UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

GIBRALTAR INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Delaware		0-22462		16-1445150
(State or other jurisdiction		(Commission		(IRS Employer
of incorporation)		File Number)		Identification No.)

3556 Lake Shore Road

P.O. Box 2028

		Buffalo, New York		14219-0228
		(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (716) 826-6500

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

 

 

PART I

Item 2.02 Results of Operations and Financial Condition

Gibraltar Industries, Inc. (the Company) is providing condensed consolidating financial information with regard to our guarantor and non-guarantor subsidiaries. We are providing this information as required in connection with the anticipated registration of our debt securities on Form S-4. Under the requirements of the U. S. Securities and Exchange Commission (the SEC), issuers of guaranteed securities being registered who meet specified criteria are required to provide audited condensed consolidating financial information regarding the registrant’s guarantor and non-guarantor subsidiaries.

This Form 8-K is being filed by the Company to reflect the addition of the condensed consolidating financial information regarding our guarantor and non-guarantor subsidiaries to our consolidated financial statements for the years ended December 31, 2005, 2004, and 2003. This additional condensed consolidating information is included in Note 21 to the consolidated financial statements. No other amendments are hereby made to the Company’s Annual Report on Form 10-K.

Audited consolidated financial statements for the years ended December 31, 2005, 2004 and 2003 are attached as Exhibit 99.1.

Readers should refer to the Company’s quarterly reports on Form 10-Q for information related to periods subsequent to December 31, 2005. The Company intends for the information provided pursuant to this Item 2.02 and 9.01 to be deemed filed and incorporated by reference into its filings with the SEC.

Item 9.01 Financial Statements and Exhibits

(c)

Exhibits

			23.1			Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
			23.2			Consent of Independent Registered Public Accounting Firm
			99.1			Audited Consolidated Financial Statements and Supplementary Data for the fiscal years ended December 31, 2005, 2004 and 2003

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

June 8, 2006		By:		/s/ David W. Kay
				David W. Kay
				Executive Vice President
				Chief Financial Officer and Treasurer

Exhibit Index

23.1		Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
23.2		Consent of Independent Registered Public Accounting Firm
99.1		Audited Consolidated Financial Statements and Supplementary Data for the fiscal years ended December 31, 2005, 2004 and 2003

Exhibit 23.1

Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

	(1)		Registration Statement (Form S-8 No. 033-87034) pertaining to the 401(k) Plan of Gibraltar Steel Corporation and Profit Sharing and Retirement Plan of Gibraltar Strip Steel, Inc.,
	(2)		Registration Statement (Form S-8 No. 033-89196) pertaining to the Incentive Stock Option Plan, Non-Qualified Stock Option Plan and the Restricted Stock Plan of Gibraltar Steel Corporation,
	(3)		Registration Statement (Form S-8 No. 333-10821) pertaining to the Incentive Stock Option Plan Second Amendment and Restatement and the Non-Qualified Stock Option Plan First Amendment and Restatement of Gibraltar Steel Corporation, and
	(4)		Registration Statement (Form S-8 No. 333-56735) pertaining to the Incentive Stock Option Plan Third Amendment and Restatement of Gibraltar Steel Corporation

of our report dated March 10, 2006 except for Note 21, as to which the date is April 20, 2006, with respect to the consolidated financial statements of Gibraltar Industries, Inc., included in its Current Report on Form 8-K expected to be filed on June 8, 2006, with the Securities and Exchange Commission.

/s/ Ernst & Young LLP

Buffalo, New York
June 8, 2006

Exhibit 23.2

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 033-87034, 033-89196, 333-10821 and 333-56735) of Gibraltar Steel Corporation of our report dated March 9, 2005, except Note 2 and Note 21, as to which the date is November 7, 2005 and April 20, 2006, respectively, relating to the financial statements which appears in this Form 8-K.

PricewaterhouseCoopers LLP
Buffalo, New York
June 8, 2006

Exhibit 99.1

Item 8. Financial Statements and Supplementary Data

		Page Number
Financial Statements
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm			2
Report of Independent Registered Public Accounting Firm			3
Consolidated Balance Sheets as of December 31, 2005 and 2004			4
Consolidated Statements of Income for the Years Ended December 31, 2005, 2004 and 2003			5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003			6
Consolidated Statements of Shareholders’ Equity and Comprehensive Income for the Years Ended December  31, 2005, 2004 and 2003			7
Notes to Consolidated Financial Statements			8 - 39
Supplementary Data:
Quarterly Unaudited Financial Data			40

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Gibraltar Industries, Inc.

We have audited the accompanying consolidated balance sheet of Gibraltar Industries, Inc. as of December 31, 2005, and the related consolidated statements of income, shareholders’ equity and comprehensive income, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Gibraltar Industries, Inc. at December 31, 2005 and the consolidated results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Gibraltar Industries, Inc.’s internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 10, 2006 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Buffalo, New York
March 10, 2006,
except for Note 21, as to which the date is
April 20, 2006

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Gibraltar Industries, Inc.:

In our opinion, the consolidated balance sheet as of December 31, 2004 and the related consolidated statements of income, of cash flows, and of shareholders’ equity and comprehensive income for each of two years in the period ended December 31, 2004 present fairly, in all material respects, the financial position of Gibraltar Industries, Inc. and its subsidiaries at December 31, 2004, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Buffalo, New York
March 9, 2005, except Note 2, as to which the date is November 7, 2005, and Note 21, as to which the date is April 20, 2006.

