SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2006

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 0-22462

Gibraltar Industries, Inc.

(Exact name of Registrant as specified in its charter)

Delaware		16-1445150
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

3556 Lake Shore Road, P.O. Box 2028, Buffalo, New York 14219-0228
(Address of principal executive offices)

(716) 826-6500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ. No o.

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o            Accelerated filer þ            Non-accelerated filer o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o. No þ.

As of November 3, 2006, the number of common shares outstanding was: 29,839,041.

 

 

GIBRALTAR INDUSTRIES, INC.

INDEX

				PAGE
				NUMBER
PART 1.		FINANCIAL INFORMATION
Item 1.		Financial Statements (unaudited)
		Condensed Consolidated Balance Sheets as of September 30, 2006 and December 31, 2005		3
		Condensed Consolidated Statements of Income For the Three and Nine Months Ended September 30, 2006 and 2005		4
		Condensed Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2006 and 2005		5
		Notes to Condensed Consolidated Financial Statements		6-28
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		29-36
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		36
Item 4.		Controls and Procedures		36
PART II.		OTHER INFORMATION		37-39
EX-31.1
EX-31.2
EX-31.3
EX-32.1
EX-32.2
EX-32.3

PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

GIBRALTAR INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

		September 30				December 31,
		2006				2005
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	12,804			$	28,529
Accounts receivable, net			193,818				162,300
Inventories			263,932				189,988
Other current assets			15,900				19,666
Current assets of discontinued operations			—				23,521
Total current assets			486,454				424,004
Property, plant and equipment, net			232,040				229,644
Goodwill			367,220				360,663
Investments in partnerships			4,840				6,151
Other assets			61,194				55,099
Assets of discontinued operations			—				129,451
		$	1,151,748			$	1,205,012
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	98,997			$	83,266
Accrued expenses			69,055				59,289
Current maturities of long-term debt			2,335				2,331
Current maturities of related party debt			—				5,833
Current liabilities of discontinued operations			—				6,529
Total current liabilities			170,387				157,248
Long-term debt			357,516				453,349
Deferred income taxes			68,255				90,942
Other non-current liabilities			6,951				6,038
Liabilities of discontinued operations			—				3,410
Shareholders’ equity:
Preferred stock, $.01 par value; authorized:
10,000,000 shares; none outstanding			—				—
Common stock, $.01 par value; authorized 50,000,000 shares; issued 29,881,641 and 29,734,986 shares in 2006 and 2005, respectively			299				298
Additional paid-in capital			215,276				216,897
Retained earnings			331,358				280,116
Unearned compensation			—				(5,153	)
Accumulated other comprehensive loss			1,706				1,867
			548,639				494,025
Less: cost of 42,600 and 41,100 common shares held in treasury in 2006 and 2005			—				—
Total shareholders’ equity			548,639				494,025
		$	1,151,748			$	1,205,012

See accompanying notes to condensed consolidated financial statements

GIBRALTAR INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(in thousands, except per share data)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2006				2005				2006				2005
Net sales		$	336,471			$	247,771			$	1,011,529			$	737,163
Cost of sales			266,660				200,193				801,222				597,744
Gross profit			69,811				47,578				210,307				139,419
Selling, general and administrative expense			33,679				26,353				110,469				77,607
Income from operations			36,132				21,225				99,838				61,812
Other (income) expense:
Equity in partnerships’ loss (income) and other income			103				820				(445	)			469
Interest expense			6,422				2,657				20,302				8,823
Total other expense			6,525				3,477				19,857				9,292
Income before taxes			29,607				17,748				79,981				52,520
Provision for income taxes			11,278				6,922				30,158				20,043
Income from continuing operations			18,329				10,826				49,823				32,477
Discontinued operations:
(Loss) income from discontinued operations before taxes			(555	)			1,694				9,458				9,179
Income tax (benefit) expense			(222	)			661				3,575				3,580
(Loss) income from discontinued operations			(333	)			1,033				5,883				5,599
Net income		$	17,996			$	11,859			$	55,706			$	38,076
Net income per share — Basic:
Income from continuing operations			.62				.37				1.68			$	1.10
(Loss) income from discontinued operations			(.01	)		$	.03			$	.20			$	.19
Net income		$	.61			$	.40			$	1.88			$	1.29
Weighted average shares outstanding – Basic			29,747				29,622				29,691				29,560
Net income per share - Diluted:
Income from continuing operations			.61				.37				1.66			$	1.09
Loss income from discontinued operations			(.01	)		$	.03			$	.20			$	.19
Net income		$	.60			$	.40			$	1.86			$	1.28
Weighted average shares outstanding – Diluted			30,040				29,831				29,993				29,789

