edgen markets and distributes specialty pipe and components made of highly engineered prime carbon and alloy steel and high grade structural steel products including plates, sections and tubulars. 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 and high grade structural steel products primarily for use in high-pressure environments. The primary industries served are oil and gas production, transmission and distribution, offshore fabrication and
mining.

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

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



|                         |  |                                  |            |   |                                  |   |            |  
|------------------------ |  | -------------------------------- | ---------- | - | -------------------------------- | - | ---------- | -
|                         |  | Successor                        |            |   | Successor                        |  
|                         |  | Three Months Ended June 30, 2006 |            |   | Three Months Ended June 30, 2005 |  
|Sales:                   |  |                                  |            |   |                                  |   |            |  
|Alloy Products           |  | $                                | 25,262,788 |   |                                  | $ | 18,951,766 |  
|Carbon Products          |  |                                  | 72,896,430 |   |                                  |   | 55,441,791 |  
|                         |  |                                  |            |   |                                  |   |            |  
|                         |  | $                                | 98,159,218 |   |                                  | $ | 74,393,557 |  
|                         |  |                                  |            |   |                                  |   |            |  
|Operating Income (Loss): |  |                                  |            |   |                                  |   |            |  
|Alloy Products           |  | $                                | 4,398,078  |   |                                  | $ | 3,477,244  |  
|Carbon Products          |  |                                  | 6,490,518  |   |                                  |   | 6,800,148  |  
|General Corporate        |  |                                  | (2,548,308 | ) |                                  |   | (2,395,925 | )
|                         |  |                                  |            |   |                                  |   |            |  
|                         |  | $                                | 8,340,288  |   |                                  | $ | 7,881,467  |  
|                         |  |                                  |            |   |                                  |   |            |  
|Capital Expenditures:    |  |                                  |            |   |                                  |   |            |  
|Alloy Products           |  | $                                | 274,324    |   |                                  | $ | 52,090     |  
|Carbon Products          |  |                                  | 11,991     |   |                                  |   | 144,171    |  
|General Corporate        |  |                                  | 555,473    |   |                                  |   | 292,339    |  
|                         |  |                                  |            |   |                                  |   |            |  
|                         |  | $                                | 841,788    |   |                                  | $ | 488,600    |  
|                         |  |                                  |            |   |                                  |   |            |  



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|                               |  |                                  |           |                                  |   |        
|------------------------------ |  | -------------------------------- | --------- | -------------------------------- | - | -------
|                               |  | Successor                        |           | Successor                       
|                               |  | Three Months Ended June 30, 2006 |           | Three Months Ended June 30, 2005
|Depreciation and Amortization: |  |                                  |           |                                  |   |        
|Alloy Products                 |  | $                                | 355,026   |                                  | $ | 49,552 
|Carbon Products                |  |                                  | 809,881   |                                  |   | 245,002
|General Corporate              |  |                                  | 346,661   |                                  |   | 314,157
|                               |  |                                  |           |                                  |   |        
|                               |  | $                                | 1,511,568 |                                  | $ | 608,711
|                               |  |                                  |           |                                  |   |        



|                               |  |                                |             |   |                                          |   |             |                                            |  |   |             |  
|------------------------------ |  | ------------------------------ | ----------- | - | ---------------------------------------- | - | ----------- | ------------------------------------------ |  | - | ----------- | -
|                               |  | Successor                      |             |   | Successor                                |   |             | Predecessor                                | 
|                               |  | Six Months Ended June 30, 2006 |             |   | Period February 1, 2005 to June 30, 2005 |   |             | Period January 1, 2005 to January 31, 2005 | 
|Sales:                         |  |                                |             |   |                                          |   |             |                                            |  |   |             |  
|Alloy Products                 |  | $                              | 49,200,263  |   |                                          | $ | 32,960,417  |                                            |  | $ | 4,214,009   |  
|Carbon Products                |  |                                | 138,665,115 |   |                                          |   | 87,327,866  |                                            |  |   | 14,730,778  |  
|                               |  |                                |             |   |                                          |   |             |                                            |  |   |             |  
|                               |  | $                              | 187,865,378 |   |                                          | $ | 120,288,283 |                                            |  | $ | 18,944,787  |  
|                               |  |                                |             |   |                                          |   |             |                                            |  |   |             |  
|Operating Income (Loss):       |  |                                |             |   |                                          |   |             |                                            |  |   |             |  
|Alloy Products                 |  | $                              | 7,627,967   |   |                                          | $ | 5,708,856   |                                            |  | $ | 959,632     |  
|Carbon Products                |  |                                | 12,751,706  |   |                                          |   | 10,495,695  |                                            |  |   | 1,980,553   |  
|General Corporate              |  |                                | (4,754,212  | ) |                                          |   | (3,664,708  | )                                          |  |   | (12,713,366 | )
|                               |  |                                |             |   |                                          |   |             |                                            |  |   |             |  
|                               |  | $                              | 15,625,461  |   |                                          | $ | 12,539,843  |                                            |  | $ | (9,773,181  | )
|                               |  |                                |             |   |                                          |   |             |                                            |  |   |             |  
|Capital Expenditures:          |  |                                |             |   |                                          |   |             |                                            |  |   |             |  
|Alloy Products                 |  | $                              | 381,099     |   |                                          | $ | 104,923     |                                            |  | $ |            |  
|Carbon Products                |  |                                | 49,109      |   |                                          |   | 158,135     |                                            |  |   | 4,079       |  
|General Corporate              |  |                                | 645,429     |   |                                          |   | 318,928     |                                            |  |   |            |  
|                               |  |                                |             |   |                                          |   |             |                                            |  |   |             |  
|                               |  | $                              | 1,075,637   |   |                                          | $ | 581,986     |                                            |  | $ | 4,079       |  
|                               |  |                                |             |   |                                          |   |             |                                            |  |   |             |  
|Depreciation and Amortization: |  |                                |             |   |                                          |   |             |                                            |  |   |             |  
|Alloy Products                 |  | $                              | 710,842     |   |                                          | $ | 215,726     |                                            |  | $ | 14,935      |  
|Carbon Products                |  |                                | 1,622,735   |   |                                          |   | 411,030     |                                            |  |   | 80,338      |  
|General Corporate              |  |                                | 669,942     |   |                                          |   | 459,894     |                                            |  |   | 105,371     |  
|                               |  |                                |             |   |                                          |   |             |                                            |  |   |             |  
|                               |  | $                              | 3,003,519   |   |                                          | $ | 1,086,650   |                                            |  | $ | 200,644     |  
|                               |  |                                |             |   |                                          |   |             |                                            |  |   |             |  



|                  |  |               |             |                   |   |            
|----------------- |  | ------------- | ----------- | ----------------- | - | -----------
|                  |  | Successor    
|                  |  | As of        
|                  |  | June 30, 2006 |             | December 31, 2005
|Total Assets:     |  |               |             |                   |   |            
|Alloy Products    |  | $             | 58,975,286  |                   | $ | 50,020,283 
|Carbon Products   |  |               | 165,624,727 |                   |   | 161,767,216
|General Corporate |  |               | 12,359,534  |                   |   | 12,247,759 
|                  |  |               |             |                   |   |            
|                  |  | $             | 236,959,547 |                   | $ | 224,035,258
|                  |  |               |             |                   |   |            

9. INCOME TAXES

For the period February 1, 2005 to June 30, 2005 and the period January 1, 2005 to January 31, 2005, the Companys effective tax rate was approximately 32% and (19%), respectively, compared to
approximately 39% and 41% for the three and six months ended June 30, 2006, respectively.



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For the three and six months ended June 30, 2006, the effective tax rates were impacted by an increase in state income taxes, and the impact of tax
losses for one of the Companys entities for which a state income tax benefit is not being recorded. 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 Buy-out Transaction related expenses, which may not be fully deductible for income tax purposes.

10. RELATED PARTY
TRANSACTIONS

With the acquisition of MIM US by the Company and the acquisition of MIM UK by Pipe Acquisition Limited, an affiliate of
the Company, on December 16, 2005, certain related party transactions commenced. During the three and six months ended June 30, 2006, the Company allocated $0.2 million and $0.4 million, respectively, of selling, general and administrative
expenses to MIM UK related to payroll and related benefits including stock-based compensation, travel and other administrative expenses.

Purchases from MIM UK and its subsidiaries were $272,221 and $1,137,064 for the three and six months ended June 30, 2006. Sales to MIM UK and its subsidiaries were $115,464 and $115,464 for the three and six months ended June 30,
2006. As of June 30, 2006 and December 31, 2005, amounts due to MIM UK were $643,483 and $218,094, respectively. As of June 30, 2006 and December 31, 2005, amounts due from MIM UK were $117,557 and $19,483, respectively.

11. Unaudited Condensed Consolidating Financial Information

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

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



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EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

(Unaudited)



