**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 WASHINGTON,
        D.C. 20549
 
 ______________
 
 **Form
        10-Q**
  (Mark
        one)
 
 x
              Quarterly
                  Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934For
                  the quarterly period ended March 31,
                  2006
 
 OR
 
  ̈
              Transition
                  report pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934For
                  the transition period from _______________ to
                  ________________
 ______________
 
 **Commission
        File Number**  **333-106356**
 ______________
 
 **CHAAS
        ACQUISITIONS, LLC**
 *(Exact
        name of registrant as specified in its charter)*
 
 **Delaware**
              **41-2107245***(State
                  or other jurisdiction of*
              *(I.R.S.
                  Employer**incorporation
                  or organization)*
              *Identification
                  No.)*
 
 **12900
                  Hall Road, Suite 200, Sterling Heights, MI**
              **48313***(Address
                  of principal executive offices)*
              *(Zip
                  Code)*
 
 **(586)
        997-2900**
 *(Registrant’s
        telephone number, including area code)*
 
 **NOT
        APPLICABLE**
 *(Former
        name, former address and former fiscal year, if changed since last
        report)*
 
 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 a 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
               ̈
              No
              x
 Indicate
        by check mark whether the Registrant is a large accelerated filer, an
        accelerated filer, or a non-accelerated filer. See definition of åaccelerated
        filer and large accelerated fileræ in Rule 12b-2 of the Exchange Act. (Check
        one):
 Large
        accelerated filer  ̈  Accelerated
        filer  ̈  Non-accelerated
        filer x
 Indicate
        by check mark whether the Registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).
 Yes
               ̈
              No
              x
 Indicate
        the number of shares outstanding of each of the issuer’s classes of common
        stock, as of the latest practicable date.
  Class
              
              Outstanding
                  at May 12, 2006Membership
                  Units
              
              100
 
 
 
 **CHAAS
              ACQUISITIONS, LLC**
  INDEX
  Page
                      No.Part
                      I.    Financial InformationItem
                      1.   Financial StatementsConsolidated
                      Condensed Balance Sheets as of March 31, 2006
                      and December 31, 2005
                  1Consolidated
                      Condensed Statements of Operations for the
                      three months ended March 31, 2006 and 2005
                  2Consolidated
                      Condensed Statements of Cash Flows for the
                      three months ended March 31, 2006 and 2005
                  3Consolidated
                      Condensed Statement of Changes in Members’
                      Equity for the three months ended March 31, 2006
                  4Notes
                      to Consolidated Condensed Financial
                      Statements
                  5Item
                      2.   Management's Discussion and Analysis
                      of Financial Condition and Results of Operations
                  12Item
                      3.   Quantitative and Qualitative
                      Disclosures About Market Risk
                  17Item
                      4.   Controls and
                      Procedures
                  17Part
                      II.   Other Information and SignatureItem
                      1.   Legal
                      Proceedings
                  18Item
                      1A. Risk Factors
                  18Item
                      2.   Unregistered Sales of Equity
                      Securities and Use of Proceeds
                  18Item
                      3.   Defaults Upon Senior
                      Securities
                  18Item
                      4.    Submission of Matters to a Vote of
                      Security-Holders
                  18Item
                      5.   Other
                      Information
                  18Item
                      6.   Exhibits
                  18Signature
                  19
 
 
 **PART
                I. FINANCIAL INFORMATION**
 
 **Item
                1.**  **Financial
                Statements**
 
 **CHAAS
                ACQUISITIONS, LLC**
 **CONSOLIDATED
                CONDENSED BALANCE SHEETS**
 **As
                of March 31, 2006 and December 31, 2005**
 **(Dollars
                in thousands)**
  **March
                    31,**
                
                **December
                    31,****2006**
                
                **2005****ASSETS**
                
                **(Unaudited)**Current
                    assetsCash
                
                $
                4,275
                
                $
                13,429Accounts
                    receivable, less reserves of $1,734 and $1,870,
                    respectively
                
