In 2005, domestic steel mill shipments reached over 103 million net tons, a decrease of 7.1% from 2004, according to the American Iron and Steel Institute. Estimated steel use in North America reached 126 million tons in 2005, approximately 25% of this supplied by imports. Steel is sold principally to the automotive, construction, steel product fabrication, container and packaging, oil and gas, electrical, machinery and appliance industries.

The domestic steel industry has experienced strong profitability following a trough period from 1999 to 2003. Increased shipments, consumption, and production were driven by strength in several key end-markets and a stronger overall economy. In addition to strong domestic demand for steel, structural changes to the U.S. steel industry, including consolidation and the widespread acceptance of steel scrap surcharges, significantly contributed to the rebound in the domestic industry.

The steel plate market is a relatively small segment of the overall steel industry, representing only 9.76% of U.S. steel shipments by weight in 2005, according to the American Iron and Steel Institute. Consistent with overall industry consolidation and rationalization trends, since the beginning of 2003, it is believed that approximately 1.2 million tons of capacity have been eliminated from the steel plate market and the number of principal plate competitors has been reduced from ten to six.

The steel plate market is comprised of three segments: coil, standard discrete and custom discrete. Since 2000, three steel plate mini-mills that historically served the custom discrete market and had aggregate capacity of over two million tons have been eliminated, leaving very favorable market conditions for the remaining three participants.

The Company offers a wide range of steel plate products of varying thickness, width and length. The Company’s discrete plate is produced in thicknesses from 1/4” to 5” and in widths from 48” to 156” with a maximum length of 1,400.”

The Company primarily produces three categories of plate steel including Carbon, High Strength Low Alloy (“HSLA”) and Pressure Vessel Quality (“PVQ”).

Within each of these categories the Company manufactures grades as specified by various organizations including the American Society for Testing and Materials (“ASTM”), the American Iron and Steel Institute (“AISI”), the American Bureau of Ships (“ABS”), Canadian Steel Association (“CSA”) and the American Association of State Highway Transportation Officials (“AASHTO”).

The Company produces steel plate from steel scrap in a two-step process involving, the melt shop operation, where scrap is melted down and cast into a steel slab, and the plate mill operation, where the slab is rolled into steel plate.

The steelmaking process begins with the receipt and charging of raw materials, scrap, alloys and flux, into the charging buckets. The scrap is loaded into charging buckets with the use of an overhead crane and a field magnet. Other materials are fed through the use of gravity into hoppers and then dumped into the charging buckets with fork trucks.

Cost of sales for the thirty-nine weeks ended September 30, 2006 increased 34% to $169.4 million, compared with $126.5 million for the thirty-nine weeks ended October 1, 2005.

Gross margin decreased from 38.0% in the thirty-nine weeks ended October 1, 2005 to 31.6% in the thirty-nine weeks ended September 30, 2006.

Interest expense for the thirty-nine weeks ended September 30, 2006 was $20.0 million compared to $19.7 million for the thirty-nine weeks ended October 1, 2005.

Net income in the thirty-nine weeks ended September 30, 2006 was $29.6 million compared to $32.5 million in the thirty-nine weeks ended October 1, 2005.