|                                           |  |                         |             |                        |   |                          |  |                                       |           |  |              |              |   |  |   |            
|------------------------------------------ |  | ----------------------- | ----------- | ---------------------- | - | ------------------------ |  | ------------------------------------- | --------- |  | ------------ | ------------ | - |  | - | -----------
|                                           |  | As of June 30, 2006    
|                                           |  | Parent Only             |             | Guarantor Subsidiaries |   | Non-Guarantor Subsidiary |  | Elimination and Consolidation Entries |           |  | Consolidated
|Current assets                             |  | $                       | 2,156,442   |                        | $ | 149,089,888              |  | $                                     | 8,176,222 |  | $            | (543,836     | ) |  | $ | 158,878,716
|Intercompany long-term receivables         |  |                         | 38,826,722  |                        |   |                         |  |                                       |          |  | $            | (38,826,722  | ) |  |   |           
|Investments in subsidiaries                |  |                         | 190,641,013 |                        |   |                         |  |                                       |          |  | $            | (190,641,013 | ) |  |   |           
|Property, plant and equipment, net         |  |                         |            |                        |   | 10,606,481               |  |                                       | 435,349   |  |              |             |   |  |   | 11,041,830 
|Goodwill and other intangibles             |  |                         |            |                        |   | 57,958,525               |  |                                       | 1,214,033 |  |              |             |   |  |   | 59,172,558 
|Other assets                               |  |                         | 7,723,000   |                        |   | 143,443                  |  |                                       |          |  |              |             |   |  |   | 7,866,443  
|                                           |  |                         |             |                        |   |                          |  |                                       |           |  |              |              |   |  |   |            
|Total Assets                               |  | $                       | 239,347,177 |                        | $ | 217,798,337              |  | $                                     | 9,825,604 |  | $            | (230,011,571 | ) |  | $ | 236,959,547
|                                           |  |                         |             |                        |   |                          |  |                                       |           |  |              |              |   |  |   |            
|Current liabilities                        |  | $                       | 8,224,056   |                        | $ | 53,097,083               |  | $                                     | 2,204,681 |  | $            | (520,661     | ) |  | $ | 63,005,159 
|Intercompany long-term debt                |  |                         | 57,525,640  |                        |   | 108,592,076              |  |                                       | 5,787,113 |  |              | (171,904,829 | ) |  |   |           
|Long-term debt and capital leases          |  |                         | 134,717,584 |                        |   | 1,789,675                |  |                                       | 193,037   |  |              |             |   |  |   | 136,700,296
|Other non-current liabilities              |  |                         | 2,696,129   |                        |   | 11,464                   |  |                                       |          |  |              |             |   |  |   | 2,707,593  
|Redeemable preferred stock                 |  |                         | 24,226,500  |                        |   |                         |  |                                       |          |  |              |             |   |  |   | 24,226,500 
|Shareholders equity                       |  |                         | 11,957,268  |                        |   | 54,308,039               |  |                                       | 1,640,773 |  |              | (57,586,081  | ) |  |   | 10,319,999 
|                                           |  |                         |             |                        |   |                          |  |                                       |           |  |              |              |   |  |   |            
|Total Liabilities and Shareholders Equity |  | $                       | 239,347,177 |                        | $ | 217,798,337              |  | $                                     | 9,825,604 |  | $            | (230,011,571 | ) |  | $ | 236,959,547
|                                           |  |                         |             |                        |   |                          |  |                                       |           |  |              |              |   |  |   |            
|                                           | 
|                                           |  | As of December 31, 2005
|                                           |  | Parent Only             |             | Guarantor Subsidiaries |   | Non-Guarantor Subsidiary |  | Elimination and Consolidation Entries |           |  | Consolidated
|Current assets                             |  | $                       | 2,244,836   |                        | $ | 139,052,795              |  | $                                     | 2,943,532 |  | $            | (538,563     | ) |  | $ | 143,702,600
|Intercompany long-term receivables         |  |                         | 38,826,722  |                        |   |                         |  |                                       |          |  |              | (38,826,722  | ) |  |   |           
|Investments in subsidiaries                |  |                         | 182,301,610 |                        |   |                         |  |                                       |          |  |              | (182,301,610 | ) |  |   |           
|Property, plant and equipment, net         |  |                         |            |                        |   | 10,803,987               |  |                                       | 454,716   |  |              |             |   |  |   | 11,258,703 
|Goodwill and other intangibles             |  |                         |            |                        |   | 59,835,515               |  |                                       | 715,442   |  |              |             |   |  |   | 60,550,957 
|Other assets                               |  |                         | 8,345,417   |                        |   | 177,581                  |  |                                       |          |  |              |             |   |  |   | 8,522,998  
|                                           |  |                         |             |                        |   |                          |  |                                       |           |  |              |              |   |  |   |            
|Total Assets                               |  | $                       | 231,718,585 |                        | $ | 209,869,878              |  | $                                     | 4,113,690 |  | $            | (221,666,895 | ) |  | $ | 224,035,258
|                                           |  |                         |             |                        |   |                          |  |                                       |           |  |              |              |   |  |   |            
|Current liabilities                        |  | $                       | 8,902,638   |                        | $ | 47,518,222               |  | $                                     | 1,162,889 |  | $            | (520,131     | ) |  | $ | 57,063,618 
|Intercompany long-term debt                |  |                         | 54,354,979  |                        |   | 115,989,362              |  |                                       | 1,555,744 |  |              | (171,900,085 | ) |  |   |           
|Long-term debt and capital leases          |  |                         | 134,613,915 |                        |   |                         |  |                                       | 193,249   |  |              |             |   |  |   | 134,807,164
|Other non-current liabilities              |  |                         | 2,764,415   |                        |   | 11,464                   |  |                                       |          |  |              |             |   |  |   | 2,775,879  
|Redeemable preferred stock                 |  |                         | 23,303,400  |                        |   |                         |  |                                       |          |  |              |              |   |  |   | 23,303,400 
|Shareholders equity                       |  |                         | 7,779,238   |                        |   | 46,350,830               |  |                                       | 1,201,808 |  |              | (49,246,679  | ) |  |   | 6,085,197  
|                                           |  |                         |             |                        |   |                          |  |                                       |           |  |              |              |   |  |   |            
|Total Liabilities and Shareholders Equity |  | $                       | 231,718,585 |                        | $ | 209,869,878              |  | $                                     | 4,113,690 |  | $            | (221,666,895 | ) |  | $ | 224,035,258
|                                           |  |                         |             |                        |   |                          |  |                                       |           |  |              |              |   |  |   |            



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EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)



|                                                   |  |                                          |            |   |                        |   |            |                          |  |   |                                       |   |  |              |            |   |  |   |            |  
|-------------------------------------------------- |  | ---------------------------------------- | ---------- | - | ---------------------- | - | ---------- | ------------------------ |  | - | ------------------------------------- | - |  | ------------ | ---------- | - |  | - | ---------- | -
|                                                   |  | Successor                                |           
|                                                   |  | For the Three Months Ended June 30, 2006 |           
|                                                   |  | Parent Only                              |            |   | Guarantor Subsidiaries |   |            | Non-Guarantor Subsidiary |  |   | Elimination and Consolidation Entries |   |  | Consolidated |           
|Sales                                              |  | $                                        |           |   |                        | $ | 93,322,728 |                          |  | $ | 4,836,490                             |   |  | $            |           |   |  | $ | 98,159,218 |  
|Operating expenses                                 |  |                                          | 320,001    |   |                        |   | 85,379,030 |                          |  |   | 4,096,471                             |   |  |              | 23,428     |   |  |   | 89,818,930 |  
|                                                   |  |                                          |            |   |                        |   |            |                          |  |   |                                       |   |  |              |            |   |  |   |            |  
|Operating income (loss)                            |  |                                          | (320,001   | ) |                        |   | 7,943,698  |                          |  |   | 740,019                               |   |  |              | (23,428    | ) |  |   | 8,340,288  |  
|Interest expense and other income (loss)           |  |                                          | (2,414,341 | ) |                        |   | (1,396,436 | )                        |  |   | (315,142                              | ) |  |              | 23,428     |   |  |   | (4,102,491 | )
|Equity in earnings of subsidiaries                 |  |                                          | 4,419,534  |   |                        |   |           |                          |  |   |                                      |   |  |              | (4,419,534 | ) |  |   |           |  
|                                                   |  |                                          |            |   |                        |   |            |                          |  |   |                                       |   |  |              |            |   |  |   |            |  
|Income (loss) before income tax expense            |  |                                          | 1,685,192  |   |                        |   | 6,547,262  |                          |  |   | 424,877                               |   |  |              | (4,419,534 | ) |  |   | 4,237,797  |  
|Income tax expense                                 |  |                                          | (919,069   | ) |                        |   | 2,384,379  |                          |  |   | 168,226                               |   |  |              |           |   |  |   | 1,633,536  |  
|                                                   |  |                                          |            |   |                        |   |            |                          |  |   |                                       |   |  |              |            |   |  |   |            |  
|Net income (loss)                                  |  |                                          | 2,604,261  |   |                        |   | 4,162,883  |                          |  |   | 256,651                               |   |  |              | (4,419,534 | ) |  |   | 2,604,261  |  
|Preferred dividend requirement                     |  |                                          | (464,100   | ) |                        |   |           |                          |  |   |                                      |   |  |              |           |   |  |   | (464,100   | )
|                                                   |  |                                          |            |   |                        |   |            |                          |  |   |                                       |   |  |              |            |   |  |   |            |  
|Net income applicable to common shareholder        |  | $                                        | 2,140,161  |   |                        | $ | 4,162,883  |                          |  | $ | 256,651                               |   |  | $            | (4,419,534 | ) |  | $ | 2,140,161  |  
|                                                   |  |                                          |            |   |                        |   |            |                          |  |   |                                       |   |  |              |            |   |  |   |            |  
|                                                   | 
|                                                   |  | Successor                                |           
|                                                   |  | For the Three Months Ended June 30, 2005 |           
|                                                   |  | Parent Only                              |            |   | Guarantor Subsidiaries |   |            | Non-Guarantor Subsidiary |  |   | Elimination and Consolidation Entries |   |  | Consolidated |           
|Sales                                              |  | $                                        |           |   |                        | $ | 74,393,557 |                          |  | $ |                                      |   |  | $            |           |   |  | $ | 74,393,557 |  
|Operating expenses                                 |  |                                          | 7,039      |   |                        |   | 66,410,267 |                          |  |   | 97,357                                |   |  |              | (2,573     | ) |  |   | 66,512,090 |  
|                                                   |  |                                          |            |   |                        |   |            |                          |  |   |                                       |   |  |              |            |   |  |   |            |  
|Operating income (loss)                            |  |                                          | (7,039     | ) |                        |   | 7,983,290  |                          |  |   | (97,357                               | ) |  |              | 2,573      |   |  |   | 7,881,467  |  
|Interest expense and other income (loss)           |  |                                          | (16,273    | ) |                        |   | (2,936,227 | )                        |  |   | (104                                  | ) |  |              | (2,573     | ) |  |   | (2,955,177 | )
|Equity in earnings of subsidiaries                 |  |                                          | 3,765,119  |   |                        |   |           |                          |  |   |                                      |   |  |              | (3,765,119 | ) |  |   |           |  
|                                                   |  |                                          |            |   |                        |   |            |                          |  |   |                                       |   |  |              |            |   |  |   |            |  
|Income (loss) before income tax expense            |  |                                          | 3,741,807  |   |                        |   | 5,047,063  |                          |  |   | (97,461                               | ) |  |              | (3,765,119 | ) |  |   | 4,926,290  |  
|Income tax expense                                 |  |                                          | 553,426    |   |                        |   | 1,203,068  |                          |  |   | (18,585                               | ) |  |              |           |   |  |   | 1,737,909  |  
|                                                   |  |                                          |            |   |                        |   |            |                          |  |   |                                       |   |  |              |            |   |  |   |            |  
|Net income (loss)                                  |  |                                          | 3,188,381  |   |                        |   | 3,843,995  |                          |  |   | (78,876                               | ) |  |              | (3,765,119 | ) |  |   | 3,188,381  |  
|Preferred dividend requirement                     |  |                                          | (464,100   | ) |                        |   |           |                          |  |   |                                      |   |  |              |           |   |  |   | (464,100   | )
|                                                   |  |                                          |            |   |                        |   |            |                          |  |   |                                       |   |  |              |            |   |  |   |            |  
|Net income (loss) applicable to common shareholder |  | $                                        | 2,724,281  |   |                        | $ | 3,843,995  |                          |  | $ | (78,876                               | ) |  | $            | (3,765,119 | ) |  | $ | 2,724,281  |  
|                                                   |  |                                          |            |   |                        |   |            |                          |  |   |                                       |   |  |              |            |   |  |   |            |  



