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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 March 31, 2008

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: 333-146823

PNA INTERMEDIATE HOLDING

CORPORATION

(Exact name of registrant as specified in its charter)



|                                         |  |                    
|---------------------------------------- |  | -------------------
|Delaware                                 |  | 20-8324117         
|(State or other jurisdiction of          |  | (I.R.S. Employer   
|incorporation or organization)           |  | 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, a non-accelerated filer, or a
smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                                              |  |  |  |                             
|--------------------------------------------- |  |  |  | ----------------------------
|Large accelerated filer   ̈                    |  |  |  | Accelerated filer   ̈        
|Non-accelerated filer  x                      |  |  |  | Smaller reporting company   ̈
|(Do not check if a smaller reporting company) |  |  |  |                             

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 May 13, 2008, the registrant had 100 shares of its common stock, $0.01 par
value per share, outstanding.









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##### Table of Contents

PNA INTERMEDIATE HOLDING CORPORATION

TABLE OF CONTENTS



|                               |  |                                                                                                               |  |     
|------------------------------ |  | ------------------------------------------------------------------------------------------------------------- |  | ----
|                               |  |                                                                                                               |  | Page
|PART I  FINANCIAL INFORMATION |  |                                                                                                              
|Item 1.                        |  | Financial Statements                                                                                          |  | 1   
|                               |  |                                                                                                              
|                               |  | Unaudited Condensed Consolidated Balance Sheets as of December 31, 2007 and March 31, 2008                    |  | 1   
|                               |  |                                                                                                              
|                               |  | Unaudited Condensed Consolidated Statements of Income for the three months ended March 31, 2007 and 2008      |  | 2   
|                               |  |                                                                                                              
|                               |  | Unaudited Condensed Consolidated Statement of Stockholders Deficit for the three months ended March 31, 2008 |  | 3   
|                               |  |                                                                                                              
|                               |  | Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2007 and 2008  |  | 4   
|                               |  |                                                                                                              
|                               |  | Notes to Unaudited Condensed Consolidated Financial Statements                                                |  | 5   
|                               |  |                                                                                                              
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                         |  | 18  
|                               |  |                                                                                                              
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                    |  | 28  
|                               |  |                                                                                                              
|Item 4T.                       |  | Controls and Procedures                                                                                       |  | 29  
|                               | 
|PART II  OTHER INFORMATION    |  |                                                                                                              
|Item 1.                        |  | Legal Proceedings                                                                                             |  | 30  
|                               |  |                                                                                                              
|Item 1A.                       |  | Risk Factors                                                                                                  |  | 30  
|                               |  |                                                                                                              
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                   |  | 30  
|                               |  |                                                                                                              
|Item 3.                        |  | Defaults Upon Senior Securities                                                                               |  | 30  
|                               |  |                                                                                                              
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                                           |  | 30  
|                               |  |                                                                                                              
|Item 5.                        |  | Other Information                                                                                             |  | 30  
|                               |  |                                                                                                              
|Item 6.                        |  | Exhibits                                                                                                      |  | 31  



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PART I  FINANCIAL INFORMATION



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

PNA INTERMEDIATE HOLDING CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands of dollars, except share amounts)



|                                                                                             |  |                  |         |   |               |   |         |  
|-------------------------------------------------------------------------------------------- |  | ---------------- | ------- | - | ------------- | - | ------- | -
|                                                                                             |  | December 31,2007 |         |   | March 31,2008 |  
|Assets                                                                                       |  |                  |         |   |               |   |         |  
|Current assets                                                                               |  |                  |         |   |               |   |         |  
|Cash and cash equivalents                                                                    |  | $                | 15,471  |   |               | $ | 11,564  |  
|Restricted cash                                                                              |  |                  | 2,096   |   |               |   | 1,660   |  
|Accounts receivable, less allowance for doubtful accounts of $4,985 and $5,414, respectively |  |                  | 185,932 |   |               |   | 236,593 |  
|Inventories, net                                                                             |  |                  | 392,110 |   |               |   | 452,102 |  
|Receivables from affiliates                                                                  |  |                  | 2,662   |   |               |   | 2,749   |  
|Other current assets                                                                         |  |                  | 18,541  |   |               |   | 18,164  |  
|                                                                                             |  |                  |         |   |               |   |         |  
|Total current assets                                                                         |  |                  | 616,812 |   |               |   | 722,832 |  
|Property, plant and equipment, net                                                           |  |                  | 72,104  |   |               |   | 88,796  |  
|Goodwill                                                                                     |  |                  | 32,667  |   |               |   | 32,667  |  
|Intangible assets, net                                                                       |  |                  | 34,380  |   |               |   | 32,127  |  
|Deferred financing costs, net                                                                |  |                  | 15,466  |   |               |   | 15,206  |  
|Equity investments                                                                           |  |                  | 8,941   |   |               |   | 9,600   |  
|Other noncurrent assets                                                                      |  |                  | 2,215   |   |               |   | 2,644   |  
|                                                                                             |  |                  |         |   |               |   |         |  
|Total assets                                                                                 |  | $                | 782,585 |   |               | $ | 903,872 |  
|                                                                                             |  |                  |         |   |               |   |         |  
|Liabilities and Stockholders Deficit                                                        |  |                  |         |   |               |   |         |  
|Current liabilities                                                                          |  |                  |         |   |               |   |         |  
|Accounts payable                                                                             |  | $                | 136,218 |   |               | $ | 154,801 |  
|Payables to affiliates                                                                       |  |                  | 2,358   |   |               |   | 2,297   |  
|Other payables                                                                               |  |                  | 44,653  |   |               |   | 35,511  |  
|Income taxes payable                                                                         |  |                  | 167     |   |               |   | 7,442   |  
|                                                                                             |  |                  |         |   |               |   |         |  
|Total current liabilities                                                                    |  |                  | 183,396 |   |               |   | 200,051 |  
|Long term debt, net of current maturities                                                    |  |                  | 678,940 |   |               |   | 766,705 |  
|Deferred income taxes                                                                        |  |                  | 788     |   |               |   | 6,329   |  
|Accrued pension costs                                                                        |  |                  | 3,316   |   |               |   | 3,063   |  
|                                                                                             |  |                  |         |   |               |   |         |  
|Total liabilities                                                                            |  |                  | 866,440 |   |               |   | 976,148 |  
|                                                                                             |  |                  |         |   |               |   |         |  
|Commitments and contingencies                                                                |  |                  |        |   |               |   |        |  
|Minority interest                                                                            |  |                  | 1,483   |   |               |   | 1,915   |  
|Stockholders deficit                                                                        |  |                  |         |   |               |   |         |  
|Common stock: $.01 par value - 1,000 shares authorized; 100 shares issued and outstanding    |  |                  |        |   |               |   |        |  
|Additional paid-in capital                                                                   |  |                  |        |   |               |   |        |  
|Accumulated deficit                                                                          |  |                  | (85,546 | ) |               |   | (74,399 | )
|Accumulated other comprehensive income                                                       |  |                  | 208     |   |               |   | 208     |  
|                                                                                             |  |                  |         |   |               |   |         |  
|Total stockholders deficit                                                                  |  |                  | (85,338 | ) |               |   | (74,191 | )
|                                                                                             |  |                  |         |   |               |   |         |  
|Total liabilities and stockholders deficit                                                  |  | $                | 782,585 |   |               | $ | 903,872 |  
|                                                                                             |  |                  |         |   |               |   |         |  

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



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PNA INTERMEDIATE HOLDING CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands of dollars)



|                                                        |  |                              |         |   |      |   |         |  
|------------------------------------------------------- |  | ---------------------------- | ------- | - | ---- | - | ------- | -
|                                                        |  | Three Months Ended March 31, |        
|                                                        |  | 2007                         |         |   | 2008 |  
|Net sales                                               |  | $                            | 407,322 |   |      | $ | 474,037 |  
|Cost and expenses:                                      |  |                              |         |   |      |   |         |  
|Cost of materials sold (exclusive of items shown below) |  |                              | 335,536 |   |      |   | 384,081 |  
|Processing                                              |  |                              | 8,137   |   |      |   | 9,924   |  
|Distribution                                            |  |                              | 5,591   |   |      |   | 6,214   |  
|Selling, general and administrative                     |  |                              | 28,622  |   |      |   | 33,379  |  
|Amortization of intangibles                             |  |                              | 1,391   |   |      |   | 2,388   |  
|Depreciation                                            |  |                              | 1,580   |   |      |   | 1,813   |  
|                                                        |  |                              |         |   |      |   |         |  
|Total operating costs and expenses                      |  |                              | 380,857 |   |      |   | 437,799 |  
|                                                        |  |                              |         |   |      |   |         |  
|Operating income                                        |  |                              | 26,465  |   |      |   | 36,238  |  
|Interest expense                                        |  |                              | 13,596  |   |      |   | 17,253  |  
|Income from equity investments                          |  |                              | (453    | ) |      |   | (658    | )
|                                                        |  |                              |         |   |      |   |         |  
|Income before minority interest and income tax expense  |  |                              | 13,322  |   |      |   | 19,643  |  
|Minority interest                                       |  |                              | 871     |   |      |   | 1,132   |  
|                                                        |  |                              |         |   |      |   |         |  
|Income before income tax expense                        |  |                              | 12,451  |   |      |   | 18,511  |  
|Income tax expense                                      |  |                              | 4,902   |   |      |   | 7,503   |  
|                                                        |  |                              |         |   |      |   |         |  
|Net income                                              |  | $                            | 7,549   |   |      | $ | 11,008  |  
|                                                        |  |                              |         |   |      |   |         |  

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



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PNA INTERMEDIATE HOLDING CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS DEFICIT

THREE MONTHS ENDED MARCH 31, 2008

(in thousands of dollars, except shares)



|                                                    |        |              |       |                          |   |                    |   |   |                                     |   |         |   |  |   |     |  |   |         |  
|--------------------------------------------------- | ------ | ------------ | ----- | ------------------------ | - | ------------------ | - | - | ----------------------------------- | - | ------- | - |  | - | --- |  | - | ------- | -
|                                                    |        | Common Stock |       | AdditionalPaid-inCapital |   | AccumulatedDeficit |   |   | AccumulatedOtherComprehensiveIncome |   | Total   |  
|                                                    |        |              |       |                         
|                                                    |        |              |       |                         
|                                                    | Shares |              | Value |                          |   |                    |  
|Balances at December 31, 2007                       |        | 100          |       | $                        |  |                    | $ |  |                                     | $ | (85,546 | ) |  | $ | 208 |  | $ | (85,338 | )
|Net income                                          |        |             |       |                          |  |                    |   |  |                                     |   | 11,008  |   |  |   |    |  |   | 11,008  |  
|Dividends paid                                      |        |             |       |                          |  |                    |   |  |                                     |   | (219    | ) |  |   |    |  |   | (219    | )
|Net income of consolidated variable interest entity |        |             |       |                          |  |                    |   |   |                                     |   | 358     |   |  |   |    |  |   | 358     |  
|                                                    |        |              |       |                          |   |                    |   |   |                                     |   |         |   |  |   |     |  |   |         |  
|Balances at March 31, 2008                          |        | 100          |       | $                        |  |                    | $ |  |                                     | $ | (74,399 | ) |  | $ | 208 |  | $ | (74,191 | )
|                                                    |        |              |       |                          |   |                    |   |   |                                     |   |         |   |  |   |     |  |   |         |  

