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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2007

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: 333-142896

PNA GROUP, INC.

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 04-3756642                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|400 Northridge Road Atlanta, Georgia                           |  | 30350                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

(770) 641-6460

(Registrants telephone number, including area code)

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

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

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filer   x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  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: As of November 13, 2007, the registrant had 1,000 shares of its common stock, $1 par value per share, outstanding.



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##### Table of Contents

PNA GROUP, INC.

TABLE OF CONTENTS



|                               |  |                                                                                                                                                                                                                                    |  |   
|------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --
|                               |  | Page                                                                                                                                                                                                                              
|PART I  FINANCIAL INFORMATION |  |                                                                                                                                                                                                                                   
|                               |  |                                                                                                                                                                                                                                   
|Item 1.                        |  | Financial Statements                                                                                                                                                                                                               |  | 1 
|                               |  |                                                                                                                                                                                                                                   
|                               |  | Unaudited Condensed Consolidated Balance Sheets as of December 31, 2006 (Successor) and September 30, 2007 (Successor)                                                                                                             |  | 1 
|                               |  |                                                                                                                                                                                                                                   
|                               |  | Unaudited Condensed Consolidated Statements of Income for the three months ended September 30, 2006 (Successor) and 2007 (Successor)                                                                                               |  | 2 
|                               |  |                                                                                                                                                                                                                                   
|                               |  | Unaudited Condensed Consolidated Statements of Income for the periods January 1, 2006 to May 9, 2006 (Predecessor) and May 10, 2006 to September 30, 2006 (Successor) and the nine months ended September 30, 2007 (Successor)     |  | 3 
|                               |  |                                                                                                                                                                                                                                   
|                               |  | Unaudited Condensed Consolidated Statement of Stockholders Equity for the nine months ended September 30, 2007 (Successor)                                                                                                        |  | 4 
|                               |  |                                                                                                                                                                                                                                   
|                               |  | Unaudited Condensed Consolidated Statements of Cash Flows for the periods January 1, 2006 to May 9, 2006 (Predecessor) and May 10, 2006 to September 30, 2006 (Successor) and the nine months ended September 30, 2007
(Successor) |  | 5 
|                               |  |                                                                                                                                                                                                                                   
|                               |  | Notes to Unaudited Condensed Consolidated Financial Statements                                                                                                                                                                     |  | 6 
|                               |  |                                                                                                                                                                                                                                   
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                                              |  | 29
|                               |  |                                                                                                                                                                                                                                   
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                                                         |  | 45
|                               |  |                                                                                                                                                                                                                                   
|Item 4T.                       |  | Controls and Procedures                                                                                                                                                                                                            |  | 45
|                               | 
|PART II  OTHER INFORMATION    |  |                                                                                                                                                                                                                                   
|                               |  |                                                                                                                                                                                                                                   
|Item 1.                        |  | Legal Proceedings                                                                                                                                                                                                                  |  | 47
|                               |  |                                                                                                                                                                                                                                   
|Item 1A.                       |  | Risk Factors                                                                                                                                                                                                                       |  | 47
|                               |  |                                                                                                                                                                                                                                   
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                                                        |  | 47
|                               |  |                                                                                                                                                                                                                                   
|Item 3.                        |  | Defaults Upon Senior Securities                                                                                                                                                                                                    |  | 47
|                               |  |                                                                                                                                                                                                                                   
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                                                                                                                                                                |  | 47
|                               |  |                                                                                                                                                                                                                                   
|Item 5.                        |  | Other Information                                                                                                                                                                                                                  |  | 47
|                               |  |                                                                                                                                                                                                                                   
|Item 6.                        |  | Exhibits                                                                                                                                                                                                                           |  | 48



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##### Table of Contents

PART I  FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

PNA GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS



|                                                                                             |  |                  |         |   |                   |   |         |  
|-------------------------------------------------------------------------------------------- |  | ---------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                             |  | Successor        |        
|(in thousands of dollars, except share amounts)                                              |  | December 31,2006 |         |   | September 30,2007 |  
|Assets                                                                                       |  |                  |         |   |                   |   |         |  
|Current assets                                                                               |  |                  |         |   |                   |   |         |  
|Cash and cash equivalents                                                                    |  | $                | 3,201   |   |                   | $ | 3,464   |  
|Restricted cash                                                                              |  |                  | 1,063   |   |                   |   | 2,114   |  
|Accounts receivable, less allowance for doubtful accounts of $5,430 and $5,720, respectively |  |                  | 188,911 |   |                   |   | 214,659 |  
|Inventories, net                                                                             |  |                  | 410,604 |   |                   |   | 391,462 |  
|Receivables from affiliates                                                                  |  |                  | 3,906   |   |                   |   | 6,444   |  
|Other current assets                                                                         |  |                  | 16,852  |   |                   |   | 17,900  |  
|                                                                                             |  |                  |         |   |                   |   |         |  
|Total current assets                                                                         |  |                  | 624,537 |   |                   |   | 636,043 |  
|Property, plant and equipment, net                                                           |  |                  | 61,542  |   |                   |   | 67,871  |  
|Goodwill                                                                                     |  |                  | 9,886   |   |                   |   | 9,886   |  
|Intangible assets, net                                                                       |  |                  | 19,338  |   |                   |   | 15,280  |  
|Deferred financing costs, net                                                                |  |                  | 11,037  |   |                   |   | 11,496  |  
|Equity investments                                                                           |  |                  | 7,643   |   |                   |   | 8,831   |  
|Other noncurrent assets                                                                      |  |                  | 2,771   |   |                   |   | 1,998   |  
|                                                                                             |  |                  |         |   |                   |   |         |  
|Total assets                                                                                 |  | $                | 736,754 |   |                   | $ | 751,405 |  
|                                                                                             |  |                  |         |   |                   |   |         |  
|Liabilities and Stockholders Equity                                                         |  |                  |         |   |                   |   |         |  
|Current liabilities                                                                          |  |                  |         |   |                   |   |         |  
|Accounts payable                                                                             |  | $                | 141,594 |   |                   | $ | 142,036 |  
|Payables to affiliates                                                                       |  |                  | 603     |   |                   |   | 6,868   |  
|Other payables                                                                               |  |                  | 48,096  |   |                   |   | 33,959  |  
|Income taxes payable                                                                         |  |                  | 8,472   |   |                   |   |        |  
|                                                                                             |  |                  |         |   |                   |   |         |  
|Total current liabilities                                                                    |  |                  | 198,765 |   |                   |   | 182,863 |  
|Long term debt, net of current maturities                                                    |  |                  | 463,414 |   |                   |   | 486,572 |  
|Deferred income taxes                                                                        |  |                  | 1,605   |   |                   |   | 192     |  
|Accrued pension costs                                                                        |  |                  | 5,293   |   |                   |   | 3,759   |  
|                                                                                             |  |                  |         |   |                   |   |         |  
|Total liabilities                                                                            |  |                  | 669,077 |   |                   |   | 673,386 |  
|                                                                                             |  |                  |         |   |                   |   |         |  
|Commitments and contingencies                                                                |  |                  |        |   |                   |   |        |  
|Minority interest                                                                            |  |                  | 1,547   |   |                   |   | 1,982   |  
|Stockholders equity                                                                         |  |                  |         |   |                   |   |         |  
|Common stock: $1 par value - 1,000 shares authorized, issued and outstanding                 |  |                  | 1       |   |                   |   | 1       |  
|Additional paid-in capital                                                                   |  |                  | 66,259  |   |                   |   | 67,125  |  
|Retained earnings                                                                            |  |                  |        |   |                   |   | 9,041   |  
|Accumulated other comprehensive loss                                                         |  |                  | (130    | ) |                   |   | (130    | )
|                                                                                             |  |                  |         |   |                   |   |         |  
|Total stockholders equity                                                                   |  |                  | 66,130  |   |                   |   | 76,037  |  
|                                                                                             |  |                  |         |   |                   |   |         |  
|Total liabilities and stockholders equity                                                   |  | $                | 736,754 |   |                   | $ | 751,405 |  
|                                                                                             |  |                  |         |   |                   |   |         |  

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



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PNA GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME



|                                                        |  |                                    |         |   |                                    |   |         |  
|------------------------------------------------------- |  | ---------------------------------- | ------- | - | ---------------------------------- | - | ------- | -
|                                                        |  | Successor                          |        
|(in thousands of dollars)                               |  | Three MonthsEndedSeptember 30,2006 |         |   | Three MonthsEndedSeptember 30,2007 |  
|Net sales                                               |  | $                                  | 434,301 |   |                                    | $ | 412,199 |  
|Cost and expenses:                                      |  |                                    |         |   |                                    |   |         |  
|Cost of materials sold (exclusive of items shown below) |  |                                    | 344,050 |   |                                    |   | 345,017 |  
|Processing                                              |  |                                    | 8,831   |   |                                    |   | 8,263   |  
|Distribution                                            |  |                                    | 6,707   |   |                                    |   | 5,823   |  
|Selling, general and administrative                     |  |                                    | 29,368  |   |                                    |   | 33,304  |  
|Amortization of intangibles                             |  |                                    | 1,415   |   |                                    |   | 1,308   |  
|Depreciation                                            |  |                                    | 1,152   |   |                                    |   | 1,658   |  
|                                                        |  |                                    |         |   |                                    |   |         |  
|Total operating costs and expenses                      |  |                                    | 391,523 |   |                                    |   | 395,373 |  
|                                                        |  |                                    |         |   |                                    |   |         |  
|Operating income                                        |  |                                    | 42,778  |   |                                    |   | 16,826  |  
|Interest expense                                        |  |                                    | 8,857   |   |                                    |   | 11,416  |  
|Income from equity investments                          |  |                                    | (413    | ) |                                    |   | (679    | )
|                                                        |  |                                    |         |   |                                    |   |         |  
|Income before minority interest and income tax expense  |  |                                    | 34,334  |   |                                    |   | 6,089   |  
|Minority interest                                       |  |                                    | 1,112   |   |                                    |   | 931     |  
|                                                        |  |                                    |         |   |                                    |   |         |  
|Income before income tax expense                        |  |                                    | 33,222  |   |                                    |   | 5,158   |  
|Income tax expense                                      |  |                                    | 12,093  |   |                                    |   | 2,225   |  
|                                                        |  |                                    |         |   |                                    |   |         |  
|Net income                                              |  | $                                  | 21,129  |   |                                    | $ | 2,933   |  
|                                                        |  |                                    |         |   |                                    |   |         |  

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



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##### Table of Contents

PNA GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME



|                                                        |  |                                    |         |   |                            |   |         |                                   |  |   |           |  
|------------------------------------------------------- |  | ---------------------------------- | ------- | - | -------------------------- | - | ------- | --------------------------------- |  | - | --------- | -
|                                                        |  |                                    |         |   | Successor                  |  
|(in thousands of dollars)                               |  | PredecessorJanuary 1 toMay 9, 2006 |         |   | May 10 toSeptember 30,2006 |   |         | Nine MonthsEndedSeptember 30,2007 | 
|Net sales                                               |  | $                                  | 487,190 |   |                            | $ | 675,633 |                                   |  | $ | 1,234,194 |  
|Cost and expenses:                                      |  |                                    |         |   |                            |   |         |                                   |  |   |           |  
|Cost of materials sold (exclusive of items shown below) |  |                                    | 401,612 |   |                            |   | 540,446 |                                   |  |   | 1,019,248 |  
|Processing                                              |  |                                    | 11,985  |   |                            |   | 14,106  |                                   |  |   | 24,548    |  
|Distribution                                            |  |                                    | 6,395   |   |                            |   | 9,686   |                                   |  |   | 17,204    |  
|Selling, general and administrative                     |  |                                    | 35,393  |   |                            |   | 47,741  |                                   |  |   | 93,572    |  
|Amortization of intangibles                             |  |                                    |        |   |                            |   | 2,125   |                                   |  |   | 4,058     |  
|Depreciation                                            |  |                                    | 3,262   |   |                            |   | 2,312   |                                   |  |   | 4,625     |  
|                                                        |  |                                    |         |   |                            |   |         |                                   |  |   |           |  
|Total operating costs and expenses                      |  |                                    | 458,647 |   |                            |   | 616,416 |                                   |  |   | 1,163,255 |  
|                                                        |  |                                    |         |   |                            |   |         |                                   |  |   |           |  
|Operating income                                        |  |                                    | 28,543  |   |                            |   | 59,217  |                                   |  |   | 70,939    |  
|Interest expense                                        |  |                                    | 1,375   |   |                            |   | 12,677  |                                   |  |   | 32,570    |  
|Income from equity investments                          |  |                                    | (770    | ) |                            |   | (700    | )                                 |  |   | (1,818    | )
|                                                        |  |                                    |         |   |                            |   |         |                                   |  |   |           |  
|Income before minority interest and income tax expense  |  |                                    | 27,938  |   |                            |   | 47,240  |                                   |  |   | 40,187    |  
|Minority interest                                       |  |                                    | 788     |   |                            |   | 1,540   |                                   |  |   | 2,624     |  
|                                                        |  |                                    |         |   |                            |   |         |                                   |  |   |           |  
|Income before income tax expense                        |  |                                    | 27,150  |   |                            |   | 45,700  |                                   |  |   | 37,563    |  
|Income tax expense                                      |  |                                    | 10,146  |   |                            |   | 17,126  |                                   |  |   | 14,561    |  
|                                                        |  |                                    |         |   |                            |   |         |                                   |  |   |           |  
|Net income                                              |  | $                                  | 17,004  |   |                            | $ | 28,574  |                                   |  | $ | 23,002    |  
|                                                        |  |                                    |         |   |                            |   |         |                                   |  |   |           |  

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



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PNA GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY

NINE MONTHS ENDED SEPTEMBER 30, 2007



|                                                    |  |              |  |       |   |                           |   |                   |  |   |                                     |   |  |       |      |   |  |   |         |  
|--------------------------------------------------- |  | ------------ |  | ----- | - | ------------------------- | - | ----------------- |  | - | ----------------------------------- | - |  | ----- | ---- | - |  | - | ------- | -
|                                                    |  | Common Stock |  |       |   |                           |   |                   |  |   |                                     |   | 
|(in thousands of dollars, except shares)            |  | Shares       |  | Value |   | AdditionalPaid-in Capital |   | Retained Earnings |  |   | AccumulatedOther Comprehensive Loss |   |  | Total |     
|Successor                                           |  |              |  |       |   |                           |   |                   |  |   |                                     |   |  |       |      |   |  |   |         |  
|Balances at December 31, 2006                       |  | 1,000        |  | $     | 1 |                           | $ | 66,259            |  | $ |                                    |   |  | $     | (130 | ) |  | $ | 66,130  |  
|Net income                                          |  |             |  |       |  |                           |   |                  |  |   | 23,002                              |   |  |       |     |   |  |   | 23,002  |  
|Dividends paid                                      |  |             |  |       |  |                           |   |                  |  |   | (13,961                             | ) |  |       |     |   |  |   | (13,961 | )
|Net income of consolidated variable interest entity |  |             |  |       |  |                           |   | 866               |  |   |                                    |   |  |       |     |   |  |   | 866     |  
|                                                    |  |              |  |       |   |                           |   |                   |  |   |                                     |   |  |       |      |   |  |   |         |  
|Balances at September 30, 2007                      |  | 1,000        |  | $     | 1 |                           | $ | 67,125            |  | $ | 9,041                               |   |  | $     | (130 | ) |  | $ | 76,037  |  
|                                                    |  |              |  |       |   |                           |   |                   |  |   |                                     |   |  |       |      |   |  |   |         |  

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



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PNA GROUP, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                           |  |                                    |         |   |                            |   |          |                                   |  |   |         |  
|------------------------------------------------------------------------------------------ |  | ---------------------------------- | ------- | - | -------------------------- | - | -------- | --------------------------------- |  | - | ------- | -
|                                                                                           |  |                                    |         |   | Successor                  |  
|(in thousands of dollars)                                                                  |  | PredecessorJanuary 1 toMay 9, 2006 |         |   | May 10 toSeptember 30,2006 |   |          | Nine MonthsEndedSeptember 30,2007 | 
|Cash flows from operating activities                                                       |  |                                    |         |   |                            |   |          |                                   |  |   |         |  
|Net income                                                                                 |  | $                                  | 17,004  |   |                            | $ | 28,574   |                                   |  | $ | 23,002  |  
|Adjustments to reconcile net income to net cash (used in) provided by operating activities |  |                                    |         |   |                            |   |          |                                   |  |   |         |  
|Depreciation and amortization of intangibles                                               |  |                                    | 3,262   |   |                            |   | 4,437    |                                   |  |   | 8,683   |  
|Amortization of deferred financing costs                                                   |  |                                    |        |   |                            |   |         |                                   |  |   | 929     |  
|Provision for bad debts                                                                    |  |                                    | 462     |   |                            |   | 738      |                                   |  |   | 902     |  
|Deferred income taxes                                                                      |  |                                    | (540    | ) |                            |   | (3,801   | )                                 |  |   | (1,777  | )
|Gain on disposal of fixed assets                                                           |  |                                    |        |   |                            |   |         |                                   |  |   | (502    | )
|Minority interests                                                                         |  |                                    | 788     |   |                            |   | 1,540    |                                   |  |   | 2,624   |  
|Income from equity investments                                                             |  |                                    | (770    | ) |                            |   | (700     | )                                 |  |   | (1,818  | )
|Dividends received from equity investments                                                 |  |                                    |        |   |                            |   |         |                                   |  |   | 630     |  
|(Increase) decrease in                                                                     |  |                                    |         |   |                            |   |          |                                   |  |   |         |  
|Accounts receivable                                                                        |  |                                    | (27,454 | ) |                            |   | (24,688  | )                                 |  |   | (26,651 | )
|Receivables from/payables to affiliates                                                    |  |                                    | (1,893  | ) |                            |   | (2,264   | )                                 |  |   | 3,727   |  
|Inventories                                                                                |  |                                    | (66,824 | ) |                            |   | (66,399  | )                                 |  |   | 19,142  |  
|Other assets                                                                               |  |                                    | 11,591  |   |                            |   | (1,403   | )                                 |  |   | 970     |  
|Increase (decrease) in                                                                     |  |                                    |         |   |                            |   |          |                                   |  |   |         |  
|Payables                                                                                   |  |                                    | 43,521  |   |                            |   | (5,071   | )                                 |  |   | 443     |  
|Accruals                                                                                   |  |                                    | (2,077  | ) |                            |   | 6,030    |                                   |  |   | (9,758  | )
|Income tax payable                                                                         |  |                                    | 372     |   |                            |   | 3,836    |                                   |  |   | (9,352  | )
|Accrued pension cost                                                                       |  |                                    | (515    | ) |                            |   | 201      |                                   |  |   | (1,534  | )
|                                                                                           |  |                                    |         |   |                            |   |          |                                   |  |   |         |  
|Net cash (used in) provided by operating activities                                        |  |                                    | (23,073 | ) |                            |   | (58,970  | )                                 |  |   | 9,660   |  
|                                                                                           |  |                                    |         |   |                            |   |          |                                   |  |   |         |  
|Cash flows from investing activities                                                       |  |                                    |         |   |                            |   |          |                                   |  |   |         |  
|Increase in restricted cash                                                                |  |                                    |        |   |                            |   | (1,015   | )                                 |  |   | (1,051  | )
|Purchases of property, plant and equipment                                                 |  |                                    | (2,460  | ) |                            |   | (2,467   | )                                 |  |   | (10,598 | )
|Proceeds from disposals of property, plant and equipment                                   |  |                                    |        |   |                            |   | 4,558    |                                   |  |   | 1,088   |  
|Acquisition of PNA Group, Inc., net of cash acquired                                       |  |                                    |        |   |                            |   | (261,568 | )                                 |  |   |        |  
|Acquisition of MSC, net of cash acquired                                                   |  |                                    |        |   |                            |   | (53,701  | )                                 |  |   | (5,300  | )
|                                                                                           |  |                                    |         |   |                            |   |          |                                   |  |   |         |  
|Net cash used in investing activities                                                      |  |                                    | (2,460  | ) |                            |   | (314,193 | )                                 |  |   | (15,861 | )
|                                                                                           |  |                                    |         |   |                            |   |          |                                   |  |   |         |  
|Cash flows from financing activities                                                       |  |                                    |         |   |                            |   |          |                                   |  |   |         |  
|Proceeds from senior notes issue                                                           |  |                                    |        |   |                            |   | 250,000  |                                   |  |   |        |  
|Net (payments) proceeds on revolving credit facility                                       |  |                                    | (54,458 | ) |                            |   | 163,331  |                                   |  |   | 23,617  |  
|Proceeds (payments) of term loan                                                           |  |                                    | 85,000  |   |                            |   | (85,000  | )                                 |  |   |        |  
|Other long-term debt                                                                       |  |                                    | 72      |   |                            |   | (23      | )                                 |  |   | (481    | )
|Net proceeds from mortgages on real estate                                                 |  |                                    |        |   |                            |   | 47,659   |                                   |  |   |        |  
|Issuance of common stock                                                                   |  |                                    |        |   |                            |   | 62,500   |                                   |  |   |        |  
|Deferred financing costs                                                                   |  |                                    | (3,435  | ) |                            |   | (8,568   | )                                 |  |   | (1,388  | )
|Dividend paid to minority interest holders                                                 |  |                                    | (343    | ) |                            |   | (1,415   | )                                 |  |   | (1,323  | )
|Dividends paid to stockholder                                                              |  |                                    | (2,000  | ) |                            |   | (52,038  | )                                 |  |   | (13,961 | )
|                                                                                           |  |                                    |         |   |                            |   |          |                                   |  |   |         |  
|Net cash provided by financing activities                                                  |  |                                    | 24,836  |   |                            |   | 376,446  |                                   |  |   | 6,464   |  
|                                                                                           |  |                                    |         |   |                            |   |          |                                   |  |   |         |  
|Net (decrease) increase in cash and cash equivalents                                       |  |                                    | (697    | ) |                            |   | 3,283    |                                   |  |   | 263     |  
|Cash and cash equivalents at beginning of period                                           |  |                                    | 2,210   |   |                            |   | 1,513    |                                   |  |   | 3,201   |  
|                                                                                           |  |                                    |         |   |                            |   |          |                                   |  |   |         |  
|Cash and cash equivalents at end of period                                                 |  | $                                  | 1,513   |   |                            | $ | 4,796    |                                   |  | $ | 3,464   |  
|                                                                                           |  |                                    |         |   |                            |   |          |                                   |  |   |         |  
|Supplemental disclosures of cash flow information:                                         |  |                                    |         |   |                            |   |          |                                   |  |   |         |  
|Cash paid during the period for:                                                           |  |                                    |         |   |                            |   |          |                                   |  |   |         |  
|Interest                                                                                   |  | $                                  | 1,581   |   |                            | $ | 7,526    |                                   |  | $ | 39,071  |  
|                                                                                           |  |                                    |         |   |                            |   |          |                                   |  |   |         |  
|Income taxes                                                                               |  | $                                  | 171     |   |                            | $ | 18,712   |                                   |  | $ | 21,021  |  
|                                                                                           |  |                                    |         |   |                            |   |          |                                   |  |   |         |  

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



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##### Table of Contents

PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)

Note 1. Description of Business

Description of Business

PNA Group, Inc. (PNA) is a holding company which provides management services to and conducts
business through four operating subsidiaries. PNA and its subsidiaries are referred to collectively herein as the Company or Successor Company, we, us or our.

