FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(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, 2008

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		(I.R.S. Employer
incorporation or organization)		Identification No.)

(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, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer   o (Do not check if a smaller reporting company)		Smaller reporting company 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 2, 2008, the number of common shares outstanding was: 29,937,340.

 

 

GIBRALTAR INDUSTRIES, INC.

INDEX

				PAGE
				NUMBER
PART I.		FINANCIAL INFORMATION
Item 1.		Financial Statements (unaudited)
		Consolidated Balance Sheets as of March 31, 2008 and December 31, 2007		3
		Consolidated Statements of Income For the Three Months ended March 31, 2008 and 2007		4
		Consolidated Statements of Cash Flows For the Three Months ended March 31, 2008 and 2007		5
		Notes to Consolidated Financial Statements		6-22
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		23-28
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		28
Item 4.		Controls and Procedures		28
PART II.		OTHER INFORMATION		29-31
EX-10.1
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.

CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)

		March 31,					December 31,
		2008				2007
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	35,107			$	35,287
Accounts receivable, net of reserve of $3,263 and $3,482 in 2008 and 2007, respectively			192,943				167,595
Inventories			203,843				212,909
Other current assets			19,427				20,362
Assets of discontinued operations			1,804				4,592
Total current assets			453,124				440,745
Property, plant and equipment, net			271,441				273,283
Goodwill			450,190				453,228
Acquired intangibles			99,871				96,871
Investments in partnerships			2,714				2,644
Other assets			14,505				14,637
		$	1,291,845			$	1,281,408
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	113,251			$	89,551
Accrued expenses			47,404				41,062
Current maturities of long-term debt			2,946				2,955
Liabilities of discontinued operations			12				657
Total current liabilities			163,613				134,225
Long-term debt			459,836				485,654
Deferred income taxes			78,384				78,071
Other non-current liabilities			18,539				15,698
Shareholders’ equity:
Preferred stock, $0.01 par value; authorized: 10,000,000 shares; none outstanding			—				—
Common stock, $0.01 par value; authorized 50,000,000 shares; issued 29,972,561 and 29,949,229 shares in 2008 and 2007			300				300
Additional paid-in capital			220,686				219,087
Retained earnings			343,134				337,929
Accumulated other comprehensive income			7,769				10,837
			571,889				568,153
Less: cost of 63,011 and 61,467 common shares held in treasury in 2008 and 2007			416				393
Total shareholders’ equity			571,473				567,760
		$	1,291,845			$	1,281,408

See accompanying notes to consolidated financial statements

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share date)
(unaudited)

		Three Months Ended
		March 31,
		2008				2007
Net sales		$	325,548			$	304,338
Cost of sales			269,798				252,587
Gross profit			55,750				51,751
Selling, general and administrative expense			37,448				34,336
Income from operations			18,302				17,415
Other (income) expense:
Equity in partnership income and other income			(94	)			(362	)
Interest expense			7,790				6,841
Total other expense			7,696				6,479
Income before taxes			10,606				10,936
Provision for income taxes			3,488				3,897
Income from continuing operations			7,118				7,039
Discontinued operations:
Loss from discontinued operations before taxes			(663	)			(1,370	)
Income tax benefit			(245	)			(499	)
Loss from discontinued operations			(418	)			(871	)
Net income		$	6,700			$	6,168
Net income per share – Basic:
Income from continuing operations		$	.24			$	.24
Income from discontinued operations			(.02	)			(.03	)
Net Income		$	.22			$	.21
Weighted average shares outstanding – Basic			29,917				29,844
Net income per share – Diluted:
Income from continuing operations		$	.24			$	.23
Income from discontinued operations			(.02	)			(.02	)
Net Income		$	.22			$	.21
Weighted average shares outstanding – Diluted			30,090				30,056