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



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PNA INTERMEDIATE HOLDING CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of dollars)



|                                                                             |  |                              |          |   |      |   |         |  
|---------------------------------------------------------------------------- |  | ---------------------------- | -------- | - | ---- | - | ------- | -
|                                                                             |  | Three Months Ended March 31, |         
|                                                                             |  | 2007                         |          |   | 2008 |  
|Cash flows from operating activities                                         |  |                              |          |   |      |   |         |  
|Net income                                                                   |  | $                            | 7,549    |   |      | $ | 11,008  |  
|Adjustments to reconcile net income to net cash used in operating activities |  |                              |          |   |      |   |         |  
|Depreciation and amortization                                                |  |                              | 2,971    |   |      |   | 4,201   |  
|Amortization of deferred financing costs and original issue discount         |  |                              |         |   |      |   | 535     |  
|Provision for bad debts                                                      |  |                              | 230      |   |      |   | 554     |  
|Deferred income taxes                                                        |  |                              | (103     | ) |      |   | (412    | )
|Gain on disposal of fixed assets                                             |  |                              |         |   |      |   | (16     | )
|Minority interests                                                           |  |                              | 871      |   |      |   | 1,132   |  
|Income from equity investments                                               |  |                              | (453     | ) |      |   | (658    | )
|Dividends received from equity investments                                   |  |                              | 315      |   |      |   |        |  
|(Increase) decrease in                                                       |  |                              |          |   |      |   |         |  
|Accounts receivable                                                          |  |                              | (12,966  | ) |      |   | (35,661 | )
|Receivables from/payables to affiliates                                      |  |                              | 536      |   |      |   | (148    | )
|Inventories                                                                  |  |                              | 15,649   |   |      |   | (26,932 | )
|Other assets                                                                 |  |                              | 4,176    |   |      |   | 1,106   |  
|(Decrease) increase in                                                       |  |                              |          |   |      |   |         |  
|Payables                                                                     |  |                              | (5,497   | ) |      |   | 8,379   |  
|Accruals                                                                     |  |                              | (14,178  | ) |      |   | (13,909 | )
|Income tax payable                                                           |  |                              | (5,002   | ) |      |   | 8,024   |  
|Accrued pension cost                                                         |  |                              | (1,033   | ) |      |   | (253    | )
|                                                                             |  |                              |          |   |      |   |         |  
|Net cash used in operating activities                                        |  |                              | (6,935   | ) |      |   | (43,050 | )
|                                                                             |  |                              |          |   |      |   |         |  
|Cash flows from investing activities                                         |  |                              |          |   |      |   |         |  
|Increase in restricted cash                                                  |  |                              | (913     | ) |      |   | 436     |  
|Purchases of property, plant and equipment                                   |  |                              | (4,631   | ) |      |   | (7,513  | )
|Proceeds from disposals of property, plant and equipment                     |  |                              |         |   |      |   | 30      |  
|Acquisition of Sugar Steel, net of cash acquired                             |  |                              |         |   |      |   | (40,760 | )
|                                                                             |  |                              |          |   |      |   |         |  
|Net cash used in investing activities                                        |  |                              | (5,544   | ) |      |   | (47,807 | )
|                                                                             |  |                              |          |   |      |   |         |  
|Cash flows from financing activities                                         |  |                              |          |   |      |   |         |  
|Proceeds from Floating Rate Note issue                                       |  |                              | 167,025  |   |      |   |        |  
|Net proceeds on revolving credit facility                                    |  |                              | 15,367   |   |      |   | 87,902  |  
|Other long-term debt                                                         |  |                              | (7       | ) |      |   | (115    | )
|Deferred financing costs                                                     |  |                              | (4,329   | ) |      |   | (275    | )
|Dividend paid to minority interest holders                                   |  |                              | (343     | ) |      |   | (343    | )
|Dividends paid to parent                                                     |  |                              | (165,492 | ) |      |   | (219    | )
|                                                                             |  |                              |          |   |      |   |         |  
|Net cash provided by financing activities                                    |  |                              | 12,221   |   |      |   | 86,950  |  
|                                                                             |  |                              |          |   |      |   |         |  
|Net decrease in cash and cash equivalents                                    |  |                              | (258     | ) |      |   | (3,907  | )
|Cash and cash equivalents at beginning of period                             |  |                              | 3,201    |   |      |   | 15,471  |  
|                                                                             |  |                              |          |   |      |   |         |  
|Cash and cash equivalents at end of period                                   |  | $                            | 2,943    |   |      | $ | 11,564  |  
|                                                                             |  |                              |          |   |      |   |         |  
|Supplemental disclosures of cash flow information:                           |  |                              |          |   |      |   |         |  
|Cash paid during the period for:                                             |  |                              |          |   |      |   |         |  
|Interest                                                                     |  | $                            | 17,818   |   |      | $ | 22,980  |  
|                                                                             |  |                              |          |   |      |   |         |  
|Income taxes                                                                 |  | $                            | 10,060   |   |      | $ | 349     |  
|                                                                             |  |                              |          |   |      |   |         |  

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



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PNA INTERMEDIATE HOLDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands of dollars)



|Note | 1.        Description of Business
|---- | ---------------------------------

Description of Business

PNA Intermediate Holding Corporation (PNA Intermediate) is a holding
company which owns all the outstanding stock of its subsidiary, PNA Group, Inc. (PNA). PNA is a holding company which provides management services to and conducts business through six operating subsidiaries. PNA Intermediate and its
subsidiaries are referred to collectively herein as the Company or Successor Company, we, us or our.

Prior to 2006, PNA was owned by Preussag North America, Inc., a holding company which was the U.S. subsidiary of a German corporation. On May 9, 2006, PNA was acquired by PNA Group Holding Corporation (PNAG Holding,
formerly known as Travel Holding Corporation), an entity controlled by Platinum Equity Capital Partners (Platinum,). 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.

The Company, through its wholly-owned subsidiary, PNA, is 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.

During 2007, PNA operated its business through four operating subsidiaries: Infra-Metals Co. (Infra-Metals), Delta Steel, LP
(Delta), Feralloy Corporation (Feralloy) and Metals Supply Company, Ltd. (Metals Supply or MSC). PNA completed the acquisition of Precision Flamecutting & Steel, L.P. (Precision
Flamecutting) on December 24, 2007, and on March 14, 2008, PNA acquired all the capital interests of Sugar Steel Corporation and its affiliate, S&S Steel Warehouse, Inc. (together referred to as Sugar Steel). See Note
2, Business Combinations for further discussion of the 2007 and 2008 acquisitions.

Basis of Presentation

Reporting Entity

PNA Intermediate was incorporated on
January 25, 2007 as an intermediate holding company for the purpose of issuing the Floating Rate Notes described herein in Note 8, Long-Term Debt. As the incorporation of PNA Intermediate and conveyance of PNAs capital stock from
PNAG Holding constituted a transfer of net assets between entities under common control, PNA Intermediate reports the accounts of PNA at their historical cost as of the date of transfer and reports results of operations for the period in which the
transfer occurs as though the transfer of net assets or exchange of equity interests had occurred May 10, 2006. Additionally, the consolidated financial statements of PNA are presented for periods prior to the date of incorporation of PNA
Intermediate.



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PNA INTERMEDIATE HOLDING CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

(dollars in thousands)



Interim Financial Reporting

In the opinion of management, the interim condensed consolidated financial statements include all adjustments (consisting of only 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 herein. The condensed consolidated balance sheet as of December 31, 2007 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 and of cash flows for the three months ended March 31, 2008 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, 2007 audited consolidated financial statements and notes thereto included in the Companys annual report on Form 10-K as of and for
the year ended December 31, 2007.

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 PNA is the primary
beneficiary (see Variable Interest Entities below) of the variable interest entities. Significant intercompany balances and transactions within the consolidated group have been eliminated in consolidation.

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 $5,738 and $6,322 of undistributed earnings in equity investments at December 31, 2007 and March 31, 2008,
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.

Variable Interest Entities

In August
2006, PNA completed a real estate transfer pursuant to which it effectively transferred 18 of its 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 PNAs continued use of them in its 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 neither PNA Intermediate nor PNA is a party to or a guarantor of the mortgages, in
accordance with FASB Interpretation No. 46(R), PNA holds an implicit variable interest in Travel Mains subsidiaries and is 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.



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PNA INTERMEDIATE HOLDING CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

(dollars in thousands)



The Combined Balance Sheet data of Travel Mains subsidiaries follow.



|                                            |  |                  |         |   |               |   |         |  
|------------------------------------------- |  | ---------------- | ------- | - | ------------- | - | ------- | -
|COMBINED BALANCE SHEET DATA                 | 
|Travel Main Subsidiaries                    | 
|                                            |  | December 31,2007 |         |   | March 31,2008 |  
|Assets                                      |  |                  |         |   |               |   |         |  
|Current assets                              |  | $                | 3,215   |   |               | $ | 3,484   |  
|Property, plant and equipment, net          |  |                  | 26,892  |   |               |   | 26,749  |  
|Other noncurrent assets                     |  |                  |         |   |               |   |         |  
|Deferred tax                                |  |                  | 6,601   |   |               |   | 6,602   |  
|Deferred financing costs                    |  |                  | 1,460   |   |               |   | 1,429   |  
|                                            |  |                  |         |   |               |   |         |  
|Total assets                                |  | $                | 38,168  |   |               | $ | 38,264  |  
|                                            |  |                  |         |   |               |   |         |  
|Liabilities and Stockholders Deficit       |  |                  |         |   |               |   |         |  
|Current liabilities                         |  | $                | 1,290   |   |               | $ | 1,260   |  
|Long term debt, net of current maturities   |  |                  | 48,228  |   |               |   | 47,996  |  
|                                            |  |                  |         |   |               |   |         |  
|Total liabilities                           |  |                  | 49,518  |   |               |   | 49,256  |  
|                                            |  |                  |         |   |               |   |         |  
|Stockholders deficit:                      |  |                  |         |   |               |   |         |  
|Capital                                     |  |                  | 34,667  |   |               |   | 34,502  |  
|Deficit                                     |  |                  | (46,017 | ) |               |   | (45,494 | )
|                                            |  |                  |         |   |               |   |         |  
|Total stockholders deficit                 |  |                  | (11,350 | ) |               |   | (10,992 | )
|                                            |  |                  |         |   |               |   |         |  
|Total liabilities and stockholders deficit |  | $                | 38,168  |   |               | $ | 38,264  |  
|                                            |  |                  |         |   |               |   |         |  

The Combined Statement of Income data of Travel Mains subsidiaries follow.



|                                     |  |                              |       |      |   |      
|------------------------------------ |  | ---------------------------- | ----- | ---- | - | -----
|COMBINED STATEMENT OF INCOME DATA   
|Travel Main Subsidiaries            
|                                     |  | Three Months Ended March 31,
|                                     |  | 2007                         |       | 2008
|Rent                                 |  | $                            | 1,569 |      | $ | 1,608
|Cost and expenses                    |  |                              |       |      |   |      
|Selling, general, and administrative |  |                              | 26    |      |   | 68   
|Depreciation                         |  |                              | 143   |      |   | 143  
|                                     |  |                              |       |      |   |      
|Total costs and expenses             |  |                              | 169   |      |   | 211  
|                                     |  |                              |       |      |   |      
|Operating income                     |  |                              | 1,400 |      |   | 1,397
|Interest expense                     |  |                              | 808   |      |   | 823  
|                                     |  |                              |       |      |   |      
|Income before income tax expense     |  |                              | 592   |      |   | 574  
|Income tax expense                   |  |                              | 234   |      |   | 216  
|                                     |  |                              |       |      |   |      
|Net income                           |  | $                            | 358   |      | $ | 358  
|                                     |  |                              |       |      |   |      



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##### Table of Contents

PNA INTERMEDIATE HOLDING CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

(dollars in thousands)



Significant Accounting Policies

Recently Issued Accounting Standards

In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS
No. 157, Fair Value Measurements (SFAS 157). SFAS 157 establishes a framework for measuring the fair value of assets and liabilities. This framework is intended to provide increased consistency in how fair value determinations
are made under various existing accounting standards which permit, or in some cases require, estimates of fair market value. SFAS 157 also expands financial statement disclosure requirements about a companys use of fair value measurements,
including the effect of such measures on earnings. SFAS 157 is effective for fiscal years beginning after November 15, 2007. The Company adopted the provisions of SFAS 157 related to its financial assets and liabilities effective
January 1, 2008, which did not have a material impact on the Companys consolidated financial position, results of operations or cash flows.

