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 March 31, 2007

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

For the transition period from                      to                     

Gibraltar Industries, Inc.

(Exact name of Registrant as specified in its charter)

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

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

(716) 826-6500

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 þ    Accelerated filer o     Non-accelerated filer o

Indicated 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 May 7, 2007, the number of common shares outstanding was: 29,844,195.

 

 

GIBRALTAR INDUSTRIES, INC.

INDEX

		PAGE
		NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of March 31, 2007 and December 31, 2006		3
Condensed Consolidated Statements of Income For the Three Months ended March 31, 2007 and 2006		4
Condensed Consolidated Statements of Cash Flows For the Three Months ended March 31, 2007 and 2006		5
Notes to Condensed Consolidated Financial Statements		6-23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		24-29
Item 3. Quantitative and Qualitative Disclosures About Market Risk		29
Item 4. Controls and Procedures		29 - 30
PART II. OTHER INFORMATION		31 - 33
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)

		March 31,				December 31,
		2007				2006
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	20,675			$	13,475
Accounts receivable, net			197,066				169,207
Inventories			248,797				254,991
Other current assets			19,082				18,107
Total current assets			485,620				455,780
Property, plant and equipment, net			245,189				243,138
Goodwill			388,874				374,821
Acquired intangibles			61,840				62,366
Investments in partnerships			2,719				2,440
Other assets			13,747				14,323
		$	1,197,989			$	1,152,868
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	92,003			$	71,308
Accrued expenses			47,255				50,771
Current maturities of long-term debt			2,555				2,336
Total current liabilities			141,813				124,415
Long-term debt			418,174				398,217
Deferred income taxes			71,320				70,981
Other non-current liabilities			12,578				9,027
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 29,883,795 shares in 2007 and 2006			299				299
Additional paid-in capital			216,485				215,944
Retained earnings			335,354				332,920
Accumulated other comprehensive income			1,966				1,065
			554,104				550,228
Less: cost of 44,100 and 42,600 common shares held in treasury in 2007 and 2006			—				—
Total shareholders’ equity			554,104				550,228
		$	1,197,989			$	1,152,868

See accompanying notes to condensed consolidated financial statements

GIBRALTAR INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share date)

(unaudited)

		Three Months Ended
		March 31,
		2007				2006
Net sales		$	317,584			$	322,637
Cost of sales			265,933				259,406
Gross profit			51,651				63,231
Selling, general and administrative expense			35,210				37,840
Income from operations			16,441				25,391
Other (income) expense:
Equity in partnerships’ income and other income			(362	)			(686	)
Interest expense			7,237				6,779
Total other expense			6,875				6,093
Income before taxes			9,566				19,298
Provision for income taxes			3,398				7,565
Income from continuing operations			6,168				11,733
Discontinued operations:
Income from discontinued operations before taxes			—				4,303
Income tax expense			—				1,639
Income from discontinued operations			—				2,664
Net income		$	6,168			$	14,397
Net income per share – Basic:
Income from continuing operations		$	.21			$	.40
Income from discontinued operations			.00				.09
Net Income		$	.21			$	.49
Weighted average shares outstanding – Basic			29,844				29,652
Net income per share – Diluted:
Income from continuing operations		$	.21			$	.39
Income from discontinued operations			.00				.09
Net Income		$	.21			$	.48
Weighted average shares outstanding – Diluted			30,056				29,944