Gibraltar Industries, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)

		December 31,
		2005				2004
Assets
Current assets:
Cash and cash equivalents		$	28,529			$	10,892
Accounts receivable			178,775				146,021
Inventories			194,653				207,215
Other current assets			22,047				15,479
Total current assets			424,004				379,607
Property, plant and equipment, net			311,147				269,019
Goodwill			406,767				285,927
Investments in partnerships			6,151				8,211
Other assets			56,943				14,937
		$	1,205,012			$	957,701
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	85,877			$	70,775
Accrued expenses			63,007				51,885
Current maturities of long-term debt			2,531				8,859
Current maturities of related party debt			5,833				5,833
Total current liabilities			157,248				137,352
Long-term debt			454,649				289,514
Long-term related party debt			—				5,833
Deferred income taxes			93,052				66,485
Other non-current liabilities			6,038				4,774
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 29,734,986 and 29,665,780 shares in 2005 and 2004, respectively			298				297
Additional paid-in capital			216,897				209,765
Retained earnings			280,116				242,585
Unearned compensation			(5,153	)			(572	)
Accumulated other comprehensive income			1,867				1,668
			494,025				453,743
Less: cost of 41,100 and 40,500 common shares held in treasury in 2005 and 2004, respectively			—				—
Total shareholders’ equity			494,025				453,743
		$	1,205,012			$	957,701

The accompanying notes are an integral part of these consolidated financial statements

Gibraltar Industries, Inc.
Consolidated Statements of Income
(in thousands, except per share data)

		Year ended December 31,
		2005				2004				2003
Net sales		$	1,178,236			$	976,255			$	729,806
Cost of sales			959,755				774,970				587,128
Gross profit			218,481				201,285				142,678
Selling, general and administrative expense			120,779				111,737				85,802
Income from operations			97,702				89,548				56,876
Other expense (income)
Interest expense			25,442				12,915				13,096
Equity in partnerships’ income and other income			(266	)			(4,846	)			(685	)
Total other expense			25,176				8,069				12,411
Income before taxes			72,526				81,479				44,465
Provision for income taxes			27,845				31,768				17,562
Income from continuing operations			44,681				49,711				26,903
Discontinued operations
(Loss) income from discontinued operations before taxes			(1,981	)			1,770				85
Income tax (benefit) expense			(772	)			699				35
(Loss) income from discontinued operations			(1,209	)			1,071				50
Net income		$	43,472			$	50,782			$	26,953
Net income (loss) per share — Basic
Income from continuing operations		$	1.51			$	1.69			$	1.12
(Loss) income from discontinued operations			(.04	)			.04				.00
Net income per share — Basic		$	1.47			$	1.73			$	1.12
Weighted average shares outstanding — Basic			29,608				29,362				24,143
Net income (loss) per share — Diluted
Income from continuing operations		$	1.50			$	1.68			$	1.11
(Loss) income from discontinued operations			(.04	)			.04				.00
Net income per share — Diluted		$	1.46			$	1.72			$	1.11
Weighted average shares outstanding—Diluted			29,810				29,596				24,387

The accompanying notes are an integral part of these consolidated financial statements

Gibraltar Industries, Inc.
Consolidated Statements of Cash Flows
(in thousands)

		Year ended December 31,
		2005				2004				2003
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	43,472			$	50,782			$	26,953
(Loss) income from discontinued operations			(1,209	)			1,071				50
Income from continuing operations			44,681				49,711				26,903
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization			28,607				24,198				21,783
Provision for deferred income taxes			(3,359	)			6,773				6,502
Equity in partnerships’ loss (income)			908				(4,846	)			(685	)
Distributions from partnerships’ income			1,152				1,680				1,001
Tax benefit from exercise of stock options			281				1,249				949
Unearned compensation			1,504				153				212
Other non-cash adjustments			133				394				114
(Decrease) increase in cash resulting from changes in (net of acquisitions):
Accounts receivable			8,329				(26,975	)			(2,716	)
Inventories			46,677				(88,145	)			11,813
Other current assets			281				(2,442	)			(2,011	)
Accounts payable and accrued expenses			4,706				37,896				1,396
Other assets			(1,499	)			(1,051	)			147
Net cash provided by (used in) continuing operations			132,401				(1,405	)			65,408
Net cash (used in) discontinued operations			(1,402	)			(214	)			(594	)
Net cash provided by (used in) operating activities			130,999				(1,619	)			64,814
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions, net of cash acquired			(271,031	)			(65,525	)			(84,243	)
Net proceeds from sale of business			42,594				—				—
Purchases of equity investment			—				—				(7,797	)
Purchases of property, plant and equipment			(22,122	)			(24,330	)			(22,050	)
Net proceeds from sale of property and equipment			626				1,388				423
Net cash used in investing activities from continuing operations			(249,933	)			(88,467	)			(113,667	)
Net cash used in investing activities for discontinued operations			(331	)			(866	)			(508	)
Net cash used in investing activities			(250,264	)			(89,333	)			(114,175	)
CASH FLOWS FROM FINANCING ACTIVITIES
Long-term debt payments			(643,698	)			(64,992	)			(118,100	)
Proceeds from long-term debt			796,568				132,302				122,144
Payment of deferred financing costs			(10,844	)			(365	)			(151	)
Net proceeds from issuance of common stock			817				9,600				73,558
Payment of dividends			(5,941	)			(3,720	)			(2,733	)
Net cash provided by financing activities			136,902				72,825				74,718
Net increase (decrease) in cash and cash equivalents			17,637				(18,127	)			25,357
Cash and cash equivalents at beginning of year			10,892				29,019				3,662
Cash and cash equivalents at end of year		$	28,529			$	10,892			$	29,019