The
fair value hierarchy for disclosure of fair value measurements under SFAS 157 is as follows:



|          |  |                                                                                                 
|--------- |  | ------------------------------------------------------------------------------------------------
|Level 1 - |  | Quoted prices in active markets for identical assets or liabilities                             
|          | 
|Level 2 - |  | Quoted prices for similar assets and liabilities in active markets or inputs that are observable
|          | 
|Level 3 - |  | Inputs that are unobservable (for example cash flow modeling inputs based on assumptions)       

The following table summarizes assets and liabilities measured at fair value on a recurring basis at
March 31, 2008, as required by SFAS 157:



|                   |  |         |   |         |   |         |  |   |  
|------------------ |  | ------- | - | ------- | - | ------- |  | - | -
|                   |  | Level 1 |   | Level 2 |   | Level 3
|Assets             |  | $       |  |         | $ |        |  | $ | 
|                   |  |         |   |         |   |         |  |   |  
|Liabilities        |  |         |   |         |   |         |  |   |  
|Interest rate swap |  | $       |  |         | $ | 1,978   |  | $ | 

See Note 16, Derivative Financial Instruments for further discussion of the interest rate swaps and
determination of their fair value.

In February 2008, the FASB issued FSP 157-1 and 157-2. FSP 157-1 amends SFAS 157 to exclude
SFAS No. 13, Accounting for Leases, (SFAS 13) and its related interpretive accounting pronouncements that address leasing transactions, while FSP 157-2 delays the effective date of the application of
SFAS 157 to fiscal years beginning after November 15, 2008 for all nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. Non-recurring
nonfinancial assets and nonfinancial liabilities include those measured at fair value in goodwill impairment testing, indefinite lived intangible assets measured at fair value for impairment testing, asset retirement obligations initially measured
at fair value, and those assets and liabilities initially measured at fair value in a business combination.

In February 2007, the FASB issued SFAS
No. 159, The Fair Value Option for Financial Assets and Financial Liabilitiesincluding an amendment to FASB Statement No. 115, (SFAS 159), which permits entities to choose to measure many financial instruments and certain
other items at fair value that are not currently required to be measured at fair value. We adopted SFAS 159 as of January 1, 2008. The adoption of SFAS 159 did not have a material impact on the Companys consolidated financial position,
results of operations or cash flows.



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##### Table of Contents

PNA INTERMEDIATE HOLDING CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

(dollars in thousands)



In December 2007, the FASB issued Statement of Financial Accounting Standards (FAS) No. 141 (revised
2007), Business Combinations (FAS 141(R)) which replaces FAS No.141, Business Combination. FAS 141(R) retains the underlying concepts of FAS 141 in that all business combinations are still required to be accounted for at fair value under
the acquisition method of accounting but FAS 141(R) changed the method of applying the acquisition method in a number of significant aspects. FAS 141(R) is effective on a prospective basis for all business combinations for which the acquisition date
is on or after the beginning of the first annual period subsequent to December 15, 2008, with the exception of the accounting for valuation allowances on deferred taxes and acquired tax contingencies. FAS 141(R) amends FAS 109 such that adjustments
made to valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to the effective date of FAS 141(R) would also apply the provisions of FAS 141(R). Early adoption is not allowed. The
provisions of FAS 141R will only impact the Company if it is a party to a business combination after the pronouncement has been adopted.

In December 2007,
the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB 51 (FAS 160)). FAS 160 amends ARB 51 to establish new standards that will govern the
accounting for and reporting of (1) noncontrolling interest in partially owned consolidated subsidiaries and (2) the loss of control of subsidiaries. FAS 160 is effective on a prospective basis for all fiscal years, and interim periods within those
fiscal years beginning, on or after December 15, 2008, except for the presentation and disclosure requirements, which will be applied retrospectively. Early adoption is not allowed. The Company is currently in the process of evaluating what, if any,
impact FAS 160 will have on its financial condition, results of operation and cash flows.

In February 2008, the FASB issued SFAS No. 161
Disclosures about Derivative Instruments and Hedging Activities  an amendment of FASB Statement No. 133 (SFAS 161), which requires enhanced disclosures about derivative and hedging activities. Companies will be required
to provide enhanced disclosures about (a) how and why a company uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and related interpretations, and (c) how
derivative instruments and related hedged items affect the companys financial position, financial performance, and cash flows. SFAS 161 is effective for financial statements issued for fiscal and interim periods beginning after
November 15, 2008. Accordingly, the Company will ensure that it meets the enhanced disclosure provisions of SFAS 161 upon the effective date thereof.



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##### Table of Contents

PNA INTERMEDIATE HOLDING CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

(dollars in thousands)



|Note | 2.        Business Combinations
|---- | -------------------------------

2007 Acquisition

Precision Flamecutting

Effective December 24, 2007, PNA completed the acquisition of Precision Flamecutting pursuant to which PNA acquired all outstanding interests in the partnership for
cash consideration of $47,063 paid at closing to the former owners, costs associated with the transaction of $200 and refinancing of $7,325 of Precision Flamecuttings then existing indebtedness. The acquisition was financed through additional
borrowings under PNAs revolving credit facility of $54,388. The purchase agreement provided for a holdback of $4,706 of the purchase price which is currently held in escrow to fund any indemnity claim by PNA as well as a working capital
adjustment that will be settled in 2008 which the Company anticipates will result in a receivable.

Precision Flamecutting, a Texas limited partnership
operating one facility in Houston, is in the business of processing and distributing carbon, alloy, and high strength, low alloy steel plate, including plasma-cutting, flame-cutting, and beveling services, as well as machining, rolling, forming,
heat-treating, coating, and general machining and fabrication services. The acquisition provides the Company the opportunity to broaden its value-added processing capabilities and product offerings and expand and diversify its customer base as well
as increase its market share in one of the Companys strategic locations. The acquisition of Precision Flamecutting represents an addition to the Companys long products and plate business segment (see Note 13, Business Segment
Information).

The Company performed an initial allocation of the purchase price based on valuations and estimates of the fair value of the assets
acquired, including identifiable intangible assets, and liabilities assumed. The purchase price allocation will be refined upon the settlement of the working capital adjustment. We do not expect significant differences between the initial purchase
price allocation entry and amounts to be recorded upon the final working capital adjustment settlement. The initial purchase price allocation resulted in goodwill being recorded at the acquisition date of $22,781, all of which is expected to be
deductible for tax purposes. Other intangible assets acquired and their respective recorded amounts were as follows: customer relationships - $13,780, non-compete agreement - $6,564 and backlog - $63. The useful lives of the acquired intangible
assets are 15 years, 2 years, and 1 month for customer relationships, non-compete agreement and backlog, respectively.

2008 Acquisition

Sugar Steel

Effective March 14, 2008, PNA
completed the acquisition of all the outstanding capital stock and ownership interests of Sugar Steel for an aggregate purchase price of approximately $44,676 subject to usual post-closing working capital and other settlement adjustments. The
purchase price included cash consideration paid at closing to the former owners of $24,926, refinancing of $16,100 of Sugar Steels then existing indebtedness and approximately $150 in transaction costs. The purchase agreement provided for a
holdback of $3,500 of the purchase price to fund any indemnity claim by PNA and which will be paid over the two years following closing. The acquisition was financed through additional borrowings under PNAs revolving credit facility.

Sugar Steel was founded in 1966 and is a general line metals service center company serving the greater Chicago area and adjacent states. Sugar Steel
specializes primarily in carbon structural products such as beams, angles, tubes, squares, channels, pipes, bars and basement columns, and provides value-added processing services such as sawing, shearing, flame cutting, plasma cutting, angle
cutting, cambering, splitting and shot blasting. The acquisition provides PNA the ability to expand its long products and plate segment in this strategic market. The acquisition of Sugar Steel represents an addition to the Companys long
products and plate business segment (see Note 13, Business Segment Information).



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##### Table of Contents

PNA INTERMEDIATE HOLDING CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

(dollars in thousands)



The Company has performed a preliminary allocation of the purchase price based on initial valuations and estimates of
the fair value of the assets acquired, including identifiable intangible assets, and liabilities assumed. The purchase price allocation will be refined upon completion of the final valuation and upon finalizing the working capital and other
settlement adjustments. The initial allocation resulted in an estimated fair value of net assets acquired of $48,290, which exceeded the purchase price by $3,614. 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 in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations.