See accompanying notes to consolidated financial statements

GIBRALTAR INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

		Three Months Ended
		March 31,
		2008				2007
Cash flows from operating activities
Net income		$	6,700			$	6,168
Loss from discontinued operations			(418	)			(871	)
Income from continuing operations			7,118				7,039
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			9,267				7,266
Provision for deferred income taxes			(452	)			(229	)
Equity in partnerships (income) loss			(71	)			279
Stock compensation expense			1,477				541
Other noncash adjustments			5				6
Increase (decrease) in cash resulting from changes in (net of acquisitions):
Accounts receivable			(25,476	)			(22,262	)
Inventories			9,121				7,066
Other current assets and other assets			637				360
Accounts payable			23,799				16,308
Accrued expenses and other non-current liabilities			5,100				(2,874	)
Net cash provided by continuing operations			30,525				13,500
Net cash provided by discontinued operations			1,365				3,217
Net cash provided by operating activities			31,890				16,717
Cash flows from investing activities
Purchases of property, plant and equipment			(4,707	)			(5,349	)
Net proceeds from sale of property and equipment			—				445
Acquisitions, net of cash acquired			(187	)			(22,492	)
Net cash used in investing activities for continuing operations			(4,894	)			(27,396	)
Net cash provided by (used in) investing activities for discontinued operations			161				(20	)
Net cash used in investing activities			(4,733	)			(27,416	)
Cash flows from financing activities
Long-term debt reduction			(59,367	)			(885	)
Proceeds from long-term debt			33,430				20,284
Payment of deferred financing costs			(4	)			(8	)
Payment of dividends			(1,495	)			(1,492	)
Tax benefit from equity compensation			122				—
Purchase of treasury stock			(23	)			—
Net cash (used in) provided by financing activities			(27,337	)			17,899
Net (decrease) increase in cash and cash equivalents			(180	)			7,200
Cash and cash equivalents at beginning of year			35,287				13,475
Cash and cash equivalents at end of period		$	35,107			$	20,675

See accompanying notes to consolidated financial statements

GIBRALTAR INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. CONSOLIDATED FINANCIAL STATEMENTS

The accompanying consolidated financial statements as of March 31, 2008 and 2007 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 at March 31, 2008 and December 31, 2007, and the results of operations and cash flows at March 31, 2008 and 2007, have been included therein in accordance with U.S. Securities and Exchange Commission (SEC) rules and regulations and prepared using the same accounting principles as are used for our annual audited financial statements.

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 in accordance with the prescribed SEC rules. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report to Shareholders for the year ended December 31, 2007, as filed on Form 10-K.

The consolidated balance sheet at December 31, 2007 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, 2008 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, 2008							29,949			$	300			$	219,087			$	337,929			$	10,837				61			$	(393	)		$	567,760
Comprehensive income:
Net income		$	6,700				—				—				—				6,700				—				—				—				6,700
Other comprehensive income (loss):
Foreign currency translation adjustment			(1,880	)
Amortization of other post retirement health care costs, net of tax of $10			16
Unrealized loss on interest rate swaps, net of tax of $615			(1,204	)
Other comprehensive income			(3,068	)			—				—				—				—				(3,068	)			—				—				(3,068	)
Total comprehensive income		$	3,632
Equity based compensation expense							—				—				1,477				—				—				—				—				1,477
Cash dividends — $.05 per share							—				—				—				(1,495	)			—				—				—				(1,495	)
Net settlement of restricted stock units							23												—				—				2				(23	)			(23	)
Tax benefit from equity compensation							—				—				122				—				—				—				—				122
Balance at March 31, 2008							29,972			$	300			$	220,686			$	343,134			$	7,769				63			$	(416	)		$	571,473

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, 2008		$	12,610			$	42			$	(604	)		$	(1,211	)		$	10,837
Current period change			(1,880	)			—				16				(1,204	)			(3,068	)
Balance at March 31, 2008		$	10,730			$	42			$	(588	)		$	(2,415	)		$	7,769

3. FAIR VALUE MEASUREMENTS

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” (SFAS 157), which is effective for fiscal years beginning after November 15, 2007 and for interim periods within those years. This statement defines fair value, establishes a framework for measuring fair value and expands the related disclosure requirements. This statement applies under other accounting pronouncements that require or permit fair value measurements. The statement indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. SFAS 157 defines fair value based upon an exit price model.

Relative to SFAS 157, the FASB issued FASB Staff Positions (FSP) 157-1 and 157-2. FSP 157-1 amends SFAS 157 to exclude SFAS No. 13, “Accounting for Leases,” (SFAS 13) and its related interpretive accounting pronouncements that address leasing transactions, while FSP 157-2 delays the effective date of the application of SFAS 157 to fiscal years beginning after November 15, 2008 for all nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis.