We are a leading national steel service center group that distributes steel products and provides value-added steel processing services to our customers, which are
largely comprised of fabricators and original equipment manufacturers, across a diversified group of industries, including the non-residential construction, machinery and equipment, manufacturing, oil and gas, telecommunications and utilities
markets. The Company distributes a variety of steel products, including a full line of structural and long products, plate, flat rolled coil, tubulars and sheet, as well as performs a variety of value-added processing services for our customers.

Historically, we have operated our business through three operating subsidiaries: Infra-Metals Company (Infra-Metals), Delta Steel, LP
(Delta) and Feralloy Corporation (Feralloy). With the completion of the acquisition of Metals Supply Company, Ltd. (Metals Supply or MSC) on May 31, 2006, MSC became the Companys fourth
operating subsidiary.

On February 14, 2006, PNA Group Holding Corporation (PNAG Holding, formerly known as Travel Holding Corporation),
an affiliate of Platinum Equity Capital Partners (Platinum), entered into an Agreement and Plan of Merger (the Merger Agreement) with PNA and Preussag North America, Inc., PNAs former owner (the Seller), to
acquire all of the outstanding capital stock of PNA for cash consideration of $261,568, refinancing of existing indebtedness of $88,048, a $12,000 seller note and other consideration and costs of $3,762 (the Platinum Acquisition). On
May 9, 2006, Platinum closed the acquisition of PNA whereby Travel Merger Corporation (Travel Merger), a wholly owned subsidiary of PNAG Holding, merged with and into PNA with PNA being the surviving corporation.

Effective May 31, 2006, the Company completed the acquisition of MSC (the MSC Acquisition) pursuant to which PNA acquired all of the outstanding
partnership interests of Metals Supply Company, Ltd. and Clinton & Lockwood, Ltd. (an affiliate of MSC) for cash consideration of approximately $33,253 and refinanced approximately $20,847 of Metals Supplys then existing indebtedness.

PNA Intermediate Holding Corporation (PNA Intermediate) was incorporated in Delaware on January 25, 2007 as a wholly owned subsidiary of
PNAG Holding. The capital stock of PNA was contributed by PNAG Holding to PNA Intermediate on January 29, 2007. As a result, PNA became a wholly-owned subsidiary of PNA Intermediate.

Basis of Presentation

Interim Financial Reporting

In the opinion of management, the interim condensed consolidated financial statements include all adjustments (consisting of normally recurring accruals)
and disclosures considered necessary for a fair presentation of the consolidated financial position and results of operations of the Company and its subsidiaries as of and for the interim periods presented. The condensed consolidated balance sheet
as of December 31, 2006 has been derived from the Companys audited consolidated financial statements as of that date. The accompanying unaudited interim condensed consolidated financial statements do not include all of the information and
footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The consolidated results of operations for the three and nine months ended September 30, 2007 are not necessarily
indicative of the results to be expected for the full year. These interim statements should be read in conjunction with the December 31, 2006 audited consolidated financial statements and notes thereto included in the Companys
Registration Statement on Form S-4 (Registration No. 333-142896) (the Registration Statement).



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##### Table of Contents

PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. In addition, in accordance with FASB Interpretation No. 46(R), or FIN 46(R), Consolidation
of Variable Interest Entities, the Company consolidates certain variable interest entities of Travel Main Corporation (Travel Main), a wholly owned subsidiary of PNAG Holding, as the Company has determined that it is the primary
beneficiary (see Variable Interest Entities below). Significant intercompany balances and transactions within the consolidated group have been eliminated in consolidation.

As a result of the purchase of PNA on May 9, 2006, the results of operations for the period January 1, 2006 to May 9, 2006 are represented by the Predecessor Company balances and results of operations
of PNA for the period May 10, 2006 to September 30, 2006 and the three and nine months ended September 30, 2007 are represented by the Successor Company balances for purposes of the accompanying condensed consolidated financial
statements. As a result of the application of purchase accounting, the Predecessor Company balances and amounts presented in the financial statements and footnotes are not comparable with those of the Successor Company.

Equity Investments

The equity method of accounting is used where the
Companys investment in voting stock gives it the ability to exercise significant influence over the investee, generally 20% to 50%. The equity method is used to account for Feralloys investments in Indiana Pickling and Processing Company
(45% interest), Acero Prime S. de R.L. de C.V. (40% interest) and Oregon Feralloy Partners LLC (40% interest).

The Company had $4,429 and $5,632 of
undistributed earnings in equity investments at December 31, 2006 and September 30, 2007, respectively.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and 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.
These estimates are based on historical experience and information that is available to management about current events and actions the Company may take in the future. Significant items subject to estimates and assumptions include the evaluation of
the recoverability of the carrying value of long-lived assets and goodwill; valuation allowances for receivables, inventories and deferred income tax assets; legal and environmental liabilities; and assets and obligations related to employee benefit
plans. Actual results could differ from those estimates and the differences could be material.



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PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



Variable Interest Entities

In August 2006, we completed a real estate transfer pursuant to which we effectively transferred 18 of our real estate assets to 7 wholly owned subsidiaries of Travel Main, collectively referred to as Travel Main
Subsidiaries, and then entered into 15 year operating leases with respect to these properties that provide for our continued use of them in our operations. Travel Main is a wholly owned subsidiary of PNAG Holding. The Travel Main Subsidiaries
subsequently mortgaged the properties for amounts approximately equal to 75% of their appraised value.

While we are not a party to nor a guarantor of the
mortgages, in accordance with FASB Interpretation No. 46(R), we hold an implicit variable interest in Travel Mains subsidiaries and are the primary beneficiary of these variable interest entities. Accordingly the combined financial
statements of Travel Mains subsidiaries have been consolidated into our condensed consolidated financial statements.

The Combined Balance Sheet and
Statement of Income of Travel Mains subsidiaries follow.

COMBINED BALANCE SHEET DATA

Travel Main Subsidiaries



|                                            |  |                  |         |   |                   |   |         |  
|------------------------------------------- |  | ---------------- | ------- | - | ----------------- | - | ------- | -
|(in thousands of dollars)                   |  | December 31,2006 |         |   | September 30,2007 |  
|Assets                                      |  |                  |         |   |                   |   |         |  
|Current assets                              |  | $                | 2,396   |   |                   | $ | 2,848   |  
|Property, plant and equipment, net          |  |                  | 27,465  |   |                   |   | 27,035  |  
|Other noncurrent assets                     |  |                  |         |   |                   |   |         |  
|Deferred tax                                |  |                  | 6,711   |   |                   |   | 6,711   |  
|Deferred financing costs                    |  |                  | 1,140   |   |                   |   | 1,491   |  
|                                            |  |                  |         |   |                   |   |         |  
|Total assets                                |  | $                | 37,712  |   |                   | $ | 38,085  |  
|                                            |  |                  |         |   |                   |   |         |  
|Liabilities and Stockholders Deficit       |  |                  |         |   |                   |   |         |  
|Current liabilities                         |  | $                | 245     |   |                   | $ | 1,179   |  
|Long term debt, net of current maturities   |  |                  | 49,876  |   |                   |   | 48,449  |  
|                                            |  |                  |         |   |                   |   |         |  
|Total liabilities                           |  |                  | 50,121  |   |                   |   | 49,628  |  
|                                            |  |                  |         |   |                   |   |         |  
|Stockholders deficit:                      |  |                  |         |   |                   |   |         |  
|Capital                                     |  |                  | 34,502  |   |                   |   | 34,502  |  
|Deficit                                     |  |                  | (46,911 | ) |                   |   | (46,045 | )
|                                            |  |                  |         |   |                   |   |         |  
|Total stockholders deficit                 |  |                  | (12,409 | ) |                   |   | (11,543 | )
|                                            |  |                  |         |   |                   |   |         |  
|Total liabilities and stockholders deficit |  | $                | 37,712  |   |                   | $ | 38,085  |  
|                                            |  |                  |         |   |                   |   |         |  

COMBINED STATEMENT OF INCOME DATA

Travel Main Subsidiaries



|                                     |  |                                   |      
|------------------------------------ |  | --------------------------------- | -----
|(in thousands of dollars)            |  | Nine MonthsEndedSeptember 30,2007
|Rent                                 |  | $                                 | 4,707
|Cost and expenses                    |  |                                   |      
|Selling, general, and administrative |  |                                   | 354  
|Depreciation                         |  |                                   | 430  
|                                     |  |                                   |      
|Total costs and expenses             |  |                                   | 784  
|                                     |  |                                   |      
|Operating income                     |  |                                   | 3,923
|Interest expense                     |  |                                   | 2,491
|                                     |  |                                   |      
|Income before income tax expense     |  |                                   | 1,432
|Income tax expense                   |  |                                   | 566  
|                                     |  |                                   |      
|Net income                           |  | $                                 | 866  
|                                     |  |                                   |      



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##### Table of Contents

PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



Significant Accounting Policies

Income Taxes

Effective January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes-an Interpretation of FASB Statement No. 109, Accounting for Income Taxes, or FIN 48, which clarifies the accounting for uncertainty in income taxes. FIN 48 prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The interpretation requires that the Company recognize in its financial statements the impact of a tax
position if that position is more likely than not of being sustained on audit, based on the technical merits of the position. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and
disclosure. The impact of the Companys reassessment of its tax positions in accordance with FIN 48 did not have a material impact on its results of operations, financial condition or liquidity.

PNAG Holding files a consolidated federal income tax return that includes PNA and all its wholly owned subsidiaries and their respective subsidiaries. The tax provision
in the accompanying condensed consolidated financial statements is calculated as if PNA filed a separate subconsolidated federal income tax return. The Company has determined it had no unrecognized tax benefits as of January 1, 2007 nor has
there been an increase in the amount of unrecognized tax benefits as of September 30, 2007. Any potential penalties and interest related to unrecognized tax benefits would be reported as Interest expense in the accompanying interim condensed
consolidated financial statements, and no such amounts have been recognized for the interim periods presented herein. The tax years ended December 31, 2004 and 2005 as well as the periods January 1, 2006 to May 9, 2006 and
May 10, 2006 to December 31, 2006 remain open and subject to examination in the following significant income tax jurisdictions: Federal, Alabama, Arizona, California, Connecticut, Florida, Georgia, Indiana, Illinois, Ohio, South
Carolina, Texas, and Virginia.

Reclassification

Certain Predecessor period amounts related to cost of materials sold, processing, distribution and selling, general and administrative costs on the condensed consolidated statements of income have been reclassified to conform to the current
year financial statement presentation.

Note 2. Business Combinations

On May 9, 2006, Platinum closed on the purchase of all the outstanding capital stock of PNA from Preussag North America, Inc for cash consideration of $261,568, refinancing of existing indebtedness of $88,048, a
$12,000 seller note and other consideration and costs of $3,762. The transaction was financed with new borrowings under PNAs amended and restated senior secured credit facility of $290,747 and an equity investment of $62,500. The proceeds from
the new borrowings and equity investment were used to pay approximately $261,568 in acquisition consideration to our former stockholder and to refinance approximately $88,048 of indebtedness then outstanding under PNAs then existing senior
secured credit facility.

Effective May 31, 2006, the Company completed the acquisition of MSC
pursuant to which PNA acquired all of the outstanding partnership interests of MSC and Clinton & Lockwood, Ltd. (an affiliate of MSC) for cash consideration of approximately $33,253 and refinanced $20,847 of Metals Supplys then
existing indebtedness. In addition, the purchase price included $5,300 in deferred consideration which was paid to the former owner on May 31, 2007. The acquisition was financed initially by a $54,221 capital contribution from PNAG Holding. On
July 17, 2006, PNA borrowed $38,021 under its amended and restated senior secured credit facility and used the proceeds to make a return of capital to PNAG Holding in the form of a dividend. The Company returned to PNAG Holding the remaining
$16,200 of its equity investment on August 16, 2006 with a portion of the proceeds from the Companys issuance on August 15, 2006 of the 103/4% Senior Notes due 2016 for $250,000 (the Senior Notes  see Note 8, Long-Term Debt).



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##### Table of Contents

PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



The following unaudited pro forma information presents consolidated results of operations for the three and nine
months ended September 30, 2006 as if the acquisitions had occurred at the beginning of the reporting period.



|           |  |                                    |         |                                   |   |          
|---------- |  | ---------------------------------- | ------- | --------------------------------- | - | ---------
|           |  | Three MonthsEndedSeptember 30,2006 |         | Nine MonthsEndedSeptember 30,2006
|Net sales  |  | $                                  | 434,301 |                                   | $ | 1,228,585
|Net income |  | $                                  | 21,075  |                                   | $ | 55,009   

Note 3. Inventories

Inventories consist of the following:



|               |  |                  |         |                   |   |        
|-------------- |  | ---------------- | ------- | ----------------- | - | -------
|               |  | Successor       
|               |  | December 31,2006 |         | September 30,2007
|Raw materials  |  | $                | 391,613 |                   | $ | 372,006
|Finished goods |  |                  | 18,991  |                   |   | 19,456 
|               |  |                  |         |                   |   |        
|               |  | $                | 410,604 |                   | $ | 391,462
|               |  |                  |         |                   |   |        

Note 4. Other Current Assets

Other current assets consist of the following:



|                           |  |                  |        |                   |   |       
|-------------------------- |  | ---------------- | ------ | ----------------- | - | ------
|                           |  | Successor       
|                           |  | December 31,2006 |        | September 30,2007
|Other receivables          |  | $                | 8,011  |                   | $ | 6,617 
|Prepaid expenses and other |  |                  | 1,135  |                   |   | 3,213 
|Deferred income taxes      |  |                  | 7,706  |                   |   | 8,070 
|                           |  |                  |        |                   |   |       
|                           |  | $                | 16,852 |                   | $ | 17,900
|                           |  |                  |        |                   |   |       



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##### Table of Contents

PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



Note 5. Property, Plant and Equipment

Property, plant and equipment consist of the following:



|                               |  |                      |  |                  |        |   |                   |   |        |  
|------------------------------ |  | -------------------- |  | ---------------- | ------ | - | ----------------- | - | ------ | -
|                               |  |                      |  | Successor        |       
|                               |  | EstimatedUseful Life |  | December 31,2006 |        |   | September 30,2007 |  
|Land                           |  |                      |  | $                | 5,437  |   |                   | $ | 5,474  |  
|Buildings and improvements     |  | 25-40 years          |  |                  | 26,586 |   |                   |   | 27,337 |  
|Equipment                      |  | 5-10 years           |  |                  | 32,544 |   |                   |   | 41,403 |  
|Construction in progress       |  |                      |  |                  | 814    |   |                   |   | 1,863  |  
|                               |  |                      |  |                  |        |   |                   |   |        |  
|                               |  |                      |  |                  | 65,381 |   |                   |   | 76,077 |  
|Less: accumulated depreciation |  |                      |  |                  | (3,839 | ) |                   |   | (8,206 | )
|                               |  |                      |  |                  |        |   |                   |   |        |  
|                               |  |                      |  | $                | 61,542 |   |                   | $ | 67,871 |  
|                               |  |                      |  |                  |        |   |                   |   |        |  

Depreciation expense was $3,262, $2,312, $1,152, $1,658 and $4,625 for the periods January 1, 2006 to
May 9, 2006, May 10, 2006 to September 30, 2006, the three months ended September 30, 2006 and the three and nine months ended September 30, 2007, respectively.

Note 6. Intangible Assets

Intangible assets consist of the
following as of December 31, 2006:



|                           |  |                    |  |                      |        |                         |   |        |                    |  |   |       
|-------------------------- |  | ------------------ |  | -------------------- | ------ | ----------------------- | - | ------ | ------------------ |  | - | ------
|Successor                  |  | AmortizationPeriod |  | Gross CarryingAmount |        | AccumulatedAmortization |   |        | Net CarryingAmount
|Customer relationships     |  | 15-20 years        |  | $                    | 16,457 |                         | $ | (1,552 | )                  |  | $ | 14,905
|Non-competition agreements |  | 2 years            |  |                      | 5,882  |                         |   | (1,726 | )                  |  |   | 4,156 
|Backlog                    |  | 1-3 months         |  |                      | 734    |                         |   | (734   | )                  |  |   |      
|Proprietary software       |  | 3 years            |  |                      | 352    |                         |   | (75    | )                  |  |   | 277   
|                           |  |                    |  |                      |        |                         |   |        |                    |  |   |       
|                           |  |                    |  | $                    | 23,425 |                         | $ | (4,087 | )                  |  | $ | 19,338
|                           |  |                    |  |                      |        |                         |   |        |                    |  |   |       

Intangible assets consist of the following as of September 30, 2007:



|                           |  |                    |  |                      |        |                         |   |        |                    |  |   |       
|-------------------------- |  | ------------------ |  | -------------------- | ------ | ----------------------- | - | ------ | ------------------ |  | - | ------
|Successor                  |  | AmortizationPeriod |  | Gross CarryingAmount |        | AccumulatedAmortization |   |        | Net CarryingAmount
|Customer relationships     |  | 15-20 years        |  | $                    | 16,457 |                         | $ | (3,324 | )                  |  | $ | 13,133
|Non-competition agreements |  | 2 years            |  |                      | 5,882  |                         |   | (3,921 | )                  |  |   | 1,961 
|Backlog                    |  | 1-3 months         |  |                      | 734    |                         |   | (734   | )                  |  |   |      
|Proprietary software       |  | 3 years            |  |                      | 352    |                         |   | (166   | )                  |  |   | 186   
|                           |  |                    |  |                      |        |                         |   |        |                    |  |   |       
|                           |  |                    |  | $                    | 23,425 |                         | $ | (8,145 | )                  |  | $ | 15,280
|                           |  |                    |  |                      |        |                         |   |        |                    |  |   |       

The Company had no amortizable intangible assets during the period January 1, 2006 to May 9, 2006.
Amortization expense was $2,125 for the period May 10, 2006 to September 30, 2006, $1,415 for the three months ended September 30, 2006 and $1,308 and $4,058 for the three and nine months ended September 30, 2007, respectively.



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PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



Note 7. Other Payables

Other payables consist of the following:



|                                     |  |                  |        |                   |   |       
|------------------------------------ |  | ---------------- | ------ | ----------------- | - | ------
|                                     |  | Successor       
|                                     |  | December 31,2006 |        | September 30,2007
|Current maturities of long-term debt |  | $                | 853    |                   | $ | 832   
|Accrued bonuses                      |  |                  | 13,103 |                   |   | 12,032
|                                     |  |                  |        |                   |   |       
|Accrued interest                     |  |                  | 11,525 |                   |   | 4,444 
|Deferred consideration payable       |  |                  | 5,300  |                   |   |      
|Accrued expenses and other           |  |                  | 17,315 |                   |   | 16,651
|                                     |  |                  |        |                   |   |       
|                                     |  | $                | 48,096 |                   | $ | 33,959
|                                     |  |                  |        |                   |   |       

Note 8. Long-Term Debt

Long-term debt consists of the following:



|                                                      |  |                  |         |   |                   |   |         |  
|----------------------------------------------------- |  | ---------------- | ------- | - | ----------------- | - | ------- | -
|                                                      |  | Successor        |        
|                                                      |  | December 31,2006 |         |   | September 30,2007 |  
|Revolver loan                                         |  | $                | 164,341 |   |                   | $ | 187,958 |  
|Senior notes                                          |  |                  | 250,000 |   |                   |   | 250,000 |  
|Real estate mortgages                                 |  |                  | 49,875  |   |                   |   | 49,281  |  
|Capitalized lease obligation and other long-term debt |  |                  | 51      |   |                   |   | 165     |  
|                                                      |  |                  |         |   |                   |   |         |  
|                                                      |  |                  | 464,267 |   |                   |   | 487,404 |  
|Less: current maturities of long-term debt            |  |                  | (853    | ) |                   |   | (832    | )
|                                                      |  |                  |         |   |                   |   |         |  
|                                                      |  | $                | 463,414 |   |                   | $ | 486,572 |  
|                                                      |  |                  |         |   |                   |   |         |  

The Senior Notes contain restrictions on dividends payable by the Company to PNA Intermediate. In general,
dividends and other restricted payments of up to 50% of Consolidated Net Income plus amounts received from equity contributions received may be made so long as the Company maintains certain operating ratios as defined in the indenture governing the
Senior Notes. Certain payments are exempt from these restrictions, and PNA can pay dividends of up to $15,000 in the aggregate over the term of the Senior Notes that are not subject to these restrictions. Approximately $31,780 and $33,125 of
PNAs retained earnings were unrestricted, and therefore available for payment of dividends, as of December 31, 2006 and September 30, 2007, respectively.

In connection with the issuance of the $250,000 Senior Notes on August 15, 2006, the Company entered into a registration rights agreement providing registration rights requiring that an initial registration
statement be filed with the Securities and Exchange Commission (the SEC) within 270 days of issuance of the Senior Notes for purposes of registering the Senior Notes, with a requirement that the registration become effective within 390
days of issuance. The Company filed the initial registration statement on Form S-4 (Registration No. 333-142896) with the SEC on May 14, 2007 and subsequently filed amendment no. 1 on July 31, 2007 and amendment no. 2 on
August 8, 2007. The SEC declared the Registration Statement effective August 9, 2007.



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PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



Note 9. Retirement Benefits and Compensation Plans

The Company has two noncontributory, defined benefit pension plans and a nonqualified, unfunded retirement plan (together, the Plans). Of the noncontributory,
defined benefit pension plans, one covers substantially all Feralloy nonunion employees who have attained age 21 and the other covers all union employees at Feralloys Midwest, Southern and St. Louis divisions. Feralloy also has a nonqualified,
unfunded retirement plan (the Supplemental Executive Retirement Plan, or SERP) to provide supplemental benefits to certain of its executive employees. To provide for the SERP, Feralloy purchased Company-owned life insurance
contracts on the related employees.

Effective December 31, 2006, the Company adopted a change to freeze the benefits under the Companys
Non-Union Pension Plan, a defined benefit pension plan and instituted a new defined contribution plan effective January 1, 2007. On October 30, 2006, Feralloys Board of Directors authorized a change to freeze the benefits under its
SERP.

Implementation of the changes to the SERP was effective March 1, 2007 to allow for appropriate notice to affected employees and provide time
necessary for essential actuarial studies and analysis with respect to the design change and preparation of operative documents. As a result, in accordance with Statement of Financial Accounting Standard No. 88, Employers Accounting
for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits, the Company recognized a curtailment gain of $2,210 in the fourth quarter of fiscal year 2006 related to freezing benefits of its Non-Union Pension
Plan and $-0- and $700 for the three and nine months ended September 30, 2007, respectively, related to freezing benefits of its SERP.

