PART I

Item 1.   Business

In this Form 10-K, IPSCO Inc. and its subsidiaries, unless otherwise specified, are collectively referred to as “IPSCO” or the “Company,” and unless the context otherwise requires, the terms “we,” “us” or “our” refer to the Company.

General

IPSCO is a North American producer of steel products with facilities located at 25 sites throughout the U.S. and Canada. Four of these facilities are steelworks; three of which produce carbon steel slabs, hot rolled discrete plate and coil and one that produces round billets. Downstream processing facilities further process the plate, coil and billets into value-added products, including heat treated and normalized plate, cut-to-length plate, and a comprehensive line of casing, tubing, large and small diameter line pipe and industrial pipe. Tubular product offerings include both seamless and welded pipe in carbon and alloy grades.

IPSCO was incorporated by certificate of incorporation under the laws of Saskatchewan on July 13, 1956 and was continued by articles of continuance under the Canada Business Corporations Act on January 28, 1977. Originally known as Prairie Pipe Manufacturing Co. Ltd., the name of the Company was changed to Interprovincial Steel and Pipe Corporation Ltd. on August 26, 1960. On April 2, 1984, the Company changed its name to IPSCO Inc.

On December 1, 2006, we completed our acquisition of NS Group, Inc. (“NSG”), a leading producer of tubular products in the U.S. serving energy and certain other industrial markets.

Financial Information about Segments

We operate and report our business as a single business segment. Our operations are managed, and operating results are reviewed, as a consolidated enterprise for purposes such as resource allocation and performance assessment. The Chief Operating Decision Maker (“CODM”) and the Board of Directors review profitability for the Company on a consolidated basis. The financial information reviewed by the CODM is presented on a consolidated basis which at times includes information by product only at the levels of gross margins. Allocation of selling, general, administrative and other costs is not computed between product groupings. Operating income by product group is not presented in the financial data we prepare. We believe the information presented in this report meets the requirements for segment reporting as defined by generally accepted accounting principles in the United States of America.

Description of Business

Operations:

We own and operate three flat rolled steelworks in: Regina, Saskatchewan; Montpelier, Iowa; and Mobile, Alabama. The Regina tubular operations began in 1956, followed by the steel mill operations in 1961. The Montpelier Steelworks began production in 1997 and the Mobile Steelworks in 2001. These steelworks use electric arc furnace or “mini-mill” technology to convert scrap metal into liquid steel. Alloys are added during processing to create a variety of steel grades. Liquid steel is cast into slabs and subsequently hot rolled, using Steckel mill technology, into either discrete plate or coil.

We own and operate one round billet steelworks, which we acquired as part of the NSG acquisition with a current estimated annual meltshop capacity of 450,000 tons which also uses mini-mill technology to convert scrap metal into liquid steel. Alloys are added during processing to create a variety of steel grades. Liquid steel is cast into 5½ inches round billets that are further processed into seamless tubes or sold as billets.

Five coil-processing locations, sourced primarily with IPSCO produced coil, fabricate cut-to-length products. Cut-to-length products are produced from steel coils of various widths, thicknesses and grades. They are cut to specific lengths to meet customer requirements in lengths ranging from 8 feet to over 60 feet. We produce a wide range of cut-to-length products in yield strengths as high as 100,000 pounds per square inch, thicknesses of up to ½ inch and widths as great as 96 inches.

Seven pipe mill locations throughout North America utilize both IPSCO and third party coil to fabricate electric resistance welded (ERW) tubular products that range from 1½ inches to 24 inches in diameter, as well as spiral formed, double submerged arc welded tubular products greater than 24 inches in diameter. One of the facilities, located in Wilder, Kentucky was acquired through our NSG acquisition.

Our seamless pipe mill in Ambridge, Pennsylvania also acquired through our NSG acquisition, heats and pierces solid steel billets into seamless pipe from 1.9 inches to 5 inches in outside diameter.

As part of the acquisition of NSG, we acquired ULTRATM Premium Oilfield Services Ltd. (“ULTRA”) which specializes in premium connections, oilfield accessories and field services for today’s complex oil and gas exploration and production activities with operating facilities in both Odessa and Houston, Texas. ULTRA is well positioned to support our growing carbon and alloy tubular market by providing the highly regarded line of ULTRA premium connections.

We operate five auto shredder facilities in Western Canada and nine smaller scrap metal processing and auto wrecking yards. These supply a significant portion of the scrap metal requirements of our Regina Steelworks as well as selling scrap to third parties in addition to processing non-ferrous materials that are sold throughout the world.

With the acquisition of NSG on December 1, 2006, our workforce increased by approximately 1,500 to 4,400 employees. On an annual basis, steel production volumes exceed 4 million tons. Acquisition and investment in new facilities and technology in the U.S., combined with training of production employees, have allowed us to expand production volumes through improved efficiencies. We believe we have a high rate of employee retention as a result of providing industry competitive wages that are supplemented by profit-driven incentives for achieving production, safety, on time shipment and other targets.