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EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(Unaudited)



|                                                   |  |                                                    |             |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|-------------------------------------------------- |  | -------------------------------------------------- | ----------- | - | ---------------------- | - | ----------- | ------------------------ |  | - | ------------------------------------- | - |  | ------------ | ---------- | - |  | - | ----------- | -
|                                                   |  | Successor                                          |            
|                                                   |  | For the Six Months Ended June 30, 2006             |            
|                                                   |  | Parent Only                                        |             |   | Guarantor Subsidiaries |   |             | Non-Guarantor Subsidiary |  |   | Elimination and Consolidation Entries |   |  | Consolidated |           
|Sales                                              |  | $                                                  |            |   |                        | $ | 181,352,856 |                          |  | $ | 6,512,522                             |   |  | $            |           |   |  | $ | 187,865,378 |  
|Operating expenses                                 |  |                                                    | 467,061     |   |                        |   | 166,123,490 |                          |  |   | 5,649,366                             |   |  |              |           |   |  |   | 172,239,917 |  
|                                                   |  |                                                    |             |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Operating income (loss)                            |  |                                                    | (467,061    | ) |                        |   | 15,229,366  |                          |  |   | 863,156                               |   |  |              |           |   |  |   | 15,625,461  |  
|Interest expense and other income (loss)           |  |                                                    | (4,816,427  | ) |                        |   | (2,290,812  | )                        |  |   | (281,353                              | ) |  |              |           |   |  |   | (7,388,592  | )
|Equity in earnings of subsidiaries                 |  |                                                    | 8,339,402   |   |                        |   |            |                          |  |   |                                      |   |  |              | (8,339,402 | ) |  |   |            |  
|                                                   |  |                                                    |             |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Income (loss) before income tax expense            |  |                                                    | 3,055,914   |   |                        |   | 12,938,554  |                          |  |   | 581,803                               |   |  |              | (8,339,402 | ) |  |   | 8,236,869   |  
|Income tax expense                                 |  |                                                    | (1,822,814  | ) |                        |   | 4,981,345   |                          |  |   | 199,610                               |   |  |              |           |   |  |   | 3,358,141   |  
|                                                   |  |                                                    |             |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Net income (loss)                                  |  |                                                    | 4,878,728   |   |                        |   | 7,957,209   |                          |  |   | 382,193                               |   |  |              | (8,339,402 | ) |  |   | 4,878,728   |  
|Preferred dividend requirement                     |  |                                                    | (923,100    | ) |                        |   |            |                          |  |   |                                      |   |  |              |           |   |  |   | (923,100    | )
|                                                   |  |                                                    |             |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Net income applicable to common shareholder        |  | $                                                  | 3,955,628   |   |                        | $ | 7,957,209   |                          |  | $ | 382,193                               |   |  | $            | (8,339,402 | ) |  | $ | 3,955,628   |  
|                                                   |  |                                                    |             |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|                                                   | 
|                                                   |  | Successor                                          |            
|                                                   |  | For the Period February 1, 2005 to June 30, 2005   |            
|                                                   |  | Parent Only                                        |             |   | Guarantor Subsidiaries |   |             | Non-Guarantor Subsidiary |  |   | Elimination and Consolidation Entries |   |  | Consolidated |           
|Sales                                              |  | $                                                  |            |   |                        | $ | 120,288,283 |                          |  | $ |                                      |   |  | $            |           |   |  | $ | 120,288,283 |  
|Operating expenses                                 |  |                                                    | 11,789      |   |                        |   | 107,593,551 |                          |  |   | 141,555                               |   |  |              | 1,545      |   |  |   | 107,748,440 |  
|                                                   |  |                                                    |             |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Operating income (loss)                            |  |                                                    | (11,789     | ) |                        |   | 12,694,732  |                          |  |   | (141,555                              | ) |  |              | (1,545     | ) |  |   | 12,539,843  |  
|Interest expense and other income (loss)           |  |                                                    | (40,522     | ) |                        |   | (4,844,808  | )                        |  |   | (104                                  | ) |  |              | 1,545      |   |  |   | (4,883,889  | )
|Equity in earnings of subsidiaries                 |  |                                                    | 4,835,918   |   |                        |   |            |                          |  |   |                                      |   |  |              | (4,835,918 | ) |  |   |            |  
|                                                   |  |                                                    |             |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Income (loss) before income tax expense            |  |                                                    | 4,783,607   |   |                        |   | 7,849,924   |                          |  |   | (141,659                              | ) |  |              | (4,835,918 | ) |  |   | 7,655,954   |  
|Income tax expense                                 |  |                                                    | (124,462    | ) |                        |   | 2,904,472   |                          |  |   | (32,125                               | ) |  |              |           |   |  |   | 2,747,885   |  
|                                                   |  |                                                    |             |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Net income (loss)                                  |  |                                                    | 4,908,069   |   |                        |   | 4,945,452   |                          |  |   | (109,534                              | ) |  |              | (4,835,918 | ) |  |   | 4,908,069   |  
|Preferred dividend requirement                     |  |                                                    | (765,000    | ) |                        |   |            |                          |  |   |                                      |   |  |              |           |   |  |   | (765,000    | )
|                                                   |  |                                                    |             |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Net income (loss) applicable to common shareholder |  | $                                                  | 4,143,069   |   |                        | $ | 4,945,452   |                          |  | $ | (109,534                              | ) |  | $            | (4,835,918 | ) |  | $ | 4,143,069   |  
|                                                   |  |                                                    |             |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|                                                   | 
|                                                   |  | Predecessor                                        |            
|                                                   |  | For the Period January 1, 2005 to January 31, 2005 |            
|                                                   |  | Parent Only                                        |             |   | Guarantor Subsidiaries |   |             | Non-Guarantor Subsidiary |  |   | Elimination and Consolidation Entries |   |  | Consolidated |           
|Sales                                              |  | $                                                  |            |   |                        | $ | 18,944,787  |                          |  | $ |                                      |   |  | $            |           |   |  | $ | 18,944,787  |  
|Operating expenses                                 |  |                                                    | 11,998,000  |   |                        |   | 16,697,129  |                          |  |   | 23,503                                |   |  |              | (664       | ) |  |   | 28,717,968  |  
|                                                   |  |                                                    |             |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Operating income (loss)                            |  |                                                    | (11,998,000 | ) |                        |   | 2,247,658   |                          |  |   | (23,503                               | ) |  |              | 664        |   |  |   | (9,733,181  | )
|Interest expense and other income (loss)           |  |                                                    | 69,632      |   |                        |   | (452,142    | )                        |  |   |                                      |   |  |              | (664       | ) |  |   | (383,174    | )
|Equity in earnings of subsidiaries                 |  |                                                    | 1,116,838   |   |                        |   |            |                          |  |   |                                      |   |  |              | (1,116,838 | ) |  |   |            |  
|                                                   |  |                                                    |             |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Income (loss) before income tax expense            |  |                                                    | (10,811,530 | ) |                        |   | 1,795,516   |                          |  |   | (23,503                               | ) |  |              | (1,116,838 | ) |  |   | (10,156,355 | )
|Income tax expense                                 |  |                                                    | (2,571,683  | ) |                        |   | 664,341     |                          |  |   | (9,166                                | ) |  |              |           |   |  |   | (1,916,508  | )
|                                                   |  |                                                    |             |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Net income (loss)                                  |  |                                                    | (8,239,847  | ) |                        |   | 1,131,175   |                          |  |   | (14,337                               | ) |  |              | (1,116,838 | ) |  |   | (8,239,847  | )
|Preferred dividend requirement                     |  |                                                    | (189,949    | ) |                        |   |            |                          |  |   |                                      |   |  |              |           |   |  |   | (189,949    | )
|                                                   |  |                                                    |             |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  
|Net income (loss) applicable to common shareholder |  | $                                                  | (8,429,796  | ) |                        | $ | 1,131,175   |                          |  | $ | (14,337                               | ) |  | $            | (1,116,838 | ) |  | $ | (8,429,796  | )
|                                                   |  |                                                    |             |   |                        |   |             |                          |  |   |                                       |   |  |              |            |   |  |   |             |  