The components
of net periodic pension cost (benefit) consist of the following:



|                                                                            |  |                                    |      |   |                            |   |      |                                    |  |   |                                    |   |  |                                   |      |   |  |   |      |  
|--------------------------------------------------------------------------- |  | ---------------------------------- | ---- | - | -------------------------- | - | ---- | ---------------------------------- |  | - | ---------------------------------- | - |  | --------------------------------- | ---- | - |  | - | ---- | -
|                                                                            |  |                                    |      |   | Successor                  |  
|                                                                            |  | PredecessorJanuary 1 toMay 9, 2006 |      |   | May 10 toSeptember 30,2006 |   |      | Three MonthsEndedSeptember 30,2006 |  |   | Three MonthsEndedSeptember 30,2007 |   |  | Nine MonthsEndedSeptember 30,2007 |     
|Components of net periodic pension (benefit) cost and total pension expense |  |                                    |      |   |                            |   |      |                                    |  |   |                                    |   |  |                                   |      |   |  |   |      |  
|Service cost                                                                |  | $                                  | 318  |   |                            | $ | 271  |                                    |  | $ | 186                                |   |  | $                                 |     |   |  | $ |     |  
|Interest cost                                                               |  |                                    | 442  |   |                            |   | 473  |                                    |  |   | 324                                |   |  |                                   | 283  |   |  |   | 885  |  
|Expected return on plan assets                                              |  |                                    | (393 | ) |                            |   | (444 | )                                  |  |   | (290                               | ) |  |                                   | (322 | ) |  |   | (960 | )
|Amortization of prior service cost                                          |  |                                    | 24   |   |                            |   |     |                                    |  |   |                                   |   |  |                                   |     |   |  |   |     |  
|Recognized actuarial loss                                                   |  |                                    | 154  |   |                            |   |     |                                    |  |   |                                   |   |  |                                   |     |   |  |   |     |  
|Curtailments                                                                |  |                                    |     |   |                            |   |     |                                    |  |   |                                   |   |  |                                   |     |   |  |   | (700 | )
|                                                                            |  |                                    |      |   |                            |   |      |                                    |  |   |                                    |   |  |                                   |      |   |  |   |      |  
|Net periodic pension cost (benefit)                                         |  | $                                  | 545  |   |                            | $ | 300  |                                    |  | $ | 220                                |   |  | $                                 | (39  | ) |  | $ | (775 | )
|                                                                            |  |                                    |      |   |                            |   |      |                                    |  |   |                                    |   |  |                                   |      |   |  |   |      |  

Effective May 17, 2007, PNAG Holding adopted a Participation Agreement (the Participation Plan)
for the purpose of providing incentive compensation to our key employees. The incentive compensation is awarded in the form of non-equity performance units, the value of which is related to the appreciation in our value. The performance units are
payable to participants upon the occurrence of a qualifying event defined as (1) a sale of any of our common stock by Platinum (other than a sale to our affiliates), (2) the consummation of a public offering of our stock owned
by Platinum or its affiliates or (3) the payment of cash dividends by PNAG Holding to Platinum (other than dividends arising out of or relating to any real estate owned by us or our subsidiaries as of the effective date of the Participation
Plan). The participants initially vested 25% at the inception of the Participation Plan and vest an additional 25% each year over the succeeding three years beginning October 1, 2007. Any vested amounts paid under the Participation Plan will be
treated as compensation at the PNA level. The Participation Plan expires December 31, 2017, and all performance units terminate upon the termination or expiration of the Participation Plan. Subject to certain exceptions, upon a termination of
employment, all performance units granted to a participant will be forfeited.



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PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



Note 10. Related Parties

Receivables from affiliates represent an amount due from our Mexican joint-venture, Acero Prime S. de R.L. de C.V. Payables to affiliates represent amounts due to two domestic joint ventures who are parties to the
group cash management system and who have positive cash balances with the Company. Dividends paid to minority interest holders totaled $343, $1,415 and $1,323 for the periods January 1, 2006 to May 9, 2006 and May 10, 2006 to
September 30, 2006 and the nine months ended September 30, 2007, respectively.

PNA paid cash dividends of $2,000 to Preussag North America, Inc.
during the period January 1, 2006 to May 9, 2006. Dividends paid to PNAG Holding during the period May 10, 2006 to September 30, 2006 consisted of the non-cash real estate transfer valued at $34,502 and cash dividends of $6,858
plus $54,221 representing the return of capital received at the time of the acquisition of MSC. Dividends paid to PNAG Holding and PNA Intermediate totaled $13,961 during the nine months ended September 30, 2007.

The Company paid Platinum $3,809 during the period May 10, 2006 to September 30, 2006 and $1,250 and $3,750 during the three and nine months ended
September 30, 2007, respectively, related to its annual monitoring fee pursuant to a corporate advisory services agreement with Platinum (the Corporate Advisory Services Agreement).

Note 11. Commitments and Contingencies

During the third
quarter of fiscal year 2007, the Company determined that the quality of certain material it received primarily during the second quarter of fiscal year 2007 from steel traders dealing with certain foreign suppliers is inconsistent with the
mills certification of the steel specifications that accompanied such material. The Company is currently in a dispute with such steel traders regarding the quality of specific orders of steel purchased from these suppliers. The Company
established an allowance of $570 related to the value of such inventory on hand as of September 30, 2007 representing the difference between the carrying value of the inventory and its estimated market value. If market conditions are less
favorable than those projected by the Company, additional charges to increase this reserve may be required.

With regard to potential claims against the
Company related to the quality of such steel previously sold, management believes there may be limited ability of the Company to ultimately recover from the foreign suppliers to the extent that any valid claims are made against the Company for which
the Company does not carry, or does not carry sufficient, insurance coverage. As the Company, consistent with industry practice, does not generally perform independent testing of the steel it receives from mills with mill certifications, we are
currently evaluating the extent to which we may have received similarly non-conforming steel from foreign suppliers through various steel traders in prior periods. Management is not able at this time to determine what, if any, effect these events
may have on the Companys consolidated financial position or consolidated results of operations in the future.

The Company is also involved in
several other legal proceedings, claims and litigation arising in the ordinary course of business. Management presently believes that the outcome of each such pending proceeding, claim or litigation will not have a material adverse effect on the
consolidated financial position of the Company or on the consolidated results of operations. Should any losses be sustained in connection with any proceeding or claim in excess of provisions, the amount will be charged to income in the future.

The Company had purchase commitments of approximately $232,312 for inventory at September 30, 2007. These commitments were made to assure the Company
a normal supply of stock and, in managements opinion, will be sold to obtain normal profit margins.

The consolidated group leases real estate,
office space, data processing equipment automobiles and trucks. Several of the leases require the lessee to pay taxes, maintenance and other operating expenses.



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##### Table of Contents

PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



Note 12. Income Taxes

As discussed in Note 1, Significant Accounting Policies,PNAG Holding files a consolidated federal income tax return that includes PNA, its wholly owned subsidiaries and their respective subsidiaries. The tax
provision in the accompanying condensed consolidated financial statements is calculated as if PNA filed a separate subconsolidated federal income tax return based on managements estimate of the effective tax rate for the fiscal year.

Income tax expense was $2,225 and $14,561 for the three and nine months ended September 30, 2007, respectively, resulting in effective tax rates of
43.1% and 38.8% for the respective periods. The effective tax rate differs from that computed at the federal statutory rate of 35% principally because of the effect of state income taxes, as well as other permanent differences between taxable income
and book income. The increase in the effective tax rate for the three months ended September 30, 2007 is attributable to an increase in these permanent differences as a percentage of taxable income due to lower than projected pre-tax earnings
in the three months ended September 30, 2007 as compared to the nine months ended September 30, 2007.

Note 13. Business Segment
Information

The Company has two reportable segments based along product lines  the long products and plate segment and the flat rolled segment.
The long products and plate segment distributes numerous products including structural beams, tubing, plates, sheets and pipes and provides some value-added steel processing capabilities that includes saw-cutting and T-splitting. The flat rolled
segment offers hot rolled, hot rolled pickled and oiled, cold rolled and galvanized and other coated coil and sheet products. Virtually all of the steel sold by the flat rolled segment receives value-added processing such as temper-passing, leveling
or slitting. Through this segment, the Company also performs a substantial amount of tolling, in which it processes steel for a fee, but does not take title to the inventory.

As discussed in Note 1, the Company conducts its steel services business through four operating subsidiaries: Infra-Metals, Delta, Feralloy and MSC. The operations of Feralloy comprise the flat rolled segment products
while Infra-Metals, Delta and MSC are aggregated to constitute the long products and plate segment based on the entities product lines and their exhibiting similar economic characteristics, products, customers and delivery methods. The primary
measures used by management in evaluating the segments performance are net sales and operating income.

The results of the Travel Main Subsidiaries,
which do not constitute a reportable segment, are combined with holding company revenue and expenses and consolidation eliminations and reclassifications and are disclosed as corporate and other for purposes of reconciling segment reporting
disclosures to the condensed consolidated financial statements.

The Company uses the same accounting policies to generate segment results as it does
for its consolidated results. None of the operating business segments relies on any one major customer. All of the Companys goodwill is included as part of the long products and plate segment total assets. All investments in unconsolidated
equity method entities are part of the flat rolled segment.



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##### Table of Contents

PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



|                                               |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|---------------------------------------------- |  | ---------------------- | ------- | ---------- | - | ------------------ |  | - | ------ | - |  | - | ---------
|                                               |  | Long Productsand Plate |         | FlatRolled |   | Corporateand Other |  |   | Total 
|Predecessor Company                            |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Period from January 1, 2006 to May 9, 2006     |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Net sales to external customers                |  | $                      | 315,034 |            | $ | 172,156            |  | $ |       |   |  | $ | 487,190  
|Operating costs and expenses                   |  |                        | 286,045 |            |   | 167,869            |  |   | 4,733  |   |  |   | 458,647  
|Operating income (loss)                        |  |                        | 28,989  |            |   | 4,287              |  |   | (4,733 | ) |  |   | 28,543   
|Capital spending                               |  |                        | 1,928   |            |   | 532                |  |   |       |   |  |   | 2,460    
|Total segment assets                           |  |                        | 398,008 |            |   | 187,553            |  |   | 6,650  |   |  |   | 592,211  
|Depreciation and amortization                  |  |                        | 1,293   |            |   | 1,967              |  |   | 2      |   |  |   | 3,262    
|Income from equity investments                 |  |                        |        |            |   | 770                |  |   |       |   |  |   | 770      
|                                               |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Interest expense                               |  |                        | 1,690   |            |   | 968                |  |   | (1,283 | ) |  |   | 1,375    
|                                               |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|                                              
|Successor Company                              |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Period from May 10, 2006 to September 30, 2006 |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Net sales to external customers                |  | $                      | 469,823 |            | $ | 205,810            |  | $ |       |   |  | $ | 675,633  
|Operating costs and expenses                   |  |                        | 416,163 |            |   | 198,651            |  |   | 1,602  |   |  |   | 616,416  
|Operating income (loss)                        |  |                        | 53,660  |            |   | 7,159              |  |   | (1,602 | ) |  |   | 59,217   
|Capital spending                               |  |                        | 1,727   |            |   | 740                |  |   |       |   |  |   | 2,467    
|Total segment assets                           |  |                        | 494,605 |            |   | 181,751            |  |   | 55,354 |   |  |   | 731,710  
|Depreciation and amortization                  |  |                        | 3,204   |            |   | 1,149              |  |   | 84     |   |  |   | 4,437    
|Income from equity investments                 |  |                        |        |            |   | 700                |  |   |       |   |  |   | 700      
|Interest expense                               |  |                        | 9,390   |            |   | 3,919              |  |   | (632   | ) |  |   | 12,677   
|Three months ended September 30, 2006          |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Net sales to external customers                |  | $                      | 305,717 |            | $ | 128,584            |  | $ |       |   |  | $ | 434,301  
|Operating costs and expenses                   |  |                        | 268,020 |            |   | 122,324            |  |   | 1,179  |   |  |   | 391,523  
|Operating income (loss)                        |  |                        | 37,697  |            |   | 6,260              |  |   | (1,179 | ) |  |   | 42,778   
|Capital spending                               |  |                        | 1,336   |            |   | 672                |  |   |       |   |  |   | 2,008    
|Total segment assets                           |  |                        | 494,605 |            |   | 181,751            |  |   | 55,354 |   |  |   | 731,710  
|Depreciation and amortization                  |  |                        | 1,880   |            |   | 685                |  |   | 2      |   |  |   | 2,567    
|Income from equity investments                 |  |                        |        |            |   | 413                |  |   |       |   |  |   | 413      
|Interest expense                               |  |                        | 7,463   |            |   | 2,736              |  |   | (1,342 | ) |  |   | 8,857    
|Three months ended September 30, 2007          |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Net sales to external customers                |  | $                      | 305,823 |            | $ | 106,376            |  | $ |       |   |  | $ | 412,199  
|Operating costs and expenses                   |  |                        | 286,630 |            |   | 106,316            |  |   | 2,427  |   |  |   | 395,373  
|Operating income (loss)                        |  |                        | 19,193  |            |   | 60                 |  |   | (2,427 | ) |  |   | 16,826   
|Capital spending                               |  |                        | 1,987   |            |   | 334                |  |   | 6      |   |  |   | 2,327    
|Total segment assets                           |  |                        | 523,855 |            |   | 173,801            |  |   | 53,749 |   |  |   | 751,405  
|Depreciation and amortization                  |  |                        | 2,020   |            |   | 801                |  |   | 145    |   |  |   | 2,966    
|Income from equity investments                 |  |                        |        |            |   | 679                |  |   |       |   |  |   | 679      
|Interest expense                               |  |                        | 7,588   |            |   | 3,373              |  |   | 455    |   |  |   | 11,416   
|Nine months ended September 30, 2007           |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Net sales to external customers                |  | $                      | 903,181 |            | $ | 331,013            |  | $ |       |   |  | $ | 1,234,194
|Operating costs and expenses                   |  |                        | 832,123 |            |   | 322,810            |  |   | 8,322  |   |  |   | 1,163,255
|Operating income (loss)                        |  |                        | 71,058  |            |   | 8,203              |  |   | (8,322 | ) |  |   | 70,939   
|Capital spending                               |  |                        | 5,183   |            |   | 5,409              |  |   | 6      |   |  |   | 10,598   
|Total segment assets                           |  |                        | 523,855 |            |   | 173,801            |  |   | 53,749 |   |  |   | 751,405  
|Depreciation and amortization                  |  |                        | 6,249   |            |   | 1,999              |  |   | 435    |   |  |   | 8,683    
|Income from equity investments                 |  |                        |        |            |   | 1,818              |  |   |       |   |  |   | 1,818    
|Interest expense                               |  |                        | 22,884  |            |   | 9,948              |  |   | (262   | ) |  |   | 32,570   



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##### Table of Contents

PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



Intersegment net sales were not significant. Travel Main charges rent to the operating subsidiaries of PNA. Rent
charged by Travel Main to the long products and plate segment and the flat rolled segment totaled $657 and $220 for the period May 10, 2006 to September 30, 2006, respectively. Rent charged by Travel Main to the long products and plate
segment totaled $1,176 and $3,528 for the three and nine months ended September 30, 2007, respectively, and rent charged by Travel Mains subsidiaries to the flat rolled segment totaled $393 and $1,179 for the three and nine months ended
September 30, 2007, respectively. There was no rent charged by Travel Main for periods prior to May 10, 2006.

Note 14. Common Stock

As discussed in Note 1, on May 9, 2006 Platinum closed the purchase of PNA whereby Travel Merger, then a wholly owned subsidiary of PNAG Holding,
merged with and into PNA with PNA being the surviving corporation. For each of the periods presented herein, PNA had 1,000 shares outstanding with no dilution. All shares outstanding are common shares and have equal voting, liquidation and
preference rights.

Note 15. Supplemental Guarantor Information

In August 2006, the Company issued the 103/4% Senior Notes due 2016 (the Senior Notes) with an aggregate principal amount of $250,000 bearing interest at a rate per annum equal to 10.75%. The Senior Notes are
fully and unconditionally guaranteed on a joint and several basis by substantially all of the Companys wholly owned subsidiaries (the Subsidiary Guarantors). Non-guarantor subsidiaries consist of those subsidiaries which hold
interests in joint ventures, including joint ventures in which the Company owns a greater than 50% interest (and are therefore consolidated), those in which less than 50% is owned by the Company and entities consolidated in accordance with FIN 46(R)
in which the Company is the primary beneficiary. The Company does not have operations independent of the Subsidiary Guarantors and there are no restrictions on the ability of the Company to obtain funds from Subsidiary Guarantors. The guarantees of
the Senior Notes by each Subsidiary Guarantor rank equally with all existing and future senior debt of such Subsidiary Guarantor and senior to any subordinated debt of such Subsidiary Guarantor. The guarantees are effectively subordinated to any
collateralized debt of such Subsidiary Guarantor (including the Companys senior credit facility) to the extent of the assets collateralizing such debt.

Set forth below is additional information of PNA Group, Inc. and its guarantor and non-guarantor subsidiaries regarding: (i) the results of operations and cash flows for the period January 1, 2006 to
May 9, 2006 (Predecessor); (ii) the results of operations and cash flows for the period May 10, 2006 to September 30, 2006 (Successor); (iii) the financial position as of December 31, 2006 (Successor); (iv) the
results of operations for the three months ended September 30, 2006 (Successor) and 2007 (Successor); and (v) the financial position, results of operations and cash flows as of and for the nine months ended September 30, 2007
(Successor).



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##### Table of Contents

PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



Predecessor Company

PNA Group, Inc.

Condensed Consolidating Statement of Income

For the Period from January 1, 2006 to May 9, 2006



|                                                                          |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|------------------------------------------------------------------------- |  | ------ | ------- | - | --------------------- | - | ------- | --------------------- |  | - | ----------- | - |  | ------------ | ------- | - |  | - | ------- | -
|                                                                          |  | Parent |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorEntities |  |   | Adjustments |   |  | Consolidated |        
|Net revenue                                                               |  | $      |        |   |                       | $ | 478,212 |                       |  | $ | 4,246       |   |  | $            | 4,732   |   |  | $ | 487,190 |  
|Cost and expenses:                                                        |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Cost of materials sold                                                    |  |        |        |   |                       |   | 396,880 |                       |  |   |            |   |  |              | 4,732   |   |  |   | 401,612 |  
|Processing, distribution and selling, general and administrative expenses |  |        | 4,821   |   |                       |   | 46,510  |                       |  |   | 2,442       |   |  |              |        |   |  |   | 53,773  |  
|Depreciation and amortization                                             |  |        | 2       |   |                       |   | 3,039   |                       |  |   | 221         |   |  |              |        |   |  |   | 3,262   |  
|                                                                          |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Total operating costs and expenses                                        |  |        | 4,823   |   |                       |   | 446,429 |                       |  |   | 2,663       |   |  |              | 4,732   |   |  |   | 458,647 |  
|                                                                          |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Operating (loss) income                                                   |  |        | (4,823  | ) |                       |   | 31,783  |                       |  |   | 1,583       |   |  |              |        |   |  |   | 28,543  |  
|Interest (income) expense                                                 |  |        | (1,283  | ) |                       |   | 2,675   |                       |  |   | (17         | ) |  |              |        |   |  |   | 1,375   |  
|Income from equity investments                                            |  |        | (20,544 | ) |                       |   | (1,582  | )                     |  |   | (770        | ) |  |              | 22,126  |   |  |   | (770    | )
|                                                                          |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Income before minority interest and income tax expense                    |  |        | 17,004  |   |                       |   | 30,690  |                       |  |   | 2,370       |   |  |              | (22,126 | ) |  |   | 27,938  |  
|Minority interest                                                         |  |        |        |   |                       |   |        |                       |  |   | 788         |   |  |              |        |   |  |   | 788     |  
|                                                                          |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Income before income tax expense                                          |  |        | 17,004  |   |                       |   | 30,690  |                       |  |   | 1,582       |   |  |              | (22,126 | ) |  |   | 27,150  |  
|Income tax expense                                                        |  |        |        |   |                       |   | 10,146  |                       |  |   |            |   |  |              |        |   |  |   | 10,146  |  
|                                                                          |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Net income                                                                |  | $      | 17,004  |   |                       | $ | 20,544  |                       |  | $ | 1,582       |   |  | $            | (22,126 | ) |  | $ | 17,004  |  
|                                                                          |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  



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##### Table of Contents

PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



PNA Group, Inc.

Condensed Consolidating Statement of Cash Flows

For the Period from January 1, 2006 to
May 9, 2006



|                                                                                           |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|------------------------------------------------------------------------------------------ |  | ------ | ------- | - | --------------------- | - | ------- | --------------------- |  | - | ----------- | - |  | ------------ | ------- | - |  | - | ------- | -
|                                                                                           |  | Parent |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorEntities |  |   | Adjustments |   |  | Consolidated |        
|Cash flows from operating activities                                                       |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Net income                                                                                 |  | $      | 17,004  |   |                       | $ | 20,544  |                       |  | $ | 1,582       |   |  | $            | (22,126 | ) |  | $ | 17,004  |  
|Adjustments to reconcile net income to net cash (used in) provided by operating activities |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Depreciation and amortization                                                              |  |        | 2       |   |                       |   | 3,039   |                       |  |   | 221         |   |  |              |        |   |  |   | 3,262   |  
|Provision for bad debts                                                                    |  |        |        |   |                       |   | 462     |                       |  |   |            |   |  |              |        |   |  |   | 462     |  
|Deferred income taxes                                                                      |  |        |        |   |                       |   | (540    | )                     |  |   |             |   |  |              |        |   |  |   | (540    | )
|Minority interests                                                                         |  |        |        |   |                       |   |        |                       |  |   | 788         |   |  |              |         |   |  |   | 788     |  
|Income from equity investments                                                             |  |        | (20,544 | ) |                       |   | (1,582  | )                     |  |   | (770        | ) |  |              | 22,126  |   |  |   | (770    | )
|(Increase) decrease in                                                                     |  |        |         |   |                       |   |         |                       |  |   |            |   |  |              |         |   |  |   |         |  
|Accounts receivable                                                                        |  |        |        |   |                       |   | (27,094 | )                     |  |   | (360        | ) |  |              |        |   |  |   | (27,454 | )
|Receivables from/payables to affiliates                                                    |  |        | (18,617 | ) |                       |   | 17,187  |                       |  |   | (463        | ) |  |              |         |   |  |   | (1,893  | )
|Inventories                                                                                |  |        |        |   |                       |   | (66,677 | )                     |  |   | (147        | ) |  |              |        |   |  |   | (66,824 | )
|Other assets                                                                               |  |        | 1,426   |   |                       |   | 10,171  |                       |  |   | (6          | ) |  |              |        |   |  |   | 11,591  |  
|Increase (decrease) in                                                                     |  |        |         |   |                       |   |         |                       |  |   |            |   |  |              |         |   |  |   |         |  
|Payables                                                                                   |  |        | 25      |   |                       |   | 43,494  |                       |  |   | 2           |   |  |              |        |   |  |   | 43,521  |  
|Accruals                                                                                   |  |        | (3,912  | ) |                       |   | 1,801   |                       |  |   | (109        | ) |  |              |        |   |  |   | (2,220  | )
|                                                                                           |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Net cash (used in) provided by operating activities                                        |  |        | (24,616 | ) |                       |   | 805     |                       |  |   | 738         |   |  |              |        |   |  |   | (23,073 | )
|                                                                                           |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Cash flows from investing activities                                                       |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Purchases of property, plant and equipment                                                 |  |        |        |   |                       |   | (2,416  | )                     |  |   | (44         | ) |  |              |        |   |  |   | (2,460  | )
|                                                                                           |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Net cash used in investing activities                                                      |  |        |        |   |                       |   | (2,416  | )                     |  |   | (44         | ) |  |              |        |   |  |   | (2,460  | )
|                                                                                           |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Cash flows from financing activities                                                       |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Net repayment on revolving credit facility                                                 |  |        | (54,458 | ) |                       |   |        |                       |  |   |            |   |  |              |        |   |  |   | (54,458 | )
|Proceeds from term loan                                                                    |  |        | 85,000  |   |                       |   |         |                       |  |   |            |   |  |              |        |   |  |   | 85,000  |  
|Proceeds from mortgages on real estate                                                     |  |        |        |   |                       |   | 72      |                       |  |   |            |   |  |              |        |   |  |   | 72      |  
|Dividend paid to minority interest holders                                                 |  |        |        |   |                       |   |        |                       |  |   | (343        | ) |  |              |        |   |  |   | (343    | )
|Deferred financing costs                                                                   |  |        | (3,429  | ) |                       |   | (6      | )                     |  |   |            |   |  |              |        |   |  |   | (3,435  | )
|Dividends paid to parent                                                                   |  |        |        |   |                       |   | 357     |                       |  |   | (357        | ) |  |              |        |   |  |   |        |  
|Dividends paid to stockholder                                                              |  |        | (2,000  | ) |                       |   |        |                       |  |   |            |   |  |              |        |   |  |   | (2,000  | )
|                                                                                           |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Net cash provided by (used in) financing activities                                        |  |        | 25,113  |   |                       |   | 423     |                       |  |   | (700        | ) |  |              |        |   |  |   | 24,836  |  
|                                                                                           |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Net increase (decrease) in cash and cash equivalents                                       |  |        | 497     |   |                       |   | (1,188  | )                     |  |   | (6          | ) |  |              |        |   |  |   | (697    | )
|Cash and cash equivalents at beginning of period                                           |  |        |        |   |                       |   | 2,192   |                       |  |   | 18          |   |  |              |        |   |  |   | 2,210   |  
|                                                                                           |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Cash and cash equivalents at end of period                                                 |  | $      | 497     |   |                       | $ | 1,004   |                       |  | $ | 12          |   |  | $            |        |   |  | $ | 1,513   |  
|                                                                                           |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  



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- 19 -



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##### Table of Contents

PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



Successor Company

PNA Group, Inc.