See accompanying notes to condensed consolidated financial statements

GIBRALTAR INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

		Nine Months Ended
		September 30,
		2006				2005
Cash flows from operating activities
Net income		$	55,706			$	38,076
Income from discontinued operations			5,883				5,599
Income from continuing operations			49,823				32,477
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization			20,024				13,564
Provision for deferred income taxes			—				(51	)
Equity in partnerships’ loss			400				554
Distributions from partnerships			909				850
Stock compensation expense			2,192				900
Other noncash adjustments			783				74
Increase (decrease) in cash resulting from changes in (net of acquisitions):
Accounts receivable			(32,598	)			(29,700	)
Inventories			(68,872	)			32,572
Other current assets and other assets			2,388				(93	)
Accounts payable			12,264				4,139
Accrued expenses and other non-current liabilities			(18,225	)			(10,898	)
Net cash (used in) provided by continuing operations			(30,912	)			44,388
Net cash provided by discontinued operations			6,750				14,682
Net cash (used in) provided by operating activities			(24,162	)			59,070
Cash flows from investing activities
Acquisitions, net of cash acquired			(13,206	)			(27,582	)
Purchases of property, plant and equipment			(17,057	)			(11,795	)
Net proceeds from sale of property and equipment			388				396
Net proceeds from sale of businesses			151,511				42,594
Net cash provided by investing activities from continuing operations			121,636				3,613
Net cash used in investing activities from discontinued operations			(3,319	)			(3,302	)
Net cash provided by investing activities			118,317				311
Cash flows from financing activities
Debt payments			(114,292	)			(182,320	)
Proceeds from long-term debt			9,604				125,589
Payment of deferred financing costs			(569	)			(1,477	)
Payment of dividends			(4,464	)			(4,453	)
Net proceeds from issuance of common stock			1,174				779
Tax benefit from stock options			167				158
Net cash used in financing activities for continuing operations			(108,380	)			(61,724	)
Net cash used in financing activities from discontinued operations			(1,500	)			(400	)
Net cash used in financing activities			(109,880	)			(62,124	)
Net decrease in cash and cash equivalents			(15,725	)			(2,743	)
Cash and cash equivalents at beginning of year			28,529				10,892
Cash and cash equivalents at end of period		$	12,804			$	8,149

See accompanying notes to condensed consolidated financial statements

GIBRALTAR INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying condensed consolidated financial statements as of September 30, 2006 and 2005 have been prepared by Gibraltar Industries, Inc. (the Company) without audit. In the opinion of management, all adjustments (consisting of normal recurring adjustments and accruals) necessary to present fairly the financial position, results of operations and cash flows at September 30, 2006 and 2005 have been included.

Certain information and footnote disclosures including significant accounting policies normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements included in the Company’s Annual Report to Shareholders for the year ended December 31, 2005, as filed on Form 10-K.

The consolidated balance sheet at December 31, 2005 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

Certain 2005 amounts have been reclassified to conform with 2006 presentation as discussed in Note 7.

The results of operations for the three and nine month periods ended September 30, 2006 are not necessarily indicative of the results to be expected for the full year.

2. EQUITY-BASED COMPENSATION

During the first quarter of 2006, the Company adopted SFAS 123(R) Share-Based Payment, applying the modified prospective method. This statement requires all equity-based payments to employees, including grants of stock options, to be recognized in the statement of income based on the grant date fair value of the award. Under the modified prospective method, the Company is required to record equity-based compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards outstanding as of the date of adoption. The Company uses the straight-line method of attributing the value of stock-based compensation expense based on vesting.

Stock compensation expense recognized during the period is based on the value of the portion of equity-based awards that is ultimately expected to vest during the period. Vesting requirements vary for directors and executives and key employees.

On May 19, 2005, the Gibraltar Industries, Inc. 2005 Equity Incentive Plan (the “2005 Equity Incentive Plan”) was approved by the Company’s stockholders. The 2005 Equity Incentive Plan is an incentive compensation plan that allows the Company to grant equity-based incentive compensation awards to eligible participants to provide them an additional incentive to promote the business of the Company, to increase their proprietary interest in the success of the Company and to encourage them to remain in the Company’s employ. Awards under the plan may be in the form of options, restricted shares, restricted units, performance shares, performance units and rights. The 2005 Equity Incentive Plan provides for the issuance of up to 2,250,000 shares of common stock. Of the total number of shares of common stock issuable under the plan, the aggregate number of shares that may be issued in connection with grants of restricted stock or restricted units cannot exceed 1,350,000 shares, and the aggregate number of shares which may be issued in connection with grants of incentive stock options and rights cannot exceed 900,000 shares. Vesting terms and award life are governed by the award document.