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EDGEN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(Unaudited)



|                                                     |  |                                                    |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|---------------------------------------------------- |  | -------------------------------------------------- | ------------ | - | ---------------------- | - | ----------- | ------------------------ |  | - | ------------------------------------- | - | ------------ | - | - |  | - | ------------ | -
|                                                     |  | Successor                                          |             
|                                                     |  | For the Six Months Ended June 30, 2006             |             
|                                                     |  | Parent Only                                        |              |   | Guarantor Subsidiaries |   |             | Non-Guarantor Subsidiary |  |   | Elimination and Consolidation Entries |   | Consolidated |  
|Net cash provided by (used in) operating activities  |  | $                                                  | 11,734,618   |   |                        | $ | (30,125,971 | )                        |  | $ | 414,723                               |   |              | $ |  |  | $ | (17,976,630  | )
|Net cash used in investing activities                |  |                                                    |             |   |                        |   | (1,455,884  | )                        |  |   | (13,505                               | ) |              |   |  |  |   | (1,469,389   | )
|Net cash (used in) provided by financing activities  |  |                                                    | (204,784     | ) |                        |   | 4,535,998   |                          |  |   | 80,814                                |   |              |   |  |  |   | 4,412,028    |  
|                                                     |  |                                                    |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|Effects of foreign exchange rate changes on cash     |  |                                                    |             |   |                        |   |            |                          |  |   | 11,089                                |   |              |   |  |  |   | 11,089       |  
|                                                     |  |                                                    |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|Net increase (decrease) in cash and cash equivalents |  |                                                    | 11,529,834   |   |                        |   | (27,045,857 | )                        |  |   | 493,121                               |   |              |   |  |  |   | (15,022,902  | )
|Cash and cash equivalents(Beginning of period)      |  |                                                    | (11,663,955  | ) |                        |   | 29,517,820  |                          |  |   | 159,668                               |   |              |   |  |  | $ | 18,013,533   |  
|                                                     |  |                                                    |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|Cash and cash equivalents(End of period)            |  | $                                                  | 2,952        |   |                        | $ | 2,334,890   |                          |  | $ | 652,789                               |   |              | $ |  |  | $ | 2,990,631    |  
|                                                     |  |                                                    |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|                                                     | 
|                                                     |  | Successor                                          |             
|                                                     |  | For the Period February 1, 2005 to June 30, 2005   |             
|                                                     |  | Parent Only                                        |              |   | Guarantor Subsidiaries |   |             | Non-Guarantor Subsidiary |  |   | Elimination and Consolidation Entries |   | Consolidated |  
|Net cash (used in) provided by operating activities  |  | $                                                  | (14,749,873  | ) |                        | $ | 351,478     |                          |  | $ |                                      |   |              | $ |  |  | $ | (14,398,395  | )
|Net cash (used in) provided by investing activities  |  |                                                    | (120,952,320 | ) |                        |   | (581,986    | )                        |  |   |                                      |   |              |   |  |  |   | (121,534,306 | )
|Net cash provided by financing activities            |  |                                                    | 135,704,381  |   |                        |   | 538,469     |                          |  |   |                                      |   |              |   |  |  |   | 136,242,850  |  
|                                                     |  |                                                    |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|Net increase in cash and cash equivalents            |  |                                                    | 2,188        |   |                        |   | 307,961     |                          |  |   |                                      |   |              |   |  |  |   | 310,149      |  
|Cash and cash equivalents(Beginning of period)      |  |                                                    |             |   |                        |   |            |                          |  |   |                                      |   |              |   |  |  | $ |             |  
|                                                     |  |                                                    |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|Cash and cash equivalents(End of period)            |  | $                                                  | 2,188        |   |                        | $ | 307,961     |                          |  | $ |                                      |   |              | $ |  |  | $ | 310,149      |  
|                                                     |  |                                                    |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|                                                     | 
|                                                     |  | Predecessor                                        |             
|                                                     |  | For the Period January 1, 2005 to January 31, 2005 |             
|                                                     |  | Parent Only                                        |              |   | Guarantor Subsidiaries |   |             | Non-Guarantor Subsidiary |  |   | Elimination and Consolidation Entries |   | Consolidated |  
|Net cash provided by operating activities            |  | $                                                  | 1,018,316    |   |                        | $ | 3,284,955   |                          |  | $ | (54,446                               | ) |              | $ |  |  | $ | 4,248,825    |  
|Net cash used in investing activities                |  |                                                    |             |   |                        |   | (1,079      | )                        |  |   |                                      |   |              |   |  |  |   | (1,079       | )
|Net cash used in financing activities                |  |                                                    | (1,018,316   | ) |                        |   | (513,168    | )                        |  |   | 54,446                                |   |              |   |  |  |   | (1,477,038   | )
|                                                     |  |                                                    |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|Net increase in cash and cash equivalents            |  |                                                    |             |   |                        |   | 2,770,708   |                          |  |   |                                      |   |              |   |  |  |   | 2,770,708    |  
|Cash and cash equivalents(Beginning of period)      |  |                                                    | 62,476       |   |                        |   | 68,815      |                          |  |   | 3,008                                 |   |              |   |  |  | $ | 134,299      |  
|                                                     |  |                                                    |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  
|Cash and cash equivalents(End of period)            |  | $                                                  | 62,476       |   |                        | $ | 2,839,523   |                          |  | $ | 3,008                                 |   |              | $ |  |  | $ | 2,905,007    |  
|                                                     |  |                                                    |              |   |                        |   |             |                          |  |   |                                       |   |              |   |   |  |   |              |  



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##### Table of Contents

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

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

Overview

Background

We are a leading global distributor of specialty steel pipe and components and high grade structural steel products for use in niche applications, 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.

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 and high grade structural
steel products that are principally used in high-yield, high-tensile applications in the oil and gas, offshore construction and mining industries. As of June 30, 2006, we operate in 17 locations, including 15 in the United States, and two in
Canada.

Predecessor and Successor

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

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

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

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

In evaluating our results of operations and
financial performance, our management has used combined results for the three and six months ended June 30, 2005 as a single measurement period. Due to the Buy-out Transaction, we believe that



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comparisons between the three and six months ended June 30, 2006 and either the Predecessors results for the period from January 1, 2005 to
January 31, 2005 or the Successors results for the period from February 1, 2005 to June 30, 2005 may impede the ability of users of our financial information to understand our operating and cash flow performance.

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

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 our amended Annual Report on Form 10-K/A as filed with the Securities and Exchange Commission (the SEC) on June 23, 2006 for a discussion of our accounting policies and estimates.

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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##### Table of Contents

Goodwill

Goodwill represents the excess of the amount we paid to acquire a company over the estimated fair value of tangible assets and identifiable assets acquired, less liabilities assumed. As of June 30, 2006, our
goodwill balance was $37.5 million, representing 15.8% of total assets.

We account for goodwill under the provisions of the Financial
Accounting Standards Boards (FASB) Statement of Financial Accounting Standards (SFAS No.) 142, Goodwill and Other Intangible Assets. Under these rules, we test for goodwill impairment annually or at any other
time when impairment indicators exist. As of January 1, 2006, we performed our annual goodwill impairment test, which requires comparison of our estimated fair value to our book value including goodwill. As a result of the test, we believe the
goodwill on our balance sheet is not impaired. In assessing the recoverability of our goodwill and other intangibles, we must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective
assets. We estimate future cash flows at the reporting unit level. 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.

Long-Lived Assets

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

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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Results of Operations

The following tables provide our statements of operations, selected segment information including our sales, operating income (loss), cost of sales 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 8 to our notes to the condensed consolidated financial statements included elsewhere in this document. The period-to-period comparisons of
financial results are not necessarily indicative of future results, or results for a full year.



|                                                           |  |                                  |        |   |                                 |   |        |  
|---------------------------------------------------------- |  | -------------------------------- | ------ | - | ------------------------------- | - | ------ | -
|                                                           |  | (dollars in thousands)           |       
|                                                           |  | Three Months Ended June
30, 2006 |        |   | Three MonthsEnded June 30, 2005 |  
|SALES                                                      |  | $                                | 98,159 |   |                                 | $ | 74,394 |  
|                                                           |  |                                 
|OPERATING EXPENSES:                                        |  |                                  |        |   |                                 |   |        |  
|Cost of sales (exclusive of depreciation and amortization) |  |                                  | 79,461 |   |                                 |   | 57,828 |  
|Yard and shop expense                                      |  |                                  | 1,301  |   |                                 |   | 1,234  |  
|Selling, general, and administrative expense               |  |                                  | 7,546  |   |                                 |   | 6,841  |  
|Depreciation and amortization expense                      |  |                                  | 1,511  |   |                                 |   | 609    |  
|                                                           |  |                                  |        |   |                                 |   |        |  
|Total operating expenses                                   |  |                                  | 89,819 |   |                                 |   | 66,512 |  
|OPERATING INCOME                                           |  |                                  | 8,340  |   |                                 |   | 7,882  |  
|OTHER INCOME (EXPENSE):                                    |  |                                  |        |   |                                 |   |        |  
|Other income (expense)                                     |  |                                  | (265   | ) |                                 |   | 68     |  
|Interest expense, net                                      |  |                                  | (3,837 | ) |                                 |   | (3,023 | )
|                                                           |  |                                  |        |   |                                 |   |        |  
|INCOME BEFORE INCOME TAX EXPENSE                           |  |                                  | 4,238  |   |                                 |   | 4,927  |  
|INCOME TAX EXPENSE                                         |  |                                  | 1,633  |   |                                 |   | 1,738  |  
|                                                           |  |                                  |        |   |                                 |   |        |  
|NET INCOME                                                 |  |                                  | 2,605  |   |                                 |   | 3,189  |  
|PREFERRED DIVIDEND REQUIREMENT                             |  |                                  | (464   | ) |                                 |   | (464   | )
|                                                           |  |                                  |        |   |                                 |   |        |  
|NET INCOME APPLICABLE TO COMMON SHAREHOLDER                |  | $                                | 2,141  |   |                                 | $ | 2,725  |  
|                                                           |  |                                  |        |   |                                 |   |        |  
|Segment Sales                                              |  |                                  |        |   |                                 |   |        |  
|Alloy Products                                             |  | $                                | 25,263 |   |                                 | $ | 18,952 |  
|Carbon Products                                            |  |                                  | 72,896 |   |                                 |   | 55,442 |  
|                                                           |  |                                  |        |   |                                 |   |        |  
|Total                                                      |  | $                                | 98,159 |   |                                 | $ | 74,394 |  
|                                                           |  |                                  |        |   |                                 |   |        |  
|Cost of Sales (Exclusive of Depreciation and Amortization) |  |                                  |        |   |                                 |   |        |  
|Alloy Products                                             |  | $                                | 17,571 |   |                                 | $ | 12,725 |  
|Carbon Products                                            |  |                                  | 61,890 |   |                                 |   | 45,103 |  
|                                                           |  |                                  |        |   |                                 |   |        |  
|Total                                                      |  | $                                | 79,461 |   |                                 | $ | 57,828 |  
|                                                           |  |                                  |        |   |                                 |   |        |  
|Segment Operating Income (Loss)                            |  |                                  |        |   |                                 |   |        |  
|Alloy Products                                             |  | $                                | 4,398  |   |                                 | $ | 3,477  |  
|Carbon Products                                            |  |                                  | 6,491  |   |                                 |   | 6,801  |  
|General Corporate                                          |  |                                  | (2,549 | ) |                                 |   | (2,396 | )
|                                                           |  |                                  |        |   |                                 |   |        |  
|Total                                                      |  | $                                | 8,340  |   |                                 | $ | 7,882  |  
|                                                           |  |                                  |        |   |                                 |   |        |  
|Segment Depreciation and Amortization                      |  |                                  |        |   |                                 |   |        |  
|Alloy Products                                             |  | $                                | 355    |   |                                 | $ | 50     |  
|Carbon Products                                            |  |                                  | 810    |   |                                 |   | 245    |  
|General Corporate                                          |  |                                  | 346    |   |                                 |   | 314    |  
|                                                           |  |                                  |        |   |                                 |   |        |  
|Total                                                      |  | $                                | 1,511  |   |                                 | $ | 609    |  
|                                                           |  |                                  |        |   |                                 |   |        |  
|Segment Cost of Sales as a Percentage of Segment Sales     |  |                                  |        |   |                                 |   |        |  
|Alloy Products                                             |  |                                  | 69.6   | % |                                 |   | 67.1   | %
|Carbon Products                                            |  |                                  | 84.9   | % |                                 |   | 81.4   | %
|Total                                                      |  |                                  | 81.0   | % |                                 |   | 77.7   | %
|Segment Operating Income as a Percentage of Segment Sales  |  |                                  |        |   |                                 |   |        |  
|Alloy Products                                             |  |                                  | 17.4   | % |                                 |   | 18.3   | %
|Carbon Products                                            |  |                                  | 8.9    | % |                                 |   | 12.3   | %
|Total                                                      |  |                                  | 8.5    | % |                                 |   | 10.6   | %
|                                                           |  |                                 
|International Sales                                        |  | $                                | 18,539 |   |                                 | $ | 6,535  |  
|                                                           |  |                                 
|International Sales as a Percentage of Total Sales         |  |                                  | 18.9   | % |                                 |   | 8.8    | %



