EXHIBIT
99.1
 
 Novamerican
Steel Inc. and Subsidiaries (Predecessor)
 Consolidated
Statement of Operations and Comprehensive Income
 (in
thousands of U.S. dollars except share and per share data)
 (unaudited)
 
 Three
      Months Ended
                August
      25, 2007
              
              
              Nine
      Months Ended
                August
      25, 2007Net
      sales
              
              $
              191,480
              
              
              $
              591,117Cost
      of sales
              
              
              155,019
              
              
              
              478,295Gross
      margin
              
              
              36,461
              
              
              
              112,822Operating
      expensesPlant
              
              
              10,517
              
              
              
              31,742Delivery
              
              
              5,762
              
              
              
              17,964Selling
              
              
              3,305
              
              
              
              10,480Administrative
      and general
              
              
              5,838
              
              
              
              19,71725,422
              
              
              
              79,903Operating
      income
              
              
              11,039
              
              
              
              32,919Interest
      expense
              
              
              52
              
              
              
              565Other
      income
              
              
              (402
              )
              
              
              (1,483
              )Share
      in income of a joint venture
              
              
              (39
              )
              
              
              (133
              )(389
              )
              
              
              (1,051
              )Income
      before income taxes
              
              
              11,428
              
              
              
              33,970Income
      taxes (Note 3)
              
              
              4,063
              
              
              
              11,349Net
      income
              
              $
              7,365
              
              
              $
              22,621Net
      income per share – basic and diluted
              
              
              0.70
              
              
              
              2.16Weighted
      average number of shares outstanding – basic and diluted
              
              
              10,450,000
              
              
              
              10,450,000Comprehensive
      incomeNet
      income
              
              
              7,365
              
              
              
              22,621Changes
      in cumulative translation adjustment
              
              
              4,715
              
              
              
              13,342$
              12,080
              
              
              $
              35,963
 
 The accompanying notes are an integral
part of the consolidated financial statements.
  1
 Novamerican Steel Inc. and Subsidiaries
(Predecessor)
 Consolidated
Statement of Cash Flows
 (in
thousands of U.S. dollars)
 (unaudited)
 
 Nine
      Months Ended
                August
      25, 2007CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      income
              
              $
              22,621Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
      and amortization
              
              
              7,947Share
      in income of a joint venture
              
              
              (133
              )Deferred
      income taxes
              
              
              (441
              )Loss
      on disposal of property, plant and equipment
              
              
              (5
              )Changes
      in working capital itemsAccounts
      receivable
              
              
              7,295Income
      taxes receivable
              
              
              81Inventories
              
              
              15,070Prepaid
      expenses and other assets
              
              
              (1,388
              )Accounts
      payable and accrued liabilities
              
              
              (1,915
              )Income
      taxes payable
              
              
              (2,357
              )Net
      cash provided by operating activities
              
              
              46,775CASH
      FLOWS FROM INVESTING ACTIVITIESRepayment
      of loan to a corporation
              
              
              37,541Additions
      to property, plant and equipment
              
              
              (10,474
              )Proceeds
      from disposal of property, plant and equipment
              
              
              357Other
      assets
              
              
              (66
              )Net
      cash provided by investing activities
              
              
              27,358CASH
      FLOWS FROM FINANCING ACTIVITIESNet
      increase in bank indebtedness
              
              
              (532
              )Repayment
      of long-term debt
              
              
              (41,346
              )Net
      cash used in financing activities
              
              
              (41,878
              )Effect
      of exchange rate changes on cash and cash equivalents
              
              
              2,958Net
      increase in cash and cash equivalents
              
              
              35,213Cash
      and cash equivalents, beginning of period
              
              
              31,016Cash
      and cash equivalents, end of period
              
              $
              66,229SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONInterest
      paid
              
              $
              216Income
      taxes paid
              
              $
              14,877
 
 The
accompanying notes are an integral part of the consolidated financial
statements.
 