The accompanying notes are an integral part of these consolidated financial statements

GIBRALTAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME
(in thousands, except per share data)

																										Accumulated Other
		Comprehensive				Common Stock								Additional Paid-in				Retained				Unearned				Comprehensive				Treasury Stock								Total Shareholders’
		Income				Shares				Amount				Capital				Earnings				Compensation				Loss				Shares				Amount				Equity
Balance at January 1, 2003							23,972			$	240			$	124,745			$	172,147			$	(1,086	)		$	(2,929	)			23			$	—			$	293,117
Comprehensive income:
Net income		$	26,953				—				—				—				26,953				—				—				—				—				26,953
Other comprehensive income (loss):
Foreign currency translation adjustment, net of tax of $637			1,346				—				—				—				—				—				—				—				—				—
Minimum pension liability adjustment, net of tax of $38			(58	)			—				—				—				—				—				—				—				—				—
Unrealized gain on interest rate swaps, net of tax of $706			1,103				—				—				—				—				—				—				—				—				—
Other comprehensive income			2,391				—				—				—				—				—				2,391				—				—				2,391
Total comprehensive income		$	29,344
Issuance of stock associated with public offering							4,500				45				69,952				—				—				—				—				—				69,997
Stock options exercised							416				4				3,557				—				—				—				—				—				3,561
Tax benefit from exercise of stock options							—				—				949				—				—				—				—				—				949
Cash dividends-$.117 per share							—				—				—				(2,962	)			—				—				—				—				(2,962	)
Earned portion of restricted stock							—				—				—				—				212				—				—				—				212
Forfeiture of restricted stock awards							(6	)			—				(93	)			—				56				—				6				—				(37	)
Balance at December 31, 2003							28,882				289				199,110				196,138				(818	)			(538	)			29				—				394,181
Comprehensive income:
Net income		$	50,782				—				—				—				50,782				—				—				—				—				50,782
Other comprehensive income (loss):
Foreign currency translation adjustment, net of tax of $319			958				—				—				—				—				—				—				—				—				—
Minimum pension liability adjustment, net of tax of $43			(67	)			—				—				—				—				—				—				—				—				—
Unrealized gain on interest rate swaps, net of tax of $841			1,315				—				—				—				—				—				—				—				—				—
Other comprehensive income			2,206				—				—				—				—				—				2,206				—				—				2,206
Total comprehensive income		$	52,988
Issuance of stock associated with public offering							322				4				5,043				—				—				—				—				—				5,047
Stock options exercised							433				4				4,549				—				—				—				—				—				4,553
Tax benefit from exercise of stock options							—				—				1,249				—				—				—				—				—				1,249
Cash dividends-$.146 per share							—				—				—				(4,335	)			—				—				—				—				(4,335	)
Earned portion of restricted stock							—				—				—				—				153				—				—				—				153
Forfeiture of restricted stock awards							(12	)			—				(186	)			—				93				—				12				—				(93	)
Balance at December 31, 2004							29,625				297				209,765				242,585				(572	)			1,668				41				—				453,743
Comprehensive income:
Net income		$	43,472				—				—				—				43,472				—				—				—				—				43,472
Other comprehensive income (loss):
Foreign currency translation adjustment, net of tax of $118			500				—				—				—				—				—				—				—				—				—
Minimum pension liability adjustment, net of tax of $60			95				—				—				—				—				—				—				—				—				—
Unrealized loss on interest rate swaps, net of tax of $246			(396	)			—				—				—				—				—				—				—				—				—
Other comprehensive income			199				—				—				—				—				—				199				—				—				199
Total comprehensive income		$	43,671
Issuance of restricted stock and restricted stock units							—				—				6,044				—				(6,044	)			—				—				—				—
Stock options exercised							69				1				816				—				—				—				—				—				817
Tax benefit from exercise of stock options							—				—				281				—				—				—				—				—				281
Cash dividends-$.20 per share							—				—				—				(5,941	)			—				—				—				—				(5,941	)
Earned portion of restricted stock							—				—				—				—				1,457				—				—				—				1,457
Forfeiture of restricted stock awards							—				—				(9	)			—				6				—				—				—				(3	)
Balance at December 31, 2005							29,694			$	298			$	216,897			$	280,116			$	(5,153	)		$	1,867				41			$	—			$	494,025

The accompanying notes are integral part of these consolidated financial statements

Gibraltar Industries, Inc.
Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies

Principles of consolidation

The consolidated financial statements include the accounts of Gibraltar Industries, Inc. and subsidiaries (the Company). The financial position and results of operations of SCM Asia, our Chinese subsidiary, are consolidated for the appropriate periods based on its fiscal year ended November 30. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue recognition

Revenue is recognized when products are shipped or service is provided, the customer takes ownership and assumes the risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable. Sales returns, allowances and customer incentives are treated as reductions to sales and are provided for based on historical experience and current estimates.

Promotional allowances

The Company promotes its branded products through cooperative advertising programs with retailers. Retailers also are offered in-store promotional allowances and rebates based on sales volumes. Promotion costs (including allowances and rebates) incurred during the year are expensed to interim periods in relation to revenues and are recorded as a reduction of net sales.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, checking accounts and all highly liquid investments with a maturity of three months or less.