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|                                                                   |  |                                |         |   |                                          |   |         |                                            |  |   |                                |   |  |   |         |  
|------------------------------------------------------------------ |  | ------------------------------ | ------- | - | ---------------------------------------- | - | ------- | ------------------------------------------ |  | - | ------------------------------ | - |  | - | ------- | -
|                                                                   |  | (dollars in thousands)         |        
|                                                                   |  | Successor                      |         |   | Successor                                |   |         | Predecessor                                |  |   | Non-GAAP Combined              |  
|                                                                   |  | Six Months Ended June 30, 2006 |         |   | Period February 1, 2005 to June 30, 2005 |   |         | Period January 1, 2005 to January 31, 2005 |  |   | Six Months Ended June 30, 2005 |  
|SALES                                                              |  | $                              | 187,865 |   |                                          | $ | 120,288 |                                            |  | $ | 18,945                         |   |  | $ | 139,233 |  
|                                                                   |  |                                |         |  
|OPERATING EXPENSES:                                                |  |                                |         |   |                                          |   |         |                                            |  |   |                                |   |  |   |         |  
|Cost of sales (exclusive of depreciation and amortization)         |  |                                | 151,962 |   |                                          |   | 93,627  |                                            |  |   | 14,153                         |   |  |   | 107,780 |  
|Yard and shop expense                                              |  |                                | 2,582   |   |                                          |   | 2,003   |                                            |  |   | 390                            |   |  |   | 2,393   |  
|Selling, general, and administrative expense                       |  |                                | 14,692  |   |                                          |   | 11,032  |                                            |  |   | 13,974                         |   |  |   | 25,006  |  
|Depreciation and amortization expense                              |  |                                | 3,004   |   |                                          |   | 1,086   |                                            |  |   | 201                            |   |  |   | 1,287   |  
|                                                                   |  |                                |         |   |                                          |   |         |                                            |  |   |                                |   |  |   |         |  
|Total operating expenses                                           |  |                                | 172,240 |   |                                          |   | 107,748 |                                            |  |   | 28,718                         |   |  |   | 136,466 |  
|OPERATING INCOME (LOSS)                                            |  |                                | 15,625  |   |                                          |   | 12,540  |                                            |  |   | (9,773                         | ) |  |   | 2,767   |  
|OTHER INCOME (EXPENSE):                                            |  |                                |         |   |                                          |   |         |                                            |  |   |                                |   |  |   |         |  
|Other income (expense)                                             |  |                                | 185     |   |                                          |   | 75      |                                            |  |   | (50                            | ) |  |   | 25      |  
|Interest expense, net                                              |  |                                | (7,574  | ) |                                          |   | (4,959  | )                                          |  |   | (333                           | ) |  |   | (5,292  | )
|                                                                   |  |                                |         |   |                                          |   |         |                                            |  |   |                                |   |  |   |         |  
|INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE |  |                                | 8,236   |   |                                          |   | 7,656   |                                            |  |   | (10,156                        | ) |  |   | (2,500  | )
|INCOME TAX EXPENSE (BENEFIT)                                       |  |                                | 3,358   |   |                                          |   | 2,748   |                                            |  |   | (1,916                         | ) |  |   | 832     |  
|                                                                   |  |                                |         |   |                                          |   |         |                                            |  |   |                                |   |  |   |         |  
|NET INCOME (LOSS)                                                  |  |                                | 4,878   |   |                                          |   | 4,908   |                                            |  |   | (8,240                         | ) |  |   | (3,332  | )
|PREFERRED DIVIDEND REQUIREMENT                                     |  |                                | (923    | ) |                                          |   | (765    | )                                          |  |   | (190                           | ) |  |   | (955    | )
|                                                                   |  |                                |         |   |                                          |   |         |                                            |  |   |                                |   |  |   |         |  
|NET INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDER                 |  | $                              | 3,955   |   |                                          | $ | 4,143   |                                            |  | $ | (8,430                         | ) |  | $ | (4,287  | )
|                                                                   |  |                                |         |   |                                          |   |         |                                            |  |   |                                |   |  |   |         |  



23



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|                                                                |  |                                |         |   |                                          |   |          |                                            |  |   |                                |    |  |   |          |  
|--------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---------------------------------------- | - | -------- | ------------------------------------------ |  | - | ------------------------------ | -- |  | - | -------- | -
|                                                                |  | (dollars in thousands)         |        
|                                                                |  | Successor                      |         |   | Successor                                |   |          | Predecessor                                |  |   | Non-GAAP Combined              |   
|                                                                |  | Six Months Ended June 30, 2006 |         |   | Period February 1, 2005 to June 30, 2005 |   |          | Period January 1, 2005 to January 31, 2005 |  |   | Six Months Ended June 30, 2005 |   
|Segment Sales                                                   |  |                                |         |   |                                          |   |          |                                            |  |   |                                |    |  |   |          |  
|Alloy Products                                                  |  | $                              | 49,200  |   |                                          | $ | 32,960   |                                            |  | $ | 4,214                          |    |  | $ | 37,174   |  
|Carbon Products                                                 |  |                                | 138,665 |   |                                          |   | 87,328   |                                            |  |   | 14,731                         |    |  |   | 102,059  |  
|                                                                |  |                                |         |   |                                          |   |          |                                            |  |   |                                |    |  |   |          |  
|Total                                                           |  | $                              | 187,865 |   |                                          | $ | 120,288  |                                            |  | $ | 18,945                         |    |  | $ | 139,233  |  
|                                                                |  |                                |         |   |                                          |   |          |                                            |  |   |                                |    |  |   |          |  
|Cost of Sales (Exclusive of Depreciation and Amortization)      |  |                                |         |   |                                          |   |          |                                            |  |   |                                |    |  |   |          |  
|Alloy Products                                                  |  | $                              | 34,953  |   |                                          | $ | 22,677   |                                            |  | $ | 2,472                          |    |  | $ | 25,149   |  
|Carbon Products                                                 |  |                                | 117,009 |   |                                          |   | 70,950   |                                            |  |   | 11,681                         |    |  |   | 82,631   |  
|                                                                |  |                                |         |   |                                          |   |          |                                            |  |   |                                |    |  |   |          |  
|Total                                                           |  | $                              | 151,962 |   |                                          | $ | 93,627   |                                            |  | $ | 14,153                         |    |  | $ | 107,780  |  
|                                                                |  |                                |         |   |                                          |   |          |                                            |  |   |                                |    |  |   |          |  
|Segment Operating Income (Loss)                                 |  |                                |         |   |                                          |   |          |                                            |  |   |                                |    |  |   |          |  
|Alloy Products                                                  |  | $                              | 7,628   |   |                                          | $ | 5,709    |                                            |  | $ | 960                            |    |  | $ | 6,668    |  
|Carbon Products                                                 |  |                                | 12,752  |   |                                          |   | 10,545   |                                            |  |   | 1,980                          |    |  |   | 12,526   |  
|General Corporate                                               |  |                                | (4,755  | ) |                                          |   | (3,714   | )                                          |  |   | (12,713                        | )  |  |   | (16,427  | )
|                                                                |  |                                |         |   |                                          |   |          |                                            |  |   |                                |    |  |   |          |  
|Total                                                           |  | $                              | 15,625  |   |                                          | $ | 12,540   |                                            |  | $ | (9,773                         | )  |  | $ | 2,767    |  
|                                                                |  |                                |         |   |                                          |   |          |                                            |  |   |                                |    |  |   |          |  
|Segment Depreciation and Amortization                           |  |                                |         |   |                                          |   |          |                                            |  |   |                                |    |  |   |          |  
|Alloy Products                                                  |  | $                              | 711     |   |                                          | $ | 216      |                                            |  | $ | 15                             |    |  | $ | 231      |  
|Carbon Products                                                 |  |                                | 1,623   |   |                                          |   | 410      |                                            |  |   | 81                             |    |  |   | 491      |  
|General Corporate                                               |  |                                | 670     |   |                                          |   | 460      |                                            |  |   | 105                            |    |  |   | 565      |  
|                                                                |  |                                |         |   |                                          |   |          |                                            |  |   |                                |    |  |   |          |  
|Total                                                           |  | $                              | 3,004   |   |                                          | $ | 1,086    |                                            |  | $ | 201                            |    |  | $ | 1,287    |  
|                                                                |  |                                |         |   |                                          |   |          |                                            |  |   |                                |    |  |   |          |  
|Segment Cost of Sales as a Percentage of Segment Sales          |  |                                |         |   |                                          |   |          |                                            |  |   |                                |    |  |   |          |  
|Alloy Products                                                  |  |                                | 71.0    | % |                                          |   | 68.8     | %                                          |  |   | 58.7                           | %  |  |   | 67.7     | %
|Carbon Products                                                 |  |                                | 84.4    | % |                                          |   | 81.2     | %                                          |  |   | 79.3                           | %  |  |   | 81.0     | %
|Total                                                           |  |                                | 80.9    | % |                                          |   | 77.8     | %                                          |  |   | 74.7                           | %  |  |   | 77.4     | %
|                                                                |  |                                |         |  
|Segment Operating Income(Loss) as a Percentage of Segment Sales |  |                                |         |   |                                          |   |          |                                            |  |   |                                |    |  |   |          |  
|Alloy Products                                                  |  |                                | 15.5    | % |                                          |   | 17.3     | %                                          |  |   | 22.8                           | %  |  |   | 17.9     | %
|Carbon Products                                                 |  |                                | 9.2     | % |                                          |   | 12.1     | %                                          |  |   | 13.4                           | %  |  |   | 12.3     | %
|Total                                                           |  |                                | 8.3     | % |                                          |   | 10.4     | %                                          |  |   | (51.6                          | )% |  |   | 2.0      | %
|                                                                |  |                                |         |  
|International Sales                                             |  | $                              | 31,195  |   |                                          | $ | 13,975   |                                            |  | $ | 2,253                          |    |  | $ | 16,228   |  
|                                                                |  |                                |         |  
|International Sales as a Percentage of Total Sales              |  |                                | 16.6    | % |                                          |   | 11.6     | %                                          |  |   | 11.9                           | %  |  |   | 11.7     | %
|                                                                |  |                                |         |  
|Net cash (used in) provided by:                                 |  |                                |         |   |                                          |   |          |                                            |  |   |                                |    |  |   |          |  
|Cash flows - operating activities                               |  | $                              | (17,977 | ) |                                          | $ | (14,398  | )                                          |  | $ | 4,249                          |    |  | $ | (10,149  | )
|Cash flows - investing activities                               |  |                                | (1,469  | ) |                                          |   | (121,534 | )                                          |  |   | (1                             | )  |  |   | (121,535 | )
|Cash flows - financing activities                               |  |                                | 4,412   |   |                                          |   | 136,243  |                                            |  |   | (1,477                         | )  |  |   | 134,766  |  