See accompanying notes to condensed consolidated financial statements

GIBRALTAR INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

		Three Months Ended
		March 31,
		2007				2006
Cash flows from operating activities
Net income		$	6,168			$	14,397
Income from discontinued operations			—				2,664
Income from continuing operations			6,168				11,733
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			7,461				6,816
Provision for deferred income taxes			(229	)			—
Equity in partnerships’ (loss) income			279				131
Distributions from partnerships			—				188
Stock compensation expense			541				706
Other noncash adjustments			3				25
Increase (decrease) in cash resulting from changes in (net of acquisitions):
Accounts receivable			(23,291	)			(31,252	)
Inventories			10,565				(16,970	)
Other current assets and other assets			384				73
Accounts payable			17,822				15,420
Accrued expenses and other non-current liabilities			(2,986	)			4,056
Net cash provided by (used in) continuing operations			16,717				(9,074	)
Net cash provided by discontinued operations			—				5,504
Net cash provided by (used in) operating activities			16,717				(3,570	)
Cash flows from investing activities
Purchases of property, plant and equipment			(5,369	)			(5,303	)
Net proceeds from sale of property and equipment			445				36
Acquisitions, net of cash acquired			(22,492	)			—
Net cash used in investing activities for continuing operations			(27,416	)			(5,267	)
Net cash used in investing activities for discontinued operations			—				(1,074	)
Net cash used in investing activities			(27,416	)			(6,341	)
Cash flows from financing activities
Long-term debt reduction			(885	)			(8,320	)
Proceeds from long-term debt			20,284				—
Payment of deferred financing costs			(8	)			(161	)
Net proceeds from issuance of common stock			—				552
Payment of dividends			(1,492	)			(1,487	)
Tax benefit from stock options			—				115
Net cash provided by (used in) financing activities			17,899				(9,301	)
Net decrease in cash and cash equivalents			7,200				(19,212	)
Cash and cash equivalents at beginning of year			13,475				28,529
Cash and cash equivalents at end of period		$	20,675			$	9,317

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 March 31, 2007 and 2006 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 March 31, 2007 and 2006 have been included therein.

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, 2006, as filed on Form 10-K.

The consolidated balance sheet at December 31, 2006 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.

The results of operations for the three month period ended March 31, 2007 are not necessarily indicative of the results to be expected for the full year.

2. 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				Other Comprehensive				Treasury Stock								Shareholders’
		Income				Shares				Amount				Capital				Earnings				Income				Shares				Amount				Equity
Balance at January 1, 2007							29,841			$	299			$	215,944			$	332,920			$	1,065				43			$	—			$	550,228
Cumulative effect of adoption of FIN 48							—				—				—				(750	)			—				—				—				(750	)
Comprehensive income:
Net income		$	6,168				—				—				—				6,168				—				—				—				6,168
Other comprehensive income (loss):
Foreign currency translation adjustment,			1,087
Unrealized gain on interest rate swaps, net of tax of $114			(186	)
Other comprehensive income			901				—				—				—				—				901				—				—				901
Total comprehensive income		$	7,069
Equity based compensation expense							—				—				541				—				—				—				—				541
Cash dividends — $.10 per share							—				—				—				(2,984	)			—				—				—				(2,984	)
Forfeiture of restricted stock							—				—				—				—				—				1				—				—
Balance at March 31, 2007							29,841			$	299			$	216,485			$	335,354			$	1,966				44			$	—			$	554,104

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

						Minimum				Unamortized				Unrealized				Accumulated
		Foreign currency				pension				post retirement				gain/(loss) on				other
		translation				liability				health care				interest rate				comprehensive
		adjustment				adjustment				costs				swaps				income
Balance at January 1, 2007		$	1,977			$	3			$	(969	)		$	54			$	1,065
Current period change			1,087								—				(186	)			901
Balance at March 31, 2007		$	3,064			$	3			$	(969	)		$	(132	)		$	1,966

3. INCOME TAXES

The Company and its U. S. subsidiaries file a U.S. federal consolidated income tax return. The Internal Revenue Service has concluded its examination of the Company’s income tax returns for the years prior to 2003. The U.S. federal statute of limitations remains open for the 2003 tax year and beyond. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from 4 to 6 years. Several of our tax returns are currently under examination in various U.S. state jurisdictions.

We adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109” (FIN 48) effective January 1, 2007. As a result of the implementation of FIN 48, the Company recognized a $750,000 increase in tax liabilities, with a corresponding reduction in retained earnings. The recognition was caused by uncertain tax positions of $408,000 and the provision for related interest and penalties of $342,000.