                
                78,018
                
                
                64,318InventoriesRaw
                    materials
                
                
                21,938
                
                
                21,740Work-in-process
                
                
                13,058
                
                
                13,153Finished
                    goods
                
                
                30,280
                
                
                27,857Reserves
                
                
                (4,359
                )
                
                (4,437
                )Total
                    inventories
                
                
                60,917
                
                
                58,313Other
                    current assets
                
                
                6,737
                
                
                6,554Total
                    current assets
                
                
                149,947
                
                
                142,614Property
                    and equipment, net
                
                
                61,446
                
                
                62,871Intangible
                    assets, net
                
                
                85,478
                
                
                87,328Deferred
                    income taxes
                
                
                63
                
                
                131Other
                    noncurrent assets
                
                
                18,494
                
                
                18,502Total
                    Assets
                
                $
                315,428
                
                $
                311,446**LIABILITIES
                    AND MEMBERS’ EQUITY**Current
                    liabilitiesCurrent
                    maturities of long-term debt
                
                $
                4,350
                
                $
                3,940Accounts
                    payable
                
                
                45,770
                
                
                40,037Accrued
                    liabilities
                
                
                27,167
                
                
                22,708Deferred
                    income taxes
                
                
                1,552
                
                
                1,513Total
                    current liabilities
                
                
                78,839
                
                
                68,198Noncurrent
                    liabilitiesDeferred
                    income taxes
                
                
                4,502
                
                
                5,119Other
                    noncurrent liabilities
                
                
                4,650
                
                
                4,558Long-term
                    debt, less current maturities
                
                
                208,320
                
                
                209,808Total
                    noncurrent liabilities
                
                
                217,472
                
                
                219,485Members’
                    equityUnits
                
                
                100,900
                
                
                100,900Other
                    comprehensive income
                
                
                4,945
                
                
                4,338Accumulated
                    deficit
                
                
                (86,728
                )
                
                (81,475
                )Total
                    Members’ Equity
                
                
                19,117
                
                
                23,763Total
                    Liabilities and Members’ Equity
                
                $
                315,428
                
                $
                311,446
 
 
 
 
  The
              accompanying notes are an integral part of the
 consolidated
              condensed financial statements.
 1
 **CHAAS
                  ACQUISITIONS, LLC**
 **CONSOLIDATED
                  CONDENSED STATEMENTS OF OPERATIONS**
 **(Dollars
                  in thousands)**
 **(Unaudited)**
   **Three
                  Months Ended****March
                  31,********2006**
              
              **2005**Netsales
              
              $
              106,527
              
              $
              111,270Cost
                  of sales
              
              
              89,001
              
              
              91,494Gross
                  profit
              
              
              17,526
              
              
              19,776Selling,
                  administrative and product development expenses
              
              
              15,415
              
              
              16,585Amortization
                  of intangible assets
              
              
              2,047
              
              
              2,066Operating
                  income
              
              
              64
              
              
              1,125Other
                  expenseInterest
                  expense
              
              
              (5,657
              )
              
              (5,683
              )Foreign
                  currency income (loss), net
              
              
              684
              
              
              (1,331
              )Other
                  income (expense)
              
              
              11
              
              
              (10
              )Loss
                  before income taxes
              
              
              (4,898
              )
              
              (5,899
              )Provision
                  for (benefit from) income taxes
              
              
              355
              
              
              (24
              )Net
                  loss
              
              $
              (5,253
              )
              $
              (5,875
              )
 
 
  The
              accompanying notes are an integral part of the
 consolidated
              condensed financial statements.
 2
 **CHAAS
                  ACQUISITIONS, LLC**
 **CONSOLIDATED
                  CONDENSED STATEMENTS OF CASH FLOWS**
 **(Dollars
                  in thousands)**
 **(Unaudited)**
   **Three
                  months Ended****March
                  31,****2006**
              
              **2005****CASHFLOWS
                  FROM OPERATING
                  ACTIVITIES:**Net
                  loss
              
              $
              (5,253
              )
              $
              (5,875
              )Adjustments
                  to reconcile net loss to netcash
                  provided by (used for) operating activities:Depreciation
                  and amortization
              