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.

Cost 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. Depreciation and amortization expenses are not included as a component of cost of sales.

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

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.



24



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##### Table of Contents

Segment Operating Income (Loss). Our segment operating income (loss) is 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.

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

Sales



|                  |  |                                        |        |                                        |   |            |  |      |  
|----------------- |  | -------------------------------------- | ------ | -------------------------------------- | - | ---------- |  | ---- | -
|Reporting Segment |  | Three Months Ended June 30, 2006 Sales |        | Three Months Ended June 30, 2005 Sales |   | % Increase | 
|                  |  | (dollars in thousands)                 |       
|Alloy Products    |  | $                                      | 25,263 |                                        | $ | 18,952     |  | 33.3 | %
|Carbon Products   |  |                                        | 72,896 |                                        |   | 55,442     |  | 31.5 | %
|                  |  |                                        |        |                                        |   |            |  |      |  
|Total             |  | $                                      | 98,159 |                                        | $ | 74,394     |  | 31.9 | %
|                  |  |                                        |        |                                        |   |            |  |      |  

Overall. For the three months ended June 30, 2006, our consolidated sales increased
$23.8 million, or 31.9%, to $98.2 million compared to the three months ended June 30, 2005. This increase in sales was primarily the result of the acquisition of Western Flow and MIM US which contributed $12.8 million in sales, sales price
increases for alloy and carbon steel products, particularly stainless steel pipe, and steady demand for oil, natural gas and refined products which drive capital expenditures and maintenance projects for the products that we supply.

Sales order backlog increased from $86.9 million at March 31, 2006 to $97.1 million at June 30, 2006. Because of increased new project and
expansion spending by the energy infrastructure market and as a result of the acquisition of MIM US in late 2005, our backlog has expanded to include sales orders which typically have a longer term from the date of sales order to shipment, as
opposed to maintenance and repair orders which tend to ship quickly. As a result, project orders may have a significant impact on our backlog, and ultimately our sales, from period to period. Project orders are driven by scheduled shipment dates and
planned major capital expenditures, as opposed to quick-ship inventory orders used primarily for daily customer repair and maintenance activity.

Alloy Products. For the three months ended June 30, 2006, alloy product sales increased $6.3 million, or 33.3%, to $25.3 million compared to the three months ended June 30, 2005. This increase was the result of the Western
Flow acquisition which contributed $4.8 million in sales driven by energy infrastructure projects in Canada, and sales price increases, particularly stainless steel pipe. Alloy products sales order backlog increased from $29.3 million at
March 31, 2006 to $30.3 million at June 30, 2006 as a result of increased sales order activity in both our Canadian and domestic operations.

Carbon Products. For the three months ended June 30, 2006, carbon product sales increased $17.5 million, or 31.5%, to $72.9 million compared to the three months ended June 30, 2005. This increase was
driven by $8.0 million in sales contributed by the MIM US acquisition, increased sales volume of pipe and fittings to the gas transmission market, and to a lesser extent, sales price increases for our carbon products. Carbon products sales order
backlog increased from $57.6 million at March 31, 2006 to $66.8 million at June 30, 2006. The increase in carbon product sales backlog is due primarily to several large sales orders for offshore oil and gas structures and alternative
energy production, partially offset by the completion and shipment of several large projects.



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##### Table of Contents

Cost of Sales (Exclusive of Depreciation and Amortization)



|                  |                        |                                                |        |                                                |   |                       |  |      |  
|----------------- | ---------------------- | ---------------------------------------------- | ------ | ---------------------------------------------- | - | --------------------- |  | ---- | -
|Reporting Segment |                        | Three Months Ended June 30, 2006 Cost of Sales |        | Three Months Ended June 30,
2005 Cost of Sales |   | % Increase (Decrease) | 
|                  | (dollars in thousands) |                                               
|Alloy Products    |                        | $                                              | 17,571 |                                                | $ | 12,725                |  | 38.1 | %
|Carbon Products   |                        |                                                | 61,890 |                                                |   | 45,103                |  | 37.2 | %
|                  |                        |                                                |        |                                                |   |                       |  |      |  
|Total             |                        | $                                              | 79,461 |                                                | $ | 57,828                |  | 37.4 | %
|                  |                        |                                                |        |                                                |   |                       |  |      |  



|                  |  |                                                                         |   |  |                                                                         |  
|----------------- |  | ----------------------------------------------------------------------- | - |  | ----------------------------------------------------------------------- | -
|Reporting Segment |  | Three Months Ended June 30,
2006 Cost of Sales as a Percentage of Sales |   |  | Three Months Ended June 30,
2005 Cost of Sales as a Percentage of Sales |  
|Alloy Products    |  | 69.6                                                                    | % |  | 67.1                                                                    | %
|Carbon Products   |  | 84.9                                                                    | % |  | 81.4                                                                    | %
|Total             |  | 81.0                                                                    | % |  | 77.7                                                                    | %

Overall. Our consolidated cost of sales for the three months ended June 30, 2006 was
$79.5 million, an increase of approximately $21.6 million, or 37.4%, from the three months ended June 30, 2005. The increase was the result of increased sales from the Western Flow and MIM US acquisitions, and higher product costs. Our cost of
sales as a percentage of sales for the three months ended June 30, 2006 increased to 81.4% compared to 77.7% for the three months ended June 30, 2005. The increase in cost of sales as a percentage of sales for the three months ended
June 30, 2006 is due primarily to increased product costs for our alloy and carbon products, to increased freight costs and to the increased shipment of products to new project and expansion orders which tend to be more competitively priced.

In addition, cost of sales and cost of sales as a percentage of sales for the three months ended June 30, 2006 were negatively
impacted by $0.1 million related to a purchase price allocation adjustment that increased the value of our alloy inventory as of February 1, 2005. As of June 30, 2006, the remaining purchase price adjustment included in inventory on the
balance sheet was not material.

Alloy Products. Cost of sales for our alloy products for the three months ended June 30, 2006
increased $4.8 million, or 38.1%, to $17.6 million compared to the three months ended June 30, 2005; cost of sales as a percentage of sales increased to 69.6% for the three months ended June 30, 2006 compared to 67.1% for the three months
ended June 30, 2005. The increase in cost of sales is attributable to an increase in alloy product sales volumes as a result of the Western Flow acquisition and to increased product costs when compared to the same period in 2005. The increase
in cost of sales as a percentage of sales for the three months ended June 30, 2006 is due primarily to higher product costs compared to the same period in 2005 and due to narrower margins on large energy infrastructure projects.

Carbon Products. Cost of sales for our carbon products for the three months ended June 30, 2006 increased $16.8 million, or 37.2%, to $61.9
million compared to the three months ended June 30, 2005. Cost of sales as a percentage of sales increased to 84.9% for the three months ended June 30, 2006 compared to 81.4% for the three months ended June 30, 2005. The increase in
cost of sales for the three months ended June 30, 2006 is due primarily to the acquisition of MIM US, increased sales volume, and higher product costs. The increase in cost of sales as a percentage of sales is due primarily to higher product
costs compared to the same period for 2005, and narrower margins on several large customer projects.



26



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##### Table of Contents

Operating Income (Loss)



|                  |                        |                                                          |        |   |                                                          |   |        |  
|----------------- | ---------------------- | -------------------------------------------------------- | ------ | - | -------------------------------------------------------- | - | ------ | -
|Reporting Segment |                        | Three Months Ended June 30,
2006 Operating Income (Loss) |        |   | Three Months Ended June 30,
2005 Operating Income (Loss) |  
|                  | (dollars in thousands) |                                                         
|Alloy Products    |                        | $                                                        | 4,398  |   |                                                          | $ | 3,477  |  
|Carbon Products   |                        |                                                          | 6,491  |   |                                                          |   | 6,801  |  
|General Corporate |                        |                                                          | (2,549 | ) |                                                          |   | (2,396 | )
|                  |                        |                                                          |        |   |                                                          |   |        |  
|Total             |                        | $                                                        | 8,340  |   |                                                          | $ | 7,882  |  
|                  |                        |                                                          |        |   |                                                          |   |        |  

Overall. Our consolidated operating income for the three months ended June 30, 2006
increased $0.5 million to operating income of $8.3 million for the three months ended June 30, 2006. The increase in consolidated operating income was primarily the result of the acquisition of Western Flow and MIM US, partially offset by a
$0.9 million increase in amortization expense of other intangible assets, and an increase in general corporate selling, general and administrative expenses related to the acquisition of Western Flow and MIM US.