We adopted SFAS 157 as of January 1, 2008, with the exception of the application of the statement to nonfinancial assets and nonfinancial liabilities. Nonfinancial assets and nonfinancial liabilities for which we have not applied the provisions of SFAS 157 include those measured at fair value in goodwill impairment testing, indefinite lived intangible assets measured at fair value for impairment testing and those initially measured at fair value in a business combination. The impact of adopting SFAS 157 was not significant.

SFAS 157 establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of March 31, 2008 (in thousands):

		Asset (Liability)				Level 1				Level 2				Level 3
Interest rate swap			(4,010	)			—				(4,010	)			—

Interest rate swaps are over the counter securities with no quoted readily available Level 1 inputs, and therefore are measured at fair value using inputs that are directly observable in active markets and are classified within Level 2 of the valuation hierarchy, using the income approach.

4. EQUITY-BASED COMPENSATION

The Gibraltar Industries, Inc. 2005 Equity Incentive Plan (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.

During the three months ended March 31, 2008, the Company issued 141,351 restricted stock units with a grant date fair value of $14.90 per unit, and granted 113,300 non-qualified stock options with a weighted average grant date fair value of $3.95 per option. There were no issuances of restricted stock units or options during the three months ended March 31, 2007.

The Management Stock Purchase Plan (“MSPP”) an integral component of the 2005 Equity Incentive Plan, 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 together 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 a termination of their 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.

The fair value of restricted stock units held in the MSPP equals the trailing 200 day closing price of our common stock as of the last day of the period. During the three months ended March 31, 2008 and 2007, 42,703 and 65,576 restricted stock units, respectively, were credited to participant accounts. At March 31, 2008, the value of the restricted stock units in the MSPP was $16.34 per share.

5. INVENTORIES

Inventories consist of the following (in thousands):

		March 31,				December 31,
		2008				2007
Raw material		$	81,581			$	81,220
Work-in process			31,904				33,343
Finished goods			90,358				98,346
Total inventories		$	203,843			$	212,909

6. 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 $170,000 and $57,000 of such additional consideration during the three months ended March 31, 2008 and 2007, respectively. These payments were recorded as additional goodwill.

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 strengthens the Company’s position in the expanded metal market and provides 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 $22,677,000 in cash and acquisition costs. The purchase price was allocated to the assets acquired and liabilities assumed based upon respective fair values. The identifiable intangible assets consisted of a trademark with a value of $1,795,000 (indefinite useful life), a trademark with a value of $111,000 (5 year estimated useful life) and customer relationships with a value of $1,828,000 (10 year estimated useful life). The excess consideration over fair value was recorded as goodwill and aggregated approximately $11,514,000, 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		$	5,566
Property, plant and equipment			5,175
Other long term liabilities, net			(3,313	)
Identifiable intangible assets			3,735
Goodwill			11,514
		$	22,677

On April 10, 2007 the Company acquired certain assets and liabilities of Noll Manufacturing Company, and its affiliates (Noll) with locations in California, Oregon and Washington. The assets the Company acquired from Noll are used to manufacture, market and distribute products for the building, HVAC, and lawn and garden components of the building products market. The acquisition of Noll will serve to strengthen our manufacturing, marketing and distribution capabilities and is expected to provide manufacturing and distribution synergies with our existing businesses. The results of Noll (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 Noll is not considered significant to the Company’s consolidated results of operations.

The aggregate purchase consideration was approximately $63,726,000 in cash and direct acquisition costs. The purchase price has been allocated to the assets acquired and liabilities assumed based upon respective fair values. The valuation resulted in negative goodwill of $9,491,000 which has been allocated to property, plant and equipment and intangibles on a pro rata basis. After giving effect to the allocation of the negative goodwill, the identifiable intangible assets consisted of patents with a value of $57,000 (8 year estimated useful life), customer relationships with a value of $2,679,000 (15 year estimated useful life), non-compete agreements valued at $726,000 (5 year estimated useful life) and trademarks with a value of $3,490,000 (indefinite useful life).

The allocation of the purchase consideration to the assets acquired and liabilities assumed is as follows (in thousands):

Working capital		$	22,820
Property, plant and equipment			33,954
Identifiable intangible assets			6,952
		$	63,726

On August 31, 2007, the Company acquired all of the outstanding stock of Florence Corporation (Florence). Florence is located in Manhattan, Kansas and designs and manufactures storage solutions, including mail and package delivery products. The acquisition of Florence strengthens the Company’s position in the storage solutions market. The results of Florence (included in the Company’s Building Products segment) have been included in the Company’s consolidated financial results since the date of acquisition. The acquisition of Florence is not considered significant to the Company’s results of operations.

