The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company's risk factors and its consolidated financial statements and notes thereto included in Item 1A and Item 8, respectively, of this Annual Report on Form 10-K. Certain information set forth herein Item 7 constitutes "forward-looking statements" as that term is used in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based, in whole or in part, on management's beliefs, estimates, assumptions and currently available information. For a more detailed discussion of what constitutes a forward-looking statement and of some of the factors that could cause actual results to differ materially from such forward-looking statements, please refer to the "Safe Harbor Statement" on page 2 of this Annual Report on Form 10-K.

Overview

We are a leading manufacturer, processor and distributor of residential and commercial building products and processed metal products for the building and construction, industrial, and automotive markets. Our building products are used by homeowners and builders to provide structural and architectural enhancements for residential and commercial building projects. Our processed metal products are comprised primarily of steel shaped to specific widths and hardened to certain tolerances as required by our customers. We serve customers in a variety of industries in all 50 states and throughout the world. We operate 59 facilities in 26 states, Canada, England, Germany, and Poland, giving us a broad platform for just-in-time delivery and support to our customers

Beginning in 2007 and continuing throughout 2008 with greater deceleration in the fourth quarter of 2008, the residential construction and automotive markets in North America experienced the following declines in volume:

                                             For Years Ended December 31,
                                      2008               2007               2006

    Residential housing starts      0.9 million        1.3 million        1.8 million
    North American auto builds     12.6 million       15.0 million       15.9 million

The decrease in residential housing starts and North American auto builds had a significant impact on the operations of our Building Products and Processed Metal Products segments, respectively, by contributing to decreased sales volumes in each segment. In an effort to respond to these market forces during the past two years, we have focused on operational excellence through lean manufacturing initiatives and facility consolidations. Our efforts have resulted in the closing or consolidation of fifteen facilities and ten facilities during 2008 and 2007, respectively. These facility consolidations include the relocation of the manufacturing capabilities of six plants to the Company's other manufacturing facilities during 2008. Two plants were shut down during 2007 and their manufacturing capabilities were moved to other facilities.

Our efforts to consolidate facilities and streamline operations to match the current demand for our products have resulted in a 17% decrease in our workforce from approximately 3,950 employees as of December 31, 2007 to 3,270 employees as of December 31, 2008. We have focused on controlling our spending in an effort to remain as a low cost supplier to our customers.

Many of our lean manufacturing initiatives have focused on reducing the working capital required to manage our business. During 2008, our achievements in this effort have resulted in an $83.5 million reduction in working capital from $306.5 million as of December 31, 2007 to $223.0 million as of December 31, 2008. This reduction in working capital plus other cash flows generated from operating and investing activities has allowed us to reduce our total debt outstanding by $131.5 million.

These lean manufacturing initiatives and facility consolidations plus other actions led to significant improvement in the first nine months of 2008 prior to when the banking and credit markets sharply deteriorated in October 2008. The steps management took during the past two years led to much improved

operating results during the first nine months of the year as evidenced below (amounts below were restated to reflect the results of SCM in discontinued operations and are in thousands except for per share data):

                                                               Nine Months Ended
                                                       September 30,        September 30,        Percentage
                                                           2008                 2007               Change

Net sales                                             $       982,925      $       918,687                 7 %
Gross profit                                                  206,522              171,714                20 %
Income from operations                                         89,248               68,039                31 %
Income from continuing operations                              43,369               28,792                51 %
Diluted income per share from continuing operations   $          1.44      $          0.96                50 %

Our net sales and profits increased during 2008 due to the incremental contributions provided by the 2007 acquisitions of Dramex, Noll and Florence and better pricing on sales within our Processed Metal Products segment partially offset by declining volumes from our residential building products and automotive products due to the downturn in demand in these markets. We increased our profitability by better aligning our customer selling prices to our product costs and decreased spending through facility consolidation efforts and lean manufacturing initiatives.