Alloy Products. Our alloy products operating income for the three months ended June 30, 2006 was $4.4 million, a $0.9 million increase from
the three months ended June 30, 2005. The increase was primarily the result of increased sales volumes, partially offset by higher product costs, by a $0.3 million increase in amortization related to other intangible assets and by an increase
in selling, general and administrative expenses related to the acquisition of Western Flow.

Carbon Products. Our carbon products
operating income for the three months ended June 30, 2006 was $6.5 million, a decrease of $0.3 million from the three months ended June 30, 2005. The decrease in operating income was driven primarily by higher product costs, a $0.6 million
increase in amortization related to other intangible assets and an increase in selling, general and administrative expenses related to the acquisition of MIM US.

Yard and Shop Expenses

Yard and shop expenses were $1.3 million, or 1.3% of sales for the three months ended
June 30, 2006, and $1.2 million, or 1.7% of sales, for the three months ended June 30, 2005.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended June 30, 2006 increased $0.7 million, or 10.3%,
compared to the three months ended June 30, 2005. This increase in selling, general and administrative expenses was primarily driven by increases in employee and facility costs related to the acquisitions of Western Flow and MIM US. Selling,
general and administrative expenses as a percentage of sales were 7.7% and 9.2% for the three months ended June 30, 2006 and 2005, respectively.

Depreciation and amortization

Depreciation and amortization expense for the three months ended June 30, 2006
and the three months ended June 30, 2005, were $1.5 million and $0.6 million, respectively. The increase reflects the amortization of customer relationships acquired in the acquisition of the Company on February 1, 2005; all customer
amortization expense for 2005 was recorded in the fourth quarter 2005 when the Company completed its purchase accounting valuation procedures.

Other
income (expense)

Other income (expense) for the three months ended June 30, 2006 of ($0.3 million) includes ($0.2 million)
related to recognized losses on foreign currency exchange forward contracts.

Interest Expense, net

Interest expense, net for the three months ended June 30, 2006 increased $0.8 million, or 27.0%, to $3.8 million from $3.0 million for the three
months ended June 30, 2005. The increase in interest expense was the result of the issuance of $31 million of Notes in December 2005. Interest expense for the three months ended June 30, 2006 includes $0.4 million of deferred financing
costs amortization compared to $0.3 million of deferred financing costs for the three months ended June 30, 2005.

Income Tax Expense

Income tax expense was $1.6 million for the three months ended June 30, 2006 compared to income tax expense of $1.7 million
for the three months ended June 30, 2005. The effective tax rate was approximately 39% for the three months



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ended June 30, 2006, compared to approximately 35% for the three months ended June 30, 2005. The increase is due primarily to an increase in
state income taxes and the impact of tax losses for one of our entities for which a state income tax benefit is not being recognized.

Preferred
Stock Dividends and Related Charges

Preferred stock dividends and related charges were $0.5 million for the three months ended
June 30, 2006 and $0.5 million for the three months ended June 30, 2005.

Six Months Ended June 30, 2006 Compared to Combined Six
Months Ended June 30, 2005

Sales



|                  |                        |                                      |         |                                                       |   |            |  |      |  
|----------------- | ---------------------- | ------------------------------------ | ------- | ----------------------------------------------------- | - | ---------- |  | ---- | -
|Reporting Segment |                        | Six Months Ended June 30, 2006 Sales |         | Non-GAAPCombined Six Months Ended
June 30, 2005 Sales |   | % Increase | 
|                  | (dollars in thousands) |                                     
|Alloy Products    |                        | $                                    | 49,200  |                                                       | $ | 37,174     |  | 32.4 | %
|Carbon Products   |                        |                                      | 138,665 |                                                       |   | 102,059    |  | 35.9 | %
|                  |                        |                                      |         |                                                       |   |            |  |      |  
|Total             |                        | $                                    | 187,865 |                                                       | $ | 139,233    |  | 34.9 | %
|                  |                        |                                      |         |                                                       |   |            |  |      |  

Overall. For the six months ended June 30, 2006, our consolidated sales increased
$48.6 million, or 34.9%, to $187.9 million compared to the combined six months ended June 30, 2005. This increase in sales was primarily the result of the acquisition of Western Flow and MIM US which contributed $30.7 million in sales, sales
price increases for alloy and carbon steel products, particularly stainless steel pipe, and steady demand for oil, natural gas and refined products which drive capital expenditures and maintenance projects for the products that we supply.

Sales order backlog increased from $88.6 million at December 31, 2005 to $97.1 million at June 30, 2006. Because of increased
new project and expansion spending by the energy infrastructure market and as a result of the acquisition of MIM US in late 2005, our backlog has expanded to include sales orders which typically have a longer term from the date of sales order to
shipment, as opposed to maintenance and repair orders which tend to ship quickly. As a result, project orders may have a significant impact on our backlog, and ultimately our sales, from period to period. Project orders are driven by scheduled
shipment dates and planned major capital expenditures, as opposed to quick-ship inventory orders used primarily for daily customer repair and maintenance activity.

Alloy Products. For the six months ended June 30, 2006, alloy product sales increased $12.0 million, or 32.4%, to $49.2 million compared to the combined six months ended June 30, 2005. This increase
was the result of the Western Flow acquisition which contributed $6.5 million in sales driven by energy infrastructure projects in Canada, and sales price increases, particularly stainless steel pipe. Alloy products sales order backlog increased
from $21.8 million at December 31, 2005 to $30.3 million at June 30, 2006 as a result of increased sales order activity in both our Canadian and domestic operations.

Carbon Products. For the six months ended June 30, 2006, carbon product sales increased $36.6 million, or 35.9%, to $138.7 million compared
to the combined six months ended June 30, 2005. This increase was driven by $24.2 million in sales contributed by the MIM US acquisition, an increase in sales volume of pipe and fittings to the gas transmission market, and sales price increases
for our carbon products. Carbon products sales order backlog remained consistent at $66.8 million at December 31, 2005 and June 30, 2006.



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Cost of Sales (Exclusive of Depreciation and Amortization)



|                  |                        |                                              |         |                                                                |   |                       |  |      |  
|----------------- | ---------------------- | -------------------------------------------- | ------- | -------------------------------------------------------------- | - | --------------------- |  | ---- | -
|Reporting Segment |                        | Six Months Ended June 30, 2006 Cost of Sales |         | Non-GAAP Combined Six Months Ended June 30, 2005 Cost of Sales |   | % Increase (Decrease) | 
|                  | (dollars in thousands) |                                             
|Alloy Products    |                        | $                                            | 34,953  |                                                                | $ | 25,149                |  | 39.0 | %
|Carbon Products   |                        |                                              | 117,009 |                                                                |   | 82,631                |  | 41.6 | %
|                  |                        |                                              |         |                                                                |   |                       |  |      |  
|Total             |                        | $                                            | 151,962 |                                                                | $ | 107,780               |  | 41.0 | %
|                  |                        |                                              |         |                                                                |   |                       |  |      |  



|                  |  |                                                                       |   |  |                                                                                         |  
|----------------- |  | --------------------------------------------------------------------- | - |  | --------------------------------------------------------------------------------------- | -
|Reporting Segment |  | Six Months Ended June 30, 2006 Cost of Sales as a Percentage of Sales |   |  | Non-GAAP Combined Six Months Ended June 30, 2005 Cost of Sales as a Percentage of Sales |  
|Alloy Products    |  | 71.0                                                                  | % |  | 67.7                                                                                    | %
|Carbon Products   |  | 84.4                                                                  | % |  | 81.0                                                                                    | %
|Total             |  | 80.9                                                                  | % |  | 77.4                                                                                    | %

Overall. Our consolidated cost of sales for the six months ended June 30, 2006 was
$152.0 million, an increase of approximately $44.2 million, or 41.0%, from the combined six months ended June 30, 2005. The increase was the result of increased sales from the Western Flow and MIM US acquisitions, and higher product costs. Our
cost of sales as a percentage of sales for the six months ended June 30, 2006 increased to 80.9% compared to 77.4% for the combined six months ended June 30, 2005. The increase in cost of sales as a percentage of sales for the six months
ended June 30, 2006 is due primarily to increased product costs for our alloy and carbon products, to increased freight costs and to the increased shipment of products to new project and expansion orders which tend to be more competitively
priced.

In addition, cost of sales and cost of sales as a percentage of sales for the six months ended June 30, 2006 were negatively
impacted by $0.2 million related to a purchase price allocation adjustment that increased the value of our alloy inventory as of February 1, 2005. As of June 30, 2006, the remaining purchase price adjustment included in inventory on the
balance sheet was not material.

Alloy Products. Cost of sales for our alloy products for the six months ended June 30, 2006
increased $9.8 million, or 39.0%, to $35.0 million compared to the combined six months ended June 30, 2005; cost of sales as a percentage of sales increased to 71.0% for the six months ended June 30, 2006 compared to 67.7% for the combined
six months ended June 30, 2005. The increase in cost of sales is attributable to an increase in alloy product sales volumes as a result of the Western Flow acquisition and to increased product costs when compared to the same period in 2005. The
increase in cost of sales as a percentage of sales for the six months ended June 30, 2006 is due primarily to higher product costs compared to the same period in 2005 and due to narrower margins on large energy infrastructure projects in the
second quarter 2006.

Carbon Products. Cost of sales for our carbon products for the six months ended June 30, 2006 increased
$34.4 million, or 41.6%, to $117.0 million compared to the combined six months ended June 30, 2005. Cost of sales as a percentage of sales increased to 84.4% for the six months ended June 30, 2006 compared to 81.0% for the combined six
months ended June 30, 2005. The increase in cost of sales for the six months ended June 30, 2006 is due primarily to the acquisition of MIM US, increased sales volumes, and higher product costs. The increase in cost of sales as a
percentage of sales is due primarily to higher product costs compared to the same period for 2005, and narrower margins on several large customer projects.