Condensed Consolidating Statement of Income

For the Period from May 10, 2006 to September 30, 2006



|                                                                          |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|------------------------------------------------------------------------- |  | ------ | ------- | - | --------------------- | - | ------- | --------------------- |  | - | ----------- | - |  | ------------ | ------- | - |  | - | ------- | -
|                                                                          |  | Parent |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorEntities |  |   | Adjustments |   |  | Consolidated |        
|Net revenue                                                               |  | $      |        |   |                       | $ | 670,520 |                       |  | $ | 5,990       |   |  | $            | (877    | ) |  | $ | 675,633 |  
|Cost and expenses:                                                        |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Cost of materials sold                                                    |  |        |        |   |                       |   | 540,443 |                       |  |   | 3           |   |  |              |        |   |  |   | 540,446 |  
|Processing, distribution and selling, general and administrative expenses |  |        | 1,518   |   |                       |   | 68,174  |                       |  |   | 2,718       |   |  |              | (877    | ) |  |   | 71,533  |  
|Depreciation and amortization                                             |  |        | 2       |   |                       |   | 4,194   |                       |  |   | 241         |   |  |              |        |   |  |   | 4,437   |  
|                                                                          |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Total operating costs and expenses                                        |  |        | 1,520   |   |                       |   | 612,811 |                       |  |   | 2,962       |   |  |              | (877    | ) |  |   | 616,416 |  
|                                                                          |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Operating (loss) income                                                   |  |        | (1,520  | ) |                       |   | 57,709  |                       |  |   | 3,028       |   |  |              |        |   |  |   | 59,217  |  
|Interest (income) expense                                                 |  |        | (2,042  | ) |                       |   | 14,713  |                       |  |   | 6           |   |  |              |        |   |  |   | 12,677  |  
|Income from equity investments                                            |  |        | (28,216 | ) |                       |   | (1,876  | )                     |  |   | (700        | ) |  |              | 30,092  |   |  |   | (700    | )
|                                                                          |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Income before minority interest and income tax expense                    |  |        | 28,738  |   |                       |   | 44,872  |                       |  |   | 3,722       |   |  |              | (30,092 | ) |  |   | 47,240  |  
|Minority interest                                                         |  |        |        |   |                       |   |        |                       |  |   | 1,083       |   |  |              | 457     |   |  |   | 1,540   |  
|                                                                          |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Income before income tax expense                                          |  |        | 28,738  |   |                       |   | 44,872  |                       |  |   | 2,639       |   |  |              | (30,549 | ) |  |   | 45,700  |  
|Income tax expense                                                        |  |        | 164     |   |                       |   | 16,656  |                       |  |   | 306         |   |  |              |        |   |  |   | 17,126  |  
|                                                                          |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Net income                                                                |  | $      | 28,574  |   |                       | $ | 28,216  |                       |  | $ | 2,333       |   |  | $            | (30,549 | ) |  | $ | 28,574  |  
|                                                                          |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  



- 20 -



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##### Table of Contents

PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



PNA Group, Inc.

Condensed Consolidating Statement of Cash Flows

For the Period from May 10, 2006 to
September 30, 2006



|                                                                                           |  |        |          |   |                       |   |          |                           |  |   |             |   |  |              |          |   |  |   |          |  
|------------------------------------------------------------------------------------------ |  | ------ | -------- | - | --------------------- | - | -------- | ------------------------- |  | - | ----------- | - |  | ------------ | -------- | - |  | - | -------- | -
|                                                                                           |  | Parent |          |   | GuarantorSubsidiaries |   |          | Non-GuarantorSubsidiaries |  |   | Adjustments |   |  | Consolidated |         
|Cash flows from operating activities                                                       |  |        |          |   |                       |   |          |                           |  |   |             |   |  |              |          |   |  |   |          |  
|Net income                                                                                 |  | $      | 28,574   |   |                       | $ | 28,216   |                           |  | $ | 2,333       |   |  | $            | (30,549  | ) |  | $ | 28,574   |  
|Adjustments to reconcile net income to net cash (used in) provided by operating activities |  |        |          |   |                       |   |          |                           |  |   |             |   |  |              |          |   |  |   |          |  
|Depreciation and amortization                                                              |  |        | 2        |   |                       |   | 4,194    |                           |  |   | 241         |   |  |              |         |   |  |   | 4,437    |  
|Provision for bad debts                                                                    |  |        |         |   |                       |   | 738      |                           |  |   |            |   |  |              |         |   |  |   | 738      |  
|Deferred income taxes                                                                      |  |        |         |   |                       |   | 2,939    |                           |  |   | (6,740      | ) |  |              |         |   |  |   | (3,801   | )
|Minority interests                                                                         |  |        |         |   |                       |   |         |                           |  |   | 1,083       |   |  |              | 457      |   |  |   | 1,540    |  
|Income from equity investments                                                             |  |        | (28,216  | ) |                       |   | (1,876   | )                         |  |   | (700        | ) |  |              | 30,092   |   |  |   | (700     | )
|(Increase) decrease in Accounts receivable                                                 |  |        |         |   |                       |   | (24,658  | )                         |  |   | (30         | ) |  |              |         |   |  |   | (24,688  | )
|Receivables from/payables to affiliates                                                    |  |        | (226,037 | ) |                       |   | 260,790  |                           |  |   | (37,017     | ) |  |              |          |   |  |   | (2,264   | )
|Inventories                                                                                |  |        |         |   |                       |   | (66,399  | )                         |  |   |            |   |  |              |         |   |  |   | (66,399  | )
|Other assets                                                                               |  |        | 251      |   |                       |   | (2,007   | )                         |  |   | 353         |   |  |              |         |   |  |   | (1,403   | )
|Increase (decrease) in Payables                                                            |  |        | 141      |   |                       |   | (5,508   | )                         |  |   | 296         |   |  |              |         |   |  |   | (5,071   | )
|Accruals                                                                                   |  |        | 6,319    |   |                       |   | 2,617    |                           |  |   | 1,131       |   |  |              |         |   |  |   | 10,067   |  
|                                                                                           |  |        |          |   |                       |   |          |                           |  |   |             |   |  |              |          |   |  |   |          |  
|Net cash (used in) provided by operating activities                                        |  |        | (218,966 | ) |                       |   | 199,046  |                           |  |   | (39,050     | ) |  |              |         |   |  |   | (58,970  | )
|                                                                                           |  |        |          |   |                       |   |          |                           |  |   |             |   |  |              |          |   |  |   |          |  
|Cash flows from investing activities                                                       |  |        |          |   |                       |   |          |                           |  |   |             |   |  |              |          |   |  |   |          |  
|Increase in restricted cash                                                                |  |        |         |   |                       |   |         |                           |  |   | (1,015      | ) |  |              |         |   |  |   | (1,015   | )
|Purchases of property, plant and equipment                                                 |  |        |         |   |                       |   | (2,467   | )                         |  |   |            |   |  |              |         |   |  |   | (2,467   | )
|Proceeds from disposals of property, plant and equipment                                   |  |        |         |   |                       |   | 4,558    |                           |  |   |            |   |  |              |         |   |  |   | 4,558    |  
|Acquisition of PNA Group, Inc., net of cash acquired                                       |  |        | (261,568 | ) |                       |   |          |                           |  |   |             |   |  |              |         |   |  |   | (261,568 | )
|Acquisition of MSC, net of cash acquired                                                   |  |        | (53,701  | ) |                       |   |          |                           |  |   |             |   |  |              |         |   |  |   | (53,701  | )
|                                                                                           |  |        |          |   |                       |   |          |                           |  |   |             |   |  |              |          |   |  |   |          |  
|Net cash used in (provided by) investing activities                                        |  |        | (315,269 | ) |                       |   | 2,091    |                           |  |   | (1,015      | ) |  |              |         |   |  |   | (314,193 | )
|                                                                                           |  |        |          |   |                       |   |          |                           |  |   |             |   |  |              |          |   |  |   |          |  
|Cash flows from financing activities                                                       |  |        |          |   |                       |   |          |                           |  |   |             |   |  |              |          |   |  |   |          |  
|Proceeds from bond issue                                                                   |  |        | 250,000  |   |                       |   |         |                           |  |   |            |   |  |              |         |   |  |   | 250,000  |  
|Net proceeds (repayment) on revolving credit facility                                      |  |        | 163,331  |   |                       |   |         |                           |  |   |            |   |  |              |         |   |  |   | 163,331  |  
|Proceeds (repayment) of term loan                                                          |  |        | (85,000  | ) |                       |   |         |                           |  |   |            |   |  |              |         |   |  |   | (85,000  | )
|Proceeds from mortgages on real estate                                                     |  |        |         |   |                       |   |         |                           |  |   | 47,659      |   |  |              |         |   |  |   | 47,659   |  
|Issuance of common stock                                                                   |  |        | 62,500   |   |                       |   |         |                           |  |   |            |   |  |              |         |   |  |   | 62,500   |  
|Other long-term debt                                                                       |  |        |         |   |                       |   | (23      | )                         |  |   |            |   |  |              |         |   |  |   | (23      | )
|Dividend paid to minority interest holders                                                 |  |        |         |   |                       |   |         |                           |  |   | (1,415      | ) |  |              |         |   |  |   | (1,415   | )
|Deferred financing costs                                                                   |  |        | (7,069   | ) |                       |   |         |                           |  |   | (1,499      | ) |  |              |         |   |  |   | (8,568   | )
|Dividends received from subsidiaries                                                       |  |        | 202,014  |   |                       |   | 2,746    |                           |  |   |            |   |  |              | (204,760 | ) |  |   |         |  
|Dividends paid to parent                                                                   |  |        | (52,038  | ) |                       |   | (202,014 | )                         |  |   | (2,746      | ) |  |              | 204,760  |   |  |   | (52,038  | )
|                                                                                           |  |        |          |   |                       |   |          |                           |  |   |             |   |  |              |          |   |  |   |          |  
|Net cash provided by (used in) financing activities                                        |  |        | 533,738  |   |                       |   | (199,291 | )                         |  |   | 41,999      |   |  |              |         |   |  |   | 376,446  |  
|                                                                                           |  |        |          |   |                       |   |          |                           |  |   |             |   |  |              |          |   |  |   |          |  
|Net (decrease) increase in cash and cash equivalents                                       |  |        | (497     | ) |                       |   | 1,846    |                           |  |   | 1,934       |   |  |              |         |   |  |   | 3,283    |  
|Cash and cash equivalents at beginning of period                                           |  |        | 497      |   |                       |   | 1,004    |                           |  |   | 12          |   |  |              |         |   |  |   | 1,513    |  
|                                                                                           |  |        |          |   |                       |   |          |                           |  |   |             |   |  |              |          |   |  |   |          |  
|Cash and cash equivalents at end of period                                                 |  | $      |         |   |                       | $ | 2,850    |                           |  | $ | 1,946       |   |  | $            |         |   |  | $ | 4,796    |  
|                                                                                           |  |        |          |   |                       |   |          |                           |  |   |             |   |  |              |          |   |  |   |          |  



- 21 -



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##### Table of Contents

PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



PNA Group, Inc.

Condensed Consolidating Statement of Income

For the Three Months Ended September 30, 2006



|                                                                          |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|------------------------------------------------------------------------- |  | ------ | ------- | - | --------------------- | - | ------- | --------------------- |  | - | ----------- | - |  | ------------ | ------- | - |  | - | ------- | -
|                                                                          |  | Parent |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorEntities |  |   | Adjustments |   |  | Consolidated |        
|Net revenue                                                               |  | $      |        |   |                       | $ | 431,141 |                       |  | $ | 4,037       |   |  | $            | (877    | ) |  | $ | 434,301 |  
|Cost and expenses:                                                        |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Cost of materials sold                                                    |  |        |        |   |                       |   | 344,047 |                       |  |   | 3           |   |  |              |        |   |  |   | 344,050 |  
|Processing, distribution and selling, general and administrative expenses |  |        | 1,177   |   |                       |   | 42,907  |                       |  |   | 1,699       |   |  |              | (877    | ) |  |   | 44,906  |  
|Depreciation and amortization                                             |  |        | (80     | ) |                       |   | 2,469   |                       |  |   | 178         |   |  |              |        |   |  |   | 2,567   |  
|Total operating costs and expenses                                        |  |        | 1,097   |   |                       |   | 389,423 |                       |  |   | 1,880       |   |  |              | (877    | ) |  |   | 391,523 |  
|Operating (loss) income                                                   |  |        | (1,097  | ) |                       |   | 41,718  |                       |  |   | 2,157       |   |  |              |        |   |  |   | 42,778  |  
|Interest (income) expense                                                 |  |        | (1,374  | ) |                       |   | 10,215  |                       |  |   | 16          |   |  |              |        |   |  |   | 8,857   |  
|Income from equity investments                                            |  |        | (21,016 | ) |                       |   | (1,136  | )                     |  |   | (413        | ) |  |              | 22,152  |   |  |   | (413    | )
|Income before minority interest and income tax expense                    |  |        | 21,293  |   |                       |   | 32,639  |                       |  |   | 2,554       |   |  |              | (22,152 | ) |  |   | 34,334  |  
|Minority interest                                                         |  |        |        |   |                       |   |        |                       |  |   | 655         |   |  |              | 457     |   |  |   | 1,112   |  
|Income before income tax expense                                          |  |        | 21,293  |   |                       |   | 32,639  |                       |  |   | 1,899       |   |  |              | (22,609 | ) |  |   | 33,222  |  
|Income tax expense                                                        |  |        | 164     |   |                       |   | 11,623  |                       |  |   | 306         |   |  |              |        |   |  |   | 12,093  |  
|                                                                          |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  
|Net income                                                                |  | $      | 21,129  |   |                       | $ | 21,016  |                       |  | $ | 1,593       |   |  | $            | (22,609 | ) |  | $ | 21,129  |  
|                                                                          |  |        |         |   |                       |   |         |                       |  |   |             |   |  |              |         |   |  |   |         |  



- 22 -



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##### Table of Contents

PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



PNA Group, Inc.

Condensed Consolidating Balance Sheet

As of December 31, 2006



|                                                         |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|-------------------------------------------------------- |  | ------ | ------- | --------------------- | - | --------------------- |  | ----------- | ------ |  | ------------ | -------- | - |  | - | -------
|                                                         |  | Parent |         | GuarantorSubsidiaries |   | Non-GuarantorEntities |  | Adjustments |        |  | Consolidated
|Assets                                                   |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Current assets                                           |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Cash and cash equivalents                                |  | $      |        |                       | $ | 2,743                 |  | $           | 458    |  | $            |         |   |  | $ | 3,201  
|Restricted cash                                          |  |        |        |                       |   |                      |  |             | 1,063  |  |              |         |   |  |   | 1,063  
|Accounts receivable less allowance for doubtful accounts |  |        |        |                       |   | 188,210               |  |             | 701    |  |              |         |   |  |   | 188,911
|Inventories, net                                         |  |        |        |                       |   | 410,604               |  |             |       |  |              |         |   |  |   | 410,604
|Intercompany receivables - current                       |  |        | 246,461 |                       |   | 760                   |  |             | 13,282 |  |              | (260,503 | ) |  |   |       
|Other current assets                                     |  |        | 1,334   |                       |   | 12,745                |  |             | 6,679  |  |              |          |   |  |   | 20,758 
|Total current assets                                     |  |        | 247,795 |                       |   | 615,062               |  |             | 22,183 |  |              | (260,503 | ) |  |   | 624,537
|Property, plant and equipment, net                       |  |        | 24      |                       |   | 31,419                |  |             | 30,099 |  |              |         |   |  |   | 61,542 
|Goodwill                                                 |  |        |        |                       |   | 9,886                 |  |             |       |  |              |         |   |  |   | 9,886  
|Intangible assets, net                                   |  |        |        |                       |   | 19,338                |  |             |       |  |              |         |   |  |   | 19,338 
|Deferred financing costs, net                            |  |        | 9,897   |                       |   |                      |  |             | 1,140  |  |              |         |   |  |   | 11,037 
|Intercompany receivables - noncurrent                    |  |        | 250,000 |                       |   |                      |  |             |       |  |              | (250,000 | ) |  |   |       
|Equity investments                                       |  |        |        |                       |   | 8,926                 |  |             | 7,643  |  |              | (8,926   | ) |  |   | 7,643  
|Other noncurrent assets                                  |  |        |        |                       |   | 1,810                 |  |             | 961    |  |              |         |   |  |   | 2,771  
|                                                         |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Total assets                                             |  | $      | 507,716 |                       | $ | 686,441               |  | $           | 62,026 |  | $            | (519,429 | ) |  | $ | 736,754
|                                                         |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Liabilities and Stockholders Equity                     |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Current liabilities                                      |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Accounts payable                                         |  | $      |        |                       | $ | 141,353               |  | $           | 241    |  | $            |         |   |  | $ | 141,594
|Intercompany payables - current                          |  |        |        |                       |   | 260,180               |  |             | 323    |  |              | (260,503 | ) |  |   |       
|Other current liabilities                                |  |        | 27,245  |                       |   | 28,447                |  |             | 1,479  |  |              |         |   |  |   | 57,171 
|Total current liabilities                                |  |        | 27,245  |                       |   | 429,980               |  |             | 2,043  |  |              | (260,503 | ) |  |   | 198,765
|                                                         |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Long term debt, net of current maturities                |  |        | 414,341 |                       |   |                      |  |             | 49,073 |  |              |         |   |  |   | 463,414
|Intercompany payables - noncurrent                       |  |        |        |                       |   | 250,000               |  |             |       |  |              | (250,000 | ) |  |   |       
|Other noncurrent liabilities                             |  |        |        |                       |   | 6,461                 |  |             | 437    |  |              |         |   |  |   | 6,898  
|                                                         |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Total liabilities                                        |  |        | 441,586 |                       |   | 686,441               |  |             | 51,553 |  |              | (510,503 | ) |  |   | 669,077
|Minority interest                                        |  |        |        |                       |   |                      |  |             | 1,547  |  |              |         |   |  |   | 1,547  
|Total stockholders equity                               |  |        | 66,130  |                       |   |                      |  |             | 8,926  |  |              | (8,926   | ) |  |   | 66,130 
|                                                         |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Total liabilities and stockholders equity               |  | $      | 507,716 |                       | $ | 686,441               |  | $           | 62,026 |  | $            | (519,429 | ) |  | $ | 736,754
|                                                         |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        



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##### Table of Contents

PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



PNA Group, Inc.

Condensed Consolidating Balance Sheet

As of September 30, 2007



|                                           |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|------------------------------------------ |  | ------ | ------- | --------------------- | - | --------------------- |  | ----------- | ------ |  | ------------ | -------- | - |  | - | -------
|                                           |  | Parent |         | GuarantorSubsidiaries |   | Non-GuarantorEntities |  | Adjustments |        |  | Consolidated
|Assets                                     |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Current assets                             |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Cash and cash equivalents                  |  | $      |        |                       | $ | 2,262                 |  | $           | 1,202  |  | $            |         |   |  | $ | 3,464  
|Restricted cash                            |  |        |        |                       |   |                      |  |             | 2,114  |  |              |         |   |  |   | 2,114  
|Accounts receivable                        |  |        |        |                       |   |                      |  |             |       |  |              |         |   |  |   |        
|less allowance for doubtful accounts       |  |        |        |                       |   | 213,422               |  |             | 1,237  |  |              |         |   |  |   | 214,659
|Inventories, net                           |  |        |        |                       |   | 391,462               |  |             |       |  |              |         |   |  |   | 391,462
|Intercompany receivables - current         |  |        | 264,343 |                       |   |                      |  |             | 11,547 |  |              | (275,890 | ) |  |   |       
|Other current assets                       |  |        | 3,601   |                       |   | 12,613                |  |             | 8,130  |  |              |         |   |  |   | 24,344 
|                                           |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Total current assets                       |  |        | 267,944 |                       |   | 619,759               |  |             | 24,230 |  |              | (275,890 | ) |  |   | 636,043
|Property, plant and equipment, net         |  |        | 24      |                       |   | 38,302                |  |             | 29,545 |  |              |         |   |  |   | 67,871 
|Goodwill                                   |  |        |        |                       |   | 9,886                 |  |             |       |  |              |         |   |  |   | 9,886  
|Intangible assets, net                     |  |        |        |                       |   | 15,280                |  |             |       |  |              |         |   |  |   | 15,280 
|Deferred financing costs, net              |  |        | 10,005  |                       |   |                      |  |             | 1,491  |  |              |         |   |  |   | 11,496 
|Intercompany receivables - noncurrent      |  |        | 250,000 |                       |   |                      |  |             |       |  |              | (250,000 | ) |  |   |       
|Equity investments                         |  |        |        |                       |   | 10,684                |  |             | 8,831  |  |              | (10,684  | ) |  |   | 8,831  
|Investment in subsidiaries                 |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Other noncurrent assets                    |  |        |        |                       |   | 1,998                 |  |             |       |  |              |         |   |  |   | 1,998  
|                                           |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Total assets                               |  | $      | 527,973 |                       | $ | 695,909               |  | $           | 64,097 |  | $            | (536,574 | ) |  | $ | 751,405
|                                           |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Liabilities and Stockholders Equity       |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Current liabilities                        |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Accounts payable                           |  | $      | 789     |                       | $ | 140,023               |  | $           | 1,224  |  | $            |         |   |  | $ | 142,036
|Intercompany payables - current            |  |        |        |                       |   | 275,890               |  |             |       |  |              | (275,890 | ) |  |   |       
|Other current liabilities                  |  |        | 13,189  |                       |   | 25,880                |  |             | 1,758  |  |              |         |   |  |   | 40,827 
|                                           |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Total current liabilities                  |  |        | 13,978  |                       |   | 441,793               |  |             | 2,982  |  |              | (275,890 | ) |  |   | 182,863
|Long term debt, net of current maturities  |  |        | 437,958 |                       |   | 165                   |  |             | 48,449 |  |              |         |   |  |   | 486,572
|Intercompany payables - noncurrent         |  |        |        |                       |   | 250,000               |  |             |       |  |              | (250,000 | ) |  |   |       
|Other noncurrent liabilities               |  |        |        |                       |   | 3,951                 |  |             |       |  |              |         |   |  |   | 3,951  
|                                           |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Total liabilities                          |  |        | 451,936 |                       |   | 695,909               |  |             | 51,431 |  |              | (525,890 | ) |  |   | 673,386
|                                           |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Minority interest                          |  |        |        |                       |   |                      |  |             | 1,982  |  |              |         |   |  |   | 1,982  
|Total stockholders equity                 |  |        | 76,037  |                       |   |                      |  |             | 10,684 |  |              | (10,684  | ) |  |   | 76,037 
|                                           |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        
|Total liabilities and stockholders equity |  | $      | 527,973 |                       | $ | 695,909               |  | $           | 64,097 |  | $            | (536,574 | ) |  | $ | 751,405
|                                           |  |        |         |                       |   |                       |  |             |        |  |              |          |   |  |   |        



- 24 -



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##### Table of Contents

PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



PNA Group, Inc.