The operating results of Precision Flamecutting and Sugar Steel are included in the Companys Consolidated Statements of Income from their respective dates of acquisition.



|Note | 3.        Inventories
|---- | ---------------------

Inventories consist of the following:



|               |  |                  |         |               |   |        
|-------------- |  | ---------------- | ------- | ------------- | - | -------
|               |  | December 31,2007 |         | March 31,2008
|Raw materials  |  | $                | 374,027 |               | $ | 432,198
|Finished goods |  |                  | 18,083  |               |   | 19,904 
|               |  |                  |         |               |   |        
|               |  | $                | 392,110 |               | $ | 452,102
|               |  |                  |         |               |   |        



|Note | 4.        Other Current Assets
|---- | ------------------------------

Other current assets consist of the following:



|                           |  |                  |        |               |   |       
|-------------------------- |  | ---------------- | ------ | ------------- | - | ------
|                           |  | December 31,2007 |        | March 31,2008
|Other receivables          |  | $                | 9,131  |               | $ | 5,841 
|Prepaid expenses and other |  |                  | 1,280  |               |   | 3,780 
|Deferred income taxes      |  |                  | 8,130  |               |   | 8,543 
|                           |  |                  |        |               |   |       
|                           |  | $                | 18,541 |               | $ | 18,164
|                           |  |                  |        |               |   |       



|Note | 5.        Property, Plant and Equipment
|---- | ---------------------------------------

Property, plant and equipment consist of the following:



|                               |  |                      |  |                  |        |   |               |   |         |  
|------------------------------ |  | -------------------- |  | ---------------- | ------ | - | ------------- | - | ------- | -
|                               |  | EstimatedUseful Life |  | December 31,2007 |        |   | March 31,2008 |  
|Land                           |  |                      |  | $                | 5,998  |   |               | $ | 7,989   |  
|Buildings and improvements     |  | 25-40 years          |  |                  | 28,434 |   |               |   | 34,023  |  
|Equipment                      |  | 5-10 years           |  |                  | 45,169 |   |               |   | 50,375  |  
|Construction in progress       |  |                      |  |                  | 2,173  |   |               |   | 7,896   |  
|                               |  |                      |  |                  |        |   |               |   |         |  
|                               |  |                      |  |                  | 81,774 |   |               |   | 100,283 |  
|Less: accumulated depreciation |  |                      |  |                  | (9,670 | ) |               |   | (11,487 | )
|                               |  |                      |  |                  |        |   |               |   |         |  
|                               |  |                      |  | $                | 72,104 |   |               | $ | 88,796  |  
|                               |  |                      |  |                  |        |   |               |   |         |  

Depreciation expense was $1,580 for the three months ended
March 31, 2007 and $1,813 for the three months ended March 31, 2008.



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PNA INTERMEDIATE HOLDING CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

(dollars in thousands)



|Note 6.        Intangible | Assets
|------------------------- | ------

Intangible assets consist of the following as of
December 31, 2007:



|                           |  |                    |  |                      |        |                         |   |        |                    |  |   |       
|-------------------------- |  | ------------------ |  | -------------------- | ------ | ----------------------- | - | ------ | ------------------ |  | - | ------
|                           |  | AmortizationPeriod |  | Gross CarryingAmount |        | AccumulatedAmortization |   |        | Net CarryingAmount
|Customer relationships     |  | 15-20 years        |  | $                    | 30,237 |                         | $ | (3,867 | )                  |  | $ | 26,370
|Non-competition agreements |  | 2 years            |  |                      | 12,446 |                         |   | (4,656 | )                  |  |   | 7,790 
|Backlog                    |  | 1-3 months         |  |                      | 797    |                         |   | (734   | )                  |  |   | 63    
|Proprietary software       |  | 3 years            |  |                      | 352    |                         |   | (195   | )                  |  |   | 157   
|                           |  |                    |  |                      |        |                         |   |        |                    |  |   |       
|                           |  |                    |  | $                    | 43,832 |                         | $ | (9,452 | )                  |  | $ | 34,380
|                           |  |                    |  |                      |        |                         |   |        |                    |  |   |       

Intangible assets consist of the following as of March 31, 2008:



|                           |  |                    |  |                      |        |                         |   |         |                    |  |   |       
|-------------------------- |  | ------------------ |  | -------------------- | ------ | ----------------------- | - | ------- | ------------------ |  | - | ------
|                           |  | AmortizationPeriod |  | Gross CarryingAmount |        | AccumulatedAmortization |   |         | Net CarryingAmount
|Customer relationships     |  | 15-20 years        |  | $                    | 30,237 |                         | $ | (5,019  | )                  |  | $ | 25,218
|Non-competition agreements |  | 2 years            |  |                      | 12,583 |                         |   | (5,801  | )                  |  |   | 6,782 
|Backlog                    |  | 1-3 months         |  |                      | 797    |                         |   | (797    | )                  |  |   |      
|Proprietary software       |  | 3 years            |  |                      | 352    |                         |   | (225    | )                  |  |   | 127   
|                           |  |                    |  |                      |        |                         |   |         |                    |  |   |       
|                           |  |                    |  | $                    | 43,969 |                         | $ | (11,842 | )                  |  | $ | 32,127
|                           |  |                    |  |                      |        |                         |   |         |                    |  |   |       

Amortization expense was $1,391 for the three months ended
March 31, 2007 and $2,388 for the three months ended March 31, 2008.



|Note 7.        Other | Payables
|-------------------- | --------

Other payables consist of the following:



|                                     |  |                  |        |               |   |       
|------------------------------------ |  | ---------------- | ------ | ------------- | - | ------
|                                     |  | December 31,2007 |        | March 31,2008
|Current maturities of long-term debt |  | $                | 846    |               | $ | 868   
|Accrued bonuses                      |  |                  | 12,262 |               |   | 8,753 
|Accrued interest                     |  |                  | 14,160 |               |   | 7,464 
|Deferred consideration payable       |  |                  |       |               |   | 3,500 
|Accrued expenses and other           |  |                  | 17,385 |               |   | 14,926
|                                     |  |                  |        |               |   |       
|                                     |  | $                | 44,653 |               | $ | 35,511
|                                     |  |                  |        |               |   |       



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##### Table of Contents

PNA INTERMEDIATE HOLDING CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

(dollars in thousands)



|Note | 8.        Long-Term Debt
|---- | ------------------------

Long-term debt consists of the following:



|                                           |  |                  |         |   |               |   |         |  
|------------------------------------------ |  | ---------------- | ------- | - | ------------- | - | ------- | -
|                                           |  | December 31,2007 |         |   | March 31,2008 |  
|Revolver loan                              |  | $                | 213,374 |   |               | $ | 301,276 |  
|Senior notes                               |  |                  | 250,000 |   |               |   | 250,000 |  
|Floating rate notes                        |  |                  | 167,338 |   |               |   | 167,433 |  
|Real estate mortgages                      |  |                  | 49,074  |   |               |   | 48,864  |  
|                                           |  |                  |         |   |               |   |         |  
|                                           |  |                  | 679,786 |   |               |   | 767,573 |  
|Less: current maturities of long-term debt |  |                  | (846    | ) |               |   | (868    | )
|                                           |  |                  |         |   |               |   |         |  
|                                           |  | $                | 678,940 |   |               | $ | 766,705 |  
|                                           |  |                  |         |   |               |   |         |  

Outstanding borrowings under PNAs revolving credit facility totaled $213,374 and $301,276 as of
December 31, 2007 and March 31, 2008, respectively. Interest rates on these lines of credit ranged from 6.375% to 6.75% at December 31, 2007 and 4.813% to 5.375% at March 31, 2008. Cash interest accrues on the Floating Rate Notes
at a rate per annum, reset quarterly, equal to the three-month LIBOR plus 7.0% (the Spread). The interest rate was 11.87% as of December 31, 2007 and 10.065% as of March 31, 2008.

Under the terms of PNAs revolving credit facility in place as of December 31, 2007, PNA was permitted to borrow up to $375 million based on a borrowing
capacity calculation equal to 65% of eligible inventory plus 85% of eligible accounts receivable, whereas the inventory portion of our capacity calculation was limited to $230 million. On March 11, 2008, PNA entered into an amendment with its
senior secured lenders to increase the revolving credit facility from $375 million to $425 million and to increase the borrowing limit on inventory from $230 million to $260 million. Other terms of the amendment provide PNA with increased
flexibility with regard to certain restrictive operating covenants including an increase in annual capital expenditure limits, the ability to make certain acquisitions without prior consent and approval to incur other indebtedness in specific
circumstances.

The Senior Notes contain restrictions on payment of dividends or other payments by PNA 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 (the Restricted Payment Calculation) may be made so long as PNA maintains a Consolidated Total Debt Ratio, as defined in
the indenture governing the Senior Notes, of 3.5 or less. Certain payments are exempt from these restrictions, and PNA can pay dividends of up to $15,000 in the aggregate (the Unrestricted Payments) over the term of the Senior Notes that
are not subject to these restrictions. Under the Restricted Payment Calculation performed as of March 31, 2008, $11,508 as well as the amount of the Unrestricted Payments would have been available for payment of distributions had the Company
met the Consolidated Total Debt Ratio as of such date. Because the Company did not maintain a Consolidated Total Debt Ratio of 3.5 or less as of March 31, 2008, $15,000 of PNAs stockholders equity was, therefore, available for
distribution as of such date.

The Floating Rate Notes contain similar restrictions on dividends payable by PNA Intermediate to our parent, PNAG Holding,
to those contained in the indenture governing the Senior Notes. However, Unrestricted Payments under the Floating Rate Note indenture are limited to $7,500 in the aggregate over the term of the Floating Rate Notes.



|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 (the Non-Union Pension Plan) 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.



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PNA INTERMEDIATE HOLDING CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

(dollars in thousands)



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 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 $700 for the three months ended March 31, 2007 related to freezing benefits of its SERP.

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



|                                                                            |  |                              |      |   |      |   |      |  
|--------------------------------------------------------------------------- |  | ---------------------------- | ---- | - | ---- | - | ---- | -
|                                                                            |  | Three Months Ended March 31, |     
|                                                                            |  | 2007                         |      |   | 2008 |  
|Components of net periodic pension (benefit) cost and total pension expense |  |                              |      |   |      |   |      |  
|Interest cost                                                               |  | $                            | 301  |   |      | $ | 292  |  
|Expected return on plan assets                                              |  |                              | (319 | ) |      |   | (324 | )
|Curtailments                                                                |  |                              | (700 | ) |      |   |     |  
|                                                                            |  |                              |      |   |      |   |      |  
|Net periodic pension benefit                                                |  | $                            | (718 | ) |      | $ | (32  | )
|                                                                            |  |                              |      |   |      |   |      |  



|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 and $343 for the three months ended March 31, 2007 and 2008, respectively.

PNA Intermediate received
cash dividends of $219 from PNA during the three months ended March 31, 2008. Dividends paid by PNA Intermediate to PNAG Holding totaled $219 for the three months ended March 31, 2008.

PNA paid Platinum $1,250 and $1,250 during the three months ended March 31, 2007 and 2008, respectively, related to its annual monitoring fee pursuant to a
corporate advisory services agreement with Platinum (the Corporate Advisory Services Agreement).

On October 19, 2007, Platinum, through
certain affiliates, completed the purchase of Ryerson, Inc., one of the largest metals service center companies operating in the United States and Canada. Net sales to and purchases from Ryerson, Inc. totaled $1,026 and $33, respectively, during the
three months ended March 31, 2008. Trade receivables due from Ryerson totaled $722 as of March 31, 2008.



|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 $711 and $705 related to the value of such inventory on hand as of December 31, 2007 and March 31, 2008, respectively, 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.



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PNA INTERMEDIATE HOLDING CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

(dollars in thousands)



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 steel traders and 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. Consistent with industry practice, the Company does not generally perform independent testing of the steel it receives from mills with mill certifications. Following these recent events, the Company did,
however, evaluate the extent to which it may have received similarly non-conforming steel from certain foreign suppliers through steel traders in prior periods. In cases where it was determined that the Company did receive non-conforming steel,
notices to this effect were sent to our customers. To date, the Company has not received any material customer claims in response to such notices.