The Management Stock Purchase Plan (MSPP) was approved by the shareholders in conjunction with the adoption of the 2005 Equity Incentive Plan. The MSPP provides participants the ability to defer up to 50% of their annual bonus under the Management Incentive Compensation Plan. The deferral is converted to restricted stock units and credited to an account along with a match equal to the deferral amount. The account is converted to cash at the current value of the Company’s stock and payable to the participants upon their termination from employment with the Company. The matching portion is payable only if the participant has reached their sixtieth birthday. If a participant terminates prior to age 60, the match is forfeited. Upon termination, the account is converted to a cash account that accrues interest at 2% over the rate of the then current 10 year U. S. Treasury note. The account is then paid out in five equal annual cash installments.

During the nine months ended September 30, 2006, the Company issued 6,000 restricted shares, 167,125 restricted stock units, and granted 174,052 non-qualified stock options. At September 30, 2006, 1,508,364 shares were available for issuance under this plan. Of this amount, 899,839 are available for restricted units and 900,000 are available for incentive stock options. The Company recognized compensation expense in connection with the vesting of stock options and the lapse of restrictions on restricted shares and restricted units issued under the 2005 Equity Incentive Plan in the amounts of $2,050,000 and $713,000 in the nine months ended September 30 , 2006 and 2005, respectively.

In 1993, the Company adopted an incentive stock option plan, whereby the Company may grant incentive stock options to officers and other key employees. Under this plan, 2,437,500 shares of common stock were reserved for the granting of stock options at an exercise price not less than the fair market value of the shares at the date of grant. Options granted under this plan vest ratably over a four-year period from the grant date and expire ten years after the date of grant. In September 2003, this plan expired. The expiration of this plan did not modify, amend or otherwise affect the terms of any outstanding options on the date of the plan’s expiration.

In 2003, the Company’s Board of Directors approved the adoption of an incentive stock option plan, whereby the Company may grant incentive stock options to officers and other key employees. This plan was approved by the shareholders in 2004. Under this plan, 2,250,000 shares of common stock were reserved for the granting of stock options. These options are granted at an exercise price not less than the fair market value of the shares at the date of grant. Options granted under this plan vest ratably over a four-year period from the grant date and expire ten years after the date of grant. On May 22, 2006 the Company terminated this plan. The termination of this plan did not modify, amend or otherwise affect the terms of any outstanding awards on the date of the plan’s termination.

The Company has a non-qualified stock option plan, whereby the Company may grant non-qualified stock options to officers, employees, non-employee directors and advisers. Under the non-qualified stock option plan, 600,000 shares of common stock were reserved for the granting of options. Options are granted under this plan at an exercise price not less than the fair market value of the shares at the date of grant. These options vest ratably over a four-year period from the grant date and expire ten years after the date of grant. On May 22, 2006 the Company terminated this plan. The termination of this plan did not modify, amend or otherwise affect the terms of any outstanding awards on the date of the plan’s termination.

The Company has a restricted stock plan and has reserved for issuance 375,000 common shares for the grant of restricted stock awards to employees and non-employee directors at a purchase price of $.01 per share. Shares of restricted stock issued under this plan vest on a straight-line basis over a period of 5 to 10 years. No shares were issued under this Plan in 2006 or 2005. On May 22, 2006 the Company terminated this plan. The termination of this plan did not modify, amend or otherwise affect the terms of any outstanding awards on the date of the plan’s termination. The Company recognized compensation expense of $142,000 and $151,000, respectively in connection with the lapse of restrictions on restricted stock in the nine months ended, September 30, 2006 and 2005, respectively.

The fair value of stock options granted was estimated on the date of grant using the Black-Scholes option pricing model. The weighted average fair value of the options was $10.15 for options granted during the nine

months ended September 30, 2006. The weighted average fair value of the options issued during the nine months ended September 30, 2005 was $8.34. The following table provides the weighted average assumptions used to value stock options during the nine months ended September 30, 2006 and 2005:

		Fair				Expected				Stock				Risk-free				Dividend
		value				life				Volatility				interest rate				yield
2006 Grants		$	10.15			6.25 Years					39.3	%			4.7	%			0.8	%
2005 Grant		$	8.34			5.0 Years					42.5	%			3.9	%			1.0	%

The fair value of restricted stock units granted was based on the grant date market price. During the nine months ended September 30, 2006, 97,027 restricted stock units were granted with a weighted average grant date fair value of $24.29 per share. These awards vest ratably over three to four years.

The fair value of restricted stock units held in the MSPP equals the market value of our common stock on the last day of the period. During the nine months ended September 30, 2006, 70,098 restricted stock units were credited to participant accounts. At September 30, 2006, the market value of our common stock was $22.18 per share.

