The document summarizes the results of a review of internal controls for cash management, pricing, and taxes processes. For cash management, some segregation of duty issues were identified with wire transfers and outstanding reconciling items. Pricing controls were found to be adequate. For taxes, there was no evidence of review of the quarterly tax provision calculation, though numbers are disclosed in public filings. Opportunities for improvements in documentation and review procedures were identified.

1. January 31, 2007 Review of Internal Controls Prepared by: Lavendar M. Watters

2. Objectives, Scope & Procedures Executive Summary Process Background Cash Management Pricing Taxes Results of Testing Table of Contents

3. Evaluate overall efficiency and effectiveness of internal controls and procedures for each of the processes reviewed. Identify opportunities for improvement in operational efficiencies related to these processes. Objectives, Scope & Procedures Scope and Procedures Objectives Review documentation, policies and procedures and other relevant supporting documents. Comparison of The Company’s practices to key internal control practices. Interviews of management and key process personnel to obtain an understanding of process operation, controls and key issues. Validation of management statements as deemed necessary. Testing of sample transactions to confirm operation of key controls. Cash Management Pricing Taxes Documentation Review Process Interviews High-Level Testing Evaluation of Key Controls

4. The internal control environment is adequate in most areas. The following matrices evaluate the internal controls present within each of the areas reviewed . General Controls Policies & Procedures Segregation of Duties Monitor and/or Review Safeguarding of Assets      Overall Control Evaluation Low High Cash Management Pricing Taxes      Low High Process-Specific Controls Executive Summary In general, in the processes reviewed, key controls are adequate and operating on a consistent basis. Opportunities for control and efficiency improvements are highlighted as Key Management Issues below.

5. 1. Policies are not formally documented and communicated (Cash Management and Taxes). 2. The Treasurer , Corporate Accountant, Assistant Controller and Mill Controller (Interlake) can create and release their own wires. 3. The Treasurer reconciles the bank statement and posts cash journal entries to the G/L. 4. Journal Entries posted to the G/L by the Treasurer are not reviewed/approved. 9. Documentation for Cash Management and Taxes should be updated. In addition, a narrative of the pricing process needs to be written, as well as, establishing internal controls. 5. No evidence of review/approval of bank reconciliations. 8. Outstanding reconciling items on the December 2006 bank reconciliation for December 2005 and April 2006. The following matrix outlines the key observations and issues identified during this review. Each item has been prioritized based on upon the degree of risk and opportunity for process improvement. Executive Summary 6. Bank reconciliations from satellite locations should be reviewed/approved by Corporate. 10. Policies and Procedures should be updated for the Pricing process. 7. No evidence of review of the quarterly tax provision calculation. Mitigating Control: sign-off on 10-Q and 10-K by the CFO. ISSUES/OBSERVATIONS PRIORITY Low Medium High Priority:

6. Cash Management Background Background Information The Company has a main checking account with JP Morgan Chase. In addition, there are six general disbursement accounts for each US Mill and the corporate office. These accounts are zero balance accounts which is maintained by a transfer of funds from the JP Morgan master account. These accounts are connected on a JP Morgan system called JPMorgan Access™. The Treasurer records daily cash transactions from the mill locations and corporate into the Cash Management FY07 Excel spreadsheet. Payroll bank accounts for the mill locations and corporate are automatically funded by ADP. The Company has a total pay package agreement with ADP (Reconciliation of accounts; quarterly and annual payroll taxes, etc.). The Company utilizes positive pay. Upon completion of a check run, the Company prepares a formatted checks issued data file and transmits data to JP Morgan. The bank compares selected check information to the data file. Checks that fail to match with checks issued by the company are rejected. The Treasurer and the CFO have the authority to move cash as needed from the Investment Account (Tax Free MMF) to the main operating account to cover expenditures. Transfer of funds is limited to $3,000,000 per transaction. The Treasurer currently handles cash management functions for the Canada location .

7. Background Information All new prices and/or changes for converted product are approved by the President. All new prices and/or changes for hard rolls are approved by a Senior Sales Executive. Monthly, Pricing Administration performs an audit of product prices by running an Open Pricing Query in JD Edwards. The Pricing Coordinator compares the Query to the Price Book. The Price Book is downloaded into an Excel spreadsheet monthly. The Mill Controllers perform a costing analysis before new prices are entered into JDE and/or price changes for products with a Gross Profit Percentage of less than 10%. An approval must accompany price changes/new prices before Pricing Administration enters into JDE. Pricing Background

8. Taxes Background Background Information The Company utilizes FAS 109 for the financial accounting and reporting standards for the effects of income taxes that resulted from activities during the current and preceding years. The CFO reviews/approves income tax returns before they are filed by E&Y. Quarterly tax J/Es are reviewed/approved by the Corporate Controller before posting to the General Ledger. The company does not have a valuation allowance recorded for the current year. However, this will be readdressed at year-end (2/28/07). The effective tax rate and tax account rollforward for all tax accounts are prepared on a quarterly basis by the Director of Tax. The Company did not owe any taxes for the 2006 tax return. However, in the first quarter 2007, the Company paid $2,250 in CT taxes and in the second quarter 2007 taxes were owed to Wisconsin in the amount of $2,000. In the third quarter 2007 there were no estimated taxes due.

9. The objective of the project was to review the controls over the processes listed below: CASH MANAGEMENT : Obtained December 2006 bank reconciliation to ensure that Mill Management reviewed/approved the reconciliation. Examined the December 2006 bank reconciliation to ensure that there were no reconciling items over 90 days. Obtained User Authorization Information for all individuals that have access to JPMorgan ACCESS™ to ensure a proper segregation of duties. Obtained November 2006 A/P Disbursement Reconciliation and verified the A/P subledger agrees to the General Ledger. RESULTS: Segregation of duties issues with wire transfers; reconciling items for December 2005 and April 2006 on The Company’s December 2006 bank reconciliation; No evidence of review/approval by the Mill Controller. PRICING: Obtained Corporate Pricing Audit Report for prices that were updated in December 2006. Selected 11 price changes for various item numbers. Obtained documentation for approvals (memo, email, etc.) and examined for the appropriate approvals. RESULTS: No exceptions were noted. TAXES : Obtained tax return for fiscal year ending 02/28/06. Examined returns for the CFO’s approval. Obtained the provision for income tax and the related deferred assets and liabilities for Q3 2007. Examined provision for the CFO’s approval. Obtained Q2 2007 income tax payments for the MI location. Examined for the Corporate Controller or CFO approval. RESULTS: No evidence of the CFO’s review of the quarterly tax provision calculation (Mitigating Control: Numbers are disclosed in the 10-Q or 10-K) Testing