During the three months ended March 31, 2007, the Company incurred an additional $25,000 to account for uncertain tax positions. The Company does not anticipate significant increases or decreases in our uncertain tax positions within the next twelve months.

The Company recognizes penalties and interest relating to uncertain tax positions in the provision for income taxes.

4. EQUITY-BASED COMPENSATION

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 then current 10 year U. S. Treasury note. The account is then paid out in five equal annual cash installments.

During the three months ended March 31, 2006, the Company issued 164,125 restricted stock units, and granted 18,625 non-qualified stock options. There were no issuances of restricted stock units or options during the three months ended March 31, 2007.

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 three months ended March 31, 2007, 55,757 restricted stock units were credited to participant accounts. At March 31, 2007, the market value of our common stock was $22.62 per share.

5. INVENTORIES

Inventories consist of the following (in thousands):

		March 31,				December 31,
		2007				2006
Raw material		$	125,655			$	122,181
Work-in process			29,578				41,164
Finished goods			93,564				91,646
Total inventories		$	248,797			$	254,991

6. 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 March 31:

		2007				2006
Numerator:
Income available to common stockholders from continuing operations		$	6,168,000			$	11,733,000
Denominator for basic income per share:
Weighted average shares outstanding			29,844,213				29,652,487
Denominator for diluted income per share:
Weighted average shares outstanding			29,844,213				29,652,487
Common stock options and restricted stock			212,088				291,874
Weighted average shares and conversions			30,056,301				29,944,361

7. ACQUISITIONS

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 mailboxes and postal accessories. The acquisition of Home Impressions served to strengthen the Company’s position in the mailbox 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) have been 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.

As part of the purchase agreement with the former owners of Home Impressions, the Company is required to pay additional consideration through May 2009 based upon the operating results of Home Impressions. The Company paid $57,000 of such additional consideration during the three months ended March 31, 2007. These payments were recorded as additional goodwill.

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 mailboxes 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 $4,879,000, in cash and acquisition costs. The 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 second quarter of 2007. The excess consideration over fair value was recorded as goodwill and aggregated approximately $2,566,000, which is deductible for tax purposes. The allocation of purchase consideration to the assets and liabilities assumed is as follows (in thousands):

Working capital		$	1,736
Property, plant and equipment			577
Goodwill			2,566
		$	4,879

On November 1, 2006, the Company acquired all of the outstanding stock of The Expanded Metal Company Limited and Sorst Streckmetall GmbH (“EMC”). EMC has locations in England, Germany and Poland 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 EMC is expected to strengthen the Company’s position in the expanded metal market and provide expanded market exposure for both EMC products and certain products currently manufactured by the Company. The results of operations of EMC (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 EMC was approximately $44,629,000 in cash and acquisition costs. The purchase price was allocated to the assets acquired and liabilities assumed based upon a preliminary valuation of respective fair values. The identifiable intangible assets consisted of a trademark with a value of $4,771,000 (indefinite useful life) and customer relationships with a value of $7,443,000 (7 year estimated useful life). A final valuation is expected to be completed during the second quarter of 2007. The excess consideration over fair value was recorded as goodwill and aggregated approximately $20,244,000, 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		$	5,790
Property, plant and equipment			11,338
Other long term liabilities, net			(4,957	)
Intangible assets			12,214
Goodwill			20,244
		$	44,629

On March 9, 2007 the Company acquired all of the outstanding stock of Dramex Corporation (“Dramex”). Dramex has locations in Ohio, Canada and England and manufactures, markets and distributes a diverse line of expanded metal products used in the commercial and industrial sectors of the building products market. The acquisition of Dramex is expected to strengthen the Company’s position in the expanded metal market and provide additional exposure for both Dramex’s products and certain products currently manufactured by the Company. The results of Dramex (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 Dramex is not considered significant to the Company’s consolidated results of operations.