The table below reflects income from continuing operations and income per share from continuing operations for the three and nine months ended September 30, 2006 compared with the pro forma information for the three and nine months ended September 30, 2005 as follows:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2006				2005				2006				2005
Income from continuing operations, as reported for the prior period(1)			N/A			$	10,826				N/A			$	32,477
Equity-based compensation expense, net of tax included in income as reported in prior period (2)			N/A				335				N/A				549
Equity-based compensation expense, net of tax(3)		$	343			$	(339	)		$	1,370			$	(553	)
Income from continuing operations including the effect of equity-based compensation expense(4)		$	18,329			$	10,822			$	49,823			$	32,473
Income from continuing operations per share:
Basic – as reported for the prior period(1)		$	.62			$	.37			$	1.68			$	1.10
Basic – including the effect of equity-based compensation expense(4)		$	.62			$	.37			$	1.68			$	1.10
Diluted – as reported for the prior period(1)		$	.61			$	.37			$	1.66			$	1.09
Diluted – including the effect of equity- based compensation expense(4)		$	.61			$	.37			$	1.66			$	1.09

The following table summarizes the ranges of outstanding and exercisable options at September 30, 2006:

						Weighted average
						remaining				Weighted								Weighted
Range of		Options				contractual life in				average				Options				average
Exercise prices		outstanding				years				exercise price				exercisable				exercise price
$  9.38 - $10.42			73,622				3.1			$	9.76				73,622			$	9.76
$14.50 - $15.00			118,625				1.2			$	14.82				118,625			$	14.82
$20.52 - $23.78			233,585				9.7			$	22.79				14,890			$	20.54

The following table summarizes information about stock option transactions:

										Weighted
						Weighted average				average				Aggregate
		Options				exercise price				remaining life				intrinsic value
Balance at January 1, 2006			383,426			$	13.70
Granted			174,025
Exercised			(120,655	)
Forfeited			(10,964	)
Balance at September 30, 2006			425,832			$	18.32				6.1			$	2,118,000

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on the $22.18 per share market price of the Company’s common stock as of September 30, 2006, which would have been received by the option holders had all option holders exercised their options as of that date. The aggregate intrinsic value of exercisable options as of September 30, 2006 was $2,118,000.

The following table summarizes information about restricted stock:

		Restricted
		Stock
Balance at January 1, 2006			77,000
Granted			6,000
Vested			(10,500	)
Forfeited			(1,500	)
Balance at September 30, 2006			71,000

The following table summarizes information about restricted stock units:

		Restricted
		Stock Units
Balance at January 1, 2006			283,036
Granted			167,125
Vested			—
Forfeited			—
Balance at September 30, 2006			450,161

As of September 30, 2006, there was $8,488,000 of total unrecognized compensation cost related to non-vested options, restricted shares, and restricted share units. That cost is expected to be recognized over a weighted average period of 1.9 years.

3. SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

The changes in shareholders’ equity and comprehensive income consist of (in thousands):

														Additional												Accumulated												Total
		Comprehensive				Common Stock								Paid-In				Retained				Unearned				Other Comprehensive				Treasury Stock								Shareholders’
		Income				Shares				Amount				Capital				Earnings				Compensation				Income				Shares				Amount				Equity
Balance at January 1, 2006							29,694			$	298			$	216,897			$	280,116			$	(5,153	)		$	1,867				41			$	—			$	494,025
Cumulative effect of adoption of SFAS 123(r)			—				—								(5,153	)							5,153				—				—				—				—
Comprehensive income:
Net income		$	55,706				—				—				—				55,706				—				—				—				—				55,706
Other comprehensive income (loss):
Foreign currency translation adjustment			(704	)			—				—				—				—				—				—				—				—				—
Unrealized gain on interest rate swaps, net of tax of $223			543				—				—				—				—				—				—				—				—				—
Other comprehensive income			(161	)			—				—				—				—				—				(161	)			—				—				(161	)
Total comprehensive income		$	55,545
Issuance of restricted shares							26				—				—				—				—				—				—				—				—
Equity based compensation expense							—				—				2,192				—				—				—				—				—				2,192
Stock options exercised and other							119				1				1,173				—				—				—				—				—				1,174
Tax benefit from exercise of stock options							—				—				167				—				—				—				—				—				167
Cash dividends — $.15 per share							—				—				—				(4,464	)			—				—				—				—				(4,464	)
Forfeiture of restricted stock							—				—				—				—								—				2				—				—
Balance at September 30, 2006							29,839			$	299			$	215,276			$	331,358			$	—			$	1,706				43			$	—			$	548,639

The cumulative balance of each component of accumulated other comprehensive loss, net of tax, is as follows (in thousands):

						Minimum				Unrealized				Accumulated
		Foreign currency				pension				gain/(loss) on				other
		translation				liability				interest rate				comprehensive
		adjustment				adjustment				swaps				loss
Balance at January 1, 2006		$	2,435			$	(30	)		$	(538	)		$	1,867
Current period change			(704	)			—				543				(161	)
Balance at September 30, 2006		$	1,731			$	(30	)		$	5			$	1,706

Total comprehensive income for the three and nine months ended September 30, 2006, was $17,118,000 and $55,545,000, respectively and for the three and nine months ended September 30, 2005 was $12,556,000 and $38,683,000, respectively.