Condensed Consolidating Statement of Income

For the Three Months Ended September 30, 2007



|                                                                          |  |        |        |   |                       |   |         |                       |  |   |             |   |  |              |        |   |  |   |         |  
|------------------------------------------------------------------------- |  | ------ | ------ | - | --------------------- | - | ------- | --------------------- |  | - | ----------- | - |  | ------------ | ------ | - |  | - | ------- | -
|                                                                          |  | Parent |        |   | GuarantorSubsidiaries |   |         | Non-GuarantorEntities |  |   | Adjustments |   |  | Consolidated |       
|Net revenue                                                               |  | $      |       |   |                       | $ | 409,996 |                       |  | $ | 4,630       |   |  | $            | (2,427 | ) |  | $ | 412,199 |  
|Cost and expenses:                                                        |  |        |        |   |                       |   |         |                       |  |   |             |   |  |              |        |   |  |   |         |  
|Cost of materials sold                                                    |  |        |       |   |                       |   | 345,869 |                       |  |   | 6           |   |  |              | (858   | ) |  |   | 345,017 |  
|Processing, distribution and selling, general and administrative expenses |  |        | 2,194  |   |                       |   | 45,056  |                       |  |   | 1,709       |   |  |              | (1,569 | ) |  |   | 47,390  |  
|Depreciation and amortization                                             |  |        | 2      |   |                       |   | 2,723   |                       |  |   | 241         |   |  |              |       |   |  |   | 2,966   |  
|Total operating costs and expenses                                        |  |        | 2,196  |   |                       |   | 393,648 |                       |  |   | 1,956       |   |  |              | (2,427 | ) |  |   | 395,373 |  
|                                                                          |  |        |        |   |                       |   |         |                       |  |   |             |   |  |              |        |   |  |   |         |  
|Operating (loss) income                                                   |  |        | (2,196 | ) |                       |   | 16,348  |                       |  |   | 2,674       |   |  |              |       |   |  |   | 16,826  |  
|                                                                          |  |        |        |   |                       |   |         |                       |  |   |             |   |  |              |        |   |  |   |         |  
|Interest (income) expense                                                 |  |        | (407   | ) |                       |   | 10,978  |                       |  |   | 845         |   |  |              |       |   |  |   | 11,416  |  
|Income from equity investments                                            |  |        | (4,103 | ) |                       |   | (1,389  | )                     |  |   | (679        | ) |  |              | 5,492  |   |  |   | (679    | )
|                                                                          |  |        |        |   |                       |   |         |                       |  |   |             |   |  |              |        |   |  |   |         |  
|Income before minority interest and income tax expense                    |  |        | 2,314  |   |                       |   | 6,759   |                       |  |   | 2,508       |   |  |              | (5,492 | ) |  |   | 6,089   |  
|Minority interest                                                         |  |        |       |   |                       |   |        |                       |  |   | 644         |   |  |              | 287    |   |  |   | 931     |  
|                                                                          |  |        |        |   |                       |   |         |                       |  |   |             |   |  |              |        |   |  |   |         |  
|Income before income tax expense                                          |  |        | 2,314  |   |                       |   | 6,759   |                       |  |   | 1,864       |   |  |              | (5,779 | ) |  |   | 5,158   |  
|Income tax expense                                                        |  |        | (619   | ) |                       |   | 2,656   |                       |  |   | 188         |   |  |              |       |   |  |   | 2,225   |  
|                                                                          |  |        |        |   |                       |   |         |                       |  |   |             |   |  |              |        |   |  |   |         |  
|Net income                                                                |  | $      | 2,933  |   |                       | $ | 4,103   |                       |  | $ | 1,676       |   |  | $            | (5,779 | ) |  | $ | 2,933   |  
|                                                                          |  |        |        |   |                       |   |         |                       |  |   |             |   |  |              |        |   |  |   |         |  



- 25 -



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##### Table of Contents

PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



PNA Group, Inc.

Condensed Consolidating Statement of Income

For the Nine Months Ended September 30, 2007



|                                                                          |  |        |         |   |                       |   |           |                       |  |   |             |   |  |              |         |   |  |   |           |  
|------------------------------------------------------------------------- |  | ------ | ------- | - | --------------------- | - | --------- | --------------------- |  | - | ----------- | - |  | ------------ | ------- | - |  | - | --------- | -
|                                                                          |  | Parent |         |   | GuarantorSubsidiaries |   |           | Non-GuarantorEntities |  |   | Adjustments |   |  | Consolidated |        
|Net revenue                                                               |  | $      |        |   |                       | $ | 1,227,892 |                       |  | $ | 13,490      |   |  | $            | (7,188  | ) |  | $ | 1,234,194 |  
|Cost and expenses:                                                        |  |        |         |   |                       |   |           |                       |  |   |             |   |  |              |         |   |  |   |           |  
|Cost of materials sold                                                    |  |        |        |   |                       |   | 1,021,717 |                       |  |   | 12          |   |  |              | (2,481  | ) |  |   | 1,019,248 |  
|Processing, distribution and selling, general and administrative expenses |  |        | 7,533   |   |                       |   | 127,310   |                       |  |   | 5,188       |   |  |              | (4,707  | ) |  |   | 135,324   |  
|Depreciation and amortization                                             |  |        | 5       |   |                       |   | 7,972     |                       |  |   | 706         |   |  |              |        |   |  |   | 8,683     |  
|                                                                          |  |        |         |   |                       |   |           |                       |  |   |             |   |  |              |         |   |  |   |           |  
|Total operating costs and expenses                                        |  |        | 7,538   |   |                       |   | 1,156,999 |                       |  |   | 5,906       |   |  |              | (7,188  | ) |  |   | 1,163,255 |  
|                                                                          |  |        |         |   |                       |   |           |                       |  |   |             |   |  |              |         |   |  |   |           |  
|Operating (loss) income                                                   |  |        | (7,538  | ) |                       |   | 70,893    |                       |  |   | 7,584       |   |  |              |        |   |  |   | 70,939    |  
|Interest (income) expense                                                 |  |        | (2,753  | ) |                       |   | 32,876    |                       |  |   | 2,447       |   |  |              |        |   |  |   | 32,570    |  
|Income from equity investments                                            |  |        | (26,119 | ) |                       |   | (3,765    | )                     |  |   | (1,818      | ) |  |              | 29,884  |   |  |   | (1,818    | )
|                                                                          |  |        |         |   |                       |   |           |                       |  |   |             |   |  |              |         |   |  |   |           |  
|Income before minority interest and income tax expense                    |  |        | 21,334  |   |                       |   | 41,782    |                       |  |   | 6,955       |   |  |              | (29,884 | ) |  |   | 40,187    |  
|Minority interest                                                         |  |        |        |   |                       |   |          |                       |  |   | 1,758       |   |  |              | 866     |   |  |   | 2,624     |  
|                                                                          |  |        |         |   |                       |   |           |                       |  |   |             |   |  |              |         |   |  |   |           |  
|Income before income tax expense                                          |  |        | 21,334  |   |                       |   | 41,782    |                       |  |   | 5,197       |   |  |              | (30,750 | ) |  |   | 37,563    |  
|Income tax expense                                                        |  |        | (1,668  | ) |                       |   | 15,663    |                       |  |   | 566         |   |  |              |        |   |  |   | 14,561    |  
|                                                                          |  |        |         |   |                       |   |           |                       |  |   |             |   |  |              |         |   |  |   |           |  
|Net income                                                                |  | $      | 23,002  |   |                       | $ | 26,119    |                       |  | $ | 4,631       |   |  | $            | (30,750 | ) |  | $ | 23,002    |  
|                                                                          |  |        |         |   |                       |   |           |                       |  |   |             |   |  |              |         |   |  |   |           |  



- 26 -



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##### Table of Contents

PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



PNA Group, Inc.

Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended September 30, 2007



|                                                                                           |  |        |         |   |                       |   |         |                           |  |   |             |   |  |              |         |   |  |   |         |  
|------------------------------------------------------------------------------------------ |  | ------ | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ----------- | - |  | ------------ | ------- | - |  | - | ------- | -
|                                                                                           |  | Parent |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Adjustments |   |  | Consolidated |        
|Cash flows from operating activities                                                       |  |        |         |   |                       |   |         |                           |  |   |             |   |  |              |         |   |  |   |         |  
|Net income                                                                                 |  | $      | 23,002  |   |                       | $ | 26,119  |                           |  | $ | 4,631       |   |  | $            | (30,750 | ) |  | $ | 23,002  |  
|Adjustments to reconcile net income to net cash (used in) provided by operating activities |  |        |         |   |                       |   |         |                           |  |   |             |   |  |              |         |   |  |   |         |  
|Depreciation and amortization                                                              |  |        | 5       |   |                       |   | 7,972   |                           |  |   | 706         |   |  |              |        |   |  |   | 8,683   |  
|Amortization of deferred financing costs                                                   |  |        | 840     |   |                       |   |        |                           |  |   | 89          |   |  |              |         |   |  |   | 929     |  
|Provision for bad debts                                                                    |  |        |        |   |                       |   | 902     |                           |  |   |            |   |  |              |        |   |  |   | 902     |  
|Deferred income taxes                                                                      |  |        | (145    | ) |                       |   | (1,632  | )                         |  |   |            |   |  |              |        |   |  |   | (1,777  | )
|Gain (loss) on disposal of fixed assets                                                    |  |        |        |   |                       |   | (502    | )                         |  |   |            |   |  |              |        |   |  |   | (502    | )
|Minority interests                                                                         |  |        |        |   |                       |   |        |                           |  |   | 1,758       |   |  |              | 866     |   |  |   | 2,624   |  
|Income from equity investments                                                             |  |        | (26,119 | ) |                       |   | (3,765  | )                         |  |   | (1,818      | ) |  |              | 29,884  |   |  |   | (1,818  | )
|Dividends received from equity investments                                                 |  |        |        |   |                       |   | 630     |                           |  |   |            |   |  |              |         |   |  |   | 630     |  
|(Increase) decrease in                                                                     |  |        |         |   |                       |   |         |                           |  |   |             |   |  |              |         |   |  |   |         |  
|Accounts receivable                                                                        |  |        |        |   |                       |   | (26,114 | )                         |  |   | (537        | ) |  |              |        |   |  |   | (26,651 | )
|Receivables from/payables to affiliates                                                    |  |        | 5,515   |   |                       |   | (2,007  | )                         |  |   | 219         |   |  |              |         |   |  |   | 3,727   |  
|Inventories                                                                                |  |        |        |   |                       |   | 19,142  |                           |  |   |            |   |  |              |        |   |  |   | 19,142  |  
|Other assets                                                                               |  |        | 66      |   |                       |   | 2,380   |                           |  |   | (1,476      | ) |  |              |        |   |  |   | 970     |  
|Increase (decrease) in                                                                     |  |        |         |   |                       |   |         |                           |  |   |             |   |  |              |         |   |  |   |         |  
|Payables                                                                                   |  |        | 789     |   |                       |   | (320    | )                         |  |   | (26         | ) |  |              |        |   |  |   | 443     |  
|Accruals                                                                                   |  |        | (7,356  | ) |                       |   | (16,054 | )                         |  |   | 2,766       |   |  |              |        |   |  |   | (20,644 | )
|                                                                                           |  |        |         |   |                       |   |         |                           |  |   |             |   |  |              |         |   |  |   |         |  
|Net cash (used in) provided by operating activities                                        |  |        | (3,403  | ) |                       |   | 6,751   |                           |  |   | 6,312       |   |  |              |        |   |  |   | 9,660   |  
|                                                                                           |  |        |         |   |                       |   |         |                           |  |   |             |   |  |              |         |   |  |   |         |  
|Cash flows from investing activities                                                       |  |        |         |   |                       |   |         |                           |  |   |             |   |  |              |         |   |  |   |         |  
|Increase in restricted cash                                                                |  |        |        |   |                       |   |        |                           |  |   | (1,051      | ) |  |              |        |   |  |   | (1,051  | )
|Purchases of property, plant and equipment                                                 |  |        | (5      | ) |                       |   | (10,441 | )                         |  |   | (152        | ) |  |              |        |   |  |   | (10,598 | )
|Proceeds from disposals of property, plant and equipment                                   |  |        |        |   |                       |   | 1,088   |                           |  |   |            |   |  |              |        |   |  |   | 1,088   |  
|Acquisition of MSC, net of cash acquired                                                   |  |        | (5,300  | ) |                       |   |         |                           |  |   |             |   |  |              |        |   |  |   | (5,300  | )
|                                                                                           |  |        |         |   |                       |   |         |                           |  |   |             |   |  |              |         |   |  |   |         |  
|Net cash used in investing activities                                                      |  |        | (5,305  | ) |                       |   | (9,353  | )                         |  |   | (1,203      | ) |  |              |        |   |  |   | (15,861 | )
|                                                                                           |  |        |         |   |                       |   |         |                           |  |   |             |   |  |              |         |   |  |   |         |  
|Cash flows from financing activities                                                       |  |        |         |   |                       |   |         |                           |  |   |             |   |  |              |         |   |  |   |         |  
|Net proceeds (repayment) on revolving credit facility                                      |  |        | 23,617  |   |                       |   |        |                           |  |   |            |   |  |              |        |   |  |   | 23,617  |  
|Other long-term debt                                                                       |  |        |        |   |                       |   | 114     |                           |  |   | (595        | ) |  |              |        |   |  |   | (481    | )
|Dividend paid to minority interest holders                                                 |  |        |        |   |                       |   |        |                           |  |   | (1,323      | ) |  |              |        |   |  |   | (1,323  | )
|Deferred financing costs                                                                   |  |        | (948    | ) |                       |   |        |                           |  |   | (440        | ) |  |              |        |   |  |   | (1,388  | )
|Dividends received from subsidiaries                                                       |  |        |        |   |                       |   | 2,007   |                           |  |   |            |   |  |              | (2,007  | ) |  |   |        |  
|Dividends paid to parent                                                                   |  |        |        |   |                       |   |        |                           |  |   | (2,007      | ) |  |              | 2,007   |   |  |   |        |  
|Dividends paid to stockholder                                                              |  |        | (13,961 | ) |                       |   |        |                           |  |   |            |   |  |              |        |   |  |   | (13,961 | )
|                                                                                           |  |        |         |   |                       |   |         |                           |  |   |             |   |  |              |         |   |  |   |         |  
|Net cash provided by (used in) financing activities                                        |  |        | 8,708   |   |                       |   | 2,121   |                           |  |   | (4,365      | ) |  |              |        |   |  |   | 6,464   |  
|                                                                                           |  |        |         |   |                       |   |         |                           |  |   |             |   |  |              |         |   |  |   |         |  
|Net (decrease) increase in cash and cash equivalents                                       |  |        |        |   |                       |   | (481    | )                         |  |   | 744         |   |  |              |        |   |  |   | 263     |  
|Cash and cash equivalents at beginning of period                                           |  |        |        |   |                       |   | 2,743   |                           |  |   | 458         |   |  |              |        |   |  |   | 3,201   |  
|                                                                                           |  |        |         |   |                       |   |         |                           |  |   |             |   |  |              |         |   |  |   |         |  
|Cash and cash equivalents at end of period                                                 |  | $      |        |   |                       | $ | 2,262   |                           |  | $ | 1,202       |   |  | $            |        |   |  | $ | 3,464   |  
|                                                                                           |  |        |         |   |                       |   |         |                           |  |   |             |   |  |              |         |   |  |   |         |  



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PNA GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2007

(dollars in thousands)



|Note | 16. Recent Accounting Pronouncements
|---- | ------------------------------------

In September 2006, the
FASB issued Statement of Financial Accounting Standard No. 157, Fair Value Measurements, or SFAS 157, which establishes a framework for measuring fair value and expands disclosure about fair value measurements. This Statement applies
under other accounting pronouncements that require or permit fair value measurements. This Statement does not require any new fair value measurements. The application of this Statement relates to the definition of fair value, the methods used to
measure fair value and the expanded disclosures about fair value measurements. The definition of fair value retains the exchange price notion and clarifies that the exchange price is the price in an orderly transaction between market participants.
The definition focuses on the price that would be received to sell the asset or paid to transfer the liability. SFAS 157 establishes a fair value hierarchy from observable market data as the highest level to fair value based on an entitys own
fair value assumptions as the lowest level. Adoption is required as of the beginning of the first fiscal year that begins after November 15, 2007. Early adoption is permitted. The provisions of this Statement should be applied prospectively as
of the beginning of the fiscal year in which it is initially applied. The Company is in the process of evaluating what, if any, impact the adoption of SFAS 157 may have on its consolidated financial statements.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities,
or SFAS 159. SFAS 159 is effective for fiscal years beginning after November 15, 2007. SFAS 159 permits companies to measure financial instruments and certain other assets and liabilities at fair value on an instrument by instrument
basis. SFAS 159 also establishes presentation and disclosure requirements to facilitate comparisons between companies that select different measurement attributes for similar types of assets and liabilities. The Company is in the process
of evaluating what, if any, effect adoption of SFAS 159 may have on its financial statements when SFAS 159 is adopted effective January 1, 2008.



|Note | 17. PNAG Holding Initial Public Offering
|---- | ----------------------------------------

On April 30,
2007, PNAG Holding, our indirect parent, filed a registration statement with the SEC relating to a proposed initial public offering of its common stock and subsequently filed amendments nos. 1, 2 and 3 to the initial registration statement on
June 13, 2007, July 6, 2007 and August 24, 2007, respectively.

Simultaneous with the consummation of PNAG Holdings planned
initial public offering, PNAG Holding will transfer the stock of Travel Main by way of dividend to a newly created parent LLC of PNAG Holding, which will be wholly owned by Platinum. The transfer will occur because ownership of real estate assets is
not a core business of PNA and its stockholders, therefore, desire to keep the real estate assets separate from the operations of PNA. While the transaction is not expected to result in pre-tax book gain or loss, the Company expects the transfer
will result in a gain for tax return purposes resulting in a tax liability payable in cash by the Company of approximately $8,400. Travel Mains subsidiaries will also record a deferred tax asset of $8,400 as they will receive the future
benefit of the increase in the tax basis of the assets transferred. In accordance with Financial Accounting Standards Board Interpretation No. 46(R) and based on the present assumptions concerning the Companys future capital structure,
the Company will likely hold an implicit variable interest in Travel Mains subsidiaries and will be the primary beneficiary of these variable interest entities. Accordingly, the combined financial statements of Travel Mains subsidiaries
will be consolidated into the Companys consolidated financial statements. Thus, while PNA will not receive any future benefit of the deferred tax asset of $8,400, it will present the deferred tax asset on its consolidated balance sheet as a
result of consolidating Travel Mains subsidiaries.

Also in connection with the initial public offering, Platinum intends to amend the Corporate
Advisory Services Agreement (see Note 10, Related Parties) pursuant to which PNA will pay Platinum Advisors an agreed-upon amount as consideration for terminating the monitoring fee payable thereunder.



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PNA GROUP, INC.



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

The following discussion and analysis of the financial condition and results of operations of PNA Group, Inc. and subsidiaries should be read in
conjunction with the unaudited condensed consolidated financial statements and the related Notes as of and for the three and nine months ended September 30, 2007 attached hereto, and with the December 31, 2006 audited consolidated
financial statements and notes thereto included in the Companys Registration Statement on Form S-4. The numbers below are expressed in thousands, unless the content provides otherwise. As used in this Quarterly Report, unless the context
indicates otherwise, the Company, PNA, we, our and us are used to indicate PNA Group, Inc.

Forward-Looking Statements

This Quarterly Report contains forward-looking statements within the meaning of
Section 27a of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In making such statements, we must rely on estimates and assumptions drawn in light of our experience and our
perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. These estimates and assumptions are inherently subject to significant business,
economic and competitive uncertainties, many of which are beyond our control. See Risk Factors in the Companys Registration Statement on Form S-4 for further description of these risks and uncertainties. These uncertainties and
contingencies can affect actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by us, or on our behalf. In particular, the words expect,
anticipate, estimate, may, will, should, intend, believe and similar expressions are intended to identify forward-looking statements. In light of the risks and
uncertainties inherent in all forward-looking statements, you should not consider the inclusion of forward-looking statements in this Quarterly Report to be a representation by us or any other person that our objectives or plans will be achieved. We
undertake no obligation to update our forward-looking statements to reflect events or circumstances after the date of this Quarterly Report or to reflect the occurrence of unanticipated events.

Overview, Acquisitions and Recent Events/Industry Trends

We are a leading national steel service center group that distributes steel products and provides value-added steel processing services to customers across a diversified group of industries, including the non-residential construction,
machinery and equipment manufacturing, oil and gas, telecommunications and utilities markets. The Company was acquired by PNAG Holding, an affiliate of Platinum Equity Capital Partners, from its former owner, Preussag North America, Inc. on
May 9, 2006 for cash consideration of $261.6 million, refinancing of existing indebtedness of $88.0 million, a $12.0 million seller note and other consideration and costs of $3.8 million.

We distribute and perform value-added processing services for our customers on a variety of steel products including a full line of structural and long
products, plate, flat rolled coil, tubulars and sheet. Using sophisticated inventory and distribution information systems developed specifically for the steel service center industry, we provide just-in-time delivery to many of our customers, which
enables them to better manage their working capital costs. Our steel service center facilities are strategically located in high density or high population growth areas in the United States, which puts us in a position to take advantage of growing
markets and market trends.

We intend to opportunistically pursue strategic acquisitions that will increase our scale, grow our market
share of value-added products and expand our business. For example, effective May 31, 2006 the Company completed the acquisition of Metals Supply Company, Ltd. (MSC) pursuant to which PNA acquired all of the outstanding partnership
interests of Metals Supply Company, Ltd. and Clinton & Lockwood, Ltd. (an affiliate of MSC) for cash consideration of approximately $33.3 million and refinanced approximately $20.8 million of MSCs then existing indebtedness as well as
$5.3 million in deferred consideration which was paid to the former owner on May 31, 2007. MSC is a leading structural steel service center and distributor in the Gulf Coast region of the United States with two facilities located in Texas. MSC
distributes and sells a wide array of wide flange beams, as well as plate, pipe, structural tubing, merchant bar, pre-galvanized structural beams, bar grating, and floor plate. MSC also exports steel to Latin America, the Middle East and Southeast
Asia. The acquisition of MSC allowed us to increase our market share in a growing geographic region as well as expand our product offering. With the acquisition of MSC, we now operate 21 metal processing centers nationally, as well as manage five
joint ventures, that operate a total of seven service centers.