Accounts receivable

Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on a number of factors, including historical experience, credit worthiness of customers and current market and economic conditions. The Company reviews the allowance for doubtful accounts on a regular basis. Account balances are charged against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Accounts receivable are expected to be collected within one year and are net of the allowance for doubtful accounts of $4,157,000 and $3,090,000 at December 31, 2005 and 2004, respectively. Amounts charged to bad debt expense and recorded as increases to the allowance during 2005 totaled $1,524,000 and deductions to the allowance recorded during 2005 for uncollectible accounts written off, net of recoveries and other adjustments, totaled $457,000.

Concentrations of credit risk on accounts receivable are limited to those from significant customers that are believed to be financially sound. Accounts receivable from The Home Depot were 14.5% of consolidated accounts receivable at December 31, 2005.

Inventories

Inventories are valued at the lower of cost or market. The cost basis of the inventory is determined on a first-in, first-out basis using either actual costs or a standard cost methodology which approximates actual cost.

Property, plant and equipment

Property, plant and equipment are stated at cost and depreciated over their estimated useful lives using the straight-line method. Expenditures that extend the useful lives of assets are capitalized, while repair and maintenance costs are expensed as incurred. The estimated useful lives of land improvements and buildings and building improvements is 15 to 40 years, while machinery and equipment is 3 to 20 years. Accelerated methods are used for income tax purposes. Depreciation expense aggregated $25,719,000, $22,883,000 and $20,979,000 in 2005, 2004 and 2003, respectively.

Interest is capitalized in connection with construction of qualified assets. Interest of $591,000, $258,000 and $156,000 was capitalized in 2005, 2004 and 2003, respectively.

Acquisition related assets and liabilities

Accounting for the acquisition of a business as a purchase transaction requires an allocation of the purchase price to the assets acquired and the liabilities assumed in the transaction at their respective estimated fair values. The most difficult estimations of individual fair values are those involving long-lived assets, such as property, plant and equipment and intangible assets. The Company uses all available information to make these fair value determinations and, for major business acquisitions, engages an independent valuation specialist to assist in the fair value determination of the acquired long-lived assets.

Goodwill and other intangible assets

The Company tests goodwill for impairment at the reporting unit level on an annual basis during the fourth quarter or more frequently if an event occurs or circumstances change that indicate that the fair value of a reporting unit could be below its carrying amount. The impairment test consists of comparing the fair value of a reporting unit, determined using discounted cash flows, with its carrying amount including goodwill, and, if the carrying amount of the reporting unit exceeds its fair value, comparing the implied fair value of goodwill with its carrying amount. An impairment loss would be recognized for the carrying amount of goodwill in excess of its implied fair value.

Acquired identifiable intangible assets are recorded at cost. Identifiable intangible assets with finite useful lives are amortized over their estimated useful lives.

Deferred charges

Deferred charges associated with costs incurred to enter into new debt arrangements are included in other assets and are amortized over the terms of the associated debt agreements.

Impairment of long-lived assets

Long-lived assets, including acquired identifiable intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of those assets may not be recoverable. The Company uses undiscounted cash flows to determine whether impairment exists and measures any impairment loss using discounted cash flows.

Investments in partnerships

The Company’s investments in partnerships are accounted for using the equity method of accounting, under which the Company’s share of the earnings of the partnership is recognized in income as earned, and distributions are credited against the investment when received.

Equity method goodwill arises when the Company’s investment in the partnership exceeds its applicable share of the fair market value of the partnership’s net assets at the date the partnership was formed. In accordance with SFAS 142, Goodwill and Other Intangible Assets, equity method goodwill is not amortized or tested for impairment in accordance with this standard. The Company reviews the equity method goodwill in accordance with Accounting Principles Board Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock (APB Opinion No. 18), under which the Company would recognize an impairment loss when there is a loss in the value of the equity method investment which is deemed to be other than a temporary decline. No impairments were recognized in the years ended December 31, 2005, 2004 and 2003.

Interest rate exchange agreements

Interest rate swap agreements are used by the Company in the management of interest rate risk. The interest rate swaps are not used for trading purposes and are accounted for as cash flow hedges under SFAS 133, Accounting for Derivative Instruments and Hedging Activities. The fair values of interest rate swap agreements are recognized as other liabilities and aggregated $873,000 and $232,000 at December 31, 2005 and 2004, respectively. Gains or losses from changes in the fair value of the swap agreements are recorded, net of taxes, as components of Accumulated Other Comprehensive Income or Loss, except to the extent the interest rate swaps are not perfectly effective, as the ineffective portion is recorded to earnings immediately. Ineffectiveness was not material in 2005. There was no ineffectiveness in 2004 or 2003. The deferred gains and losses are amortized into interest expense during the period in which the related interest payments on variable rate debt are recorded as expense.

Translation of foreign currency

The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at the rate of exchange in effect at the balance sheet date. Income and expense items are translated at the average exchange rates prevailing during the period. Gains and losses resulting from foreign currency transactions are recognized currently in income and those resulting from the translation of financial statements are accumulated as a separate component of comprehensive income net of related taxes.

Shareholders’ equity

During 2005, 2004 and 2003, the Company declared dividends of $5,941,000, $4,335,000 and $2,962,000, respectively, of which $1,487,000, $1,484,000 and $869,000 are accrued at December 31, 2005, 2004 and 2003, respectively.

The Company reacquired 600 shares and 12,000 shares of forfeited restricted common stock in 2005 and 2004 respectively, at a cost of $.01 per share and reduced additional paid-in capital for an amount equal to the gross unvested portion of the restricted stock award at the date of forfeiture. These reacquired shares and related cost are reflected as treasury stock in the consolidated balance sheets at December 31, 2005 and 2004.

