Goodfellow Inc.
TSX : GDL

Goodfellow Inc.

March 28, 2007 17:14 ET

Goodfellow Reports its Results for the Second Quarter 2006-2007

DELSON, QUEBEC--(CCNMatthews - March 28, 2007) - Goodfellow Inc. (TSE:GDL) announced today its sales and net income for the first six months ended February 28, 2007. Sales decreased 2.6% to $225.7 million compared to $231.7 million a year ago. Net income increased to $6.0 million or $0.70 per share compared to $4.6 million or 0.54 per share for the same period last year. This result includes the final net settlement after tax of $3.5 million CAD related to the Softwood Lumber Agreement which entered into force on October 12, 2006. Net income without this non recurring item was $2.5 million or $0.29 per share. During the second quarter ended February 28, 2007, consolidated sales decreased to $106.6 million compared to $111.2 million for the same period last year. Net income decreased to $0.5 million or $0.06 per share compared to $1.5 million or $0.18 per share during the corresponding quarter a year ago. Sales activities during the first six months of fiscal 2007 reflect sagging demand on the US side and weak business activity on new housing markets in Canada. General expenses, selling and administrative costs for the first six months ended February 28, 2007 increased from $34.8 million to $36.7 million. This was due to higher volume of value added products combined with increased thrust in western Canada.

"The second quarter of fiscal 2007 was a disappointment compared with the previous year. Sales were sluggish all winter both in Central Ontario and the U.S. Northeast, areas most hit by the housing slowdown" said Richard Goodfellow, President and Chief Executive Officer. "It is expected during the spring and summer, markets will remain strong for many of our specialty products even with what is clearly a declining new housing market"

Goodfellow Inc. is eastern Canada's largest independent re-manufacturer and distributor of lumber products and Canada's largest distributor of hardwood flooring products. Goodfellow shares trade on the Toronto Stock Exchange under the symbol GDL.



GOODFELLOW INC.
STATEMENT OF INCOME
(in thousands of dollars except earnings per share)
(Unaudited)

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Six Months Three Months
Ended February 28 Ended February 28
2007 2006 2007 2006
$ $ $ $
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Sales 225,727 231,692 106,577 111,150
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Expenses

Cost of goods sold,
selling, administrative
and general expenses 214,300 222,389 104,587 107,739
Depreciation and
amortization 1,028 997 530 512
Financial 1,227 1,271 630 635
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216,555 224,657 105,747 108,886
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Income before income
taxes 9,172 7,035 829 2,264
Income taxes 3,164 2,427 286 781
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Net income 6,008 4,608 543 1,483
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Earnings per share 0.70 0.54 0.06 0.18
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Earnings per share diluted 0.70 0.54 0.06 0.17
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GOODFELLOW INC.
CONDENSED BALANCE SHEET
(in thousands of dollars)
(Unaudited)

---------------------------------------------------
As at february 28
2007 2006
$ $
---------------------------------------------------
Current assets 145,125 143,069
Total assets 174,124 171,211
Current liabilities 75,999 80,750
Total liabilities 77,806 82,930
Shareholder's equity 96,318 88,281
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GOODFELLOW INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
(unaudited)


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Six Months Three Months
Ended February 28 Ended February 28
2007 2006 2007 2006
$ $ $ $
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Operating activities

Net income 6,008 4,608 543 1,483
Items not affecting cash
Depreciation and
amortization 1,028 997 530 512
Excess of expense over
pension plan funding
(pension plan funding
over expense) (224) 316 (53) 161
Loss disposal of assets - 11 - 4
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6,811 5,932 1,021 2,160

Changes in non-cash operating
working capital balances

Decrease (increase)
in accounts receivable 14,747 18,017 1,003 4,519
Decrease (increase)
in inventories (26,518) (19,475) (4,841) 535
Decrease (increase)
in prepaid expenses (773) (448) (829) (1,682)
Increase (decrease)
in accounts payable 5,033 (3,345) 3,790 (4,775)
Decrease in income taxes (1,402) (882) (1,634) (599)
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(2,102) (201) (1,490) 158
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Financing activities

Dividends (3,417) (3,822) - (2,123)
Issuance of common shares - 299 - 266
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(3,417) (3,523) - (1,857)
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Investing activities

Acquisition of fixed
assets (1,945) (1,392) (468) (488)
Disposal of fixed assets - 18 - 18
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(1,945) (1,374) (468) (470)
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Foreign currency translation
adjustment 92 - (11) -
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Net cash inflow (outflow) (7,372) (5,098) (1,969) (2,169)
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Cash and cash equivalents,
beginning of period (34,859) (42,555) (40,262) (45,483)
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Cash and cash equivalents,
end of period (42,231) (47,652) (42,231) (47,652)
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