The aggregate purchase consideration for the acquisition of Dramex was $22,492,000 in cash and acquisition costs. The purchase price was allocated to the assets acquired and liabilities assumed based upon a preliminary valuation of respective fair values. A final valuation is expected to be completed prior to the end of the Company’s fiscal year. The excess consideration over fair value was recorded as goodwill and aggregated approximately $13,570,000, 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		$	5,571
Property, plant and equipment			4,652
Other long term liabilities, net			(1,301	)
Goodwill			13,570
		$	22,492

8. 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 strapping business was previously included in the processed metals products segment and the thermal processing business previously was reported as a segment.

In accordance with the provisions of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144), the results of operations for the thermal processing business and strapping business have been classified as discontinued operations in the consolidated financial statements for all periods presented.

The Company allocates interest to its discontinued operations in accordance with the provisions of the Financial Accounting Standards Board’s Emerging Issues Task Force item 87-24, Allocation of Interest to Discontinued Operations. Interest expense of $0 and $1,268,000 was allocated to discontinued operations during the three months ended March 31, 2007 and 2006, respectively.

Components of the income from discontinued operations are as follows (in thousands):

		Three Months Ended
		March 31,
		2007				2006
Net sales		$	—			$	37,718
Expenses			—				33,415
Income from discontinued operations before taxes		$	—			$	4,303

9. GOODWILL AND RELATED INTANGIBLE ASSETS

Goodwill

The changes in the approximate carrying amount of goodwill by reportable segment for the three months ended March 31, 2007 is as follows (in thousands):

						Processed
		Building				Metals
		Products				Products
		Segment				Segment				Total
Balance as of January 1, 2007		$	358,856			$	15,965			$	374,821
Goodwill acquired			13,570				—				13,570
Additional acquisition costs, net			42				—				42
Foreign currency translation			415				26				441
Balance as of March 31, 2007		$	372,883			$	15,991			$	388,874

Acquired Intangible Assets

Acquired intangible assets subject to amortization at March 31, 2007 are as follows (in thousands):

		Gross
		Carrying				Accumulated
		Amount				Amortization				Estimated Life
Trademark / Trade Name		$	2,000			$	(268	)			2 to 15 years
Unpatented Technology			5,123				(914	)			5 to 20 years
Customer Relationships			26,562				(3,103	)			5 to 15 years
Non-Competition Agreements			3,569				(1,474	)			5 to 10 years
Balance as of March 31, 2007		$	37,254			$	(5,759	)

Acquired intangible assets with indefinite useful lives not subject to amortization consist of trade names and a trademark valued at $30,345,000.

Acquired intangible asset amortization expense for the three month periods ended March 31, 2007 and 2006 aggregated approximately $941,000 and $504,000, respectively.

Amortization expense related to acquired intangible assets for the remainder of fiscal 2007 and the next five years thereafter is estimated as follows (in thousands):

2007		$	2,824
2008		$	3,637
2009		$	3,556
2010		$	3,488
2011		$	3,323
2012		$	3,299

10. RELATED PARTY TRANSACTIONS

In connection with the acquisition of Construction Metals Inc. (“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’ employment relationship with the Company. These notes were payable in annual principal installments of $2,917,000 per note on April 1, with the final principal payment made on April 1, 2006. These notes required quarterly interest payments at an interest rate of 5.0% per annum. At March 31, 2006 the current portion of these notes aggregated approximately $5,833,000.

Accrued interest and interest expense related to these notes was approximately $72,000 as of and for the three months ended March 31, 2006.

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 $339,000 and $388,000 for the three months ended March 31, 2007 and 2006, respectively.

Two members of our Board of Directors are partners in law firms that provide legal services to the Company. For the three months ended March 31, 2007 and 2006, the Company incurred $241,000 and $356,000, respectively, for legal services from these firms. Of the amount incurred, $113,000 and $249,000, was expensed during the three months ended March 31, 2007 and 2006, respectively. $128,000 and $107,000 was capitalized as acquisition costs and deferred debt issuance costs during the three months ended March 31, 2007 and 2006, respectively.