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PNA GROUP, INC.



As a result of the purchase of PNA by PNAG Holding on May 9, 2006, the results of operations for
the period January 1, 2006 to May 9, 2006 are represented by the Predecessor Company balances and results of operations of PNA for the period May 10, 2006 to September 30, 2006, the three months ended September and the nine
months ended September 30, 2007 are represented by the Successor Company balances for purposes of the accompanying condensed consolidated financial statements. As a result of the application of purchase accounting, the Predecessor Company
balances and amounts presented in the financial statements and footnotes are not comparable with those of the Successor Company. In addition, as a result of the acquisition of MSC on May 31, 2006, the results of operations for the period
May 10, 2006 to September 30, 2006, the three months ended September 30, 2006 and the three and nine months ended September 30, 2007 include the operations of MSC while the results of operations for the period January 1,
2006 to May 9, 2006 do not include MSC.

As discussed in the section of the Companys Registration Statement on Form S-4 entitled
Managements Discussion and Analysis of Financial Condition and Results of Operations  Recent Events/Industry Trends, in general, constrained supplies and increasing demand for steel in the world markets have resulted in an
environment of increasing prices over the past several years. It is difficult to predict or determine with any certainty whether steel prices will decline or increase.

Critical Accounting Policies

The Companys critical accounting policies are those estimates,
assumptions and judgments involved in the accounting policies that have the greatest potential impact on our financial statements. Please see the section entitled Managements Discussion and Analysis of Financial Condition and Results of
Operations  Critical Accounting Policies contained in the Registration Statement on Form S-4. The Company has not made any significant changes in its critical accounting policies from those disclosed in the section of the Companys
Registration Statement on Form S-4 (Registration No. 333-142896) entitled Managements Discussion and Analysis of Financial Condition and Results of Operations  Critical Accounting Policies.



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PNA GROUP, INC.



Results of Operations

Nine Months Ended September 30, 2006 Successor and Predecessor Company Results  Combined Non-GAAP

The
following tables present our combined results of operations, consolidated and by segment, for the nine months ended September 30, 2006. For purposes of arriving at our results for the nine months ended September 30, 2006, we combined the
Companys results for the period January 1, 2006 to May 9, 2006, the Predecessor company period, and the Companys results for the period May 10, 2006 to September 30, 2006, the Successor company period.

Accounting principles generally accepted in the United States of America, or GAAP, do not allow for such combination of Predecessor and Successor
financial results and this approach yields results that are not comparable on a period-to-period basis due to the new basis of accounting established at the date of the Platinum Acquisition. We believe the combined results provide the most
meaningful way to comment on our results of operations for the nine months ended September 30, 2006 compared to the same period in the following year because discussion of a partial period consisting of the period May 10, 2006 to
September 30, 2006 compared to the nine months ended September 30, 2007 would not be meaningful. The combined information is the result of merely adding the Predecessor and Successor columns and does not include any pro forma assumptions
or adjustments.

The table below presents our results of operations for the periods January 1, 2006 to May 9, 2006 (Predecessor)
and May 10, 2006 to September 30, 2006 (Successor) and the combination of the results of these periods (in thousands).



|                                                        |  |                                    |         |   |                                     |   |         |                                                                        |  |   |           |  
|------------------------------------------------------- |  | ---------------------------------- | ------- | - | ----------------------------------- | - | ------- | ---------------------------------------------------------------------- |  | - | --------- | -
|                                                        |  | PredecessorJanuary 1 toMay 9, 2006 |         |   | SuccessorMay 10 toSeptember 30,2006 |   |         | CombinedPredecessor/SuccessorNon-GAAPNine MonthsEndedSeptember 30,2006 | 
|Net sales                                               |  | $                                  | 487,190 |   |                                     | $ | 675,633 |                                                                        |  | $ | 1,162,823 |  
|Cost and expenses:                                      |  |                                    |         |   |                                     |   |         |                                                                        |  |   |           |  
|Cost of materials sold (exclusive of items shown below) |  |                                    | 401,612 |   |                                     |   | 540,446 |                                                                        |  |   | 942,058   |  
|Processing                                              |  |                                    | 11,985  |   |                                     |   | 14,106  |                                                                        |  |   | 26,091    |  
|Distribution                                            |  |                                    | 6,395   |   |                                     |   | 9,686   |                                                                        |  |   | 16,081    |  
|Selling, general and administrative                     |  |                                    | 35,393  |   |                                     |   | 47,741  |                                                                        |  |   | 83,134    |  
|Amortization of intangibles                             |  |                                    |        |   |                                     |   | 2,125   |                                                                        |  |   | 2,125     |  
|Depreciation                                            |  |                                    | 3,262   |   |                                     |   | 2,312   |                                                                        |  |   | 5,574     |  
|                                                        |  |                                    |         |   |                                     |   |         |                                                                        |  |   |           |  
|Total operating costs and expenses                      |  |                                    | 458,647 |   |                                     |   | 616,416 |                                                                        |  |   | 1,075,063 |  
|                                                        |  |                                    |         |   |                                     |   |         |                                                                        |  |   |           |  
|Operating income                                        |  |                                    | 28,543  |   |                                     |   | 59,217  |                                                                        |  |   | 87,760    |  
|Interest expense                                        |  |                                    | 1,375   |   |                                     |   | 12,677  |                                                                        |  |   | 14,052    |  
|Income from equity investments                          |  |                                    | (770    | ) |                                     |   | (700    | )                                                                      |  |   | (1,470    | )
|                                                        |  |                                    |         |   |                                     |   |         |                                                                        |  |   |           |  
|Income before minority interest and income tax expense  |  |                                    | 27,938  |   |                                     |   | 47,240  |                                                                        |  |   | 75,178    |  
|Minority interest                                       |  |                                    | 788     |   |                                     |   | 1,540   |                                                                        |  |   | 2,328     |  
|                                                        |  |                                    |         |   |                                     |   |         |                                                                        |  |   |           |  
|Income before income tax expense                        |  |                                    | 27,150  |   |                                     |   | 45,700  |                                                                        |  |   | 72,850    |  
|Income tax expense                                      |  |                                    | 10,146  |   |                                     |   | 17,126  |                                                                        |  |   | 27,272    |  
|                                                        |  |                                    |         |   |                                     |   |         |                                                                        |  |   |           |  
|Net income                                              |  | $                                  | 17,004  |   |                                     | $ | 28,574  |                                                                        |  | $ | 45,578    |  
|                                                        |  |                                    |         |   |                                     |   |         |                                                                        |  |   |           |  



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PNA GROUP, INC.



The tables below present our results of operations on a consolidated basis and by segment for the
periods January 1, 2006 to May 9, 2006 (Predecessor) and May 10, 2006 to September 30, 2006 (Successor) and the combination of the results of these periods (dollars and tonnage in thousands). The combined information is the
result of merely adding the Successor Company and Predecessor Company amounts and does not include any pro forma assumptions or adjustments.



|                                                                             |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|---------------------------------------------------------------------------- |  | ---------------------- | ------- | ---------- | - | ------------------ |  | - | ------ | - |  | - | ---------
|Predecessor Company Period from January 1 to May 9, 2006                     |  | Long Productsand Plate |         | FlatRolled |   | Corporateand Other |  |   | Total 
|Net sales                                                                    |  | $                      | 315,034 |            | $ | 172,156            |  | $ |       |   |  | $ | 487,190  
|Cost and expenses:                                                           |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Cost of materials sold                                                       |  |                        | 253,790 |            |   | 147,822            |  |   |       |   |  |   | 401,612  
|Processing, distribution and S,G & A costs                                   |  |                        | 30,962  |            |   | 18,080             |  |   | 4,731  |   |  |   | 53,773   
|Depreciation and amortization                                                |  |                        | 1,293   |            |   | 1,967              |  |   | 2      |   |  |   | 3,262    
|                                                                             |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Total operating costs and expenses                                           |  |                        | 286,045 |            |   | 167,869            |  |   | 4,733  |   |  |   | 458,647  
|                                                                             |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Operating income                                                             |  | $                      | 28,989  |            | $ | 4,287              |  | $ | (4,733 | ) |  | $ | 28,543   
|                                                                             |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Tons sold                                                                    |  |                        | 373     |            |   | 228                |  |   |       |   |  |   | 601      
|Tons tolled                                                                  |  |                        |        |            |   | 271                |  |   |       |   |  |   | 271      
|                                                                             |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Tons shipped                                                                 |  |                        | 373     |            |   | 499                |  |   |       |   |  |   | 872      
|                                                                             |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|                                                                            
|                                                                             |  |                        |         |           
|Successor Company Period from May 10, 2006 to September 30, 2006             |  | Long Productsand Plate |         | FlatRolled |   | Corporateand Other |  |   | Total 
|Net sales                                                                    |  | $                      | 469,823 |            | $ | 205,810            |  | $ |       |   |  | $ | 675,633  
|Cost and expenses:                                                           |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Cost of materials sold                                                       |  |                        | 366,619 |            |   | 173,827            |  |   |       |   |  |   | 540,446  
|Processing, distribution and S,G & A costs                                   |  |                        | 46,340  |            |   | 23,675             |  |   | 1,518  |   |  |   | 71,533   
|Depreciation and amortization                                                |  |                        | 3,204   |            |   | 1,149              |  |   | 84     |   |  |   | 4,437    
|                                                                             |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Total operating costs and expenses                                           |  |                        | 416,163 |            |   | 198,651            |  |   | 1,602  |   |  |   | 616,416  
|                                                                             |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Operating income                                                             |  | $                      | 53,660  |            | $ | 7,159              |  | $ | (1,602 | ) |  | $ | 59,217   
|                                                                             |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Tons sold                                                                    |  |                        | 522     |            |   | 256                |  |   |       |   |  |   | 778      
|Tons tolled                                                                  |  |                        |        |            |   | 310                |  |   |       |   |  |   | 310      
|                                                                             |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Tons shipped                                                                 |  |                        | 522     |            |   | 566                |  |   |       |   |  |   | 1,088    
|                                                                             |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|                                                                             |  |                        |         |           
|Combined Predecessor/Successor Non-GAAP Nine Months Ended September 30, 2006 |  | Long Productsand Plate |         | FlatRolled |   | Corporateand Other |  |   | Total 
|Net sales                                                                    |  | $                      | 784,857 |            | $ | 377,966            |  | $ |       |   |  | $ | 1,162,823
|Cost and expenses:                                                           |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Cost of materials sold                                                       |  |                        | 620,409 |            |   | 321,649            |  |   |       |   |  |   | 942,058  
|Processing, distribution and S,G & A costs                                   |  |                        | 77,302  |            |   | 41,755             |  |   | 6,249  |   |  |   | 125,306  
|Depreciation and amortization                                                |  |                        | 4,497   |            |   | 3,116              |  |   | 86     |   |  |   | 7,699    
|                                                                             |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Total operating costs and expenses                                           |  |                        | 702,208 |            |   | 366,520            |  |   | 6,335  |   |  |   | 1,075,063
|                                                                             |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Operating income                                                             |  | $                      | 82,649  |            | $ | 11,446             |  | $ | (6,335 | ) |  | $ | 87,760   
|                                                                             |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Tons sold                                                                    |  |                        | 895     |            |   | 484                |  |   |       |   |  |   | 1,379    
|Tons tolled                                                                  |  |                        |        |            |   | 581                |  |   |       |   |  |   | 581      
|                                                                             |  |                        |         |            |   |                    |  |   |        |   |  |   |          
|Tons shipped                                                                 |  |                        | 895     |            |   | 1,065              |  |   |       |   |  |   | 1,960    
|                                                                             |  |                        |         |            |   |                    |  |   |        |   |  |   |          



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PNA GROUP, INC.



Three Months Ended September 30, 2006 Compared to Three Months Ended September 30, 2007

The table below presents our results of operations for the three months ended September 30, 2006 (Successor) and 2007
(Successor).



|                                                        |  |                                             |         |   |               |      |   |                                             |   |         |               |  |      |  
|------------------------------------------------------- |  | ------------------------------------------- | ------- | - | ------------- | ---- | - | ------------------------------------------- | - | ------- | ------------- |  | ---- | -
|(in thousands, except average realized price per ton)   |  | SuccessorThree MonthsEndedSeptember 30,2006 |         |   | % ofNet Sales |      |   | SuccessorThree MonthsEndedSeptember 30,2007 |   |         | % ofNet Sales | 
|Net sales                                               |  | $                                           | 434,301 |   |               |      |   |                                             | $ | 412,199 |               |  |      |  
|Cost and expenses:                                      |  |                                             |         |   |               |      |   |                                             |   |         |               |  |      |  
|Cost of materials sold (exclusive of items shown below) |  |                                             | 344,050 |   |               | 79.2 | % |                                             |   | 345,017 |               |  | 83.7 | %
|Processing                                              |  |                                             | 8,831   |   |               | 2.0  | % |                                             |   | 8,263   |               |  | 2.0  | %
|Distribution                                            |  |                                             | 6,707   |   |               | 1.5  | % |                                             |   | 5,823   |               |  | 1.4  | %
|Selling, general and administrative (S,G & A)           |  |                                             | 29,368  |   |               | 6.8  | % |                                             |   | 33,304  |               |  | 8.1  | %
|Amortization of intangibles                             |  |                                             | 1,415   |   |               | 0.3  | % |                                             |   | 1,308   |               |  | 0.3  | %
|Depreciation                                            |  |                                             | 1,152   |   |               | 0.3  | % |                                             |   | 1,658   |               |  | 0.4  | %
|                                                        |  |                                             |         |   |               |      |   |                                             |   |         |               |  |      |  
|Total operating costs and expenses                      |  |                                             | 391,523 |   |               | 90.2 | % |                                             |   | 395,373 |               |  | 95.9 | %
|                                                        |  |                                             |         |   |               |      |   |                                             |   |         |               |  |      |  
|Operating income                                        |  |                                             | 42,778  |   |               | 9.8  | % |                                             |   | 16,826  |               |  | 4.1  | %
|Interest expense, net                                   |  |                                             | 8,857   |   |               | 2.0  | % |                                             |   | 11,416  |               |  | 2.8  | %
|Income from equity investments                          |  |                                             | (413    | ) |               | -0.1 | % |                                             |   | (679    | )             |  | -0.2 | %
|                                                        |  |                                             |         |   |               |      |   |                                             |   |         |               |  |      |  
|Income before minority interest and income tax expense  |  |                                             | 34,334  |   |               | 7.9  | % |                                             |   | 6,089   |               |  | 1.5  | %
|Minority interest                                       |  |                                             | 1,112   |   |               | 0.3  | % |                                             |   | 931     |               |  | 0.2  | %
|                                                        |  |                                             |         |   |               |      |   |                                             |   |         |               |  |      |  
|Income before income tax expense                        |  |                                             | 33,222  |   |               | 7.6  | % |                                             |   | 5,158   |               |  | 1.3  | %
|Income tax expense                                      |  |                                             | 12,093  |   |               | 2.8  | % |                                             |   | 2,225   |               |  | 0.5  | %
|                                                        |  |                                             |         |   |               |      |   |                                             |   |         |               |  |      |  
|Net income                                              |  | $                                           | 21,129  |   |               | 4.9  | % |                                             | $ | 2,933   |               |  | 0.7  | %
|                                                        |  |                                             |         |   |               |      |   |                                             |   |         |               |  |      |  
|Tons sold                                               |  |                                             | 489     |   |               |      |   |                                             |   | 467     |               |  |      |  
|Tons tolled                                             |  |                                             | 193     |   |               |      |   |                                             |   | 166     |               |  |      |  
|                                                        |  |                                             |         |   |               |      |   |                                             |   |         |               |  |      |  
|Tons shipped                                            |  |                                             | 682     |   |               |      |   |                                             |   | 633     |               |  |      |  
|                                                        |  |                                             |         |   |               |      |   |                                             |   |         |               |  |      |  
|Average realized price per ton                          |  | $                                           | 874     |   |               |      |   |                                             | $ | 869     |               |  |      |  
|                                                        |  |                                             |         |   |               |      |   |                                             |   |         |               |  |      |  

Net sales. Net sales including tolling income decreased $22.1 million, or 5.1%, from
$434.3 million for the three months ended September 30, 2006 to $412.2 million for the three months ended September 30, 2007. The reduction was primarily due to a decrease in volumes sold of 4.5%, decrease in volumes tolled of 14.0% and
decrease in average realized prices of 0.6%.

Cost of materials sold. Cost of materials sold increased $0.9 million, or 0.3%,
from $344.1 million for the three months ended September 30, 2006 to $345.0 million for the three months ended September 30, 2007. This was primarily due to a 5.0% increase in average cost per ton of product purchased offset by a decrease
in volumes sold of 4.5%.

Processing, distribution, selling, general and administrative expenses. Processing, distribution,
selling, general and administrative expenses increased by $2.5 million, or 5.6%, from $44.9 million for the three months ended September 30, 2006 to $47.4 million for the three months ended September 30, 2007. The increase was due
primarily to participation plan expenses of $3.9 million in 2007 that were not incurred in 2006.

Amortization and depreciation.Amortization of intangibles decreased $0.1 million from $1.4 million for the three months ended September 30, 2006 to $1.3 million for the three months ended September 30, 2007. Amortization of intangibles is related to the
acquisitions of PNA and MSC, both of which were completed in May 2006. Depreciation expense increased $0.5 million from $1.2 million for the three months ended September 30, 2006 to $1.7 million for the three months ended September 30,
2007. The increase was related primarily to the acquisition of approximately $13.0 million in fixed assets during the twelve month period ended September 30, 2007.



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Interest expense. Interest expense increased $2.5 million from $8.9 million for the
three months ended September 30, 2006 to $11.4 million for the three months ended September 30, 2007 primarily due to: (a) the $250.0 million unsecured Senior Notes, which were issued on August 15, 2006 principally to finance the
acquisitions of PNA and MSC, and (b) the $49.9 million in mortgage loans at Travel Mains subsidiaries which were issued September 28, 2006. As a result of the timing of issuance of these debt instruments, neither fully effected
interest expense for the three months ended September 30, 2006 and both were outstanding for the entire three months ended September 30, 2007.

Income tax expense. Income tax expense decreased from $12.1 million for the three months ended September 30, 2006 to $2.2 million for the three months ended September 30, 2007. Income tax
expense represented 36.4% and 43.1% of income before income tax expense for the three months ended September 30, 2006 and 2007, respectively. A portion of the increase is due to higher projected state taxes in 2007 due, in part, to recent
changes in state tax law. The remainder is primarily due to certain corporate expenses not being deductible for state taxes as well as other permanent differences between taxable income and book income. The amount of these differences between book
and taxable income have a more significant impact on the quarterly effective tax rate due to the Companys lower level of earnings during the three months ended September 30, 2007 compared to the same period in the prior year thus
resulting in an increase in the effective tax rate for the three months ended September 30, 2007 compared to the same period in the prior year.

Results by Segment Three Months Ended September 30, 2006 Compared to Three Months Ended September 30, 2007

Long Products
and Plate Segment

The table below presents our results of operations for our Long Products and Plate segment for the three months ended
September 30, 2006 (Successor) and 2007 (Successor) (dollars and tonnage in thousands).



|                                                        |  |                                             |         |               |      |   |                                             |   |               |  |      |  
|------------------------------------------------------- |  | ------------------------------------------- | ------- | ------------- | ---- | - | ------------------------------------------- | - | ------------- |  | ---- | -
|                                                        |  | SuccessorThree MonthsEndedSeptember 30,2006 |         | % ofNet Sales |      |   | SuccessorThree MonthsEndedSeptember 30,2007 |   | % ofNet Sales | 
|Net sales                                               |  | $                                           | 305,717 |               |      |   |                                             | $ | 305,823       |  |      |  
|Cost and expenses:                                      |  |                                             |         |               |      |   |                                             |   |              |  |      |  
|Cost of materials sold (exclusive of items shown below) |  |                                             | 235,387 |               | 77.0 | % |                                             |   | 253,099       |  | 82.8 | %
|Processing, distribution and S,G & A costs              |  |                                             | 30,753  |               | 10.1 | % |                                             |   | 31,511        |  | 10.3 | %
|Depreciation and amortization                           |  |                                             | 1,880   |               | 0.6  | % |                                             |   | 2,020         |  | 0.7  | %
|                                                        |  |                                             |         |               |      |   |                                             |   |               |  |      |  
|Total operating costs and expenses                      |  |                                             | 268,020 |               | 87.7 | % |                                             |   | 286,630       |  | 93.7 | %
|                                                        |  |                                             |         |               |      |   |                                             |   |               |  |      |  
|Operating income                                        |  | $                                           | 37,697  |               | 12.3 | % |                                             | $ | 19,193        |  | 6.3  | %
|                                                        |  |                                             |         |               |      |   |                                             |   |               |  |      |  
|Tons sold                                               |  |                                             | 333     |               |      |   |                                             |   | 331           |  |      |  
|Tons tolled                                             |  |                                             |        |               |      |   |                                             |   |              |  |      |  
|                                                        |  |                                             |         |               |      |   |                                             |   |               |  |      |  
|Tons shipped                                            |  |                                             | 333     |               |      |   |                                             |   | 331           |  |      |  
|                                                        |  |                                             |         |               |      |   |                                             |   |               |  |      |  
|Average realized price per ton                          |  | $                                           | 918     |               |      |   |                                             | $ | 924           |  |      |  
|                                                        |  |                                             |         |               |      |   |                                             |   |               |  |      |  

Net sales. Net sales increased $0.1 million from $305.7 million for the three months
ended September 30, 2006 to $305.8 million for the three months ended September 30, 2007. A decrease in volume sold of 0.6% was offset by a 0.7% increase in average realized price per ton.

Cost of materials sold. Cost of materials sold increased $17.7 million, or 7.5%, from $235.4 million for the three months ended
September 30, 2006 to $253.1 million for the three months ended September 30, 2007. The increase was primarily due to an 8.4% increase in average cost per ton of product purchased offset by a decrease in volumes sold of 0.6%.



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Processing, distribution, selling, general and administrative
expenses. Processing, distribution, selling, general and administrative expenses increased by $0.7 million, or 2.3%, from $30.8 million for the three months ended September 30, 2006 to $31.5 million for the three months ended
September 30, 2007.

Amortization and depreciation.Depreciation and amortization expense increased $0.1 million from
$1.9 million for the three months ended September 30, 2006 to $2.0 million for the three months ended September 30, 2007 primarily due to the acquisition of fixed assets during the twelve month period ending September 30, 2007.