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Operating Income (Loss)



|                  |                        |                                                        |        |   |                                                                          |   |         |  
|----------------- | ---------------------- | ------------------------------------------------------ | ------ | - | ------------------------------------------------------------------------ | - | ------- | -
|Reporting Segment |                        | Six Months Ended June 30,
2006 Operating Income (Loss) |        |   | Non-GAAP Combined Six Months Ended June 30,
2005 Operating Income (Loss) |  
|                  | (dollars in thousands) |                                                       
|Alloy Products    |                        | $                                                      | 7,628  |   |                                                                          | $ | 6,668   |  
|Carbon Products   |                        |                                                        | 12,752 |   |                                                                          |   | 12,526  |  
|General Corporate |                        |                                                        | (4,755 | ) |                                                                          |   | (16,427 | )
|                  |                        |                                                        |        |   |                                                                          |   |         |  
|Total             |                        | $                                                      | 15,625 |   |                                                                          | $ | 2,767   |  
|                  |                        |                                                        |        |   |                                                                          |   |         |  

Overall. Our consolidated operating income for the six months ended June 30, 2006
increased $12.9 million to operating income of $15.6 million for the combined six months ended June 30, 2006. The increase in consolidated operating income was primarily the result of increased operating income from the acquisitions of Western
Flow and MIM US and approximately $12.0 million in Buy-out Transaction related expenses incurred in the combined six months ended June 30, 2005 which did not occur in the same period in 2006, partially offset by increased amortization expense
of other intangible assets of $1.7 million, and by an increase in general corporate selling, general and administrative expenses related to the acquisition of Western Flow and MIM US.

Alloy Products. Our alloy products operating income for the six months ended June 30, 2006 was $7.6 million, a $1.0 million increase from the
combined six months ended June 30, 2005. The increase was primarily the result of increased sales volumes, margin increases related to sales driven by the Western Flow acquisition, partially offset by a $0.5 million increase in amortization
related to other intangible assets and by an increase in selling, general and administrative expenses related to the acquisition of Western Flow.

Carbon Products. Our carbon products operating income for the six months ended June 30, 2006 was $12.8 million, an increase of $0.2 million from the combined six months ended June 30, 2005. The increase in operating income
was driven primarily by the acquisition of MIM US, and was partially offset by a $1.2 million increase in amortization related to other intangible assets and by an increase in selling, general and administrative expenses related to the acquisition
of MIM US.

Yard and Shop Expenses

Yard and shop expenses were $2.6 million, or 1.4% of sales for the six months ended June 30, 2006, and $2.4 million, or 1.7% of sales, for the combined six months ended June 30, 2005.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the six months ended June 30, 2006 decreased $10.3 million, or 41.2%, compared to the combined six months ended June 30, 2005. The decrease is primarily attributable to $12.0
million in Buy-out Transaction related expenses incurred during the combined six months ended June 30, 2005 which did not occur in the same period in 2006. The decrease in selling, general and administrative expenses was partially offset by
increases in employee and facility costs related to the acquisition of Western Flow and MIM US.

Depreciation and amortization

Depreciation and amortization expense for the six months ended June 30, 2006 and the combined six months ended June 30, 2005, were $3.0 million
and $1.3 million, respectively. The increase reflects the amortization of customer relationships acquired in the acquisition of the Company on February 1, 2005; all customer amortization expense for 2005 was recorded in the fourth quarter 2005
when the Company completed its purchase accounting valuation procedures.

Other income (expense)

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

Interest Expense, net

Interest expense, net for the six months ended June 30, 2006 increased $2.3 million, or 43.1%, to $7.6 million from $5.3 million for the combined six months ended June 30, 2005. The increase in interest
expense was the result of the issuance of an additional $31 million of Notes in 2006 which were not outstanding in the same period in 2005, and outstanding



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borrowings under our revolving line of credit during the second quarter 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 six months ended June 30, 2006 includes $0.8 million of deferred financing costs amortization compared to $0.5 million of deferred financing costs for the combined six months
ended June 30, 2005.

Income Tax Expense

Income tax expense was $3.4 million for the six months ended June 30, 2006 compared to income tax expense of $0.8 million for the combined six months ended June 30, 2005. The effective tax rate was
approximately 41% for the six months ended June 30, 2006, and was approximately 33% for the combined six months ended June 30, 2005; the increase is primarily the result of an increase in our state income taxes, and the impact of tax
losses for one of our entities for which a state income tax benefit is not being recognized.

Preferred Stock Dividends and Related Charges

Preferred stock dividends and related charges were comparable with $0.9 million for the six months ended June 30, 2006 and
$1.0 million for the combined six months ended June 30, 2005.

Liquidity and Capital Resources

Six Months Ended June 30, 2006 Compared to Combined Six Months Ended June 30, 2005

Operating Activities. Net cash outflows from operating activities were $18.0 million for the six months ended June 30, 2006 and $10.1 million
for the combined six months ended June 30, 2005. The $7.9 million increase in net cash outflows from operating activities is primarily the result of increased working capital requirements as a result of sales increases and higher product costs.

Investing Activities. Net cash outflows from investing activities were $1.5 million for the six months ended June 30, 2006
compared with net cash outflows from investing activities of $121.6 million for the combined six months ended June 30, 2005. The reduction in cash outflows is the result of no acquisitions during the six months ended June 30, 2006 compared
to the acquisition of Edgen Corporation for a cash purchase price of approximately $121.0 million during the combined six months ended June 30, 2005. Capital expenditures increased to $1.1 million for the six months ended June 30, 2006
compared to $0.6 million for the same period in 2005 in support of increased facilities and equipment related to our Canadian operations, and corporate expenditures related to information technology infrastructure.

Financing Activities. Net cash inflows from financing activities were $4.4 million for the six months ended June 30, 2006 compared with net
cash inflows of $134.8 million from financing activities during the combined six months ended June 30, 2005. The decrease in cash inflows from financing activities is due primarily to the issuance of Notes, additional borrowings under our new
revolving credit facility and the issuance of common and preferred stock in connection with the Buy-out Transaction for the combined six months ended June 30, 2005.

Indebtedness

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



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Senior Credit Facility. On February 1, 2005, we entered into a five-year $20.0 million senior
secured revolving credit facility, with a $5.0 million sublimit for letters of credit. Interest is determined based on several alternative rates as stipulated in the revolving credit facility, including the base lending rate per annum plus an
applicable margin, or LIBOR plus an applicable margin. The revolving credit facility contains various affirmative and negative covenants, including limitation on additional indebtedness and liens, the making of distributions, loans and advances,
transactions with affiliates, dispositions or mergers, and the sale of assets. We borrowed approximately $2.7 million under the revolving credit facility in connection with the consummation of the Buy-out Transaction. As of June 30, 2006, we
had $1.8 million in outstanding borrowings under the revolving credit facility. As of December 31, 2005, we had no borrowings outstanding under the revolving credit facility. The revolving credit facility is secured by a first priority security
interest in all of our and our domestic subsidiaries working capital assets, which is contractually senior to the liens on such assets securing the Notes, and by a second priority security interest in substantially all of our and our domestic
subsidiaries other assets (other than certain excluded assets such as our leasehold interests and the capital stock of our existing and future subsidiaries), which is contractually subordinated to the liens on such assets securing the Notes.

Future Capital Needs

Our
principal source of liquidity is cash flow generated from operations and borrowings under our revolving credit facility. Our principal liquidity requirements are to meet debt service requirements, finance our capital expenditures and provide working
capital. Our ability to make payments on and to refinance our indebtedness, and to fund planned capital expenditures will depend on our ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors that are beyond our control. Our total debt, excluding any related discount, was $138.1 million and $136.4 million at June 30, 2006 and December 31, 2005, respectively.

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

Commitments and Contractual Obligations

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

Financial Instruments

In our business, we may enter into purchase and sales commitments that are denominated in a foreign currency (primarily the Euro). Our practices include
entering into foreign currency forward exchange contracts to minimize foreign currency exposure related to forecasted purchases and sales of certain inventories. As of June 30, 2006, we had six contracts related to purchases of inventory, that
mature in varying increments through May 2007 to purchase an aggregate notional amount of $12.1 million of foreign currency. We also had five contracts related to the sale of inventory, that mature in varying increments through August 2006, to
receive an aggregate notional amount of $5.7 million of foreign currency.

As of June 30, 2006, the fair value of these foreign
currency forward exchange contracts of $0.1 million was recorded as a liability on the consolidated balance sheet. For the three and six months ended June 30, 2006, we recognized a loss of $0.2 million and a gain of $0.2 million, respectively,
in gains (losses) on foreign currency forward exchange contracts reflected in other income (expense) on the statement of operations. We did not enter into foreign currency forward exchange contracts for the three months ended June 30, 2005 and
the combined six months ended June 30, 2005.

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



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Off-Balance Sheet Arrangements

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

Recently Issued Accounting Pronouncements

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

Seasonality

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

Forward Looking Statements

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

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



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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Interest Rate Risk. At June 30, 2006, we had $1.8 million in variable
rate borrowings under our revolving credit facility. A 100 basis point increase in interest rates, applied to our borrowings at June 30, 2006, would have increased our annual interest expense by less than $0.1 million.

Foreign Currency Risk. Substantially all of our net sales and expenses are denominated in U.S. dollars. However, in our business, we may enter
into purchase and sales commitments that are denominated in a foreign currency (primarily the Euro). Our practices include entering into foreign currency forward exchange contracts to minimize foreign currency exposure related to forecasted
purchases and sales of certain inventories. As of June 30, 2006, we had six contracts related to purchases of inventory, that mature in varying increments through May 2007 to purchase an aggregate notional amount of $12.1 million of foreign
currency. We also had five contracts related to the sale of inventory, that mature in varying increments through August 2006, to receive an aggregate notional amount of $5.7 million of foreign currency.

As of June 30, 2006, the fair value of these foreign currency forward exchange contracts of $0.1 million was recorded as a liability on the
consolidated balance sheet. For the three and six months ended June 30, 2006, we recognized a loss of $0.2 million and a gain of $0.2 million, respectively, in gains (losses) on foreign currency forward exchange contracts reflected in other
income (expense) on the statement of operations. We did not enter into foreign currency forward exchange contracts for the three months ended June 30, 2005 and the combined six months ended June 30, 2005.

ITEM 4. CONTROLS AND PROCEDURES

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



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PART IIOTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

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

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. Exhibits



|         |  |                                                                                                                                                                                                                   
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibits |  |                                                                                                                                                                                                                   
|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: August 14, 2006 |  | By:               |  | /s/ DANIEL J. OLEARY                
|                      |  |                   |  | Daniel J. OLeary                    
|                      |  |                   |  | President and Chief Executive Officer
|                      |  |                  
|Date: August 14, 2006 |  | By:               |  | /s/ DAVID L. LAXTON, III             
|                      |  |                   |  | David L. Laxton, III                 
|                      |  |                   |  | Chief Financial Officer              



36



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##### Table of Contents

EXHIBIT INDEX



|            |  |                                                                                                                                                                                                                   
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                       
|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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| | Filed herewith.
|- | ---------------



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