              
              6,120
              
              
              6,265Deferred
                  taxes
              
              
              (676
              )
              
              (668
              )Foreign
                  currency (gain)/loss
              
              
              (684
              )
              
              1,241Loss
                  on disposal of assets
              
              
              10
              
              
              8Interest
                  accretion on notes
              
              
              409
              
              
              319Changes
                  in assets and liabilities, net:Accounts
                  receivable
              
              
              (13,284
              )
              
              (10,187
              )Inventories
              
              
              (1,824
              )
              
              (5,693
              )Other
                  current assets
              
              
              184
              
              
              (3,218
              )Other
                  noncurrent assets
              
              
              (202
              )
              
              1,051Accounts
                  payable
              
              
              6,118
              
              
              7,447Accrued
                  liabilities
              
              
              4,133
              
              
              5,227Other
                  noncurrent liabilities
              
              
              (3
              )
              
              (78
              )Net
                  cash used for operating activities
              
              
              (4,952
              )
              
              (4,161
              )**CASH
                  FLOWS USED FOR INVESTING ACTIVITIES:**Acquisition
                  of property and equipment
              
              
              (2,404
              )
              
              (4,827
              )Proceeds
                  from disposals of property & equipment
              
              
              65
              
              
              —Net
                  cash used for investing activities
              
              
              (2,339
              )
              
              (4,827
              )**CASH
                  FLOWS USED FOR FINANCING ACTIVITIES:**Net
                  decrease in revolving loan
              
              
              (1,275
              )
              
              (211
              )Repayment
                  of debt
              
              
              (769
              )
              
              (336
              )Net
                  cash used for financing activities
              
              
              (2,044
              )
              
              (547
              )Effect
                  of exchange rate changes
              
              
              181
              
              
              (485
              )Net
                  decrease in cash
              
              
              (9,154
              )
              
              (10,020
              )Cash
                  at beginning of period
              
              
              13,429
              
              
              14,747Cash
                  at end of period
              
              $
              4,275
              
              $
              4,727
 
 
 
 
 
  The
              accompanying notes are an integral part of the
 consolidated
              condensed financial statements.
 3
 **CHAAS
                  ACQUISITIONS, LLC**
 **CONSOLIDATED
                  CONDENSED STATEMENT OF CHANGES IN MEMBERS’ EQUITY**
 **For
                  the Three Months Ended March 31, 2006**
 **(Dollars
                  in thousands)**
 **(Unaudited)**
 
 
 **Other**
              
              
              
              **Total****Members’**
              
              **comprehensive**
              
              **Accumulated**
              
              **members’****capital**
              
              **income**
              
              **deficit**
              
              **equity**Balanceat
                  December 31, 2005
              
              $
              100,900
              
              $
              4,338
              
              $
              (81,475
              )
              $
              23,763Currency
                  translation adjustment
              
              
              —
              
              
              607
              
              
              
              
              
              607Net
                  loss
              
              
              
              
              
              
              
              
              (5,253
              )
              
              (5,253
              )Balance
                  at March 31, 2006
              
              $
              100,900
              
              $
              4,945
              
              $
              (86,728
              )
              $
              19,117
 
 
 
 
 
 
 
  The
              accompanying notes are an integral part of the
 consolidated
              condensed financial statements.
 4
 **CHAAS
                ACQUISITIONS, LLC**
 **NOTES
                TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**
 **(Dollars
                in thousands)**
 **(Unaudited)**
 
 **1.**  **BASISOF
        PRESENTATION**
 
 On
        April
        15, 2003, substantially all of the equity interests of Advanced Accessory
        Systems, LLC (the "Predecessor") were acquired by Castle Harlan Partners
        IV, L.P. (the "Acquisition"), a private equity investment fund organized
        and managed by Castle Harlan Inc. CHAAS Holdings, LLC ("CHAAS Holdings")
        was
        formed in April 2003 in connection with the Acquisition and was the direct
        parent of CHAAS Acquisitions, LLC ("CHAAS Acquisitions" or "the Company")
        which
        was formed as an acquisition vehicle to acquire the Predecessor's equity
        interest from J.P. Morgan Partners (23 SBIC), LLC, directors and officers
        of the
        Predecessor, and other investors (the "Sellers").
 