However, the improved operating results did not carry over into the fourth quarter of 2008. The worldwide banking and credit turmoil in the fourth quarter of 2008 significantly contributed to a dramatic downturn of the global economy and the key end markets we serve. These factors led to a significant decrease in the Company's sales volume and profitability as evidenced below (amounts in thousands except for per share data):

                                                              Three Months Ended
                                                       December 31,        December 31,       Percentage
                                                           2008                2007             Change

Net sales                                             $      249,374      $      280,028              (11 )%
Gross profit                                                  29,584              43,506              (32 )%
Income from operations                                        (7,779 )             7,702             (201 )%
Income from continuing operations                             (9,964 )            (1,853 )           (437 )%
Diluted income per share from continuing operations   $        (0.33 )    $        (0.06 )           (450 )%

The decrease in net sales was a result of significant turmoil within the global economy and its negative impact on the new build housing and the North American auto markets. As a result of the lower sales volume experienced by the Company, gross profit as a percentage of sales declined to 11.9% from 15.5% for the fourth quarters of 2008 and 2007, respectively, due to fixed cost becoming a higher percentage of net sales and the FIFO (first-in, first-out inventory valuation method) effect on margins in some product lines as material costs and product pricing declined as a result of commodity raw material pricing declines. Our Processed Metal Products segment also recognized a $2.7 million charge to bad debt expense during the fourth quarter of 2008 due to an automotive customer filing for bankruptcy.

Outlook

As in the fourth quarter of 2008, there is little forward visibility on either the economy or our industry, therefore, we are not providing numerical guidance for 2009. We see the first quarter as again being very challenging, with only marginally better results than the fourth quarter of 2008 and we are expecting an operating loss in the first quarter as results continue to reflect the extremely difficult global economic environment. In the meantime, we continue aggressive efforts to increase liquidity and reduce costs and will take additional actions as market conditions warrant. We believe that the aggressive actions taken during the past two years to streamline and improve the efficiency of our business will position our company to generate marked improvements in performance when economic and end market conditions return to more normal levels.

Divestitures

As part of our continuing evaluation of our businesses' past performance and probable future benefits of our companies, we determined that our copper powder metals business, SCM Metal Products (SCM), no longer fit our long-term strategic goals. Effective October 3, 2008, we sold the outstanding and issued capital stock of our SCM subsidiaries for a purchase price of $43,702,000. The final purchase price is net of working capital adjustments and transaction fees. SCM was formerly reported as a part of the Processed Metal Products segment.

During 2007, we determined that both our steel service center (formerly part of the Processed Metal Products segment) and cabinet manufacturing (formerly part of the Building Products segment) businesses no longer provided a strategic fit with our long-term growth and operational objectives. In August 2007, we sold the operating assets of our bath cabinet manufacturing business. In September 2007, we committed to a plan to dispose of the assets of our steel service center business. We sold the majority of the assets of these businesses during the remaining period of 2007 and 2008.

During 2006, we determined that our thermal processing (formerly reported as a reportable segment) and strapping (formerly part of the Processed Metal Products segment) businesses no longer provided a strategic fit with our long-term growth and operational objectives. In June 2006, in separate transactions, we sold certain assets and liabilities of both our thermal processing and strapping businesses.

All divestitures described above are properly classified as discontinued operations in the Company's consolidated financial statements and notes thereto. See Note 10 of the Company's consolidated financial statements for more information regarding the divestitures described above in Item 8 of this Annual Report on Form 10-K.

Acquisitions

We did not acquire any new businesses during 2008.

We acquired three businesses with complementary market positions in 2007. In March 2007, we acquired the stock of the Dramex Corporation (Dramex), a manufacturer, marketer and distributor of a diverse line of expanded metal products through its locations in the United States, Canada and England. In April 2007, we acquired certain assets and liabilities of Noll Manufacturing Company and affiliates (Noll), a manufacturer, marketer and distributor of products for the building, heating, ventilation and air conditioning (HVAC) and lawn and garden components of the building products market through its locations in California, Washington and Oregon. In August 2007, we acquired the stock of the Florence Corporation (Florence), a Kansas manufacturer of storage products for mail and package delivery.

We also acquired three businesses during 2006. In June 2006, we acquired Home Impressions, Inc. (Home Impressions) and certain assets of Steel City Hardware, LLC (Steel City) in separate transactions. Home Impressions markets and distributes mailboxes and accessories and the assets acquired from Steel City are used to manufacture mailboxes and postal accessories. In November 2006, we acquired all the outstanding stock of The Expanded Metal Company Limited and Sorst Streckmetell GmbH (EMC). EMC has locations in England, Germany and Poland and manufactures, markets and distributes a diverse line of expanded metal products used in the commercial and industrial sectors of the building products market.

All the acquisitions described above are reported as a part of our Building Products segment. See Note 6 of the Company's consolidated financial statements for more information regarding the acquisitions described above in Item 8 of this Annual Report on Form 10-K.