 
  2
 Novamerican
Steel Inc. and Subsidiaries (Predecessor)
 Notes
to Consolidated Financial Statements
 (in
U.S. dollars; tabular amounts in thousands of U.S. dollars)
 (unaudited)
 1
- INTERIM FINANCIAL PRESENTATION
 
 The
accompanying interim financial statements of Novamerican Steel Inc. and its
subsidiaries (“Acquired
Company” or the “Predecessor”)
should be read in conjunction with the consolidated financial statements for the
fiscal year ended November 25, 2006 and notes thereto contained in Acquired
Company’s annual report.  The financial statements presented herein
are unaudited but, in the opinion of management, include all necessary
adjustments (which comprise only normal recurring items) required for a fair
statement of results of operations and cash flows for the periods
presented.  However, interim results of operations may not be
indicative of results for the full fiscal year.  The accompanying
interim consolidated financial statements of Acquired Company have been prepared
in conformity with accounting principles generally accepted in the United States
of America for interim financial statements.
 
 Fiscal
period
 
 The
Acquired Company operates on the basis of a fiscal year that ends on the last
Saturday of November. Quarterly financial periods end on the last Saturday of
February, May and August.
 
 2
- SIGNIFICANT ACCOUNTING POLICIES
 
 The
accompanying consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial statements.
 
 A summary
of significant accounting policies consistently applied in the preparation of
the accompanying consolidated financial statements follows.
 
 Basis
of consolidation
 
 The
accompanying consolidated financial statements include the accounts of Acquired
Company and all its wholly-owned subsidiaries.  All intercompany
balances and transactions have been eliminated in the consolidated financial
statements.
 
 Translation
of foreign currencies
 
 The
non-consolidated financial statements of Acquired Company and its subsidiaries
are prepared based on their respective functional currencies, which are the U.S.
dollar for U.S. operations and the Canadian dollar for Canadian operations. As a
result, in Acquired Company’s consolidated financial statements, the financial
statements of the Canadian operations are translated into U.S. dollars using the
current rate method. Under this method, assets and liabilities are translated
using the exchange rate in effect at the balance sheet date. Revenues and
expenses are translated at the average rate in effect during the quarter. Gains
and losses arising from translation are included in accumulated other
comprehensive income.
 
 Transactions
concluded in foreign currencies by Acquired Company are translated into their
respective functional currency as follows: monetary assets and liabilities are
translated at the exchange rate in effect at quarter end and revenues and
expenses are translated at the average exchange rate for the month in which they
occur. Exchange gains and losses arising from transactions denominated in
foreign currencies are included in the consolidated statements of operations and
comprehensive income. Losses of approximately $723,000 were recorded in the
three months ended August 25, 2007 and losses for the nine months ended August
25, 2007 were approximately $356,100.
 
 Accounting
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. On an ongoing basis, management reviews its
estimates based on currently available information. Management believes the most
sensitive estimates include the allowance for doubtful accounts, the
recoverability of goodwill and the provision for income taxes. Actual results
could differ from these estimates.
 
 3
 Novamerican
Steel Inc. and Subsidiaries (Predecessor)
 Notes
to Consolidated Financial Statements
 (in
U.S. dollars; tabular amounts in thousands of U.S. dollars)
 (unaudited)
 Current
and Pending Accounting Changes
 
 Current
 
 In May
2005, the FASB issued SFAS No. 154, Accounting Changes and Error
Corrections – a replacement of APB Opinion No. 20 and FASB Statement No.
3.  This statement replaces APB Opinion No. 20, Accounting Changes, and SFAS
No. 3, Reporting Accounting
Changes in Interim Financial Statements, and changes the requirements for
the accounting for and reporting of a change in accounting
principle.  It applies to all voluntary changes in accounting
principle.  It also applies to changes required by an accounting
pronouncement in the unusual instance that the pronouncement does not include
specific transition provisions.  This statement is effective for
Acquired Company at the beginning of the 2007 fiscal year, including interim
periods.  The adoption of SFAS No. 154 had no impact on the
preparation of the consolidated financial statements.
 