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 $332,811 for inventory at March 31, 2008. 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.



|Note 12.        Income | Taxes
|---------------------- | -----

PNAG Holding files a consolidated federal income tax return
that includes PNA Intermediate, PNA, its wholly owned subsidiaries and their respective subsidiaries. The tax provision in the accompanying condensed consolidated financial statements is calculated as if PNA Intermediate 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 $4,902
and $7,503 for the three months ended March 31, 2007 and 2008, respectively, resulting in effective tax rates of 39.4% and 40.5% 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 March 31, 2008 is primarily attributable
to higher anticipated state income tax rates applicable to 2008 projected taxable income.



|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 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 tolling, in which it
processes customer owned 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 six operating subsidiaries: Infra-Metals, Delta, Feralloy, MSC, Precision Flamecutting and Sugar Steel. The operations of Feralloy comprise the flat rolled segment products while Infra-Metals, Delta, MSC, Precision Flamecutting and
Sugar Steel 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.



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PNA INTERMEDIATE HOLDING CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

(dollars in thousands)



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.



|                                  |  |                        |         |            |   |                    |  |   |        |   |  |   |        
|--------------------------------- |  | ---------------------- | ------- | ---------- | - | ------------------ |  | - | ------ | - |  | - | -------
|                                  |  | Long Productsand Plate |         | FlatRolled |   | Corporateand Other |  |   | Total 
|Three Months Ended March 31, 2007 |  |                        |         |            |   |                    |  |   |        |   |  |   |        
|Net sales to external customers   |  | $                      | 296,706 |            | $ | 110,616            |  | $ |       |   |  | $ | 407,322
|Operating costs and expenses      |  |                        | 271,833 |            |   | 106,371            |  |   | 2,653  |   |  |   | 380,857
|Operating income (loss)           |  |                        | 24,873  |            |   | 4,245              |  |   | (2,653 | ) |  |   | 26,465 
|Capital spending                  |  |                        | 1,893   |            |   | 2,738              |  |   |       |   |  |   | 4,631  
|Total segment assets              |  |                        | 508,596 |            |   | 172,598            |  |   | 56,135 |   |  |   | 737,329
|Depreciation and amortization     |  |                        | 2,135   |            |   | 690                |  |   | 146    |   |  |   | 2,971  
|Income from equity investments    |  |                        |        |            |   | 453                |  |   |       |   |  |   | 453    
|Interest expense                  |  |                        | 7,723   |            |   | 3,213              |  |   | 2,660  |   |  |   | 13,596 
|                                  |  |                        |         |           
|Three months ended March 31, 2008 |  |                        |         |            |   |                    |  |   |        |   |  |   |        
|Net sales to external customers   |  | $                      | 347,584 |            | $ | 126,453            |  | $ |       |   |  | $ | 474,037
|Operating costs and expenses      |  |                        | 314,499 |            |   | 120,480            |  |   | 2,820  |   |  |   | 437,799
|Operating income (loss)           |  |                        | 33,085  |            |   | 5,973              |  |   | (2,820 | ) |  |   | 36,238 
|Capital spending                  |  |                        | 6,666   |            |   | 847                |  |   |       |   |  |   | 7,513  
|Total segment assets              |  |                        | 675,740 |            |   | 173,845            |  |   | 54,287 |   |  |   | 903,872
|Depreciation and amortization     |  |                        | 3,359   |            |   | 698                |  |   | 144    |   |  |   | 4,201  
|Income from equity investments    |  |                        |        |            |   | 658                |  |   |       |   |  |   | 658    
|Interest expense                  |  |                        | 6,995   |            |   | 2,987              |  |   | 7,271  |   |  |   | 17,253 

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 $1,176 and $393, respectively, for the three months ended March 31, 2007. Rent charged by Travel Main to the long products and plate segment and
the flat rolled segment totaled $1,205 and $403, respectively, for the three months ended March 31, 2008.



|Note | 14.        Common Stock
|---- | -----------------------

As discussed in Note 1, PNA Intermediate was incorporated on January 25, 2007 and capitalized by PNAG Holding with 1,000 shares of $0.01 par value common stock authorized, of which 100 shares are outstanding. On January 29, 2007,
PNAG Holding contributed the capital stock of PNA to PNA Intermediate. As a result, PNA became a wholly-owned subsidiary of PNA Intermediate. All PNA Intermediate shares outstanding are common shares and have equal voting, liquidation and preference
rights.



|Note | 15.        Derivative Financial Instrument
|---- | ------------------------------------------

As required by its senior secured credit facility, PNA entered into three interest rate swap agreements for a total of $50,000 in June 2006 for a three year period commencing October 1, 2006 with each of Bank of
America, N.A., Wachovia Bank, N.A. and LaSalle Bank, N.A. These agreements were entered into to reduce the impact of changes in interest rates on PNAs floating rate revolving credit facility.



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PNA INTERMEDIATE HOLDING CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

(dollars in thousands)



The fair market value of interest rate swaps is determined in accordance with SFAS 157 using Level 2 inputs, which
are defined as significant other observable inputs including quotes from counterparties that are corroborated with market sources. Our interest rate swap agreements are traded in the over the counter market. Fair values are based on
quoted market prices for similar liabilities or determined using inputs that use as their basis readily observable market data that are actively quoted and can be validated through external sources, including third-party pricing services, brokers,
and market transactions and represent the estimated amount the Company would receive or pay to terminate the swap agreement at the reporting date, taking into account current and expected interest rates.

The fair values of the outstanding swap agreements were determined to be liabilities of approximately $1,117 at December 31, 2007 and $1,978 at March 31, 2008.
These liabilities are recorded in other current payables in the accompanying unaudited condensed consolidated Balance Sheets. Changes in the value of the swap agreements are recorded to interest expense in the unaudited condensed consolidated
Statements of Income and resulted in losses of $122 and $861 for the three months ended March 31, 2007 and 2008, respectively. PNA and its subsidiaries are jointly and severally liable for the performance under the interest rate swap
agreements.



|Note | 16.        PNAG Holding Initial Public Offering
|---- | -----------------------------------------------

On April 30, 2007, PNAG Holding, our parent, filed a registration statement with the Securities and Exchange Commission (the SEC) relating to a proposed initial public offering of its common stock and
subsequently filed amendments nos. 1, 2, 3 and 4 to the initial registration statement on June 13, 2007, July 6, 2007, August 24, 2007, and December 14, 2007, respectively.

Simultaneous with the consummation of PNAG Holdings planned initial public offering, PNAG Holding intends to 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 our stockholder, therefore, desires 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 $7,900. Travel Mains subsidiaries will also record a deferred tax asset of approximately $7,900 as they will receive the future benefit of the increase in the tax basis of the assets transferred. In accordance with
FIN 46(R) and based on the present assumptions regarding the Companys future capital structure, PNA 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 the Company will not receive any future benefit of the
deferred tax asset of approximately $7,900, 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 INTERMEDIATE HOLDING CORPORATION



|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 Intermediate Holding Corporation and subsidiaries should
be read in conjunction with the unaudited condensed consolidated financial statements and the related Notes as of and for the three months ended March 31, 2008 attached hereto, and with the December 31, 2007 audited consolidated financial
statements and notes thereto included in the Companys annual report on Form 10-K as of and for the year ended December 31, 2007. 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 Intermediate, we, our and us are used to indicate PNA Intermediate Holding Corporation.

PNA Intermediate was incorporated on January 25, 2007 as an intermediate holding company which was established for the purpose of issuing the
Floating Rate Notes described below. As the incorporation of PNA Intermediate Holding Corporation and conveyance of PNAs capital stock from PNAG Holding constituted a transfer of net assets between entities under common control, PNA
Intermediate reports the accounts of PNA at their historical cost as of the date of transfer and reports results of operations for the period in which the transfer occurs as though the transfer of net assets or exchange of equity interests had
occurred at the beginning of the period. Additionally, the consolidated financial statements of PNA are presented for periods prior to the date of incorporation of PNA Intermediate.

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 annual report as of and for the year ended December 31, 2007 on Form 10-K 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. PNA was acquired by PNAG Holding, an affiliate of Platinum Equity Capital Partners, from its former owner, Preussag North
America, Inc. on May 9, 2006.

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.



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PNA INTERMEDIATE HOLDING CORPORATION



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 PNA completed the acquisition of Metals Supply Company, Ltd. (MSC), 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.

Since the acquisition of MSC we have continued to actively identify growth opportunities and pursue strategic acquisitions.

Effective December 24, 2007, PNA completed the acquisition of Precision Flamecutting, a Texas limited partnership operating one facility in Houston.
Precision Flamecutting is in the business of processing and distributing carbon, alloy, and high strength, low alloy steel plate, including plasma-cutting, flame-cutting, and beveling services, as well as machining, rolling, forming, heat-treating,
coating, and general machining and fabrication services. PNA acquired all outstanding interests in the partnership for cash consideration of $47,063 paid at closing to the former owners, costs associated with the transaction of $200 and refinancing
of $7,325 of Precision Flamecuttings then existing indebtedness. The acquisition was financed through additional borrowings under PNAs revolving credit facility of $54,388. The acquisition provides the Company the opportunity to broaden
its value-added processing capabilities and product offerings and expand and diversify its customer base as well as increase its market share in the Companys long products and plate business segment in one of the Companys strategic
locations.

Effective March 14, 2008, PNA completed the acquisition of all the outstanding capital stock and ownership interests of
Sugar Steel, a general line metals service center company serving the greater Chicago area and adjacent states founded in 1966. Sugar Steel specializes primarily in carbon structural products such as beams, angles, tubes, squares, channels, pipes,
bars and basement columns, and provides value-added processing services such as sawing, shearing, flame cutting, plasma cutting, angle cutting, cambering, splitting and shot blasting. PNA paid an aggregate purchase price of approximately $44,676
subject to usual post-closing working capital and other settlement adjustments. The purchase price included cash consideration paid at closing to the former owners of $24,926, refinancing of $16,100 of Sugar Steels then existing
indebtedness and approximately $150 in transaction costs. The acquisition was financed through additional borrowings under PNAs revolving credit facility. The acquisition provides PNA the ability to expand the Companys long products and
plate segment business in one of the Companys strategic markets.

With the acquisitions of MSC, Precision Flamecutting and Sugar
Steel, we now operate 23 metal processing centers nationally, as well as manage five joint ventures, that operate a total of seven service centers.

We believe we have demonstrated an ability to integrate acquisitions into our existing operations principally due to our decentralized management and operating structure which allows local managers the ability to make strategic operating
decisions at the levels necessary that affect their markets. Additionally, we are continually monitoring and evaluating important organic growth opportunities consisting of investing in the expansion of existing facilities, purchases of equipment
and machinery that expand our value-added processing capabilities and building greenfield sites for expansion into new markets.

As
discussed in the section of the Companys annual report on Form 10-K as of and for the year ended December 31, 2007 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. This trend of rising prices continued throughout
the first quarter of 2008 and we were able to pass along these increases to our customers resulting in improved operating margins as compared to the prior year. It is difficult to predict or determine with any certainty whether steel prices will
decline or increase in the future. Also, we can not determine whether the price increases experienced in the past or prospective future price increases charged by suppliers to distributors will be able to be passed through to our customers in future
periods.