The preliminary aggregate purchase consideration for the acquisition of Florence was $119,460,000 in cash, including direct acquisition costs, and the assumption of a $6,496,000 capital lease. The purchase price was allocated to the assets acquired and liabilities assumed based upon a preliminary estimate of respective fair values. The identifiable intangible assets consisted of unpatented technology and patents with a value of $2,200,000 (10 year estimated useful life), customer contracts with a value of $15,700,000 (13 year estimated useful life), customer relationships with a value of $6,700,000 (15 year estimated useful life) and trademarks with a value of $6,700,000 (indefinite useful life). A final valuation is expected to be completed during the second quarter of 2008. The excess consideration was recorded as goodwill and approximated $67,494,000. The allocation of purchase consideration to the assets acquired and liabilities assumed is as follows (in thousands):

Working capital		$	14,383
Property, plant and equipment			12,514
Other assets			265
Identifiable intangible assets			31,300
Goodwill			67,494
		$	125,956

The Company and the former owners of Florence plan to make a joint election under Internal Revenue Code (IRC) Section 338(h) (10) which will allow the Company to treat the stock purchase as an asset purchase for tax purposes, and therefore, goodwill is expected to be deductible for tax purposes.

7. 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, 2008 is as follows (in thousands):

						Processed
		Building				Metal
		Products				Products
		Segment				Segment				Total
Balance as of January 1, 2008		$	445,072			$	8,156			$	453,228
Adjustment to prior year acquisitions			(3,318	)			—				(3,318	)
Foreign currency translation			124				156				280
Balance as of March 31, 2008		$	441,878			$	8,312			$	450,190

Acquired Intangible Assets

Acquired intangible assets at March 31, 2008 are as follows (in thousands):

		Gross
		Carrying				Accumulated
		Amount				Amortization				Estimated Life
Trademark / Trade name		$	42,976			$	—			indefinite
Trademark / Trade Name			2,138				(466	)		2 to 15 years
Unpatented Technology			7,457				(1,623	)			5 to 20 years
Customer Relationships			54,397				(7,221	)			5 to 15 years
Non-Competition Agreements			4,374				(2,161	)			5 to 10 years
Balance as of March 31, 2008		$	111,342			$	(11,471	)

Acquired intangible asset amortization expense for the three month periods ended March 31, 2008 and 2007 aggregated approximately $1,582,000 and $941,000, respectively.

Amortization expense related to acquired intangible assets for the remainder of fiscal 2008 and the next five years thereafter is estimated as follows (in thousands):

2008		$	4,621
2009		$	6,111
2010		$	6,041
2011		$	5,864
2012		$	5,728
2013		$	5,301

8. DISCONTINUED OPERATIONS

As part of its continuing evaluation of its businesses during 2007, the Company determined that both its bath cabinet manufacturing and steel service center businesses no longer provided a strategic fit with its long-term growth and operational objectives. On August 1, 2007, the Company sold certain assets of its bath cabinet manufacturing business, and committed to a plan to sell the remaining assets of the business. On September 27, 2007, the Company committed to a plan to dispose of the assets of its steel service center business. We expect to complete the liquidation of the remaining assets of the steel service center business and the bath cabinet manufacturing business during 2008.

The steel service center business was previously included in the processed metal products segment and the bath cabinet manufacturing business was previously reported in the building products 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 bath cabinet manufacturing and steel service center businesses 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 $396,000 was allocated to discontinued operations during the three months ended March 31, 2007. No interest was allocated to discontinued operations during the three months ended March 31, 2008.

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

		Three Months Ended
		March 31,
		2008				2007
Net sales		$	—			$	13,264
Expenses			663				14,616
Loss from discontinued operations before taxes		$	(663	)		$	(1,370	)

9. 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 its equity compensation 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 and the unrecognized expense related to the restricted stock and restricted stock unit awards assumed to have vested. Income from discontinued operations per share is rounded for presentation purposes to allow net income per share to foot.