At March 31, 2007, the Company had $25,000 recorded in accounts payable for these law firms.

11. BORROWINGS UNDER REVOLVING CREDIT FACILITY

The aggregate borrowing limit under the Company’s revolving credit facility is $300,000,000. At March 31, 2007, the Company had $187,844 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 for the three months ended March 31 (in thousands):

										Other Post
		Pension Benefits								Retirement Benefits
		2007				2006				2007				2006
Service cost		$	40			$	40			$	26			$	26
Interest cost			31				31				56				56
Amortization of unrecognized prior service cost			—				—				(5	)			(5	)
Loss amortization			—				—				28				28
Net periodic benefit costs		$	71			$	71			$	105			$	105

13. 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; and

(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
		March 31,
		2007				2006
Net sales
Building products		$	207,226			$	214,742
Processed metal products			110,358				107,895
		$	317,584			$	322,637
Income (loss) from operations
Building products		$	18,731			$	31,271
Processed metal products			4,427				5,819
Corporate			(6,717	)			(11,699	)
		$	16,441			$	25,391
Depreciation and amortization
Building products		$	4,895			$	4,212
Processed metal products			1,889				1,825
Corporate			677				779
		$	7,461			$	6,816
Capital expenditures
Building products		$	3,951			$	3,456
Processed metal products			918				931
Corporate			500				916
		$	5,369			$	5,303

		March 31, 2007				December 31, 2006
Total identifiable assets
Building products		$	863,099			$	828,797
Processed metal products			278,326				283,546
Corporate			56,564				40,525
		$	1,197,989			$	1,152,868

14. 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.
Consolidating Balance Sheets
March 31, 2007
(in thousands)

		Gibraltar				Guarantor				Non-Guarantor
		Industries, Inc.				Subsidiaries				Subsidiaries				Eliminations				Total
Assets
Current assets:
Cash and cash equivalents		$	—			$	7,957			$	12,718			$	—			$	20,675
Accounts receivable			—				173,708				23,358				—				197,066
Intercompany balances			338,926				(324,194	)			(14,732	)			—				—
Inventories			—				235,394				13,403				—				248,797
Other current assets			—				18,052				1,030				—				19,082
Total current assets			338,926				110,917				35,777				—				485,620
Property, plant and equipment, net			—				223,484				21,705				—				245,189
Goodwill			—				346,150				42,724				—				388,874
Investments in partnerships			—				2,719				—				—				2,719
Acquired intangibles			—				48,620				13,220				—				61,840
Other assets			6,320				6,584				843				—				13,747
Investment in subsidiaries			415,399				86,961				—				(502,360	)			—
			760,645				825,435				114,269				(502,360	)			1,197,989
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable			—				77,198				14,805				—				92,003
Accrued expenses			5,654				36,466				5,135				—				47,255
Current maturities of long-term debt			—				2,555				—				—				2,555
Total current liabilities			5,654				116,219				19,940				—				141,813
Long-term debt			200,887				216,293				994				—				418,174
Deferred income taxes			—				65,264				6,056				—				71,320
Other non-current liabilities			—				12,260				318				—				12,578
Shareholders’ equity			554,104				415,399				86,961				(502,360	)			554,104
		$	760,645			$	825,435			$	114,269			$	(502,360	)		$	1,197,989

Gibraltar Industries, Inc.
Consolidating Balance Sheets
December 31, 2006
(in thousands)