Results of Operations

Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

The following table sets forth selected results of operations data (in
thousands) and its percentages of net sales for the years ended December 31:


                                                            2008                          2007

Net sales                                         $ 1,232,299        100.0 %    $ 1,198,715        100.0 %
Cost of sales                                         996,193         80.8          983,495         82.0

Gross profit                                          236,106         19.2          215,220         18.0
Selling, general and administrative expense           154,637         12.5          139,479         11.6

Income from operations                                 81,469          6.7           75,741          6.4
Interest expense                                       29,235          2.4           32,498          2.7
Equity in partnerships' income(1)                        (724 )       (0.1 )         (1,172 )       (0.1 )

Income before taxes                                    52,958          4.4           44,415          3.8
Provision for income taxes                             19,553          1.6           17,476          1.5

Income from continuing operations                      33,405          2.8           26,939          2.3
Discontinued operations, net of taxes(2)               (9,337 )       (0.8 )        (13,715 )       (1.1 )

Net income                                        $    24,068          2.0 %    $    13,224          1.2 %

(1) Equity in partnerships' income represents our proportional interest in the income of our steel pickling joint venture and other income.

(2) Discontinued operations represents the loss, net of income taxes, attributable to our SCM subsidiaries, our steel service center, cabinet manufacturing business, and our strapping business, which we sold in October 2008, December 2007 and August 2007, respectively.

The following table sets forth the Company's net sales by reportable segment for the years ended December 31 (in thousands):

                                                                      Total                 Change Due to
                                     2008             2007           Change         Acquisitions        Operations

Net sales:
Building Products                 $   986,840      $   929,022      $  57,818      $       72,783      $    (14,965 )
Processed Metal Products              245,459          269,693        (24,234 )                 -           (24,234 )

Consolidated                      $ 1,232,299      $ 1,198,715      $  33,584      $       72,783      $    (39,199 )

Net sales increased by $33.6 million, or 2.8%, to $1,232.3 million in 2008, compared to 2007. The increase in net sales was attributable to the 2007 acquisitions of Dramex, Noll and Florence which provided incremental net sales of $72.8 million during 2008. Net sales by our historic businesses decreased $39.2 million, or 3.3%. This decrease in net sales was primarily the result of volume decreases due to the downturn in residential building and North American auto markets.

Net sales in our Building Products segment increased 6.2%, or $57.8 million, to $986.8 million in 2008 compared to 2007. Excluding the $72.8 million in incremental net sales provided by the 2007 acquisitions of Dramex, Noll and Florence, net sales decreased $15.0 million, or 1.6%, from the prior year. The decrease in net sales from our recurring operations was the net result of declining volumes from our residential products due to the effects of the slowdown in the residential housing market which offset higher customer selling prices on products used in the commercial, industrial, architectural and international markets.

Net sales in our Processed Metal Products segment decreased $24.2 million, or 9.0%, to $245.5 million in 2008 compared to 2007. Although the cost of steel was higher for much of 2008 which led to increased selling

prices for our strip steel products, a significant decline in volume due to decreased North American automotive production led to a decrease in net sales for our Processed Metal Products segment.

Gross margin increased to 19.2% in 2008 from 18.0% in 2007. The increase in gross margin was a result of a better alignment of customer selling prices to raw material costs and lower costs due to lean manufacturing initiatives and facility consolidations, partially offset by the effects of a $2.5 million increase in exit activity and impairment charges, an increase in freight costs and reductions in volume. The 2007 acquisitions of Dramex and Florence also contributed to higher gross margins for the year ended December 31, 2008.

Selling, general and administrative expenses increased approximately $15.2 million, or 10.9%, to $154.6 million in 2008, compared to 2007. The 2007 acquisitions noted above caused an increase of $8.5 million in 2008. Excluding the effect of the acquisitions, selling, general and administrative costs increased $6.7 million, or 4.8% over the prior year. Selling, general and administrative expense as a percentage of net sales increased 0.9%, to 12.5% in 2008 from 11.6% in 2007 as a result of a $2.7 million charge to bad debt expense due to an automotive customer filing for bankruptcy, a $1.4 million increase in exit activity costs, a $1.1 million charge for software no longer in use, increased amortization of acquired intangible assets due to the 2007 acquisitions, and higher incentive compensation costs due to improved operating results.

