Goodfellow Reports Improved Results for the Third Quarter Ended May 31, 2010

Goodfellow Inc. today reported its financial results for the third quarter ended May 31, 2010. Net income from operations was $3.8 million or $0.45 per share compared to a net income of $2.1 million or $0.24 per share a year ago. Consolidated sales for the third quarter of fiscal 2010 were $140.0 million compared to $110.2 million for the same period a year ago. Cash flow from operations (excluding non-cash working capital) for the third quarter of fiscal 2010 increased to $3.2 million from $2.5 million for the same period last year. Sales in Canada grew 26% due to strong performances in all regional areas of our business and diversification of our product offering in Ontario and Western Canada. Sales in the US increased 33% due to market conditions improving throughout the spring season. Export sales increased 67% compared to last year due mainly to a strong performance in the UK and increasing sales to China and the Middle East. General expenses, selling and administrative costs for the third quarter ended May 31, 2010 increased from $17.1 million last year to $21.0 million. The increase reflects higher staffing and overhead costs to respond to the growth generated in the 3rd quarter. Selling and administrative costs reflects increased commission and profit sharing provisions, temporary staffing for the spring and summer season and higher energy costs linked with the increased production output. On the other hand, Bad debt provisions were 55% lower than last year when customer's credit limits were being reduced.

'The quarter, although not a record one, put us back on track to restore our yearly sales numbers to pre-recession levels.' said Richard Goodfellow, President and Chief Executive Officer. 'The contribution from our Ontario group was improved and all efforts are now focused on our key fourth quarter'.

For the 9 months ended May 31, 2010, Consolidated Sales reached $357.1 million compared to $312.6 million for the same period last year. Net results from operations for the 9 months ended May 31, 2010 was $7.8 million or $0.91 per share compared to $2.3 million or $0.27 per share. Including the extraordinary gain of $3.2 million or $0.37 per share related to the revaluation at fair value, net income for the 9 months of fiscal 2009 reached $5.5 million or $0.64 per share.

Goodfellow Inc. is one of eastern 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)
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                                   Three Months ended    Nine Months ended
                                               May 31               May 31

                                       2010      2009       2010      2009
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                                          $         $          $         $

Sales                               140,014   110,177    357,092   312,612
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Expenses
  Cost of goods sold, selling,
   administrative and general
   expenses                         133,625   106,654    343,392   306,857
  Amortization                          380       387      1,106     1,040
  Financial                             324       252        816       913
  Foreign currency loss                 141      (184)       447       355
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                                    134,470   107,109    345,761   309,165
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Earnings before income taxes and
 extraordinary item                   5,544     3,068     11,331     3,447

Income taxes                          1,748       993      3,573     1,115

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Net earnings before extraordinary
 item                                 3,796     2,075      7,758     2,332
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Extraordinary gain, net of income
 taxes of $1,143                          -         -          -     3,191

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Net earnings                          3,796     2,075      7,758     5,523
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Earnings per share
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  Net earnings before
   extraordinary item                  0.45      0.24       0.91      0.27
  Extraordinary item                      -         -          -      0.37
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  Basic and diluted                    0.45      0.24       0.91      0.64
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GOODFELLOW INC.
Consolidated statements of retained earnings
(in thousands of dollars)
(unaudited)
-------------------------------------------------------
                                 Nine Months ended May
                                                    31
                                       2010       2009
                                          $          $

Balance, beginning of year          101,932     94,559

Net earnings                          7,758      5,523
-------------------------------------------------------
                                    109,690    100,082

Dividends                            (5,143)    (2,144)
Redemption of shares                      -        (33)
-------------------------------------------------------
Balance, end of year                104,547     97,905
-------------------------------------------------------


Consolidated statements of
 comprehensive income
(in thousands of dollars)
(unaudited)
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                                          Three Months         Nine Months
                                          ended May 31        ended May 31
                                        2010      2009      2010      2009
--------------------------------------------------------------------------
                                           $         $         $         $

Net Income                             3,796     2,075     7,758     5,523

Other comprehensive income

  Foreign currency translation
   adjustment                              -         -         -       303
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Total other comprehensive income           -         -         -       303
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Comprehensive income                   3,796     2,075     7,758     5,826
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GOODFELLOW INC.
Consolidated balance sheets
(in thousands of dollars)
(unaudited)
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                                       May 31    May 31 August 31
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                                         2010      2009      2009
                                            $         $         $
Assets
Current assets
  Cash                                    302       433       580
  Accounts receivable                  81,186    66,553    65,330
  Income taxes recoverable                  -     1,309         -
  Inventories                          80,038    59,806    46,163
  Prepaid expenses                      3,298     2,931     1,768
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                                      164,824   131,032   113,841

Capital assets                         30,489    30,345    30,369
Deferred pension asset                  6,185     4,500     4,701
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                                      201,498   165,877   148,911
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Liabilities
Current liabilities
  Bank indebtedness                    47,214    28,185     5,427
  Accounts payable and accrued
   liabilities                         36,823    27,875    29,417
  Income taxes payable                  1,018         -       239
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                                       85,055    56,060    35,083

Future income taxes                     2,674     2,690     2,674
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                                       87,729    58,750    37,757
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Shareholders' equity
  Capital stock                         9,222     9,222     9,222
  Retained earnings                   104,547    97,905   101,932
  Accumulated other comprehensive
   income                                   -         -         -
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                                      113,769   107,127   111,154
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                                      201,498   165,877   148,911
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GOODFELLOW INC.
Consolidate statements of cash flows
(in thousands of dollars)
(unaudited)
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                                 Three Months ended Nine Months ended May
                                             May 31                    31
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                                    2010       2009       2010       2009
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                                       $          $          $          $

Cash flows from operating
 activities
  Net earnings                     3,796      2,075      7,758      5,523
  Adjustments for :
    Extraordinary item                 -          -          -     (4,334)
    Amortization                     380        386      1,106      1,040
    Amortization included in
     cost of good sold               265        268        775        694
    Gain on disposal of
     capital assets                    -          -          6         36
    Future Income Taxes                -          -          -      1,192
    Impact of foreign exchange
     on cash                           -          -          -        303
    Shortage of expense over
     pension plan funding         (1,247)      (199)    (1,484)      (671)
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                                   3,194      2,531      8,161      3,783
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  Changes in non-cash working
   capital items                 (23,438)    (6,741)   (43,076)    (6,364)
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                                 (20,244)    (4,210)   (34,915)    (2,581)
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Cash flows used by financing
 activities
  (Decrease) increase in bank
   loan                            1,000     (5,542)    10,000     (8,911)
  Increase in banker's
   acceptances                    15,000     13,000     25,000     15,000
  Redemption of common shares          -         (3)         -        (33)
  Dividends                       (2,571)         -     (5,143)    (2,144)
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                                  13,429      7,455     29,857      3,912
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Cash flows used by investing
 activities
  Acquisition of capital
   assets                           (577)      (318)    (2,028)    (2,096)
  Proceeds on disposal of
   capital assets                      -          -         21        181
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                                    (577)      (318)    (2,007)    (1,915)
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Net cash (outflow) inflow         (7,392)     2,927     (7,065)      (584)
(Bank overdraft), beginning of
 year                             (4,520)    (6,405)    (4,847)    (2,894)
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Bank overdraft, end of year      (11,912)    (3,478)   (11,912)    (3,478)
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Bank overdraft is comprised of
 :
  Cash                               302        433        302        433
  Bank overdraft                 (12,214)    (3,911)   (12,214)    (3,911)
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                                 (11,912)    (3,478)   (11,912)    (3,478)