Comprehensive income

Comprehensive income includes net income as well as accumulated other comprehensive income (loss). The Company’s accumulated other comprehensive income (loss) consists of unrealized gains and losses on interest rate swaps, minimum pension liability and foreign currency translation adjustments, which are recorded net of related taxes.

Net income per share

Share and per share data for all periods presented have been adjusted for the three-for-two stock split further discussed at Note 13.

Basic net income per share equals net income divided by the weighted average shares outstanding during the year. The computation of diluted net income per share includes all dilutive common stock equivalents in the weighted average shares outstanding. A reconciliation between basic net income per share and diluted net income per share for the years ended December 31, 2005, 2004 and 2003 is displayed in Note 14.

Income taxes

The consolidated financial statements of the Company have been prepared using the asset and liability approach in accounting for income taxes which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of other assets and liabilities.

Fair market value disclosures

SFAS 107, Disclosures About Fair Market Value of Financial Instruments, defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. The Company’s cash and cash equivalents, accounts receivable and accounts payable are stated at cost which approximates fair value at December 31, 2005. The fair value of the Company’s debt approximated $467,444,000 at December 31, 2005. The fair value of interest rate swaps was $873,000 at December 31, 2005.

Fair market value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

Stock based compensation

Stock options

In December 2002, the Financial Accounting Standards Board (FASB) issued SFAS 148, Accounting for Stock-Based Compensation-Transition and Disclosure which amends SFAS 123, Accounting for Stock-Based Compensation. SFAS 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation and amends the disclosure requirements of SFAS 123 to require disclosures in both the annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. As allowed by SFAS 123, the Company follows the disclosure requirements of SFAS 123 and SFAS 148, but continues to account for its stock options using the intrinsic value-based method of accounting as prescribed by APB Opinion No. 25, Accounting for Stock Issued to Employees (APB Opinion No. 25). Accordingly, no compensation cost has been recognized for the stock option plans, as stock options granted under these plans have an exercise price equal to 100% of the market price of the underlying stock on the date of grant. The Company’s stock option plans are discussed in more detail in Note 15.

Restricted stock and restricted stock units

The Company grants restricted stock and restricted stock unit awards to employees and non-employee directors. Upon issuance of the restricted shares or restricted stock units, a charge equivalent to the market value of the shares on the date of grant is charged to shareholders’ equity, as unearned compensation (a contra equity account) and is amortized on a straight-line basis over the related share restriction period. The Company’s restricted stock plan is discussed in more detail in Note 16.

The following table illustrates the pro forma effect on net income and net income per share, had the Company used the Black-Scholes option pricing model to calculate the fair value of stock based employee compensation pursuant to the provisions of SFAS 123 and SFAS 148 (in thousands, except per share data):

		Year ended December 31,
		2005				2004				2003
Net income as reported		$	43,472			$	50,782			$	26,953
Add: Compensation expense recognized in net income, net of related tax effects			917				153				212
Deduct: Stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects			(945	)			(344	)			(569	)
Pro forma net income		$	43,444			$	50,591			$	26,596
Net income per share:
Basic—as reported		$	1.47			$	1.73			$	1.12
Basic—pro forma		$	1.47			$	1.72			$	1.10
Diluted—as reported		$	1.46			$	1.72			$	1.11
Diluted—pro forma		$	1.46			$	1.71			$	1.09

The fair values and assumptions used in the Black-Scholes option pricing model are as follows:

						Expected				Stock				Risk-free				Dividend
		Fair value				life				volatility				interest rate				yield
2005 Grant		$	8.24			5 Years					43.7	%			4.0	%			1.0	%
2000 Grant		$	4.21			5 Years					43.7	%			6.3	%			.7	%
1999 Grant		$	6.12			5 Years					45.1	%			4.4	%			.2	%

Recent accounting pronouncements

The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 123 (Revised 2004) (SFAS No. 123R), Share-Based Payment, in December 2004. SFAS No. 123R is a revision of FASB Statement 123, Accounting for Stock-Based Compensation and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees and its related implementation guidance. The Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS No. 123R requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award. This statement will be effective for the Company as of January 1, 2006 and the Company will adopt the standard in first quarter of 2006. The Company does not expect the adoption of this statement will have a material impact on its consolidated results of operations.

In November 2004, the FASB issued SFAS No. 151, Inventory Costs; an amendment of ARB No. 43, Chapter 4, (SFAS 151) which clarifies the types of costs that should be expensed rather than capitalized as inventory. This statement also clarifies the circumstances under which fixed overhead costs associated with operating facilities involved in inventory processing should be capitalized. The provisions of SFAS No. 151 are effective for fiscal years beginning after June 15, 2005 and the Company will adopt this standard in the first quarter of fiscal 2006. The Company does not expect that the adoption of this statement will have a material impact on its consolidated financial position or results of operations.

In May 2004, the FASB released FASB Staff Position No. FAS 106-2 Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (FSP 106-2). The Medicare Prescription Drug Improvement and Modernization Act of 2003 (the “Medicare Act”) was enacted December 8, 2003. On January 21, 2005 the Centers for Medicare and Medicaid Services released the final regulations for implementing the Medicare Act. FSP 106-2 provides authoritative guidance on accounting for the federal subsidy specified in the Medicare Act. The Medicare Act provides for a federal subsidy equal to 28% of certain prescription drug claims for sponsors of retiree health care plans with drug benefits that are at least actuarially equivalent to those to be offered under Medicare Part D, beginning in 2006. The Company determined that the drug benefits under its Plan were actuarially equivalent to those offered under Medicare Part D. The recognition of the Medicare Act reduced actuarial losses and measurement date APBO by $652,000 and 2005 net periodic post retirement benefit cost by $107,000.