		Gibraltar				Guarantor				Non-Guarantor
		Industries, Inc.				Subsidiaries				Subsidiaries				Eliminations				Total
Assets
Current assets:
Cash and cash equivalents		$	—			$	4,982			$	8,493			$	—			$	13,475
Accounts receivable			—				152,335				16,872				—				169,207
Intercompany balances			335,496				(313,514	)			(21,982	)			—				—
Inventories			—				243,036				11,955				—				254,991
Other current assets			—				17,297				810				—				18,107
Total current assets			335,496				104,136				16,148				—				455,780
Property, plant and equipment, net			—				223,535				19,603				—				243,138
Goodwill			—				346,108				28,713				—				374,821
Investments in partnerships			—				2,440				—				—				2,440
Acquired intangibles			—				49,200				13,136				—				62,366
Other assets			6,492				7,001				860				—				14,323
Investment in subsidiaries			410,578				56,823				—				(467,401	)			—
		$	752,566			$	789,243			$	78,460			$	(467,401	)		$	1,152,868
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	—			$	60,737			$	10,571			$	—			$	71,308
Accrued expenses			1,513				45,782				3,476				—				50,771
Current maturities of long-term debt			—				2,336				—				—				2,336
Total current liabilities			1,513				108,855				14,047				—				124,415
Long-term debt			200,825				196,152				1,240				—				398,217
Deferred income taxes			—				64,935				6,046				—				70,981
Other non-current liabilities			—				8,723				304				—				9,027
Shareholders’ equity			550,228				410,578				56,823				(467,401	)			550,228
		$	752,566			$	789,243			$	78,460			$	(467,401	)		$	1,152,868

Gibraltar Industries, Inc.
Consolidating Statements of Income
Three Months Ended March 31, 2007
(in thousands)

		Gibraltar				Guarantor				Non-Guarantor
		Industries, Inc.				Subsidiaries				Subsidiaries				Eliminations				Total
Net sales		$	—			$	289,850			$	30,661			$	(2,927	)		$	317,584
Cost of sales			—				243,574				25,286				(2,927	)			265,933
Gross profit			—				46,276				5,375				—				51,651
Selling, general and administrative expense			179				32,467				2,564				—				35,210
Income from operations			(179	)			13,809				2,811				—				16,441
Other (income) expense
Interest expense			4,203				3,064				(30	)			—				7,237
Equity in partnerships’ income and other income			—				(362	)			—				—				(362	)
Total other expense			4,203				2,702				(30	)			—				6,875
Income before taxes			(4,382	)			11,107				2,841				—				9,566
Provision for income taxes			(1,622	)			4,034				986				—				3,398
Income from continuing operations			(2,760	)			7,073				1,855				—				6,168
Discontinued operations
(Loss) income discontinued operations before taxes			—				—				—				—				—
Income tax (benefit) expense			—				—				—				—				—
(Loss) income from discontinued operations			—				—				—				—				—
Equity in earnings from subsidiaries			8,928				1,855				—				(10,783	)			—
Net income		$	6,168			$	8,928			$	1,855			$	(10,783	)		$	6,168

		Gibraltar Industries, Inc.
		Consolidating Statements of Income
		Three Months Ended March 31, 2006
		(in thousands)

		Gibraltar				Guarantor				Non-Guarantor
		Industries, Inc.				Subsidiaries				Subsidiaries				Eliminations				Total
Net sales		$	—			$	310,457			$	12,532			$	(352	)		$	322,637
Cost of sales			—				249,464				10,294				(352	)			259,406
Gross profit			—				60,993				2,238				—				63,231
Selling, general and administrative expense			164				36,762				914				—				37,840
Income from operations			(164	)			24,231				1,324				—				25,391
Other (income) expense
Interest expense (income)			—				(686	)			—				—				(686	)
Equity in partnerships’ income and other income			4,206				2,581				(8	)			—				6,779
Total other expense			4,206				1,895				(8	)			—				6,093
Income before taxes			(4,370	)			22,336				1,332				—				19,298
Provision for income taxes			(1,704	)			8,765				504				—				7,565
Income from continuing operations			(2,666	)			13,571				828				—				11,733
Discontinued operations
Income discontinued operations before taxes			—				4,303				—				—				4,303
Income tax expense			—				1,639				—				—				1,639
Income from discontinued operations			—				2,664				—				—				2,664
Equity in earnings from subsidiaries			17,063				828				—				(17,891	)			—
Net income		$	14,397			$	17,063			$	828			$	(17,891	)		$	14,397