Flat Rolled Segment

The table below
presents our results of operations for our Flat Rolled segment for the three months ended September 30, 2006 (Successor) and 2007 (Successor) (dollars and tonnage in thousands).



|                                                                             |  |                                             |         |               |      |   |                                             |   |               |  |      |  
|---------------------------------------------------------------------------- |  | ------------------------------------------- | ------- | ------------- | ---- | - | ------------------------------------------- | - | ------------- |  | ---- | -
|                                                                             |  | SuccessorThree MonthsEndedSeptember 30,2006 |         | % ofNet Sales |      |   | SuccessorThree MonthsEndedSeptember 30,2007 |   | % ofNet Sales | 
|Net sales                                                                    |  | $                                           | 128,584 |               |      |   |                                             | $ | 106,376       |  |      |  
|Cost and expenses:                                                           |  |                                             |         |               |      |   |                                             |   |               |  |      |  
|Cost of materials sold (exclusive of items shown below)                      |  |                                             | 108,663 |               | 84.5 | % |                                             |   | 91,918        |  | 86.4 | %
|Processing, distribution and S,G & A costs                                   |  |                                             | 12,976  |               | 10.1 | % |                                             |   | 13,597        |  | 12.8 | %
|Depreciation and amortization                                                |  |                                             | 685     |               | 0.5  | % |                                             |   | 801           |  | 0.8  | %
|                                                                             |  |                                             |         |               |      |   |                                             |   |               |  |      |  
|Total operating costs and expenses                                           |  |                                             | 122,324 |               | 95.1 | % |                                             |   | 106,316       |  | 99.9 | %
|                                                                             |  |                                             |         |               |      |   |                                             |   |               |  |      |  
|Operating income                                                             |  | $                                           | 6,260   |               | 4.9  | % |                                             | $ | 60            |  | 0.1  | %
|                                                                             |  |                                             |         |               |      |   |                                             |   |               |  |      |  
|Tons sold                                                                    |  |                                             | 156     |               |      |   |                                             |   | 137           |  |      |  
|Tons tolled                                                                  |  |                                             | 193     |               |      |   |                                             |   | 166           |  |      |  
|                                                                             |  |                                             |         |               |      |   |                                             |   |               |  |      |  
|Tons shipped                                                                 |  |                                             | 349     |               |      |   |                                             |   | 303           |  |      |  
|                                                                             |  |                                             |         |               |      |   |                                             |   |               |  |      |  
|Average realized price per ton (exclusive of tolling income and tons tolled) |  | $                                           | 781     |               |      |   |                                             | $ | 734           |  |      |  
|                                                                             |  |                                             |         |               |      |   |                                             |   |               |  |      |  

Net sales. Net sales including tolling income decreased $22.2 million, or
17.3%, from $128.6 million for the three months ended September 30, 2006 to $106.4 million for the three months ended September 30, 2007. The decrease was primarily related to a 12.2% decline in volumes sold, a 14.0% decrease in tolled
volumes, and a 6.0% decrease in average realized price per ton.

Cost of materials sold. Cost of materials sold
decreased $16.8 million, or 15.5%, from $108.7 million for the three months ended September 30, 2006 to $91.9 million for the three months ended September 30, 2007. The decrease was primarily related to a 12.2% decline in volumes sold and
a decrease in the average cost per ton of 3.3%.

Processing, distribution, selling, general and administrative
expenses. Processing, distribution, selling, general and administrative expenses increased by $0.6 million, or 4.6%, from $13.0 million for the three months ended September 30, 2006 to $13.6 million for the three months ended
September 30, 2007. The increase was principally due to severance costs incurred during the three months ended September 30, 2007 offset by reduction of pension expenses resulting from the freezing of the retirement plans at the end of
fiscal year 2006.

Amortization and depreciation. Depreciation and amortization expense increased $0.1 million from $0.7
million for the three months ended September 30, 2006 to $0.8 million for the three months ended September 30, 2007 primarily due to the acquisition of fixed assets during the twelve month period ending September 30, 2007.



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PNA GROUP, INC.



Corporate and Other

This category reflects administrative costs and expenses management has not allocated to its reportable segments. These costs include compensation for executive officers and support staff, professional fees for audit,
tax and legal services, consulting fees and travel and entertaining.

Corporate expenses increased $1.2 million, or 100%, from $1.2 million
for the three months ended September 30, 2006 to $2.4 million for the three months ended September 30, 2007 related primarily to incremental costs incurred in 2007 including increased personnel costs of $0.5 million and provision for the
management participation plan of $0.8 million.

Nine Months Ended September 30, 2006 Compared to Nine Months Ended September 30, 2007

The table below presents our results of operations for the nine months ended September 30, 2006 (Combined) and 2007
(Successor).



|                                                        |  |                                                                        |           |   |               |      |   |                                            |   |           |               |  |      |  
|------------------------------------------------------- |  | ---------------------------------------------------------------------- | --------- | - | ------------- | ---- | - | ------------------------------------------ | - | --------- | ------------- |  | ---- | -
|(in thousands, except average realized price per ton)   |  | CombinedPredecessor/SuccessorNon-GAAPNine MonthsEndedSeptember 30,2006 |           |   | % ofNet Sales |      |   | SuccessorNine MonthsEndedSeptember 30,2007 |   |           | % ofNet Sales | 
|Net sales                                               |  | $                                                                      | 1,162,823 |   |               |      |   |                                            | $ | 1,234,194 |               |  |      |  
|Cost and expenses:                                      |  |                                                                        |           |   |               |      |   |                                            |   |           |               |  |      |  
|Cost of materials sold (exclusive of items shown below) |  |                                                                        | 942,058   |   |               | 81.0 | % |                                            |   | 1,019,248 |               |  | 82.6 | %
|Processing                                              |  |                                                                        | 26,091    |   |               | 2.2  | % |                                            |   | 24,548    |               |  | 2.0  | %
|Distribution                                            |  |                                                                        | 16,081    |   |               | 1.4  | % |                                            |   | 17,204    |               |  | 1.4  | %
|Selling, general and administrative (S,G & A)           |  |                                                                        | 83,134    |   |               | 7.1  | % |                                            |   | 93,572    |               |  | 7.6  | %
|Amortization of intangibles                             |  |                                                                        | 2,125     |   |               | 0.2  | % |                                            |   | 4,058     |               |  | 0.3  | %
|Depreciation                                            |  |                                                                        | 5,574     |   |               | 0.5  | % |                                            |   | 4,625     |               |  | 0.4  | %
|                                                        |  |                                                                        |           |   |               |      |   |                                            |   |           |               |  |      |  
|Total operating costs and expenses                      |  |                                                                        | 1,075,063 |   |               | 92.5 | % |                                            |   | 1,163,255 |               |  | 94.3 | %
|                                                        |  |                                                                        |           |   |               |      |   |                                            |   |           |               |  |      |  
|Operating income                                        |  |                                                                        | 87,760    |   |               | 7.5  | % |                                            |   | 70,939    |               |  | 5.7  | %
|Interest expense, net                                   |  |                                                                        | 14,052    |   |               | 1.2  | % |                                            |   | 32,570    |               |  | 2.6  | %
|Income from equity investments                          |  |                                                                        | (1,470    | ) |               | -0.1 | % |                                            |   | (1,818    | )             |  | -0.1 | %
|                                                        |  |                                                                        |           |   |               |      |   |                                            |   |           |               |  |      |  
|Income before minority interest and income tax expense  |  |                                                                        | 75,178    |   |               | 6.5  | % |                                            |   | 40,187    |               |  | 3.3  | %
|Minority interest                                       |  |                                                                        | 2,328     |   |               | 0.2  | % |                                            |   | 2,624     |               |  | 0.2  | %
|                                                        |  |                                                                        |           |   |               |      |   |                                            |   |           |               |  |      |  
|Income before income tax expense                        |  |                                                                        | 72,850    |   |               | 6.3  | % |                                            |   | 37,563    |               |  | 3.0  | %
|Income tax expense                                      |  |                                                                        | 27,272    |   |               | 2.3  | % |                                            |   | 14,561    |               |  | 1.2  | %
|                                                        |  |                                                                        |           |   |               |      |   |                                            |   |           |               |  |      |  
|Net income                                              |  | $                                                                      | 45,578    |   |               | 3.9  | % |                                            | $ | 23,002    |               |  | 1.9  | %
|                                                        |  |                                                                        |           |   |               |      |   |                                            |   |           |               |  |      |  
|Tons sold                                               |  |                                                                        | 1,379     |   |               |      |   |                                            |   | 1,417     |               |  |      |  
|Tons tolled                                             |  |                                                                        | 581       |   |               |      |   |                                            |   | 493       |               |  |      |  
|                                                        |  |                                                                        |           |   |               |      |   |                                            |   |           |               |  |      |  
|Tons shipped                                            |  |                                                                        | 1,960     |   |               |      |   |                                            |   | 1,910     |               |  |      |  
|                                                        |  |                                                                        |           |   |               |      |   |                                            |   |           |               |  |      |  
|Average realized price per ton                          |  | $                                                                      | 825       |   |               |      |   |                                            | $ | 857       |               |  |      |  
|                                                        |  |                                                                        |           |   |               |      |   |                                            |   |           |               |  |      |  

Net sales. Net sales including tolling income increased $71.4 million, or 6.1%, from
$1,162.8 million for the nine months ended September 30, 2006 to $1,234.2 million for nine months ended September 30, 2007. The



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PNA GROUP, INC.



increase was primarily related to $81.2 million of incremental sales in 2007 of MSC which was acquired May 31, 2006 offset by a decrease in tons sold of
4.4% (exclusive of MSC tons sold).

Cost of materials sold. Cost of materials sold increased $77.1 million, or 8.2%, from
$942.1 million for the nine months ended September 30, 2006 to $1,019.2 million for the nine months ended September 30, 2007. Of the increase, $72.2 million related to incremental cost of materials sold in 2007 of MSC which was acquired
May 31, 2006.

Processing, distribution, selling, general and administrative expenses. Processing, distribution,
selling, general and administrative expenses increased by $10.0 million, or 8.0%, from $125.3 million for the nine months ended September 30, 2006 to $135.3 million for the nine months ended September 30, 2007. Of the increase, $6.3
million was due to the addition of MSC which was acquired May 31, 2006. The remainder of the increase was due primarily to increases in corporate personnel costs of $2.2 million, audit and other professional fees of $1.1 million, and $1.3
million in expenses related to Sarbanes-Oxley external consulting services. In addition to these increases in corporate expenses, the Company provided for $7.2 million in participation plan expense in 2007 that was not incurred in 2006. These
increases were partially offset by $3.9 million in non-recurring transaction bonuses incurred in 2006 and a 13.8% decrease in volume of tons of product shipped in our Flat Rolled segment. Virtually all the steel sold by the Flat Rolled segment
receives processing as compared to less than 30% of steel sold by the Long Products and Plate segment. Thus, while the total volume of steel shipped by the Company decreased 2.6% for the nine months ended September 30, 2007 compared to the nine
months ended September 30, 2006, the decrease in volume at the Flat Rolled segment had a more significant impact on processing costs than the increase in volume at the Long Products and Plate segment.

Amortization and depreciation.Amortization of intangibles increased $2.0 million from $2.1 million for the nine months ended
September 30, 2006 to $4.1 million for the nine months ended September 30, 2007. Amortization of intangibles is related to the acquisitions of PNA and MSC, both of which were completed in May 2006. Therefore, for the nine months ended
September 30, 2006 there is approximately four and a half months of amortization expense recorded as compared to nine months of amortization expense recorded for the nine months ended September 30, 2007. Depreciation expense decreased $1.0
million from $5.6 million for the nine months ended September 30, 2006 to $4.6 million for the nine months ended September 30, 2007. The decrease was related primarily to the acquisition of PNA in which estimated fair value of net assets
acquired exceeded the purchase price. This estimated fair value of net assets acquired in excess of the purchase price was allocated as a pro rata reduction of long-lived assets resulting in a reduction of the carrying value of property, plant and
equipment and a corresponding decrease in depreciation subsequent to the acquisition.

Interest expense. Interest expense
increased $18.5 million from $14.1 million for the nine months ended September 30, 2006 to $32.6 million for the nine months ended September 30, 2007 primarily due to: (a) the $250.0 million unsecured Senior Notes, which were issued
on August 15, 2006 principally to finance the acquisitions of PNA and MSC and (b) $49.9 million in mortgage loans at Travel Mains subsidiaries issued September 28, 2006.

Income tax expense. Income tax expense decreased from $27.3 million for the nine months ended September 30, 2006 to $14.6 million for
the nine months ended September 30, 2007. Income tax expense represented 37.4% and 38.8% of income before income tax expense for the nine months ended September 30, 2006 and 2007, respectively.



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PNA GROUP, INC.



Results by Segment Nine Months Ended September 30, 2006 Compared to Nine Months Ended
September 30, 2007

Long Products and Plate Segment

The table below presents our results of operations for our Long Products and Plate segment for the nine months ended September 30, 2006 (Combined) and the nine months ended September 30, 2007 (Successor)
(dollars and tonnage in thousands).



|                                                        |  |                                                                        |         |               |      |   |                                            |   |               |  |      |  
|------------------------------------------------------- |  | ---------------------------------------------------------------------- | ------- | ------------- | ---- | - | ------------------------------------------ | - | ------------- |  | ---- | -
|                                                        |  | CombinedPredecessor/SuccessorNon-GAAPNine MonthsEndedSeptember 30,2006 |         | % ofNet Sales |      |   | SuccessorNine MonthsEndedSeptember 30,2007 |   | % ofNet Sales | 
|Net sales                                               |  | $                                                                      | 784,857 |               |      |   |                                            | $ | 903,181       |  |      |  
|Cost and expenses:                                      |  |                                                                        |         |               |      |   |                                            |   |               |  |      |  
|Cost of materials sold (exclusive of items shown below) |  |                                                                        | 620,409 |               | 79.0 | % |                                            |   | 735,374       |  | 81.4 | %
|Processing, distribution and S,G&A costs                |  |                                                                        | 77,302  |               | 9.8  | % |                                            |   | 90,500        |  | 10.0 | %
|Depreciation and amortization                           |  |                                                                        | 4,497   |               | 0.6  | % |                                            |   | 6,249         |  | 0.7  | %
|                                                        |  |                                                                        |         |               |      |   |                                            |   |               |  |      |  
|Total operating costs and expenses                      |  |                                                                        | 702,208 |               | 89.5 | % |                                            |   | 832,123       |  | 92.1 | %
|                                                        |  |                                                                        |         |               |      |   |                                            |   |               |  |      |  
|Operating income                                        |  | $                                                                      | 82,649  |               | 10.5 | % |                                            | $ | 71,058        |  | 7.9  | %
|                                                        |  |                                                                        |         |               |      |   |                                            |   |               |  |      |  
|Tons sold                                               |  |                                                                        | 895     |               |      |   |                                            |   | 993           |  |      |  
|Tons tolled                                             |  |                                                                        |        |               |      |   |                                            |   |              |  |      |  
|                                                        |  |                                                                        |         |               |      |   |                                            |   |               |  |      |  
|Tons shipped                                            |  |                                                                        | 895     |               |      |   |                                            |   | 993           |  |      |  
|                                                        |  |                                                                        |         |               |      |   |                                            |   |               |  |      |  
|Average realized price per ton                          |  | $                                                                      | 877     |               |      |   |                                            | $ | 910           |  |      |  
|                                                        |  |                                                                        |         |               |      |   |                                            |   |               |  |      |  

Net sales. Net sales increased $118.3 million, or 15.1%, from $784.9 million for the
nine months ended September 30, 2006 to $903.2 million for the nine months ended September 30, 2007. Of the increase, $81.2 million related to incremental sales in 2007 of MSC which was acquired May 31, 2006. The remainder of the
increase was primarily due to an increase in average realized prices of 4.9% (exclusive of MSC average realized price per ton).

Cost
of materials sold. Cost of materials sold increased $115.0 million, or 18.5%, from $620.4 million for the nine months ended September 30, 2006 to $735.4 million for the nine months ended September 30, 2007. Of the increase, $72.2
million related to incremental cost of materials sold in 2007 of MSC which was acquired May 31, 2006. The remainder of the increase was primarily due to a 7.3% increase in average cost per ton of product purchased (exclusive of MSC average cost
per ton).

Processing, distribution, selling, general and administrative expenses. Processing, distribution, selling,
general and administrative expenses increased by $13.2 million, or 17.1%, from $77.3 million for the nine months ended September 30, 2006 to $90.5 million for the nine months ended September 30, 2007. Of the increase, $6.3 million was due
to the addition of MSC which was acquired May 31, 2006 and $3.4 million related to the provision for the management participation plan. The remainder of the increase was due to a 10.9% increase in volumes sold.

Amortization and depreciation.Depreciation and amortization expense increased $1.7 million from $4.5 million for the nine months ended
September 30, 2006 to $6.2 million for the nine months ended September 30, 2007. Amortization of intangibles increased $2.0 million for the nine months ended September 30, 2007 compared to the nine months ended September 30, 2006
due to the acquisitions of PNA and MSC, both completed in May 2006. Therefore, for the nine months ended September 30, 2006 there is approximately four and a half months of amortization expense recorded as compared to nine months of
amortization expense recoded for the nine months



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ended September 30, 2007. The increase in amortization expense was offset by a decrease in depreciation of $0.2 million related primarily to the
acquisition of PNA in May 2006 in which estimated fair value of net assets acquired exceeded the purchase price. This estimated fair value of net assets acquired in excess of the purchase price was allocated as a pro rata reduction of long-lived
assets resulting in a reduction of the carrying value of property, plant and equipment and a corresponding decrease in depreciation subsequent to the acquisition.

Flat Rolled Segment

The table below presents our results of operations for our Flat Rolled segment for the nine months
ended September 30, 2006 (Combined) and the nine months ended September 30, 2007 (Successor) (dollars and tonnage in thousands).



|                                                                             |  |                                                                        |         |                |      |   |                                            |   |                |  |      |  
|---------------------------------------------------------------------------- |  | ---------------------------------------------------------------------- | ------- | -------------- | ---- | - | ------------------------------------------ | - | -------------- |  | ---- | -
|                                                                             |  | CombinedPredecessor/SuccessorNon-GAAPNine MonthsEndedSeptember 30,2006 |         | % of Net Sales |      |   | SuccessorNine MonthsEndedSeptember 30,2007 |   | % of Net Sales | 
|Net sales                                                                    |  | $                                                                      | 377,966 |                |      |   |                                            | $ | 331,013        |  |      |  
|Cost and expenses:                                                           |  |                                                                        |         |                |      |   |                                            |   |                |  |      |  
|Cost of materials sold (exclusive of items shown below)                      |  |                                                                        | 321,649 |                | 85.1 | % |                                            |   | 283,874        |  | 85.8 | %
|Processing, distribution and S,G&A costs                                     |  |                                                                        | 41,755  |                | 11.0 | % |                                            |   | 36,937         |  | 11.2 | %
|Depreciation and amortization                                                |  |                                                                        | 3,116   |                | 0.8  | % |                                            |   | 1,999          |  | 0.6  | %
|                                                                             |  |                                                                        |         |                |      |   |                                            |   |                |  |      |  
|Total operating costs and expenses                                           |  |                                                                        | 366,520 |                | 97.0 | % |                                            |   | 322,810        |  | 97.5 | %
|                                                                             |  |                                                                        |         |                |      |   |                                            |   |                |  |      |  
|Operating income                                                             |  | $                                                                      | 11,446  |                | 3.0  | % |                                            | $ | 8,203          |  | 2.5  | %
|                                                                             |  |                                                                        |         |                |      |   |                                            |   |                |  |      |  
|Tons sold                                                                    |  |                                                                        | 484     |                |      |   |                                            |   | 425            |  |      |  
|Tons tolled                                                                  |  |                                                                        | 581     |                |      |   |                                            |   | 493            |  |      |  
|                                                                             |  |                                                                        |         |                |      |   |                                            |   |                |  |      |  
|Tons shipped                                                                 |  |                                                                        | 1,065   |                |      |   |                                            |   | 918            |  |      |  
|                                                                             |  |                                                                        |         |                |      |   |                                            |   |                |  |      |  
|Average realized price per ton (exclusive of tolling income and tons tolled) |  | $                                                                      | 740     |                |      |   |                                            | $ | 737            |  |      |  
|                                                                             |  |                                                                        |         |                |      |   |                                            |   |                |  |      |  

Net sales. Net sales including tolling income decreased $47.0 million, or
12.4%, from $378.0 million for the nine months ended September 30, 2006 to $331.0 million for the nine months ended September 30, 2007. The decrease was primarily related to a 12.2% decline in volumes sold, a 15.1% decrease in tolled
volumes, and a 0.4% decrease in average realized price per ton.

Cost of materials sold. Cost of materials sold
decreased $37.7 million, or 11.7%, from $321.6 million for the nine months ended September 30, 2006 to $283.9 million for the nine months ended September 30, 2007. The decrease was primarily related to a 12.2% decline in volumes sold
partially offset by a 0.6% increase in average cost per ton.

Processing, distribution, selling, general and administrative
expenses. Processing, distribution, selling, general and administrative expenses decreased by $4.9 million, or 11.7%, from $41.8 million for the nine months ended September 30, 2006 to $36.9 million for the nine months ended
September 30, 2007. The decrease is primarily due to a decrease in pension related costs of $1.7 million principally related to curtailment of the Feralloy plans and the effect in the latter portion of 2006 of closing the Cleveland location of
$1.7 million. The remainder of the decrease was due to decreases in processing and distribution costs resulting from decreases in tons of product shipped.

Amortization and depreciation. Depreciation and amortization expense decreased $1.1 million from $3.1 million for the nine months ended September 30, 2006 to $2.0 million for the nine months
ended September 30, 2007 primarily due to a decrease in depreciation of $1.2 million resulting from the acquisition of PNA in which estimated fair value of net assets acquired exceeded the purchase price. This estimated fair value of net assets
acquired in excess of the purchase price was allocated as a pro rata reduction of long-lived assets resulting in a reduction of the carrying value of property, plant and equipment and a corresponding decrease in depreciation in 2007 compared to
2006.



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Corporate and Other

This category reflects administrative costs and expenses management has not allocated to its reportable segments. These costs include compensation for executive officers and support staff, professional fees for audit,
tax and legal services, consulting fees and travel and entertaining.

Corporate expenses rose by $2.0 million, or 31.7%, from $6.3 million
for the nine months ended September 30, 2006 to $8.3 million for the nine months ended September 30, 2007 related primarily to incremental costs incurred in 2007 including increased personnel costs of $2.2 million, increased professional
fees of $1.1 million, $1.8 million related to the provision for the management participation plan and $0.4 million in expenses related to Travel Main administrative expenses. These increases were partially offset by $3.9 million in non-recurring
transaction bonuses incurred in 2006.

Liquidity and Capital Resources

Our primary sources of liquidity are borrowings under PNAs revolving credit facility and our cash flow from operations. Under the terms of our revolving credit facility we may borrow up to 65% of eligible
inventory and 85% of eligible trade receivables. As of September 30, 2007, we had $172.4 million of availability under the revolving credit facility. The following discussion of the principal sources and uses of cash should be read in
conjunction with our condensed Consolidated Statements of Cash Flows for the periods January 1, 2006 to May 9, 2006 and from May 10, 2006 to September 30, 2006 and nine months ended September 30, 2007 included elsewhere in
this Quarterly Report.

Operating and Investing Activities

Although we do not produce any metal, our financial performance is affected by changes in metal prices. When metal prices rise, the prices at which we are
able to sell our products generally increase over their historical costs; accordingly, our cost of materials sold as a percent of net sales tends to decrease and our working capital (which consists primarily of accounts receivable and inventory)
tends to increase. Conversely, when metal prices fall, our cost of materials sold as a percent of net sales tends to increase and working capital tends to decrease. Our working capital (current assets less current liabilities) increased from $425.8
million at December 31, 2006 to $453.2 million at September 30, 2007 primarily due to an increase in accounts receivable of $25.7 million (including the allowance for doubtful accounts) and decrease in other payables and income taxes
payable of $14.1 million and $8.5 million, respectively. These increases in working capital items were offset by a decrease in inventory of $19.1 million. The increase in accounts receivable was primarily due to the higher level of net sales for the
two months ended September 30, 2007 compared to the two months ended December 31, 2006. The decrease in other payables was primarily the result of: (a) a reduction in accrued interest of $7.1 million due to the semi-annual payment of
interest due September 1, 2007 on the Senior Notes, (b) the payment of $5.3 million in deferred consideration payable, and (c) the payment of bonuses which resulted in a decrease in accrued bonuses of $1.1 million. Income taxes
payable decreased primarily due to the timing of payments at the end of fiscal year 2006 compared to payments made at September 30, 2007. Inventory levels in 2007 have declined in relation to levels on hand at the end of fiscal year 2006 due
primarily to concerted efforts on the part of the Company to increase operating efficiencies and reduce inventory on hand. These efforts resulted in 24,000 fewer tons of product on hand at September 30, 2007 compared to December 31, 2006.