Reclassifications

Certain 2004 and 2003 amounts have been reclassified to conform with the 2005 presentation.

2. Discontinued operations

As part of its continuing evaluation of its business, the Company determined that its Milcor subsidiary was not positioned to obtain a leadership position in its marketplace. The Company was approached by a market leader from Milcor’s marketplace and on January 27, 2005, the Company sold the net assets of Milcor, 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 (SFAS No. 144), the results of operations for Milcor have been classified as discontinued operations in the consolidated statements of income and cash flows for all periods presented. This reclassification has been reflected in Notes 1, 3, 4, 9, 11, 14 and 17.

During the second quarter of 2005, the Company reached an agreement with the purchaser regarding the final working capital adjustment, which resulted in a loss of $728,000 on the sale. As the Company previously disclosed, a contingent liability related to a potential tax liability due to the recognition of a built in gain for Portals Plus had been identified. During the third quarter of 2005, the Company determined that a $4.5 million unrecognized built in gain existed when the former owners of Portals Plus converted the businesses from C-Corp’s to S-Corp’s. The Company made a payment of $1,457,000 to the Internal Revenue Service on behalf of the former owners pursuant to the original purchase agreement. This amount has been reflected as a loss on the discontinued operations during the third quarter of 2005. We retained a liability related to a multi-employer pension plan to fund the terminated pensions of the union employees of Milcor. We have accrued $59,000 for the termination based on the information that is available. The administrator of the plan has engaged the plan’s actuary to measure our withdrawal liability as of January 27, 2005, which could cause us to recognize additional expense. The plan’s administrator expects to have the actuarial calculations completed during the next year. The carrying amounts of the assets and liabilities sold were as follows (in thousands):

Current assets		$	14,176
Property, plant and equipment			11,861
Intangible assets			1,774
Goodwill			18,760
Current liabilities			(1,792	)
Net assets		$	44,779

The results of operations for Milcor for the years ended December 31, 2005, 2004 and 2003 have been classified as discontinued operations in the consolidated statements of income. Components of the income or loss from discontinued operations of Milcor are as follows (in thousands):

		December 31,
		2005				2004				2003
Net sales		$	3,452				38,409			$	28,455
Expenses			4,661				37,338				28,405
(Loss) income from discontinued operations		$	(1,209	)		$	1,071			$	50

3. Acquisitions

On April 1, 2003, the Company acquired all of the outstanding stock of Construction Metals, Inc. (Construction Metals). Construction Metals is headquartered in Ontario, California and is a manufacturer of a wide array of building and construction products that are sold to retail and wholesale customers throughout the western United States. The acquisition of Construction Metals allowed the Company to eliminate a competitor and strengthen its distribution network in the building products market. The results of operations of Construction Metals (included in the Company’s Building Products segment) have been included in the Company’s consolidated financial statements since the date of acquisition.

The aggregate purchase consideration for the acquisition of Construction Metals was approximately $29,185,000, which was comprised of approximately $11,685,000 in cash, including direct acquisition costs, and $17,500,000 of unsecured subordinated debt, payable to the former owners of Construction Metals. 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 non-competition agreements with an aggregate fair market value of approximately $830,000 (5-year weighted average useful life). The excess consideration over such fair value was recorded as goodwill and aggregated approximately $20,878,000, 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		$	3,485
Property, plant and equipment			5,669
Intangible assets			830
Goodwill			20,878
		$	30,862

As part of the purchase agreement between the Company and the former owners of Construction Metals, the Company may be required to pay additional consideration if certain net sales levels as defined in the purchase agreement are achieved during the period from acquisition up to March 31, 2006. During the second quarter of 2005 and 2004, payments of $1,332,000 and $345,000, respectively, were made as a result of the net sales achieved. These payments were recorded as additional goodwill.

On May 1, 2003, the Company acquired all of the outstanding stock of Air Vent Inc. (Air Vent). Air Vent is headquartered in Dallas, Texas and is primarily engaged in the manufacture and distribution of a complete line of ventilation products and accessories. The acquisition of Air Vent allowed the Company to eliminate a competitor and strengthen its position in the building products market. The results of operations of Air Vent (included in the Company’s Building Products segment) have been included in the Company’s consolidated financial statements since the date of acquisition.

The aggregate purchase consideration for the acquisition of Air Vent was approximately $117,798,000, which was comprised of approximately $75,503,000 in cash, including direct acquisition costs, and $42,295,000 of

unsecured subordinated debt, payable to the former owner of Air Vent. 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 non-competition agreements with an aggregate fair market value of approximately $1,400,000 (10-year weighted average useful life). The excess consideration over such fair value was recorded as goodwill and aggregated approximately $103,104,000. The allocation of purchase consideration to the assets acquired and liabilities assumed is as follows (in thousands):

Working capital		$	2,997
Property, plant and equipment			10,297
Intangible assets			1,400
Goodwill			103,104
		$	117,798

The Company and the former owner of Air Vent have made a joint election under Internal Revenue Code (IRC) Section 338(h) (10) which allows the Company to treat the stock purchase as an asset purchase for tax purposes. As a result of the 338(h) (10) election, goodwill in the amount of $103,104,000 is fully deductible for tax purposes.

On January 6, 2004, the Company acquired all of the outstanding stock of Renown Specialties Company Ltd. (Renown). Renown is headquartered in Thornhill, Ontario and is a designer, manufacturer and distributor of construction hardware products in Canada. The acquisition of Renown served to broaden the Company’s product lines and strengthen its existing position in the building products market. The results of operations of Renown (included in the Company’s Building Products segment) have been included in the Company’s consolidated financial statements since the date of acquisition.