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 Companys annual report on Form 10-K as of and for the year ended December 31,
2007. The Company has not made any significant changes in its critical accounting policies from those disclosed in the section of the Companys annual report on Form 10-K as of and for the year ended December 31, 2007 entitled
Managements Discussion and Analysis of Financial Condition and Results of Operations  Critical Accounting Policies.



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PNA INTERMEDIATE HOLDING CORPORATION



Results of Operations

Three Months Ended March 31, 2007 Compared to the Three Months Ended March 31, 2008

The table below
presents our results of operations for the three months ended March 31, 2007 and 2008.



|                                                        |  |                                |         |   |               |      |   |                                |   |         |               |  |      |  
|------------------------------------------------------- |  | ------------------------------ | ------- | - | ------------- | ---- | - | ------------------------------ | - | ------- | ------------- |  | ---- | -
|(in thousands, except average realized price per ton)   |  | Three MonthsEndedMarch 31,2007 |         |   | % ofNet Sales |      |   | Three MonthsEndedMarch 31,2008 |   |         | % ofNet Sales | 
|Net sales                                               |  | $                              | 407,322 |   |               |      |   |                                | $ | 474,037 |               |  |      |  
|Cost and expenses:                                      |  |                                |         |   |               |      |   |                                |   |         |               |  |      |  
|Cost of materials sold (exclusive of items shown below) |  |                                | 335,536 |   |               | 82.4 | % |                                |   | 384,081 |               |  | 81.0 | %
|Processing                                              |  |                                | 8,137   |   |               | 2.0  | % |                                |   | 9,924   |               |  | 2.1  | %
|Distribution                                            |  |                                | 5,591   |   |               | 1.4  | % |                                |   | 6,214   |               |  | 1.3  | %
|Selling, general and administrative (S, G&A)            |  |                                | 28,622  |   |               | 7.0  | % |                                |   | 33,379  |               |  | 7.0  | %
|Amortization of intangibles                             |  |                                | 1,391   |   |               | 0.3  | % |                                |   | 2,388   |               |  | 0.5  | %
|Depreciation                                            |  |                                | 1,580   |   |               | 0.4  | % |                                |   | 1,813   |               |  | 0.4  | %
|                                                        |  |                                |         |   |               |      |   |                                |   |         |               |  |      |  
|Total operating costs and expenses                      |  |                                | 380,857 |   |               | 93.5 | % |                                |   | 437,799 |               |  | 92.4 | %
|                                                        |  |                                |         |   |               |      |   |                                |   |         |               |  |      |  
|Operating income                                        |  |                                | 26,465  |   |               | 6.5  | % |                                |   | 36,238  |               |  | 7.6  | %
|Interest expense, net                                   |  |                                | 13,596  |   |               | 3.3  | % |                                |   | 17,253  |               |  | 3.6  | %
|Income from equity investments                          |  |                                | (453    | ) |               | -0.1 | % |                                |   | (658    | )             |  | -0.1 | %
|                                                        |  |                                |         |   |               |      |   |                                |   |         |               |  |      |  
|Income before minority interest and income tax expense  |  |                                | 13,322  |   |               | 3.3  | % |                                |   | 19,643  |               |  | 4.1  | %
|Minority interest                                       |  |                                | 871     |   |               | 0.2  | % |                                |   | 1,132   |               |  | 0.2  | %
|                                                        |  |                                |         |   |               |      |   |                                |   |         |               |  |      |  
|Income before income tax expense                        |  |                                | 12,451  |   |               | 3.1  | % |                                |   | 18,511  |               |  | 3.9  | %
|Income tax expense                                      |  |                                | 4,902   |   |               | 1.2  | % |                                |   | 7,503   |               |  | 1.6  | %
|                                                        |  |                                |         |   |               |      |   |                                |   |         |               |  |      |  
|Net income                                              |  | $                              | 7,549   |   |               | 1.9  | % |                                | $ | 11,008  |               |  | 2.3  | %
|                                                        |  |                                |         |   |               |      |   |                                |   |         |               |  |      |  
|Tons sold                                               |  |                                | 475     |   |               |      |   |                                |   | 496     |               |  |      |  
|Tons tolled                                             |  |                                | 160     |   |               |      |   |                                |   | 151     |               |  |      |  
|                                                        |  |                                |         |   |               |      |   |                                |   |         |               |  |      |  
|Tons shipped                                            |  |                                | 635     |   |               |      |   |                                |   | 647     |               |  |      |  
|                                                        |  |                                |         |   |               |      |   |                                |   |         |               |  |      |  
|Average realized price per ton                          |  | $                              | 845     |   |               |      |   |                                | $ | 945     |               |  |      |  
|                                                        |  |                                |         |   |               |      |   |                                |   |         |               |  |      |  

Net sales. Net sales including tolling income increased $66.7 million, or 16.4%,
from $407.3 million for the three months ended March 31, 2007 to $474.0 million for the three months ended March 31, 2008. Of the increase, $19.9 million related to the acquisitions of Precision Flamecutting in December 2007 and Sugar
Steel in March 2008. The remainder of the increase was primarily due to an increase in the average realized price per ton of 9.2% (exclusive of Precision Flamecutting and Sugar Steel average realized price per ton) and an increase in tons sold of
2.1% (exclusive of Precision Flamecutting and Sugar Steel tons sold).

Cost of materials sold. Cost of materials sold
increased $48.6 million, or 14.5%, from $335.5 million for the three months ended March 31, 2007 to $384.1 million for the three months ended March 31, 2008. Of the increase, $14.2 million related to the acquisitions of Precision
Flamecutting in December 2007 and Sugar Steel in March 2008. The remainder of the increase was primarily due to an increase in the average realized cost per ton of 7.9% (exclusive of Precision Flamecutting and Sugar Steel average realized cost per
ton) and an increase in tons sold of 2.1% (exclusive of Precision Flamecutting and Sugar Steel tons sold).

Processing, distribution,
selling, general and administrative expenses. Processing, distribution, selling, general and administrative expenses increased by $7.1 million, or 16.7%, from $42.4 million for the three months ended March 31, 2007 to $49.5 million for
the three months ended March 31, 2008. Of the increase, $3.2 million was related to the acquisitions of Precision Flamecutting in December 2007 and Sugar Steel in March 2008. The remainder of the increase was due to a number of factors
including increased compensation costs associated with profit based incentive plans, incremental processing and warehousing costs associated with the increase in volumes shipped and increased operating expenses such as energy costs.



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Amortization and depreciation.Amortization of intangibles increased $1.0 million from
$1.4 million for the three months ended March 31, 2007 to $2.4 million for the three months ended March 31, 2008. Depreciation expense increased $0.2 million from $1.6 million for the three months ended March 31, 2007 to $1.8 million
for the three months ended March 31, 2008. The increases were primarily related to the acquisitions of Precision Flamecutting in December 2007 and Sugar Steel in March 2008.

Interest expense.Interest expense increased $3.7 million from $13.6 million for the three months ended March 31, 2007 to $17.3
million for the three months ended March 31, 2008 due to a number of factors. The Floating Rate Notes were issued February 12, 2007. Therefore, they were outstanding for only a portion of the three months ended March 31, 2007 as
compared to the entire period for the three months ended March 31, 2008. Interest expense also increased due to an increase in the average outstanding balance of PNAs senior secured revolving credit facility which increased from $172.0
million for the three months ended March 31, 2007 to $257.3 million for the three months ended March 31, 2008. Several factor contributed to the level of borrowing under the secured revolving credit facility including increased working
capital needs due to increases in inventory resulting from the rising cost of raw materials and larger sales volumes as well as financing needs due to the acquisitions of Precision Flamecutting in December 2007 and Sugar Steel in March 2008. The
remainder of the increase was due to the change in fair value of the outstanding swap agreements which accounted for incremental expense of $0.7 million for the three months ended March 31, 2008 compared to the same period in the prior year
(see Derivative Financial Instrument below).

Income tax expense. Income tax expense increased from $4.9 million for
the three months ended March 31, 2007 to $7.5 million for the three months ended March 31, 2008. Income tax expense represented 39.4% and 40.5% of income before income tax expense for the three months ended March 31, 2007 and 2008,
respectively. A portion of the increase is due to certain corporate expenses not being deductible for state taxes as well as other permanent differences between taxable income and book income.

Results by Segment Three Months Ended March 31, 2007 Compared to Three Months Ended March 31, 2008

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 March 31, 2007 and 2008 (in thousands, except average realized price per ton).



|                                                        |  |                                |         |               |      |   |                                |   |               |  |      |  
|------------------------------------------------------- |  | ------------------------------ | ------- | ------------- | ---- | - | ------------------------------ | - | ------------- |  | ---- | -
|                                                        |  | Three MonthsEndedMarch 31,2007 |         | % ofNet Sales |      |   | Three MonthsEndedMarch 31,2008 |   | % ofNet Sales | 
|Net sales                                               |  | $                              | 296,706 |               |      |   |                                | $ | 347,584       |  |      |  
|Cost and expenses:                                      |  |                                |         |               |      |   |                                |   |               |  |      |  
|Cost of materials sold (exclusive of items shown below) |  |                                | 241,316 |               | 81.3 | % |                                |   | 276,872       |  | 79.6 | %
|Processing, distribution and S,G & A costs              |  |                                | 28,382  |               | 9.6  | % |                                |   | 34,268        |  | 9.9  | %
|Depreciation and amortization                           |  |                                | 2,135   |               | 0.7  | % |                                |   | 3,359         |  | 1.0  | %
|                                                        |  |                                |         |               |      |   |                                |   |               |  |      |  
|Total operating costs and expenses                      |  |                                | 271,833 |               | 91.6 | % |                                |   | 314,499       |  | 90.5 | %
|                                                        |  |                                |         |               |      |   |                                |   |               |  |      |  
|Operating income                                        |  | $                              | 24,873  |               | 8.4  | % |                                | $ | 33,085        |  | 9.5  | %
|                                                        |  |                                |         |               |      |   |                                |   |               |  |      |  
|Tons sold                                               |  |                                | 333     |               |      |   |                                |   | 335           |  |      |  
|Tons tolled                                             |  |                                |        |               |      |   |                                |   |              |  |      |  
|                                                        |  |                                |         |               |      |   |                                |   |               |  |      |  
|Tons shipped                                            |  |                                | 333     |               |      |   |                                |   | 335           |  |      |  
|                                                        |  |                                |         |               |      |   |                                |   |               |  |      |  
|Average realized price per ton                          |  | $                              | 889     |               |      |   |                                | $ | 1,040         |  |      |  
|                                                        |  |                                |         |               |      |   |                                |   |               |  |      |  

Net sales. Net sales increased $50.9 million, or 17.2%, from $296.7 million for the
three months ended March 31, 2007 to $347.6 million for the three months ended March 31, 2008. Of the increase, $19.9 million related to the acquisitions of Precision Flamecutting in December 2007 and Sugar Steel in March 2008. The
remainder of the increase was primarily due to an increase in average realized price per ton of 13.7% (exclusive of Precision Flamecutting and Sugar Steel average realized price per ton) which was partially offset by a decrease in tons sold of 2.8%
(exclusive of Precision Flamecutting and Sugar Steel tons sold).