Dividends of $.05 per share were declared in the three months ended September 30, 2006 and 2005 and $.15 per share in the nine months ended September 30, 2006 and 2005.

4. INVENTORIES

Inventories consist of the following (in thousands):

		September 30,				December 31,
		2006				2005
Raw material		$	123,043			$	87,888
Work-in process			46,377				32,251
Finished goods			94,512				69,849
Total inventories		$	263,932			$	189,988

5. NET INCOME PER SHARE

Basic income per share is based on the weighted average number of common shares outstanding. Diluted income per share is based on the weighted average number of common shares outstanding, as well as dilutive potential common shares which, in the Company’s case, comprise shares issuable under the stock option and restricted stock plans. The treasury stock method is used to calculate dilutive shares, which reduces the gross number of dilutive shares by the number of shares purchasable from the proceeds of the options assumed to be exercised.

The following table sets forth the computation of basic and diluted earnings per share as of:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2006				2005				2006				2005
Numerator:
Income available to common stockholders from continuing operations		$	18,329 ,000			$	10,826,000			$	49,823,000			$	32,477,000
Weighted average shares outstanding			29,747,231				29,621,946				29,690,616				29,599,655
Denominator for diluted income per share:
Weighted average shares outstanding Common stock options and restricted stock			292,359				209,014				302,434				189,710
Weighted average shares and conversions			30,039,590				29,830,960				29,993,050				29,789,365

6. ACQUISITIONS

On April 1, 2003, the Company acquired all of the outstanding stock of Construction Metals, Inc. (Construction Metals). As part of the purchase agreement between the Company and the former owners of Construction Metals, the Company was required to pay additional consideration if certain net sales levels as defined in the purchase agreement were achieved during the period from acquisition up to March 31, 2006. During the second quarter of 2006 and 2005 payments of $1,754,000 and $1,332,000, respectively, were made pursuant to the additional consideration.

On September 15, 2005, the Company acquired all of the outstanding stock of Curie International (Suzhou) Co., Ltd. (SCM Asia). SCM Asia is located in Suzhou, China and manufactures, markets and distributes non-ferrous metal powder products to customers in a number of different industries, including the powder metallurgy and thermal processing markets. The acquisition of SCM Asia provided the Company with an on-the-ground presence in the rapidly growing Chinese industrial market, which strengthens our ability to grow our business in this market. The results of SCM Asia (included in the Company’s Processed Metal Products segment) are included in the Company’s consolidated financial results from the date of acquisition on a one month lag. The acquisition of SCM Asia is not considered significant to the Company’s consolidated results of operations.

The aggregate purchase consideration for the acquisition of SCM Asia was approximately $7,631,000 in cash, a seller note, and acquisition costs. The seller note of $1,000,000 was satisfied in September 2006. The purchase price was allocated to the assets acquired and liabilities assumed based upon respective fair market values. The fair market values of the property, plant and equipment and identifiable intangible assets were determined with the assistance of an independent valuation. The identifiable intangible assets consisted of a non-compete agreement with a value of $645,000 (7 year estimated useful life) and unpatented technology of $715,000 (5 year estimated useful life). The excess consideration over fair value was recorded as goodwill and aggregated approximately $3,056,000, none of which is deductible for tax purposes. The allocation of purchase consideration to the assets acquired and liabilities assumed is as follow (in thousands):

Working capital		$	681
Property, plant and equipment			2,160
Other assets			374
Intangible assets			1,360
Goodwill			3,056
		$	7,631

On October 3, 2005, the Company acquired all the outstanding shares of Alabama Metal Industries Corporation (AMICO). AMICO is headquartered in Birmingham, Alabama, and manufactures, markets and distributes a diverse line of products used in the commercial and industrial sectors of the building products market. The acquisition of AMICO increased the Company’s participation in the industrial and commercial sectors of the building products markets and increased our product offerings in the residential sector of the building products market. The results of operations of AMICO (included in the Company’s Building Products segment) have been included in the Company’s consolidated results of operations from the date of acquisition.