Changes in steel prices also affect our liquidity because of the time difference between our payment for raw materials and collection of
cash from our customers. We tend to pay for replacement materials (which are more expensive when steel prices are rising) over a shorter period than the time it typically takes to collect our accounts receivable after the sale of our products. As a
result, when metal prices are rising, we tend to draw more on PNAs revolving credit facility to cover the cash flow cycle from material purchase to cash collection. This cash requirement for working capital is higher in periods when we are
increasing inventory quantities. When metal prices fall, we can replace our inventory at lower cost and, thus, generally do not need to access PNAs revolving credit facility as much to cover the cash flow cycle. We believe our cash flow from
operations, supplemented by the cash available under PNAs revolving credit facility, will provide sufficient liquidity to meet the challenges and obligations we face during the current metal price environment.

We have recently implemented several expansion projects to increase capacity at certain of our facilities and we are in the planning phase of additional
projects. We are in the planning phase of four additional expansion



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PNA GROUP, INC.



projects that are expected to increase our capacity beginning in 2008. We are confident that we will be able to finance such expansion projects in the future
from operating cash flows, and if necessary, we expect to have borrowing capacity under PNAs revolving credit agreement or to obtain other financing as needed to implement future planned projects.

During the periods January 1, 2006 to May 9, 2006 and from May 10, 2006 to September 30, 2006, net cash used by operating activities
was $23.1 million and $59.0 million, respectively, which, combined, total $82.0 million net cash used by operations for the nine months ended September 30, 2006. Net income for the nine months ended September 30, 2006 (Combined) totaled
$45.6 million, of which $7.7 million related to non-cash depreciation and amortization charges. Therefore, the difference between net income plus depreciation and amortization and net cash used by operations for the nine months ended
September 30, 2006 was $135.3 million, which primarily related to cash used for increases in inventory of $133.2 million and an increase in accounts receivable of $52.1 million. Inventory levels increased due to a somewhat overstocked inventory
position in 2006 caused by extended lead times from steel mills, growth of our operations in 2006 and increases in the market prices of steel over the prior year. The increase in accounts receivable was primarily due to the higher level of net sales
for the two months ended September 30, 2007 compared to the two months ended December 31, 2006. These uses of cash were offset by cash provided as a result of an increase in accounts payable of $38.5 million and decrease in other assets of
$10.2 million.

Net cash used in investing activities was $2.5 million for the period January 1, 2006 to May 9, 2006 related to
purchases of property, plant and equipment. Net cash used in investing activities was $314.2 million for the period May 10, 2006 to September 30, 2006 of which $261.6 million related to the acquisition of PNA and $53.7 million related to
the acquisition of MSC.

During the nine months ended September 30, 2007, net cash provided by operating activities was $9.7 million.
Net income for the period was $23.0 million, of which $9.6 million related to non-cash depreciation and amortization charges. Therefore, the difference between net income plus depreciation and amortization and net cash used in operations for the
nine months ended September 30, 2007 was $ 22.9 million, which primarily related to an increase in accounts receivable of $26.7 million and decreases in accruals, income tax payable and accrued pension costs of $9.8 million, $9.4 million
and $1.5 million, respectively. The changes in these working capital items were partially offset by decreases in inventory of $19.1 million and an increase in net payables to affiliates of $3.7 million. The increase in accounts receivable was
primarily related to increased sales levels in the second quarter of 2007 compared to the fourth quarter of 2006. Inventory levels in 2007 have declined in relation to levels on hand at the end of fiscal year 2006 due primarily to concerted efforts
on the part of the Company to increase operating efficiencies and reduce inventory on hand. These efforts resulted in 24,000 fewer tons of product on hand at September 30, 2007 compared to December 31, 2006. The change in accruals
primarily relates to the payment of interest on the Senior Notes resulting in a decrease in accrued interest of $7.1 million and the decrease in accrued pension costs is primarily related to the freezing of the SERP plan in the first quarter of
2007. Income taxes payable decreased primarily due to the timing of payments at the end of fiscal year 2006 compared to payments made at September 30, 2007. The increase in amounts owed to affiliates was primarily due to federal tax relief on
interest paid by PNA Intermediate.

Net cash used in investing activities was $15.9 million for the nine months ended September 30,
2007, of which $10.6 million related to purchases of property, plant and equipment and $5.3 million related to the payment of deferred consideration to the former owner of MSC.

Financing Activities

Net cash
provided by financing activities was $24.8 million for the period January 1, 2006 to May 9, 2006, primarily from term loan proceeds of $85.0 million offset by payments on the revolving credit facility of $54.5 million, $3.4 million in
deferred financing costs incurred related to PNAs senior secured credit facility and $2.0 million in dividends paid. Net cash provided by financing activities was $376.4 million for the period May 10, 2006 to September 30, 2006,
primarily from the proceeds of the issuance of the Senior Notes of $250.0 million, net proceeds of borrowings under PNAs revolving credit facility of $163.3 million, the issuance of $62.5 million in common stock to Platinum in connection with
the Platinum Acquisition, and net proceeds of the Travel Main mortgage loans of $47.7 million which were offset by the payoff of the term loan of $85.0 million, dividends paid to PNAG Holding of $52.0 million and payment of financing costs incurred
in association with Senior Notes and the amended and restated revolving credit facility totaling $8.6 million.

Net cash provided by
financing activities was $6.5 million for the nine months ended September 30, 2007 which includes net proceeds on the revolving credit facility of $23.6 million offset by dividends totaling $14.0 million paid to PNA Intermediate and PNAG
Holding, deferred financing costs incurred of $1.4 million and dividends paid to minority interest holders of $1.3 million.



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Senior Notes.On August 15,
2006, the Company issued $250 million aggregate principal amount of its 103/4% Senior Notes due 2016 (the
Senior Notes or PNA Offering). Interest on the Senior Notes accrues at a rate of 103/4% per year, payable semi-annually in cash in arrears on March 1 and September 1 of each year, the first payment being made March 1, 2007. The Senior Notes mature on September 1, 2016.

The indenture governing the Senior Notes contains restrictions on dividends payable by PNA to PNA Intermediate. These
restrictions are based on our consolidated net income and other factors including provisions that the Companys performance meets certain operating ratio covenants, although PNA may pay dividends not in excess of $15 million in the aggregate
that are not subject to such restrictions. The restriction on payment of dividends by PNA to PNA Intermediate results in a restriction on our retained earnings. Approximately $33.1 million of PNAs retained earnings were unrestricted, and
therefore available for payment of dividends, as of September 30, 2007.

The Senior Notes include registration rights under a
registration rights agreement whereby in the event PNA does not meet certain timetables for registering the Senior Notes with the SEC, PNA will be required to pay additional interest in certain circumstances. The registration rights agreement
relating to the Senior Notes required that an initial registration statement be filed with the SEC within 270 days of issuance of the Senior Notes, and the registration statement must become effective within 390 days of issuance. PNA filed the
initial registration statement on Form S-4 with the SEC on May 14, 2007 and subsequently filed amendment no. 1 and no. 2 on July 31, 2007 and August 8, 2007, respectively. The SEC declared the registration statement effective on
August 9, 2007.

For further discussion of the Senior Notes, please see the section of the Companys Registration Statement on
Form S-4 entitled Managements Discussion and Analysis of Financial Condition and Results of Operations  Financing Activities.

Senior Secured Credit Facilities. In connection with the Platinum Acquisition, on May 9, 2006 we amended and restated our senior secured credit agreement. Our senior secured credit facilities
provide for senior secured financing of up to approximately $460 million, of which $85 million was a term loan facility that was permanently repaid with the proceeds of the PNA Offering. As of September 30, 2007, $188.0 million was outstanding
under the revolving credit facility.

The loans are charged interest on a base rate method or a LIBOR method, at the option of the Company,
as defined in the credit agreement. Interest on the loans is paid on a monthly or quarterly basis, depending on whether the loan is under the base rate method or LIBOR method. The interest rate per annum applicable to revolver loans made or
outstanding as base rate loans is equal to the base rate in effect, and the interest rate per annum applicable to revolver loans made or outstanding as LIBOR loans is equal to the relevant adjusted LIBOR rate for the applicable interest period
selected by us, in each case plus an applicable margin percentage.

On the first business day of each month we are required to pay each
lender a commitment fee in respect of any unused commitments under the revolving loan facility.

Our senior secured credit facilities
require, subject to certain conditions, that we comply with a consolidated fixed charge coverage test. In addition, our senior secured credit facilities include certain customary negative covenants and contain certain customary representations and
warranties, affirmative covenants and events of default.

We believe that our cash flow from operations, together with borrowings under our
revolving credit facility, will enable us to meet our liquidity requirements for at least the next twelve months.

For further discussion
of the Senior Secured Credit Facilities, please see the section of the Companys Registration Statement on Form S-4 entitled Managements Discussion and Analysis of Financial Condition and Results of Operations  Financing
Activities.



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Related Parties

PNA paid cash dividends of $2.0 million to Preussag North America, Inc. during the period January 1, 2006 to May 9, 2006. Dividends paid to PNAG Holding during the period May 9, 2006 to
December 31, 2006 consisted of the non-cash real estate transfer valued at $34.5 million and cash dividends of $7.1 million plus $54.2 million representing the return of capital received at the time of the acquisition of MSC. Dividends paid to
our parent totaled $14.0 million during the nine months ended September 30, 2007.

The Company paid Platinum $3.8 million during the
period May 10, 2006 to September 30, 2006 and $1.3 million and $3.8 million during the three and nine months ended September 30, 2007, respectively, related to its annual monitoring fee pursuant to the Corporate Advisory Services
Agreement with Platinum.

Retirement Benefits and Compensation Plans

The Company has two noncontributory, defined benefit pension plans and a nonqualified, unfunded retirement plan (together, the Plans). Of the noncontributory, defined benefit pension plans, one covers
substantially all Feralloy nonunion employees who have attained age 21 and the other covers all union employees at Feralloys Midwest, Southern and St. Louis divisions. Feralloy also has a nonqualified, unfunded retirement plan (the
Supplemental Executive Retirement Plan, or SERP) to provide supplemental benefits to certain of its executive employees. To provide for the SERP, Feralloy purchased Company-owned life insurance contracts on the related
employees.

Effective December 31, 2006, the Company adopted a change to freeze the benefits under the Companys Non-Union
Pension Plan, a defined benefit pension plan and instituted a new defined contribution plan effective January 1, 2007. On October 30, 2006, Feralloys Board of Directors authorized a change to freeze the benefits under its SERP.

Implementation of the changes to the SERP was effective March 1, 2007 to allow for appropriate notice to affected employees and
provide time necessary for essential actuarial studies and analysis with respect to the design change and preparation of operative documents. As a result, in accordance with Statement of Financial Accounting Standard No. 88, Employers
Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits, the Company recognized a curtailment gain of $2.2 million in the fourth quarter of fiscal year 2006 related to freezing benefits of its
Non-Union Pension Plan and $0.7 million during the nine months ended September 30, 2007 related to freezing benefits of its SERP.

Effective May 17, 2007, we adopted a Participation Agreement for the purpose of providing incentive compensation to our key employees. The incentive compensation is awarded in the form of non-equity performance units, the value of
which is related to the appreciation in our value. The performance units are payable to participants upon the occurrence of a qualifying event defined as (1) a sale of any of our common stock by Platinum (other than a sale to our
affiliates), (2) the consummation of a public offering of our stock owned by Platinum or its affiliates or (3) the payment of cash dividends to Platinum by us (other than dividends arising out of or relating to any real estate owned by us
or our subsidiaries as of the effective date of the Participation Plan). The participants initially vested 25% at the inception of the Participation Plan and vest an additional 25% each year over the succeeding three years beginning October 1,
2007. Any vested amounts paid under the Participation Plan will be treated as compensation at the PNA level. The Participation Plan expires December 31, 2017, and all performance units terminate upon the termination or expiration of the
Participation Plan. Subject to certain exceptions, upon a termination of employment, all performance units granted to a participant will be forfeited.



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Commitments, Contingencies and Contractual Obligations

During the third quarter of fiscal year 2007, the Company determined that the quality of certain material it received primarily during the second quarter
of fiscal year 2007 from steel traders dealing with certain foreign suppliers is inconsistent with the mills certification of the steel specifications that accompanied such material. The Company is currently in a dispute with such steel
traders regarding the quality of specific orders of steel purchased from these suppliers. The Company established a reserve of $0.6 million related to the value of such inventory on hand as of September 30, 2007 representing the difference
between the carrying value of the inventory and its estimated market value. If market conditions are less favorable than those projected by the Company, additional charges to increase this reserve may be required

With regard to potential claims against the Company related to the quality of such steel previously sold, management believes there may be limited
ability of the Company to ultimately recover from the foreign suppliers to the extent that any valid claims are made against the Company for which the Company does not carry, or does not carry sufficient, insurance coverage. As the Company,
consistent with industry practice, does not generally perform independent testing of the steel it receives from mills with mill certifications, we are currently evaluating the extent to which we may have received similarly non-conforming steel from
foreign suppliers through various steel traders in prior periods. Management is not able at this time to determine what, if any, effect these events may have on the Companys consolidated financial position or consolidated results of operations
in the future.

We are also involved in several other legal proceedings, claims and litigation arising in the ordinary course of business.
Management presently believes that the outcome of each such pending proceeding or claim will not have a material adverse effect on the consolidated financial position of the Company or on the consolidated results of operations. Should any losses be
sustained in connection with any proceeding or claim in excess of provisions, the amount will be charged to income in the future.

We had
purchase commitments of approximately $232.3 million for inventory at September 30, 2007. These commitments were made to assure the Company a normal supply of stock and, in managements opinion, will be sold to obtain normal profit
margins.

The consolidated group leases real estate, office space, data processing equipment, automobiles and trucks. Several of the leases
require the lessee to pay taxes, maintenance and other operating expenses.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Recent Accounting
Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standard No. 157, Fair Value
Measurements, or SFAS 157, which establishes a framework for measuring fair value and expands disclosure about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements.
This Statement does not require any new fair value measurements. The application of this Statement relates to the definition of fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements. The
definition of fair value retains the exchange price notion and clarifies that the exchange price is the price in an orderly transaction between market participants. The definition focuses on the price that would be received to sell the asset or paid
to transfer the liability. SFAS 157 establishes a fair value hierarchy from observable market data as the highest level to fair value based on an entitys own fair value assumptions as the lowest level. Adoption is required as of the beginning
of the first fiscal year that begins after November 15, 2007. Early adoption is permitted. The provisions of this Statement should be applied prospectively as of the beginning of the fiscal year in which it is initially applied. The Company is
in the process of evaluating what, if any, impact the adoption of SFAS 157 may have on its consolidated financial statements.

In
February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, or SFAS 159. SFAS 159 is effective for fiscal years beginning
after November 15, 2007. SFAS 159 permits companies to measure financial instruments and certain other assets and liabilities at fair value on an instrument by instrument basis. SFAS 159 also establishes presentation and disclosure
requirements to facilitate comparisons between companies that select different measurement attributes for similar types of assets and liabilities. The Company is in the process of evaluating what, if any, effect adoption of SFAS 159 may
have on its financial statements when SFAS 159 is adopted effective January 1, 2008.



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|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

During the past several years, the
base price of carbon steel has fluctuated significantly. Declining prices could reduce our operating income levels which are lower than our historical levels. Higher levels of inventory at steel service centers and end-use customers could cause
competitive pressures which could also compress operating income. Steel prices began increasing at the end of the third quarter of 2005 and remained relatively level during the fourth quarter of 2005 and the first quarter of 2006. Steel prices began
increasing during the second quarter of 2006. While we have been successful in the past in passing on producers price increases and surcharges to our customers, there is no guarantee that we will be able to pass on price increases to our
customers during 2007 and beyond. The possibility also exists that steel prices may decrease at some point during 2007 which could result in lower sales, gross margin and income.

We are exposed to the impact of interest rate changes and fluctuating steel prices. In September 2003 PNA entered into an interest rate swap agreement
with its secured lender for a notional $75 million derivative that swapped the floating LIBOR rate on its senior secured credit facilities with a fixed rate. This interest rate swap agreement expired in September 2006 and was replaced with a three
year fixed to floating rate notional $50 million derivative. The fair market value of the interest rate swap is the estimated amount that PNA would receive or pay to terminate the swap agreements at any point in time. These agreements also reduce
the impact of changes in interest rates on our floating rate debt. We have not entered into any steel commodity hedge transactions for speculative purposes or otherwise.



|ITEM 4T. | CONTROLS AND PROCEDURES
|-------- | -----------------------

Under the supervision and with the participation of the Companys
management, including the Companys Chief Executive Officer and Chief Financial Officer, the Company carried out an evaluation as of September 30, 2007 of the effectiveness of the design and operation of the Companys disclosure
controls and procedures pursuant to and as defined in Rule 13a-15(e) or 15d-15(e) of the Securities Act of 1934, as amended. Based upon that evaluation, our management including our Chief Executive Officer and the Chief Financial Officer
concluded that, as of the end of the period covered by this Quarterly Report, the Companys disclosure controls and procedures were effective to ensure that information required to be disclosed in our reports that we file with the SEC is
(i) recorded, processed, summarized and reported, within the time periods specified in the SECs rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial
Officer, to allow timely decisions regarding required disclosure.

As described below, the Company implemented new controls and procedures
during the period covered in this report that materially affected its internal control over financial reporting.

Remediation of
Material Weaknesses

In conjunction with the review of the consolidated financial statements for the period ended September 30,
2006, our independent registered public accounting firm issued a letter, dated January 29, 2007, to our Board of Directors identifying material weaknesses in the design and operation of internal control over financial reporting. This letter
elaborates on a communication initially reported to us by our independent registered public accounting firm on July 19, 2006, in which we were informed that during their review of our consolidated financial statements as of and for the period
ended March 31, 2006, material weaknesses had been identified. A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected. The detail and nature of these are as follows:

The following was
reported July 19, 2006:



| |  |  | Accounting and finance resources: The Company had not maintained a sufficient complement of personnel with an appropriate level of accounting knowledge, experience
and training in financial controls, the application of generally accepted accounting principles, and a general understanding of reporting requirements for SEC registrants commensurate with our financial reporting requirements. The Company determined
that, as of March 31, 2007, we had remediated this material weakness;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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The following were reported January 29, 2007:



| |  |  | Financial control environment: The Company did not maintain fully documented and effectively communicated accounting policies and procedures throughout the
organization. The Company determined, that as of March 31, 2007, we had remediated this material weakness; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Period-end close and financial reporting: The Company did not maintain effective controls over certain period-end financial close and reporting processes. This
includes failure to follow an effective monthly/quarterly financial close and consolidation schedule incorporating critical and realistic timing, pre-established analytics, and comprehensive corporate review. The control deficiency resulted in
errors in the statements of cash flows and equity that necessitated restatements of quarterly financials in 2006. The Company has determined that as of September 30, 2007, we have remediated this material weakness.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following actions, among others, were taken as remediation measures to address the material weaknesses identified above:



| |  |  | A corporate controller has been hired by us, and we have contracted with outside consulting resources in the form of SEC and tax advisory services. In April 2007,
we hired William S. Johnson, Senior Vice President of Finance, a former chief financial officer of an SEC reporting company in the metals service center industry. We have also engaged a national financial services consulting company specializing in
internal auditing and Sarbanes-Oxley Section 404 compliance services; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | During the third quarter of 2007, we implemented additional procedures to more proficiently execute our period end close process. Procedures implemented by
management included: implementation of reporting standards and more timely deadlines at our subsidiary companies as well as the provision of subsidiary certifications; development of documentation and retention guidelines; implementation of
financial disclosure checklists; and establishment of a disclosure committee to monitor the period-end close process, review the financial disclosure checklists and evaluate current operations for potential disclosure items or other matters that
would affect financial reporting.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Efforts to remediate the material weaknesses related to control deficiencies in our
period end close and financial reporting processes have been ongoing throughout 2007. A period of time was required to formulate and execute these steps which were implemented primarily in June and July 2007. As noted above, management concluded
that all such remediation efforts were completed as of September 30, 2007.

We plan to continue to work closely with our consultants
and financial management to monitor ongoing adherence with disclosure controls and procedures and to provide the resources necessary to ensure compliance with the requirements of the Securities and Exchange Act of 1934, as amended, and
Section 404 of the Sarbanes-Oxley Act of 2002. We may, however, encounter unexpected difficulties with regard to the maintenance of such disclosure controls and procedures, and the aforementioned material weaknesses may recur or management may
identify other material weaknesses in the future.



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PNA GROUP, INC.



PART II  OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

We are currently a party to various claims and legal actions that arise in the
ordinary course of business. We believe such claims and legal actions, individually and in the aggregate, will not have a material adverse effect on our business, financial condition or results of operations.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

During the nine months ended September 30, 2007, there were no material
changes to the risk factors disclosed in the section of the Companys Registration Statement on Form S-4 (Registration No. 333-142896) entitled Risk Factors except as set forth below.

We rely upon our steel suppliers as to the specifications of the steel we purchase from them.

We rely on mill certifications that attest to the specifications of the product received from our suppliers as to the physical and chemical properties of the steel purchased for resale and generally, consistent with
industry practice, do not undertake independent testing of such steel. We generally rely on our customers to notify us of any steel that does not conform to the specifications certified by the mill. We are currently in a dispute with certain steel
traders regarding the quality of specific orders of steel purchased from certain foreign mills and may have unknowingly received such non-conforming product in the past. Although our primary sources of product have been domestic mill suppliers, we
have and will continue to purchase product from foreign steel suppliers. In the event that steel purchased from domestic suppliers is deemed to not meet quality specifications per the mill certifications, we generally have had recourse against these
suppliers for both the cost of the product purchased and possible claims from our customers. However, there is a greater level of risk that similar recourse will not be available to us in the event of claims by our customers related to product
delivered from foreign suppliers that does not meet the specifications per the mill certifications. In these circumstances, we may be at greater risk of loss for claims for which we do not carry, or do not carry sufficient, insurance.



|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.



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PNA GROUP, INC.



|ITEM 6. | EXHIBITS
|------- | --------

The following exhibits are filed herewith:



|              |  |                                                                                                                                                                                                
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibits                                                                                                                                                                        
|              | 
|31.1          |  | Certification of the Companys Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|              | 
|31.2          |  | Certification of the Companys Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|              | 
|32            |  | Certification of the Companys Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.   



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PNA GROUP, INC.



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.

Dated: November 13, 2007



PNA Group, Inc.By:

/s/ Maurice S. Nelson, Jr.Maurice S. Nelson, Jr.Chief Executive Officer and PresidentBy:

/s/ Christopher J. MoretonChristopher J. MoretonChief Financial Officer




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