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Cost of materials sold. Cost of materials sold increased $35.6 million, or 14.8%, from
$241.3 million for the three months ended March 31, 2007 to $276.9 million for the three months ended March 31, 2008. Of the increase, $14.2 million related to the acquisitions of Precision Flamecutting in December 2007 and Sugar Steel in
March 2008. The remainder of the increase was primarily due to an increase in average realized cost per ton of 12.2% (exclusive of Precision Flamecutting and Sugar Steel average realized cost per ton) which was partially offset by a decrease in tons
sold of 2.8% (exclusive of Precision Flamecutting and Sugar Steel tons sold).

Processing, distribution, selling, general and
administrative expenses. Processing, distribution, selling, general and administrative expenses increased by $5.9 million, or 20.8%, from $28.4 million for the three months ended March 31, 2007 to $34.3 million for the three months
ended March 31, 2008. Of the increase, $3.2 million was related to the acquisitions of Precision Flamecutting in December 2007 and Sugar Steel in March 2008. The remainder of the increase was due to a number of factors including increased
compensation costs associated with profit based incentive plans and increased operating expenses such as energy costs.

Amortization
and depreciation.Depreciation and amortization expense increased $1.3 million from $2.1 million for the three months ended March 31, 2007 to $3.4 million for the three months ended March 31, 2008. The increase was primarily
related to the acquisitions of Precision Flamecutting in December 2007 and Sugar Steel in March 2008.

Flat Rolled Segment

The table below presents our results of operations for our Flat Rolled segment for the three months ended March 31, 2007 and 2008 (in thousands,
except average realized price per ton).



|                                                        |  |                                |         |               |      |   |                                |   |               |  |      |  
|------------------------------------------------------- |  | ------------------------------ | ------- | ------------- | ---- | - | ------------------------------ | - | ------------- |  | ---- | -
|                                                        |  | Three MonthsEndedMarch 31,2007 |         | % ofNet Sales |      |   | Three MonthsEndedMarch 31,2008 |   | % ofNet Sales | 
|Net sales                                               |  | $                              | 110,616 |               |      |   |                                | $ | 126,453       |  |      |  
|Cost and expenses:                                      |  |                                |         |               |      |   |                                |   |               |  |      |  
|Cost of materials sold (exclusive of items shown below) |  |                                | 94,220  |               | 85.2 | % |                                |   | 107,209       |  | 84.8 | %
|Processing, distribution and S, G&A costs               |  |                                | 11,461  |               | 10.4 | % |                                |   | 12,573        |  | 9.9  | %
|Depreciation and amortization                           |  |                                | 690     |               | 0.6  | % |                                |   | 698           |  | 0.6  | %
|                                                        |  |                                |         |               |      |   |                                |   |               |  |      |  
|Total operating costs and expenses                      |  |                                | 106,371 |               | 96.2 | % |                                |   | 120,480       |  | 95.3 | %
|                                                        |  |                                |         |               |      |   |                                |   |               |  |      |  
|Operating income                                        |  | $                              | 4,245   |               | 3.8  | % |                                | $ | 5,973         |  | 4.7  | %
|                                                        |  |                                |         |               |      |   |                                |   |               |  |      |  
|Tons sold                                               |  |                                | 142     |               |      |   |                                |   | 161           |  |      |  
|Tons tolled                                             |  |                                | 160     |               |      |   |                                |   | 151           |  |      |  
|Tons shipped                                            |  |                                | 302     |               |      |   |                                |   | 312           |  |      |  
|                                                        |  |                                |         |               |      |   |                                |   |               |  |      |  
|Average realized price per ton                          |  | $                              | 740     |               |      |   |                                | $ | 747           |  |      |  
|                                                        |  |                                |         |               |      |   |                                |   |               |  |      |  

Net sales. Net sales including tolling income increased $15.9 million, or
14.4%, from $110.6 million for the three months ended March 31, 2007 to $126.5 million for the three months ended March 31, 2008. The increase was primarily related to a 13.8% increase in volumes sold and a 0.9% increase in average
realized price per ton.

Cost of materials sold. Cost of materials sold increased $13.0 million, or 13.8%, from $94.2
million for the three months ended March 31, 2007 to $107.2 million for the three months ended March 31, 2008. The increase was primarily related to a 13.8% increase in volumes sold.

Processing, distribution, selling, general and administrative expenses. Processing, distribution, selling, general and administrative
expenses increased by $1.1 million, or 9.6%, from $11.5 million for the three months ended March 31, 2007 to $12.6 million for the three months ended March 31, 2008. The increase was principally due to increases in warehousing, processing
and distribution costs associated with the increase in volumes sold.

Amortization and depreciation. Depreciation and
amortization expense of $0.7 million for the three months ended March 31, 2007 remained level with the expense for the three months ended March 31, 2008 which we deemed to be reasonable given that the Company did not make any acquisitions
in this business segment nor did it experience any significant fixed asset additions.



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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 remained relatively consistent with prior year
levels increasing $0.1 million, or 3.7%, from $2.7 million for the three months ended March 31, 2007 to $2.8 million for the three months ended March 31, 2008. The increase was the result of incremental costs incurred in 2008 related to
the provision for the management participation plan of $0.5 million offset by decreases in other corporate expenses such as audit fees and personnel costs.

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 PNAs revolving credit facility, PNA may borrow up to an amount equal to 65% of eligible inventory, limited to $260 million, plus 85% of eligible accounts receivable. As of March 31,
2008, we had approximately $11.6 million of cash on hand and approximately $97.4 million available under the revolving credit facility. The following discussion of the principal sources and uses of cash should be read in conjunction with our
unaudited condensed consolidated Statements of Cash Flows for the three months ended March 31, 2007 and 2008 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 $433.4 million at December 31, 2007 to $522.8 million at March 31, 2008 primarily due to increases in inventory and accounts receivable
(including the allowance for doubtful accounts) of $60.0 million and $50.7 million, respectively, and a decrease in other payables of $9.1 million. These increases in working capital items were offset by increases in accounts payable of $33.1
million and current income taxes payable of $15.6 million. The increases in inventory and accounts receivable were partially due to the acquisition of Sugar Steel which accounted for $18.6 million and $15.7 million, respectively, of the increases.
The remainder of the increases in inventory and accounts receivable were primarily due to increases in the Companys sales volumes, average price per ton sold (in the case of accounts receivable) and average cost per ton of raw materials (in
the case of inventory). The decrease in other payables was primarily related to the timing of interest payments due on the Senior Notes and the payment of fiscal year 2007 bonuses during the first quarter of 2008. The increase in accounts payable
was partially due to the acquisition of Sugar Steel which accounted for $10.2 million of the increase. The remainder of the increase was primarily due to the increase in the Companys sales volumes and average cost per ton of raw materials.
Income taxes payable increased primarily due to the increase in income before taxes for the first quarter of 2008 compared to the fourth quarter of 2007 and the timing of federal and state income tax payments.

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.



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PNA INTERMEDIATE HOLDING CORPORATION



We have recently implemented several expansion projects to increase capacity at certain of our
facilities and we are in the planning phase of four additional expansion projects that are expected to increase our capacity beginning in middle to late 2008. The Company presently has budgeted for capital improvements and maintenance projects
including the building of two new facilities, one each by Infra-Metals and MSC, and expanding capacity at certain of its existing facilities. The total budgeted cost of these projects is approximately $40 million which is expected to be expended
largely in 2008 though a portion of this amount may be expended in 2009. The capital expenditures are expected to be financed through advances under PNAs revolving credit facility except for approximately $10.5 million in financing anticipated
to be provided under a state sponsored loan and bond issue for the budgeted Infra-Metals facility. We currently anticipate that the planned new facilities to be completed in 2008 will be in full operation in 2009.

During the three months ended March 31, 2008, net cash used in operating activities was $43.1 million. Net income for the three months ended March 31,
2008 was $11.0 million of which $4.2 million related to non-cash charges for depreciation and amortization. Therefore, the difference between net income and net cash used in operations for the three months ended March 31, 2008 was $58.3 million,
which primarily related to cash used for increases in accounts receivable and inventory of $35.7 million and $26.9 million, respectively, and decrease in accrued expenses of $13.9 million. These uses of cash were partially offset by net cash
provided by increases in accounts payable of $8.4 million and income taxes payable of $8.0 million. The increase in accounts receivable was primarily due to increases in the Companys sales volumes and average price per ton sold. Factors
affecting the increases in inventory levels and accounts payable outstanding were also due in part to an increase in the average cost per ton of raw materials purchased as well as an increase in the Companys sales volumes in the first quarter
of 2008 compared to the fourth quarter of 2007. Net cash used to pay accrued expenses primarily related to interest payments made on the Senior Notes and the payment of fiscal year 2007 bonuses in the first quarter of 2008. Net cash provided by the
increase in income taxes payable was primarily related to income taxes payable on first quarter 2008 income generated before tax.

During
the three months ended March 31, 2007, net cash used in operating activities was $6.9 million. Net income for the three months ended March 31, 2007 was $7.5 million. Therefore, the difference between net income and net cash used in operations for
the three months ended March 31, 2007 was $14.4 million, which primarily related to cash used for an increase in accounts receivable of $13.0 million due to the increase in net sales over the same period in the prior year and a decrease in accrued
expenses of $14.2 million primarily related to interest and bonuses paid partially offset by a decrease in inventory of $15.6 million as management commenced an inventory reduction program.

Net cash used in investing activities was $47.8 million for the three months ended March 31, 2008, of which $40.8 million related to net cash used for
the acquisition of Sugar Steel in March 2008 and $7.5 million related to purchases of property, plant and equipment. Net cash used in investing activities was $5.5 million for the three months ended March 31, 2007 primarily related to purchases of
property, plant and equipment.

Financing Activities

Net cash provided by financing activities was $87.0 million for the three months ended March 31, 2008 primarily related to net proceeds of our senior
secured revolving credit facility. Net cash provided by financing activities was $12.2 million for the three months ended March 31, 2007 primarily related to proceeds of the Floating Rate Note issue which totaled $167.0 million (net of the original
issue discount) and net proceeds of $15.4 million under our senior secured credit facilities. These sources of cash were partially offset by dividends to our parent of $165.5 million and deferred debt issuance costs primarily related to the issuance
of the Floating Rate Notes of $4.3 million.

Floating Rate Notes. On February 12, 2007, we issued $170.0 million aggregate
principal amount of our Senior Floating Rate Toggle Notes due 2013, or the Floating Rate Notes. The Floating Rate Notes were offered for sale to the initial purchasers at 98.25% of their principal amount plus accrued interest from and including the
date of issuance. The Floating Rate Notes will mature on February 15, 2013.

Cash interest on the Floating Rate Notes accrues at a rate per
annum, reset quarterly based on a spread over LIBOR. The initial interest payment on the Floating Rate Notes was payable in cash. For any interest period thereafter, PNA Intermediate may elect to pay interest (1) entirely in cash or (2) entirely by
increasing the principal amount of the outstanding Floating Rate Notes or by issuing additional paid-in-kind, or PIK, notes. To date, all interest payments have paid in cash.

The indenture governing the Floating Rate Notes contains restrictions on dividends payable by PNA Intermediate to our parent, PNAG Holding. These
restrictions are based on our consolidated net income and other factors, although PNA Intermediate may pay dividends not in excess of $7.5 million in the aggregate that are not subject to such restrictions.



