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Press release from Marketwire

Goodfellow Reports Its Results for the Second Quarter Ended February 28, 2011

Friday, March 25, 2011

Goodfellow Reports Its Results for the Second Quarter Ended February 28, 201116:38 EDT Friday, March 25, 2011DELSON, QUEBEC--(Marketwire - March 25, 2011) - Goodfellow Inc. (TSX:GDL) today reported its financial results for the second quarter ended February 28, 2011. Net loss from operations was $1.7 million or $0.20 per share compared to a net income of $1.9 million or $0.22 per share a year ago. Consolidated sales for the second quarter of fiscal 2011 were $94.9 million compared to $107.8 million for the same period a year ago. Cash flow from operations (excluding non-cash working capital) for the second quarter of fiscal 2011 decreased to $(1.3) million from $2.5 million last year. Sales in Canada decreased 14% compared to last year mainly due to the absence of the Home Renovation Tax Credit which was in full force during the second quarter of fiscal 2010. Consequently, flooring sales were affected in the retail industry which continued to slow down throughout the winter. Sales in the US increased 3% due to the slow recovery in the Northeast US retail lumber and panel market. Export sales increased 9% compared to last year due mainly to strong flooring sales in the UK and increasing sales to China and the Middle East. Selling, General and Administrative expenses for the second quarter of fiscal 2011 decreased slightly at $18.2 million compared to $18.4 million for the corresponding period a year ago. The decrease is due to the reduction in selling and administrative expenses due to reduced commissions linked with the sales decrease, lower bad debt provisions and lower collection fees. On the other hand, direct labour and energy costs increased due to the value-added production build-up through the winter. Finally, leases and rental costs rose due to fleet and logistics requirements linked with our commitment to improved customer service. For the six months ended February 28, 2011, the Company reported net loss from operations of $0.7 million or $0.09 per share compared to a net income of $4.0 million or $0.46 per share a year ago. Consolidated sales were $204.2 million compared to $217.1 million for the same period a year ago. Cash flow from operations (excluding non-cash working capital) decreased to $0.2 million from $5.0 million for the same period last year."The above results reflect the fact that business conditions were very tough during the winter quarter. The harsh weather everywhere, the rapid rise in fuel costs, and the sharp slump in retail demand all contributed to these disappointing results" said Richard Goodfellow, President and Chief Executive Officer. "Historically, the second quarter has been difficult but this year presented even greater challenges. We remain however cautiously optimistic that the 3rd and 4th quarter will mark a return to our usual level of profitability".Goodfellow Inc. is one of Canada's largest independent re-manufacturers and distributors of lumber and hardwood flooring products. Goodfellow shares trade on the Toronto Stock Exchange under the symbol GDL.GOODFELLOW INC. Consolidated statements of earnings (in thousands of dollars, except per share amounts) (unaudited)Three Months ended February 28Six Months ended February 282011201020112010$$$$Sales94,853107,832204,231217,078ExpensesCost of goods sold, selling, administrative and general expenses96,426104,217203,482209,767Amortization384370750726Financial296261667492Foreign currency loss19415939230697,300105,007205,291211,291Earnings before income taxes(2,447)2,825(1,060)5,787Income taxes(759)891(329)1,825Net earnings(1,688)1,934(731)3,962Earnings per shareBasic and diluted(0.20)0.22(0.09)0.46GOODFELLOW INC. Consolidated statements of retained earnings (in thousands of dollars) (unaudited)Six Months ended February 2820112010$$Balance, beginning of year106,880101,932Net earnings(731)3,962106,149105,894Dividends(2,572)(2,572)Balance, end of year103,577103,322Consolidated statements of comprehensive income (in thousands of dollars) (unaudited)Three Months ended February 28Six Months ended February 282011201020112010$$$$Net Income(1,688)1,934(731)3,962Other comprehensive incomeForeign currency translation adjustment----Total other comprehensive income----Comprehensive income(1,688)1,934(731)3,962GOODFELLOW INC. Consolidated balance sheets As at February 28, 2011 and 2010 (in thousands of dollars) (unaudited)20112010$$AssetsCurrent assetsCash527560Accounts receivable54,47761,805Income taxes recoverable2,586-Inventories74,77772,714Prepaid expenses3,0852,230135,452137,309Capital assets31,04430,558Deferred pension asset6,8504,938173,346172,805LiabilitiesCurrent liabilitiesBank indebtedness33,81824,078Accounts payable and accrued liabilities23,70733,197Income taxes payable-31157,52557,586Future income taxes3,0222,67460,54760,260Shareholders' equityCapital stock9,2229,222Retained earnings103,577103,322Accumulated other comprehensive income--112,799112,545173,346172,805GOODFELLOW INC. Consolidate statements of cash flows (in thousands of dollars) (unaudited)Three Months ended February 28Six Months ended February 282011201020112010$$$$Cash flows from operating activitiesNet earnings(1,688)1,934(731)3,962Adjustments for :Amortization384370750726Amortization included in cost of good sold249258487510Gain on disposal of capital assets-14-6Shortage of expense over pension plan funding(197)(126)(329)(237)(1,252)2,4501774,967Changes in non-cash working capital items(7,741)(9,695)(2,568)(19,636)(8,993)(7,245)(2,391)(14,669)Cash flows used by financing activities(Decrease) increase in bank loan12,0004,000(1,000)9,000(Decrease) increase in banker's acceptances(10,000)5,000-10,000Dividends--(2,572)(2,572)2,0009,000(3,572)16,428Cash flows used by investing activitiesAcquisition of capital assets(802)(470)(1,744)(1,452)Proceeds on disposal of capital assets-12-21(802)(458)(1,744)(1,432)Net cash (outflow) inflow(7,795)1,297(7,707)327(Bank overdraft), beginning of year(26,496)(5,817)(26,584)(4,847)Bank overdraft, end of year(34,291)(4,520)(34,291)(4,520)Bank overdraft is comprised of :Cash527560527560Bank overdraft(34,818)(5,080)(34,818)(5,080)(34,291)(4,520)(34,291)(4,520)FOR FURTHER INFORMATION PLEASE CONTACT: Richard GoodfellowGoodfellow Inc.President and CEO450-635-6511450-635-3730 (FAX)info@goodfellowinc.com