The following table sets forth the computation of basic and diluted earnings per share as of March 31:

		2008				2007
Numerator:
Income from continuing operations		$	7,118,000			$	7,039,000
Loss from discontinued operations			(418,000	)			(871,000	)
Income available to common stockholders		$	6,700,000			$	6,168,000
Denominator for basic income per share:
Weighted average shares outstanding			29,916,864				29,844,213
Denominator for diluted income per share:
Weighted average shares outstanding			29,916,864				29,844,213
Common stock options and restricted stock			172,901				212,088
Weighted average shares and conversions			30,089,765				30,056,301

10. RELATED PARTY TRANSACTIONS

The Company has certain operating lease agreements related to operating locations and facilities with the former owners of Construction Metals, Inc. or companies controlled by these parties. These operating leases are considered to be related party in nature due to the former owner’s employment with the Company during these periods. Rental expense associated with these related party operating leases aggregated approximately $352,000 and $339,000 for the three months ended March 31, 2008 and 2007, 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, 2008 and 2007, the Company incurred $306,000 and $241,000, respectively, for legal services from these firms. Of the amount incurred, $306,000 and $113,000, was expensed during the three months ended March 31, 2008 and 2007, respectively. $128,000 was capitalized as acquisition costs and deferred debt issuance costs during the three months ended March 31, 2007.

At March 31, 2008 and 2007, the Company had $35,000 and $25,000, respectively, 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 $375,000,000. At March 31, 2008, the Company had $191,401,000 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 for the three months ended March 31 (in thousands):

										Other Post
		Pension Benefits								Retirement Benefits
		2008				2007				2008				2007
Service cost		$	37			$	40			$	18			$	26
Interest cost			40				31				62				56
Amortization of unrecognized prior service cost			—				—				(5	)			(5	)
Loss amortization			—				—				21				28
Net periodic benefit costs		$	77			$	71			$	96			$	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,
		2008				2007
Net sales
Building Products		$	229,323			$	205,138
Processed Metal Products			96,225				99,200
		$	325,548			$	304,338
Income (loss) from Operations
Building Products		$	20,800			$	18,713
Processed Metal Products			4,236				5,338
Corporate			(6,734	)			(6,636	)
		$	18,302			$	17,415
Depreciation and Amortization
Building Products		$	6,747			$	4,812
Processed Metal Products			1,720				1,777
Corporate			800				677
		$	9,267			$	7,266
Capital Expenditures
Building Products		$	3,689			$	3,951
Processed Metal Products			804				898
Corporate			214				500
		$	4,707			$	5,349

		March 31,				December 31,
		2008				2007
Total identifiable assets
Building Products		$	1,038,867			$	1,001,541
Processed Metal Products			217,363				219,014
Corporate			35,615				60,853
		$	1,291,845			$	1,281,408

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, 2008
(in thousands)

		Gibraltar				Guarantor				Non-Guarantor
		Industries, Inc.				Subsidiaries				Subsidiaries				Eliminations				Total
Assets
Current assets:
Cash and cash equivalents		$	—			$	9,978			$	25,129			$				$	35,107
Accounts receivable			—				165,719				27,224								192,943
Intercompany balances			222,817				(191,925	)			(30,892	)							—
Inventories			—				190,588				13,255								203,843
Other current assets			—				18,276				1,151								19,427
Assets of discontinued operations			—				1,804				—								1,804
Total current assets			222,817				194,440				35,867								453,124
Property, plant and equipment, net			—				249,840				21,601								271,441
Goodwill			—				409,088				41,102								450,190
Investments in partnerships			—				—				—								—
Acquired intangibles			—				82,690				17,181								99,871
Other assets			5,600				8,695				210								14,505
Investment in subsidiaries			549,641				90,312				—				(637,239	)			2,714
			778,058				1,035,065				115,961				(637,239	)			1,291,845
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable			—				99,405				13,846								113,251
Accrued expenses			5,440				36,189				5,775								47,404
Current maturities of long-term debt			—				2,946				—								2,946
Liabilities of discontinued operations			—				12				—								12
Total current liabilities			5,440				138,552				19,621								163,613
Long-term debt			201,145				257,578				1,113								459,836
Deferred income taxes			—				71,256				7,128								78,384
Other non-current liabilities			—				18,038				501								18,539
Shareholders’ equity			571,473				549,641				87,598				(637,239	)			571,473
		$	778,058			$	1,035,065			$	115,961			$	(637,239	)		$	1,291,845

Gibraltar Industries, Inc.
Consolidating Balance Sheets
December 31, 2007
(in thousands)