 Pending
 
 The FASB
issued FASB Interpretation No. 48 (“FIN 48”),Accounting for Uncertainty in
Income Taxes—an interpretation of FASB Statement No. 109, in
June 2006. This interpretation clarifies the accounting for uncertainty in
income taxes recognized in an enterprise’s financial statements in accordance
with SFAS No. 109,Accounting for Income Taxes. It prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement of
an income tax position taken or expected to be taken in an income tax return. It
also provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure, and transition. FIN 48 is
effective for Acquired Company at the beginning of the 2008 fiscal year,
including interim periods. The impact resulting from the adoption of FIN 48
on the consolidated financial statements has not yet been
determined.
 
 In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS
157 defines fair value, establishes a framework for measuring fair value and
expands disclosures about fair value measurements. SFAS 157 does not impose fair
value measurements on items not already accounted for at fair value; rather it
applies, with certain exceptions, to other accounting pronouncements that either
require or permit fair value measurements. SFAS 157 is effective for Acquired
Company at the beginning of the 2008 fiscal year, including interim periods. The
impact resulting from the adoption of SFAS 157 on the consolidated financial
statements has not yet been determined.
 
 In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities. SFAS 159 permits entities
to choose to measure many financial instruments and certain other items at fair
value and establishes presentation and disclosure requirements designed to
facilitate comparisons between entities that choose different measurement
attributes for similar types of assets and liabilities. Unrealized gains
and losses on items for which the fair value option has been elected are
reported in earnings at each subsequent reporting date. SFAS 159 is
effective for Acquired Company at the beginning of the 2008 fiscal year
including interim periods. The impact resulting from the adoption of SFAS 159 on
the consolidated financial statements has not yet been determined.
 
 3
- INCOME TAXES
 
 For the
three and nine months ended August 25, 2007, Acquired Company recognized pretax
income of $11,428,000 and $33,970,000 and tax expense of $4,063,000 and
$11,349,000, respectively.
 
 Income
taxes for the three and nine months ended August 25, 2007 reflect an effective
income tax rate of 36% and 33%, respectively.  The effective income
tax rate for the twelve months ended November 25, 2006 was 36%.  The
effective income tax rate decreased in the nine months ended August 25, 2007 due
primarily to the recognition of a prior period tax benefit and a reduction to a
Canadian provincial tax rate.
 
  4
 Novamerican
Steel Inc. and Subsidiaries (Predecessor)
 Notes
to Consolidated Financial Statements
 (in
U.S. dollars; tabular amounts in thousands of U.S. dollars)
 (unaudited)
  4
- RELATED PARTY TRANSACTIONS
 
 The
following transactions with related parties were concluded in the normal course
of business and were measured at their respective exchange values, which are the
amounts established and agreed to by the related parties:
 
 
 
 Three
      months
                ended
                August
      25, 2007
              
              
              Nine
      months
                ended
                August
      25, 2007Processing
      revenue from a joint venture
              
              $
              40
              
              
              $
              169Processing
      charges paid to a joint venture
              
              $
              765
              
              
              $
              2,143Rental
      charges paid to companies controlled by a director
              
              $
              263
              
              
              $
              1,059Rental
      charges paid to companies jointly controlled by
      a director
              
              $
              2
              
              
              $
              185Freight
      charges paid to a company controlled by a director
              
              $
              2,823
              
              
              $
              7,784
 
 5
- INVESTMENT IN A JOINT VENTURE
 
 Acquired
Company holds a 60% equity interest and a 50% voting interest in a joint venture
with Mittal Canada, Inc., that processes carbon steel into tubing. The joint
venture, Delta Tube and Company, Limited Partnership (“Delta
Tube”), is located in LaSalle, Quebec, Canada.
 
 Condensed
financial information of the joint venture is summarized below:
 
 Three
      months
                ended
                August
      25, 2007
              
              
              Nine
      months ended
                August
      25, 2007OperationsNet
      sales
              
              $
              1,157
              
              
              $
              3,328Operating
      income
              
              $
              65
              
              
              $
              225
 
  5