The aggregate purchase consideration for the acquisition of AMICO was approximately $240,871,000 in cash and acquisition costs. The purchase price was allocated to the assets acquired and liabilities assumed based upon respective fair market values. The fair market values of property, plant and equipment and identifiable intangible assets were determined with the assistance of an independent valuation. The identifiable intangible assets consisted of trademark with a value of $25,000,000 (indefinite useful life), customer relationships with a value of $11,300,000 (13 year estimated useful life), and unpatented technology with a value of $2,400,000 (10 year estimated useful life). The excess consideration over fair value was recorded as goodwill and aggregated approximately $110,490,000 none of which is deductible for tax purposes. The allocation of purchase consideration to the assets acquired and liabilities assumed is as follows (in thousands):

Working capital		$	66,250
Property, plant and equipment			55,151
Other long term liabilities, net			(29,720	)
Intangible assets			38,700
Goodwill			110,490
		$	240,871

On June 8, 2006 the Company acquired all of the outstanding stock of Home Impressions, Inc. (Home Impressions). Home Impressions is based in Hickory, North Carolina and markets and distributes mail boxes and postal accessories. The acquisition of Home Impressions served to strengthen the Company’s position in the mail box and storage systems markets, and is expected to provide marketing, manufacturing and distribution synergies with our existing operations. The results of Home Impressions (included in the Company’s Building Products segment) are included in the Company’s consolidated financial results from the date of acquisition. The acquisition of Home Impressions is not considered significant to the Company’s consolidated results of operations.

The aggregate initial consideration was approximately $12,468,000 which consisted of $9,607,000 in cash and the assumption of $2,861,000 notes payable, including direct acquisition costs, with the final purchase price subject to adjustment for operating results through May 2009. The initial purchase price has been allocated to the assets acquired and liabilities assumed based upon a preliminary valuation of respective fair market values. A final valuation is expected to be completed during the fourth quarter of 2006. The excess consideration over fair value was recorded as goodwill and aggregated approximately $9,606,000, none of which is deductible for tax purposes. The allocation of purchase consideration to the assets and liabilities assumed is as follows (in thousands):

Working capital		$	1,619
Property, plant and equipment			1,243
Goodwill			9,606
		$	12,468

On June 30, 2006 the Company acquired certain assets of Steel City Hardware, LLC (Steel City). The assets the Company acquired from Steel City are used to manufacture mail boxes and postal accessories. The acquisition of the assets of Steel City served to vertically integrate Home Impression’s major domestic supplier and expanded our manufacturing competency in the storage market. The results of Steel City (included in the Company’s Building Products segment) are included in the Company’s consolidated financial results from the date of acquisition. The acquisition of Steel City is not considered significant to the Company’s consolidated results of operations.

The aggregate initial consideration was approximately $5,000,000, subject to adjustment for working capital and direct acquisition costs. The initial purchase price has been allocated to the assets acquired based upon a preliminary valuation of respective fair market values. A final valuation is expected to be completed during the fourth quarter of 2006. The excess consideration over fair value was recorded as goodwill and aggregated approximately $1,926,000, none of which is deductible for tax purposes. The allocation of purchase consideration to the assets and liabilities assumed is as follows (in thousands):

Working capital		$	2,617
Property, plant and equipment			457
Goodwill			1,926
		$	5,000

The following unaudited pro forma financial information presents the combined results of operations as if the AMICO acquisition had occurred on January 1, 2005. The pro forma information includes certain adjustments, including depreciation expense, interest expense and certain other adjustments, together with related income tax effects. The pro forma amounts may not be indicative of the results that actually would have been achieved had the acquisition occurred as of January 1, 2005 and are not necessarily indicative of future results of the combined companies (in thousands, except per share amounts):

		Three Months Ended				Nine Months Ended
		September 30, 2005				September 30, 2005
		(unaudited)				(unaudited)
Net sales		$	327,709			$	976,978
Income from continuing operations		$	16,039			$	45,693
Income from continuing operations per share – Basic		$	.54			$	1.55
Income from continuing operations per share – Diluted		$	.54			$	1.53

7. DISCONTINUED OPERATIONS

As part of its continuing evaluation of its businesses, the Company determined that its thermal processing and strapping businesses no longer provided a strategic fit with its long-term growth and operational objectives. On June 16, 2006 and June 30, 2006, in separate transactions, the Company sold certain assets and liabilities of both its strapping and thermal processing businesses, respectively. The proceeds from the sale of the strapping assets were $15,193,000, subject to an adjustment for working capital, and resulted in a pre-tax gain of $5,351,000. The proceeds from the sale of the thermal assets were $136,318,000 and resulted in a pre-tax loss of $2,613,000.