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For further discussion of the Floating Rate Notes, please see the section of the Companys
annual report on Form 10-K as of and for the year ended December 31, 2007 entitled Managements Discussion and Analysis of Financial Condition and Results of Operations  Financing Activities.

Senior Notes.On August 15, 2006, PNA 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 Senior
Notes contain restrictions on payment of dividends or other payments by PNA 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
(the Restricted Payment Calculation) may be made so long as PNA maintains a Consolidated Total Debt Ratio, as defined in the indenture governing the Senior Notes, of 3.5 or less. Certain payments are exempt from these restrictions, and
PNA can pay dividends of up to $15 million in the aggregate (the Unrestricted Payments) over the term of the Senior Notes that are not subject to these restrictions. Under the Restricted Payment Calculation performed as of March 31,
2008, $11.5 million as well as the amount of the Unrestricted Payments, would have been available for payment of distributions had the Company met the Consolidated Total Debt Ratio as of such date. Because the Company did not maintain a Consolidated
Total Debt Ratio of 3.5 or less as of March 31, 2008, $15 million of PNAs stockholders equity was, therefore, available for distribution as of such date. These amounts do not include approximately $5.6 million in cash at March 31,
2008 at PNA Intermediate available to us to pay our interest obligations.

For further discussion of the Senior Notes, please see the
section of the Companys annual report on Form 10-K as of and for the year ended December 31, 2007 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, PNA amended and restated
its senior secured credit agreement to 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. Under the revolving
credit facility terms in place as of December 31, 2007, PNA was permitted to borrow up to $375 million based on a borrowing capacity calculation equal to 65% of eligible inventory plus 85% of eligible accounts receivable, whereas the inventory
portion of PNAs capacity calculation was limited to $230 million. On March 11, 2008, PNA entered into an amendment with its senior secured lenders to increase the revolving credit facility from $375 million to $425 million and to increase
the borrowing limit on inventory from $230 million to $260 million. Other terms of the amendment provide PNA with increased flexibility with regard to certain restrictive operating covenants including an increase in annual capital expenditure
limits, the ability to make certain acquisitions without prior consent and approval to incur other indebtedness in specific circumstances.

As of March 31, 2008, $301.3 million was outstanding under the revolving credit facility. The acquisitions of Precision Flamecutting in December 2007 and Sugar Steel in March 2008 were both financed through additional borrowings under
PNAs revolving credit facility of approximately $54.4 million and $44.5 million, respectively.

The loans are charged interest on a
base rate method or a LIBOR method, at the option of PNA, 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 PNA, in each case plus an applicable margin percentage. There are no principal payments required under the revolving credit facility until May 2011, the maturity date thereof.

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

PNAs senior secured credit facilities require, subject to certain conditions, that it comply with a consolidated fixed
charge coverage test. In addition, PNAs senior secured credit facility also includes certain customary negative covenants, such as restrictions on our ability and the ability of its subsidiaries to incur additional indebtedness or liens, pay
dividends (only to the extent that availability under the revolver is less than $40 million), make certain investments, engage in business combinations, sell assets or transact with affiliates. The Senior Notes and the Floating Rate Notes contain
similar negative covenants to those contained in PNAs senior secured credit facility.

For further discussion of the Senior Secured
Credit Facilities, please see the section of the Companys annual report on Form 10-K as of and for the year ended December 31, 2007 entitled Managements Discussion and Analysis of Financial Condition and Results of Operations
 Financing Activities.



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

Related Parties

PNA paid cash dividends of $0.2 million to us during the three months ended March 31, 2008. We paid cash dividends totaling $0.2 million to our
parent, PNAG Holding, during the three months ending March 31, 2008.

PNA paid Platinum $1.3 million and $1.3 million during the three
months ended March 31, 2007 and 2008, respectively, related to its annual monitoring fee pursuant to the Corporate Advisory Services Agreement.

Retirement Benefits and Compensation Plans

The Company has two noncontributory, defined benefit pension plans and a
nonqualified, unfunded retirement plan. Of the noncontributory, defined benefit pension plans, one covers substantially all Feralloy nonunion employees who have attained age 21 (the Non-Union Pension Plan) 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 three months ended March 31, 2007 related
to freezing benefits of its SERP.

Derivative Financial Instrument

As required by PNAs senior secured credit facility, PNA entered into three interest rate swap agreements for a total of $50 million in June 2006 for a three year period commencing October 1, 2006 with each
of Bank of America, N.A., Wachovia Bank, N.A. and LaSalle Bank, N.A. These agreements were entered into to reduce the impact of changes in interest rates on PNAs floating rate revolving credit facility.

The fair market value of interest rate swaps is determined in accordance with SFAS 157 using Level 2 inputs, which are defined as significant other
observable inputs including quotes from counterparties that are corroborated with market sources. PNAs interest rate swap agreements are traded in the over-the-counter market. Fair values are based on quoted market prices for
similar liabilities or determined using inputs that use as their basis readily observable market data that are actively quoted and can be validated through external sources, including third-party pricing services, brokers, and market transactions
and represent the estimated amount PNA would receive or pay to terminate the swap agreement at the reporting date, taking into account current and expected interest rates.

The fair values of the outstanding swap agreements were determined to be liabilities of approximately $1.1 million at December 31, 2007 and $2.0
million at March 31, 2008. These liabilities are recorded in other current payables in the accompanying unaudited condensed consolidated Balance Sheets. Changes in the value of the swap agreements are recorded to interest expense in the
unaudited condensed consolidated Statements of Income and resulted in losses of $0.1 million and $0.9 million for the three months ended March 31, 2007 to 2008, respectively. PNA and its subsidiaries are jointly and severally liable for the
performance under the interest rate swap agreements.

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



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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 $0.7 million related to the value of such inventory on hand as of March 31, 2008 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 steel traders and 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. Consistent with industry practice, the Company does not generally perform independent testing of the steel it receives from
mills with mill certifications. Following these recent events, the Company did, however, evaluate the extent to which it may have received similarly non-conforming steel from certain foreign suppliers through steel traders in prior
periods. In cases where it was determined that the Company did receive non-conforming steel, notices to this effect were sent to our customers. To date, the Company has not received any material customer claims in response to such notices.

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 $332.8 million for inventory at March 31, 2008. 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 Financial Accounting Standards Board (FASB) issued SFAS No. 157, Fair Value
Measurements (SFAS 157). SFAS 157 establishes a framework for measuring the fair value of assets and liabilities. This framework is intended to provide increased consistency in how fair value determinations are made under various
existing accounting standards which permit, or in some cases require, estimates of fair market value. SFAS 157 also expands financial statement disclosure requirements about a companys use of fair value measurements, including the effect of
such measures on earnings. SFAS 157 is effective for fiscal years beginning after November 15, 2007. The Company adopted the provisions of SFAS 157 related to its financial assets and liabilities effective January 1, 2008, which did not
have a material impact on the Companys consolidated financial position, results of operations or cash flows.

In February 2008, the
FASB issued FSP 157-1 and 157-2. FSP 157-1 amends SFAS 157 to exclude SFAS No. 13, Accounting for Leases, (SFAS 13) and its related interpretive accounting pronouncements that address leasing
transactions, while FSP 157-2 delays the effective date of the application of SFAS 157 to fiscal years beginning after November 15, 2008 for all nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair
value in the financial statements on a nonrecurring basis. Non-recurring nonfinancial assets and nonfinancial liabilities include those measured at fair value in goodwill impairment testing, indefinite lived intangible assets measured at fair value
for impairment testing, asset retirement obligations initially measured at fair value, and those assets and liabilities initially measured at fair value in a business combination.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilitiesincluding an amendment to
FASB Statement No. 115, (SFAS 159), which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. We adopted SFAS 159 as of
January 1, 2008. The adoption of SFAS 159 did not have a material impact on the Companys consolidated financial position, results of operations or cash flows.

In December 2007, the FASB issued Statement of Financial Accounting Standards (FAS) No. 141 (revised 2007), Business Combinations (FAS 141(R)) which replaces FAS No.141, Business Combination.
FAS 141(R) retains the underlying concepts of FAS 141 in that all business combinations are still required to be accounted for at fair value under the acquisition method of accounting but FAS 141(R) changed the method of applying the acquisition
method in a number of significant aspects. FAS 141(R) is



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effective on a prospective basis for all business combinations for which the acquisition date is on or after the beginning of the first annual period
subsequent to December 15, 2008, with the exception of the accounting for valuation allowances on deferred taxes and acquired tax contingencies. FAS 141(R) amends FAS 109 such that adjustments made to valuation allowances on deferred taxes and
acquired tax contingencies associated with acquisitions that closed prior to the effective date of FAS 141(R) would also apply the provisions of FAS 141(R). Early adoption is not allowed. The provisions of FAS 141R will only impact the Company if it
is a party to a business combination after the pronouncement has been adopted.

In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB 51 (FAS 160)). FAS 160 amends ARB 51 to establish new standards that will govern the accounting for and reporting of (1)
noncontrolling interest in partially owned consolidated subsidiaries and (2) the loss of control of subsidiaries. FAS 160 is effective on a prospective basis for all fiscal years, and interim periods within those fiscal years beginning, on or after
December 15, 2008, except for the presentation and disclosure requirements, which will be applied retrospectively. Early adoption is not allowed. The Company is currently in the process of evaluating what, if any, impact FAS 160 will have on its
financial condition, results of operation and cash flows.

In February 2008, the FASB issued SFAS No. 161, Disclosures about
Derivative Instruments and Hedging Activities  an amendment of FASB Statement No. 133 (SFAS 161), which requires enhanced disclosures about derivative and hedging activities. Companies will be required to provide enhanced
disclosures about (a) how and why a company uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and related interpretations, and (c) how derivative instruments
and related hedged items affect the companys financial position, financial performance, and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal and interim periods beginning after November 15, 2008.
Accordingly, the Company will ensure that it meets the enhanced disclosure provisions of SFAS 161 upon the effective date.



|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.

It was reported in several financial publications
in February 2008 that one of the three major iron ore suppliers, Vale do Rio Doce, negotiated a 65% price increase from Japanese and South Korean steel producers. This development has been deemed to be an indicator of likely price increases
from the other iron ore producers as well as possible continued increases later in 2008. Nonetheless, it is difficult to predict what effect price increases or decreases will have on the domestic market for users of the product as evidenced by the
fact that in the second half of 2007 we noted a period of rising prices charged by suppliers to distributors that we were not able to pass along to our customers due to increased availability in many of our product lines.

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.



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

Evaluation of
Disclosure 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 March 31, 2008 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.

Changes in Internal Control Over Financial Reporting

During the three months ended March 31, 2008, there has been no change in the Companys internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



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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 three months ended
March 31, 2008, there were no material changes to the risk factors disclosed in the section of the Companys annual report as of and for the year ended December 31, 2007 on Form 10-K entitled Risk Factors.



|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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|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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SIGNATURES

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

Dated: May 15, 2008



PNA Intermediate Holding CorporationBy:

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




By:

/s/ William S. JohnsonWilliam S. Johnson Chief Financial
Officer




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