		Gibraltar				Guarantor				Non-Guarantor
		Industries, Inc.				Subsidiaries				Subsidiaries				Eliminations				Total
Assets
Current assets:
Cash and cash equivalents		$	—			$	11,090			$	24,197			$	—			$	35,287
Accounts receivable, net			—				146,379				21,216				—				167,595
Intercompany balances			210,891				(191,268	)			(19,623	)			—				—
Inventories			—				199,516				13,393				—				212,909
Other current assets			—				19,524				838				—				20,362
Assets of discontinued operations			—				4,592				—				—				4,592
Total current assets			210,891				189,833				40,021				—				440,745
Property, plant and equipment, net			—				251,233				22,050				—				273,283
Goodwill			—				405,869				47,359				—				453,228
Acquired intangibles			—				83,762				13,109				—				96,871
Investments in partnerships			—				2,644				—				—				2,644
Other assets			5,781				8,621				235				—				14,637
Investment in subsidiaries			553,526				98,883				—				(652,409	)			—
		$	770,198			$	1,040,845			$	122,774			$	(652,409	)		$	1,281,408
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	—			$	76,698			$	12,853			$	—			$	89,551
Accrued expenses			1,360				35,797				3,905				—				41,062
Current maturities of long-term debt			—				2,955				—				—				2,955
Liabilities of discontinued operations			—				657				—				—				657
Total current liabilities			1,360				116,107				16,758				—				134,225
Long-term debt			201,078				283,512				1,064				—				485,654
Deferred income taxes			—				72,463				5,608				—				78,071
Other non-current liabilities			—				15,237				461				—				15,698
Shareholders’ equity			567,760				553,526				98,883				(652,409	)			567,760
		$	770,198			$	1,040,845			$	122,774			$	(652,409	)		$	1,281,408

Gibraltar Industries, Inc.
Consolidating Statements of Income
Three Months Ended March 31, 2008
(in thousands)

		Gibraltar				Guarantor				Non-Guarantor
		Industries, Inc.				Subsidiaries				Subsidiaries				Eliminations				Total
Net sales		$	—			$	289,700			$	39,830			$	(3,982	)		$	325,548
Cost of sales			—				241,819				31,961				(3,982	)			269,798
Gross profit			—				47,881				7,869				—				55,750
Selling, general and administrative expense			(1,377	)			35,391				3,434				—				37,448
Income from operations			1,377				12,490				4,435				—				18,302
Other (income) expense
Interest expense (income)			4,147				3,778				(135	)			—				7,790
Equity in partnerships’ income and other income			—				(94	)			—				—				(94	)
Total other expense			4,147				3,684				(135	)			—				7,696
Income before taxes			(2,770	)			8,806				4,570				—				10,606
Provision for income taxes			(1,048	)			3,373				1,163				—				3,488
Income from continuing operations			(1,722	)			5,433				3,407				—				7,118
Discontinued operations
Income discontinued operations before taxes			—				(663	)			—				—				(663	)
Income tax expense			—				(245	)			—				—				(245	)
Income from discontinued operations			—				(418	)			—				—				(418	)
Equity in earnings from subsidiaries			8,422				3,407				—				(11,829	)			—
Net income		$	6,700			$	8,422			$	3,407			$	(11,829	)		$	6,700

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		$	—			$	276,604			$	30,661			$	(2,927	)		$	304,338
Cost of sales			—				230,228				25,286				(2,927	)			252,587
Gross profit			—				46,376				5,375				—				51,751
Selling, general and administrative expense			179				31,593				2,564				—				34,336
Income from operations			(179	)			14,783				2,811				—				17,415
Other (income) expense
Interest expense			4,203				2,668				(30	)			—				6,841
Equity in partnerships’ income and other income			—				(362	)			—				—				(362	)
Total other expense			4,203				2,306				(30	)			—				6,479
Income before taxes			(4,382	)			12,477				2,841				—				10,936
Provision for income taxes			(1,622	)			4,533				986				—				3,897
Income from continuing operations			(2,760	)			7,944				1,855				—				7,039
Discontinued operations
(Loss) income discontinued operations before taxes			—				(1,370	)			—				—				(1,370	)
Income tax (benefit) expense			—				(499	)			—				—				(499	)
(Loss) income from discontinued operations			—				(871	)			—				—				(871	)
Equity in earnings from subsidiaries			8,928				1,855				—				(10,783	)			—
Net income		$	6,168			$	8,928			$	1,855			$	(10,783	)		$	6,168