The aggregate purchase consideration for the acquisition of Renown was approximately $6,370,000 which was comprised solely of cash, including direct 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 the property, plant and equipment and identifiable intangible assets were determined with the assistance of an independent valuation. The identifiable intangible assets consisted of non-competition agreements with an aggregate fair market value of $35,000 (5-year weighted average useful life), trademarks/trade names with an aggregate fair market value of $100,000 (2-year weighted average useful life), and customer relationships with an aggregate fair market value of $80,000 (5-year weighted average useful life). See Note 4 for further discussion.

The excess consideration over such fair value was recorded as goodwill and aggregated approximately $3,701,000, 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		$	1,504
Property, plant and equipment			950
Intangible assets			215
Goodwill			3,701
		$	6,370

On February 16, 2004, the Company acquired the net assets of Covert Operations, Inc. (Covert), a manufacturer of epoxies and crack injection systems for concrete and masonry. The aggregate purchase consideration of Covert was approximately $1,336,000, including direct acquisition costs. The acquisition of Covert resulted in approximately $640,000 in goodwill, which is fully deductible for tax purposes. The acquisition of Covert is not considered to be material to the Company’s consolidated results of operations.

On June 1, 2004, the Company acquired the net assets of SCM Metal Products, Inc. (SCM). SCM is headquartered in Research Triangle Park, North Carolina and manufactures, markets and distributes non-ferrous metal powder products to customers in a number of different industries, including the automotive, aerospace,

electronics and consumer products industries. The results of operations of SCM (included in the Company’s Processed Metal Products segment) have been included in the Company’s consolidated financial statements since the date of acquisition.

The aggregate purchase consideration for the acquisition of SCM was approximately $42,882,000 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 the property, plant and equipment and identifiable intangible assets were determined with the assistance of an independent valuation. The identifiable intangible assets consisted of trademarks/trade names with an aggregate value of $440,000 (indeterminable useful life), unpatented technology with a value of $900,000 (10-year weighted average useful life) and customer relationships with a value of $5,560,000 (15-year weighted average useful life). See Note 4 for further discussion. The excess consideration over such fair value was recorded as goodwill and aggregated approximately $4,238,000, which is fully deductible for tax purposes. The allocation of purchase consideration to the assets acquired and liabilities assumed is as follows (in thousands):

Working capital		$	15,863
Property, plant and equipment			15,881
Intangible assets			6,900
Goodwill			4,238
		$	42,882

On August 13, 2004 the Company acquired all of the outstanding stock of Portals Plus Incorporated and its affiliated companies, Roofing Products & Systems Corporation and J.L.R. Services, Inc. (Portals Plus). Portals Plus is headquartered in Chicago, Illinois, and manufactures a diverse line of roofing products. The acquisition of Portals Plus served to strengthen the Company’s position in the roofing products markets. The results of operations of Portals Plus (included in the Company’s Building Products segment) have been included in the Company’s consolidated financial statements since the date of acquisition.

The aggregate purchase consideration of Portals Plus was approximately $15,167,000 and was comprised solely of cash, including direct acquisition costs. The purchase price was allocated to the assets acquired and liabilities assumed based upon respective fair 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 customer relationships with a value of $1,830,000 (10-year weighted average useful life), and patents with a value of $21,000 (18-year weighted average useful life). The excess consideration over such fair value was recorded as goodwill and aggregated approximately $10,853,000. The allocation of purchase consideration to the assets acquired and liabilities assumed is as follows (in thousands):

Working capital		$	1,448
Property, plant and equipment			1,015
Intangible assets			1,851
Goodwill			10,853
		$	15,167

The Company and the former owner of Portals Plus have made a joint election under Internal Revenue Code (IRC) Section 338(h) (10) which allowed the Company to treat the stock purchase as an asset purchase for tax purposes. As a result of the 338(h) (10) election, goodwill in the amount of $10,853,000 is expected to be fully deductible for tax purposes.

On January 27, 2005, the Company disposed of the operations of Portals Plus as discussed Note 2.

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 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 $8,049,000 in cash, a seller note, and acquisition costs. The seller note of $1,465,000 is due on September 15, 2006, and bears no interest. The purchase price was 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 in the first quarter of 2006. The excess consideration over fair value was recorded as goodwill and aggregated approximately $4,991,000. The allocation of purchase consideration to the assets acquired and liabilities assumed is as follows (in thousands):

Working capital		$	681
Property, plant and equipment			2,152
Other assets			225
Goodwill			4,991
		$	8,049

On September 16, 2005, the Company acquired the net assets of the Gutter Helmet product line (Gutter Helmet). Gutter Helmet manufactures a protection system that is installed over existing full size gutters by professional installers nationwide. The results of Gutter Helmet (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 Gutter Helmet is not considered to be significant to the Company’s consolidated results of operations.