In January 2005, the Company determined that Milcor was not positioned to obtain a leadership position in its marketplace. We were approached by a market leader from Milcor’s marketplace and on January 27, 2005, the Company sold the net assets of its Milcor subsidiary, which included Portals Plus, for approximately $42,594,000.

In accordance with the Provisions of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the results of operations for the thermal processing business, the strapping business and Milcor for the current and prior period have been classified as discontinued operations in the condensed consolidated statements of income. Components of the net income from discontinued operations are as follows (in thousands):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2006				2005				2006				2005
Net sales		$	4,902			$	34,368			$	80,533			$	110,395
Expenses			5,457				32,674				71,075				101,216
(Loss) income from discontinued operations before taxes		$	(555	)		$	1,694			$	9,458			$	9,179

In connection with the disposal of Milcor, we retained a liability related to a multi-employer pension plan to fund the terminated pensions of the union employees of Milcor. We accrued $59,000 for the termination based on the information that was available at the time of disposal. During the second quarter of 2006, we received notification from the administrator of the plan that we had no further liability to the plan. Accordingly, we reversed the accrual.

8. GOODWILL AND RELATED INTANGIBLE ASSETS

Goodwill

The changes in the approximate carrying amount of goodwill by reportable segment for the nine months ended September 30, 2006 are as follows (in thousands):

		Building				Processed Metal
		Products				Products
		Segment				Segment				Total
Balance as of January 1, 2006		$	332,029			$	28,634			$	360,663
Purchase price adjustments			(3,288	)			(1,931	)			(5,219	)
Goodwill acquired			11,532				—				11,532
Foreign currency translation			173				71				244
Balance as of September 30, 2006		$	340,446			$	26,774			$	367,220

Intangible Assets

At September 30, 2006, intangible assets subject to amortization related to the Company’s acquisitions are included as part of the total other assets on the Company’s condensed consolidated balance sheet. Intangible assets at September 30, 2006 are as follows (in thousands):

		Gross Carrying				Accumulated				Estimated
		Amount				Amortization				Life
Trademark / Trade Name		$	660			$	164				2 to 10 years
Unpatented Technology			4,555				536			5 to 20 years
Customer Relationships			17,340				1,684				3 to 15 years
Non-Competition Agreements			3,010				1,228				5 to 10 years
Balance as of September 30, 2006		$	25,565			$	3,612

Intangible assets with indefinite useful lives not subject to amortization consist of trademarks and trade names valued at $25,440,000.

Intangible asset amortization expense for the three and nine month periods ended September 30, 2006 and 2005 aggregated approximately $537,000 and $1,650,000, and $223,000 and $661,000, respectively.

Amortization expense related to intangible assets for the remainder of fiscal 2006 and the next five years thereafter is estimated as follows (in thousands)

Year Ended December 31,
2006		$	756
2007		$	2,322
2008		$	2,194
2009		$	2,116
2010		$	2,053
2011		$	1,886

9. SEGMENT INFORMATION

The Company is organized into two reportable segments on the basis of the production process and products and services provided by each segment, identified as follows:

(i)

Building Products, which primarily includes the processing of sheet steel, aluminum and other materials to produce a wide variety of building and construction products.

(ii)

Processed Metal Products, which primarily includes the intermediate processing of wide, open tolerance flat-rolled sheet steel and other metals through the application of several different processes to produce high-quality, value-added coiled steel and other metal products to be further processed by customers.

     The following table illustrates certain measurements used by management to assess the performance of the segments described above (in thousands):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2006				2005				2006				2005
Net sales
Building products		$	226,351			$	149,116			$	680,151			$	410,942
Processed metal products			110,120				98,655				331,378				326,221
		$	336,471			$	247,771			$	1,011,529			$	737,163
Income (loss) from operations
Building products		$	34,662			$	23,229			$	106,454			$	55,930
Processed metal products			7,569				4,322				21,332				24,807
Corporate			(6,099	)			(6,326	)			(27,948	)			(18,925	)
		$	36,132			$	21,225			$	99,838			$	61,812
Depreciation and amortization
Building products		$	3,517			$	2,235			$	12,021			$	7,237
Processed metal products			1,552				1,743				5,679				5,216
Corporate			780				289				2,324				1,111
		$	5,849			$	4,267			$	20,024			$	13,564
Capital expenditures (excluding acquisitions)
Building products		$	4,445			$	2,149			$	12,899			$	6,645
Processed metal products			487				1,154				2,141				3,672
Corporate			673				419				2,017				1,478
		$	5,605			$	3,722			$	17,057			$	11,795

		September 30, 2006				December 31, 2005
Total identifiable assets
Building products		$	797,153			$	730,846
Processed metal products			316,885				232,294
Sub-total			1,114,038				963,140
Corporate *			37,710				241,872
		$	1,151,748			$	1,205,012

10. RELATED PARTY TRANSACTIONS

In connection with the acquisition of Construction Metals, the Company entered into two unsecured subordinated notes each in the amount of $8,750,000 (aggregate total of $17,500,000). These notes were payable to the two former owners of Construction Metals and were considered related party in nature due to the former owners’ continuing employment relationship with the Company. These notes were payable in annual principal installments of $2,917,000 per note on April 1, and were satisfied on April 1, 2006. These notes required quarterly interest payments at an interest rate of 5.0% per annum. Interest expense related to these notes was approximately $72,000 and $290,000 for the nine months ended September 30, 2006 and 2005, respectively.