The following table sets forth the Company's income from operations and income from operations as a percentage of sales by reportable segment for the years ended December 31 (in thousands):

                                                                     Total                 Change Due to
                                        2008           2007          Change       Acquisitions        Operations

Income from operations:
Building Products                     $  94,522      $  91,589      $  2,933      $       8,873      $     (5,940 )
Processed Metal Products                 17,655         13,265         4,390                  -             4,390
Corporate                               (30,708 )      (29,113 )      (1,595 )                -            (1,595 )

Consolidated                          $  81,469      $  75,741      $  5,728      $       8,873      $     (3,145 )

                                                                               Total
                                                          2008      2007      Change

   Income from operations as a percentage of net sales:
   Building Products                                        9.6 %     9.9 %      (0.3 )%
   Processed Metal Products                                 7.2 %     4.9 %       2.3 %
   Consolidated                                             6.6 %     6.3 %       0.3 %

Income from operations as a percentage of net sales in our Building Products segment for the year ended December 31, 2008 decreased to 9.6% from 9.9% in 2007. Gross margin percentage remained flat year over year as result of our efforts to reduce manufacturing costs through lean manufacturing initiatives and facility consolidation. These cost reductions were offset by increased exit activity costs and impairment charges of $3.9 million. Selling, general and administrative costs also increased $1.8 million from the prior year due to increased amortization of acquired intangible assets from our 2007 acquisitions.

Income from operations from our Processed Metal Products segment increased to 7.2% of net sales for the year ended December 31, 2008 from 4.9% for the prior year period. The increase in operating margin percentage is a result of lower costs due to the completion of our consolidation of our strip steel business and a better alignment of customer selling prices to raw material costs.

Corporate expenses increased $1.6 million, or 5.5%, to $30.7 million for 2008 from $29.1 million for 2007. The increase in corporate expenses was largely due to a $1.1 million charge for software no longer in use and higher incentive compensation costs due to improved operating results.

Interest expense decreased 10.2% or $3.3 million, to $29.2 million in 2008 from $32.5 million in 2007. The decrease in interest was the result of a combination of lower average borrowings and lower average interest rates.

Income taxes related to continuing operations for 2008 approximated $19.6 million, an effective tax rate of 36.9% compared to $17.5 million and an effective tax rate of 39.3% in 2007. The lower effective tax rate for 2008 reflects the benefit of a decrease in our overall state income tax and foreign income tax as a percentage of pretax income due to adjustments recorded after completing state and foreign tax returns, an increase in income generated by foreign locations, and the result of a higher proportion of permanently non-deductible expenses as a percentage of pre-tax income in 2007.

Loss from discontinued operations decreased $4.4 million to $9.3 million in 2008 compared to a $13.7 million loss in 2007. The loss in the current year was primarily a result of a $11.0 million after-tax loss recorded from the sale of SCM. The loss in 2007 was primarily a result of losses recognized for the liquidation of our steel service center and bath cabinet manufacturing businesses.

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

The following table sets forth selected results of operations data (in
thousands) and its percentages of net sales for the years ended December 31:


                                                            2007                          2006

Net sales                                         $ 1,198,715        100.0 %    $ 1,125,864        100.0 %
Cost of sales                                         983,495         82.0          885,254         78.6

Gross profit                                          215,220         18.0          240,610         21.4
Selling, general and administrative expense           139,479         11.6          128,920         11.5

Income from operations                                 75,741          6.4          111,690          9.9
Interest expense                                       32,498          2.7           26,226          2.3
Equity in partnerships' (income) loss(1)               (1,172 )       (0.1 )         12,900          1.1

Income before taxes                                    44,415          3.8           72,564          6.5
Provision for income taxes                             17,476          1.5           27,436          2.4

Income from continuing operations                      26,939          2.3           45,128          4.1
Discontinued operations, net of taxes(2)              (13,715 )       (1.1 )         12,141          1.1

Net income                                        $    13,224          1.2 %    $    57,269          5.2 %

(1) Equity in partnerships' (income) loss represents our proportional interest in the income or losses of our steel pickling joint venture, our proportional interest in the income or losses of our cold-rolled strip steel joint venture, a $12.9 million impairment charge to recognize the impairment of our investment in this cold-rolled strip steel joint venture in 2006 and other income.

(2) Discontinued operations represents the (loss) income, net of income taxes, attributable to our SCM subsidiaries, our steel service center, cabinet manufacturing business, thermal processing business, and our strapping business, which we sold in October 2008, December 2007, August 2007, June 2006, and June 2006, respectively.

The following table sets forth the Company's net sales by reportable segment for the years ended December 31 (in thousands):

                                                                      Total                 Change Due to
                                      2007             2006           Change        Acquisitions        Operations

Net sales:
Building Products                  $   929,022      $   862,287      $ 66,735      $      156,011      $    (89,276 )
Processed Metal Products               269,693          263,577         6,116                   -             6,116

Consolidated                       $ 1,198,715      $ 1,125,864      $ 72,851      $      156,011      $    (83,160 )