The aggregate purchase consideration for the acquisition of Gutter Helmet was approximately $21,522,000 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 market values. The identifiable intangible assets identified during the preliminary allocation of purchase price consisted of trademarks with a value of $540,000 (10 year estimated useful life), customer relationships with a value of $400,000 (5 year estimated useful life), and unpatented technology with a value of $365,000 (20 year estimated useful life). A final valuation is expected to be completed in the first quarter of 2006. The excess consideration over fair value was recorded as goodwill and aggregated approximately $15,826,000. The allocation of purchase consideration to the assets acquired and liabilities assumed is as follows (in thousands):

Working capital		$	3,229
Property, plant and equipment			1,162
Intangible assets			1,305
Goodwill			15,826
		$	21,522

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 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 $240,842,000 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 market values. The identifiable intangible assets identified during the preliminary allocation of purchase price consisted of trade name with a value of $21,000,000 (indeterminable useful life), trademarks with a value of $1,000,000 (10 year estimated useful life), customer relationships with a value of $7,000,000 (10 year estimated useful life), and unpatented technology with a value of $2,000,000 (9

year estimated useful life). A final valuation is expected to be completed in the first half of 2006. The excess consideration over fair value was recorded as goodwill and aggregated approximately $115,809,000, 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		$	66,263
Property, plant and equipment			53,893
Other long term liabilities, net			(26,123	)
Intangible assets			31,000
Goodwill			115,809
		$	240,842

On October 4, 2005, the Company acquired the assets of American Wilcon Plastics, Inc. (American Wilcon”), a privately owned manufacturer of custom injected plastic molded products. American Wilcon, founded in 1975, currently operates a manufacturing facility in Orrick, Missouri and a distribution facility in Richmond, Missouri. The Company buys a significant portion of AmericanWilcon’s products, and it acquired American Wilcon to vertically integrate one of its suppliers, expand its manufacturing capabilities and lower its costs. The acquisition of American Wilcon is not considered to be significant to the Company’s consolidated results of operations.

The aggregate purchase consideration for the acquisition of American Wilcon was approximately $4,514,000 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 market values. A final valuation is expected to be completed in the first half of 2006. The excess consideration over fair value was recorded as goodwill and aggregated approximately $22,000. The allocation of purchase consideration to the assets acquired and liabilities assumed is as follows (in thousands):

Working capital		$	1,462
Property, plant and equipment			3,030
Goodwill			22
		$	4,514

The following unaudited pro forma financial information presents the combined results of operations as if the acquisition of AMICO had occurred as of January 1, 2004. 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 acquisitions occurred as of January 1, 2004 and are not necessarily indicative of future results of the combined companies (in thousands, except per share data):

		December 31,
		2005				2004
Net sales		$	1,418,051			$	1,264,609
Net income			62,466				68,945
Net income per share — Basic			2.11				2.35
Net income per share — Diluted		$	2.10			$	2.33

4. Goodwill and Related Intangible Assets

Goodwill

The changes in the carrying amount of goodwill by reportable segment for the years ended December 31, 2005 and 2004 are as follows (in thousands):

						Processed
		Building				metal				Thermal
		products				products				processing
		segment				segment				segment				Total
Balance at January 1, 2004		$	201,706			$	19,347			$	46,104			$	267,157
Goodwill acquired			14,081				4,270				—				18,351
Foreign currency translation			419				—				—				419
Balance as of December 31, 2004		$	216,206			$	23,617			$	46,104			$	285,927
Goodwill acquired			134,446				4,991				—				139,437
Goodwill disposed			(18,760	)			—				—				(18,760	)
Foreign currency translation			137				26				—				163
Balance at December 31, 2005		$	332,029			$	28,634			$	46,104			$	406,767

As described in Note 7, the Company entered into a joint venture with Duferco Farrell Corporation in 2003, in which the Company acquired a 50% partnership interest in Gibraltar DFC Strip Steel, LLC. The Company’s investment in Gibraltar DFC Strip Steel, LLC (included in the Company’s Processed Metals Products segment) exceeded its applicable share of the fair market value of the partnership’s net assets at the date the partnership was formed and resulted in equity method goodwill of approximately $11,320,000. There was no impairment associated with this equity method goodwill in 2005 or 2004.

Intangible Assets

Intangible assets related to the Company’s acquisitions are included as part of the total other assets on the Company’s consolidated balance sheet. Intangible assets subject to amortization at December 31 are as follows (in thousands):

		2005								2004
		Gross								Gross
		carrying				Accumulated				Carrying				Accumulated
		amount				amortization				amount				amortization				Estimated Life
Trademark/patent		$	1,660			$	(143	)		$	141			$	(54	)		2 - 10 years
Unpatented technology			3,440				(225	)			1,075				(63	)		9 – 20 years
Customer relationships			13,040				(809	)			7,470				(293	)		5 – 15 years
Non-competition agreements			2,365				(885	)			2,365				(549	)		5 – 10 years
		$	20,505			$	(2,062	)		$	11,051			$	(959	)

Intangible assets with indefinite useful lives not subject to amortization consist of a trade name and a trademark valued at $21,440,000.

Intangible asset amortization expense for the years ended December 31, 2005, 2004 and 2003 aggregated approximately $1,175,000, $680,000 and $218,000, respectively.

Amortization expense related to intangible assets subject to amortization at December 31, 2005 for the next five years is estimated as follows (in thousands):

Year Ended December 31,
2006		$	2,000
2007		$	2,000
2008		$	1,875
2009		$	1,789
2010		$	1,767

5. Inventories

Inventories at December 31 consist of the following:

(in thousands)		2005				2004
Raw material		$	90,650			$	121,614
Work-in-process			32,241				27,279
Finished goods			71,762				58,322
Total inventory		$	194,653			$	207,215

6. Property, Plant and Equipment

Components of property, plant and equipment at December 31 consisted of the following:

(in thousands)		2005				2004
Land and land improvements		$	13,811			$	12,106
Building and improvements			91,571				85,936
Machinery and equipment			361,084				310,271
Construction in progress			13,474				12,765
			479,940				421,078
Less accumulated depreciation and amortization			168,793				152,059
Property, plant and equipment, net		$	311,147			$	269,019