The Company has certain operating lease agreements related to operating locations and facilities with the former owners of Construction Metals or companies controlled by these parties. These operating leases are considered to be related party in nature. Rental expense associated with these related party operating leases aggregated approximately $1,015,000 and $1,079,000 for the nine months ended September 30, 2006 and 2005, respectively.

Two members of our Board of Directors are partners in law firms that provide legal services to the Company. For the nine months ended September 30, 2006 and 2005, the Company incurred $1,413,000 and $1,166,000, respectively, for legal services from these firms. Of the amount incurred, $1,116,000 and $841,000, was expensed during the nine months ended September 30, 2006 and 2005, respectively. $297,000 and $325,000 were capitalized as acquisition costs and deferred debt issuance costs during the nine months ended September 30, 2006 and 2005, respectively. $295,000 and $389,000 were included in accounts payable at September 30, 2006 and 2005, respectively.

11. BORROWINGS UNDER REVOLVING CREDIT FACILITY

The aggregate borrowing limit under the Company’s revolving credit facility is $300,000,000. At September 30, 2006, the Company had $252,788,000 of availability under the revolving credit facility.

12. NET PERIODIC BENEFIT COSTS

The following tables present the components of net periodic pension and other postretirement benefit costs charged to expense (in thousands):

Pension Benefit

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2006				2005				2006				2005
Service cost		$	40			$	44			$	120			$	132
Interest cost			30				31				91				93
Net periodic benefit costs		$	70			$	75			$	211			$	225

		Other Post Retirement Benefits
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2006				2005				2006				2005
Service cost		$	26			$	23			$	78			$	69
Interest cost			56				53				168				159
Amortization of unrecognized prior service cost			(6	)			(5	)			(18	)			(15	)
Loss amortization			28				27				84				81
Net periodic benefit costs		$	104			$	98			$	312			$	294

13. SUPPLEMENTAL FINANCIAL INFORMATION

The following information sets forth the consolidating summary financial statements of the issuer (Gibraltar Industries, Inc.) and guarantors, which guarantee the 8% senior subordinated notes due December 1, 2015, and the non-guarantors. The guarantors are wholly owned subsidiaries of the issuer and the guarantees are full, unconditional, joint and several.

Investments in subsidiaries are accounted for by the parent using the equity method of accounting. The guarantor subsidiaries and non-guarantor subsidiaries are presented on a combined basis. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.

Gibraltar Industries, Inc.
Condensed Consolidating Balance Sheets
September 30, 2006
(in thousands)

		Gibraltar				Guarantor				Non-Guarantor
		Industries, Inc.				Subsidiaries				Subsidiaries				Eliminations				Total
Assets
Current assets:
Cash and cash equivalents		$	—			$	9,109			$	3,695			$	—			$	12,804
Accounts receivable, net			—				182,734				11,084				—				193,818
Intercompany balances			379,456				(368,097	)			(11,359	)			—				—
Inventories			—				257,123				6,809				—				263,932
Other current assets			—				15,610				290				—				15,900
Total current assets			379,456				96,479				10,519				—				486,454
Property, plant and equipment, net			—				223,768				8,272				—				232,040
Goodwill			—				359,633				7,587				—				367,220
Investments in partnerships			—				4,840				—				—				4,840
Other assets			6,575				52,972				1,647				—				61,194
Investment in subsidiaries			368,995				21,837				—				(390,832	)			—
			755,026				759,529				28,025				(390,832	)			1,151,748
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable			—				95,704				3,293				—				98,997
Accrued expenses			5,622				63,051				382				—				69,055
Current maturities of long-term debt			—				2,335				—				—				2,335
Total current liabilities			5,622				161,090				3,675				—				170,387
Long-term debt			200,765				155,043				1,708				—				357,516
Deferred income taxes			—				67,450				805				—				68,255
Other non-current liabilities			—				6,951				—				—				6,951
Shareholders’ equity			548,639				368,995				21,837				(390,832	)			548,639
		$	755,026			$	759,529			$	28,025			$	(390,832	)		$	1,151,748