 The
        aggregate consideration paid at or shortly after the closing of the Acquisition
        was approximately $266,000, approximately $168,000 of which was used to repay,
        assume or defease certain indebtedness at the time of the Acquisition and
        approximately $98,000 (inclusive of subordinated promissory notes and a
        subsequent working capital adjustment) of which was used for the closing
        purchase price of the equity interests of Advanced Accessory Systems,
        LLC.
 
 In
        January 2004, Advanced Accessory Holdings Corporation ("AAHC") was formed
        by
        CHAAS Holdings, LLC in connection with an offering of the $88,000 aggregate
        principal amount at maturity, 131⁄4% Senior Discount Notes due 2011. At that time,
        CHAAS Holdings made a contribution of all of its equity interests in the
        Company
        to AAHC in exchange for all the outstanding membership units of AAHC. CHAAS
        Holdings is the direct parent of AAHC and AAHC is the direct parent of CHAAS
        Acquisitions. Unless the context otherwise requires, all information which
        refers to "we," "our" or "us" refers to the Company and its
        subsidiaries.
 
 The
        Acquisition was accounted for in accordance with the purchase method of
        accounting. Accordingly, the purchase price of the Acquisition has been
        allocated to identifiable assets acquired and liabilities assumed based upon
        the
        estimated fair values at the acquisition date. The Company engaged an
        independent appraiser to assist in the determination of fair value at the
        acquisition date and such independent appraiser completed its work during
        the
        fourth quarter of 2003. The accompanying financial statements of the Company
        as
        of and for the periods ended March 31, 2005, December 31, 2005 and March
        31,
        2006 reflect the allocation of the purchase consideration to tangible assets,
        goodwill and other identifiable intangible assets.
 
 The
        North
        American subsidiaries of the Company use a fiscal month-end that corresponds
        to
        two four-week months and one five-week month per quarter, each ending on
        Saturday. The exception to this rule is at year-end, when the subsidiaries
        close
        on December 31. The Company’s Brink subsidiary uses the calendar month-end and
        year-end. The Company’s financial statements are dated as of the end of the
        calendar period, although they reflect the different closing dates identified
        above.
 
 The
        accompanying unaudited consolidated financial statements have been prepared
        in
        accordance with accounting principles generally accepted in the United States
        of
        America for interim financial information and with the instructions to Form
        10-Q. Accordingly, they do not include all information and footnotes required
        by
        accounting principles generally accepted in the United States of America
        for
        complete financial statements and should be read in conjunction with the
        Annual
        Report on Form 10-K for the fiscal year ended December 31,
        2005.
 
 In
        the
        opinion of the Company, the accompanying unaudited consolidated condensed
        financial statements contain all adjustments, which are normal and recurring
        in
        nature, necessary to present fairly its financial position as of March 31,
        2006
        and December 31, 2005 and the results of its operations for the three months
        ended March 31, 2006 and 2005.
 
 5
 **CHAAS
              ACQUISITIONS, LLC**
 **NOTES
              TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**
 **(Dollars
              in thousands)**
 **(Unaudited)**
 
 **2.**
              **COMPREHENSIVE
                  LOSS**
 
 Comprehensive
        loss for the Company is as follows:
 
 Three
                  months endedMarch
                  31, 2006
              
              March
                  31, 2005Net
                  loss
              
              $
              (5,253
              )
              $
              (5,875
              )Change
                  in the cumulative translation adjustment, net of tax
              
              
              607
              
              
              (1,690
              )Comprehensive
                  loss
              
              $
              (4,646
              )
              $
              (7,565
              )
 
 
 **3.**
              **CURRENCY
                  CONTRACTS**
 
 The
        Company has significant operations in Europe where the functional currency
        is
        the Euro. On February 12, 2004, when the Euro to the US Dollar exchange
        rate was 1.28:1.00, the Company entered into a series of foreign currency
        forward option contracts related to the Euro ("Euro Collar"), which matured
        quarterly on a staggered basis. On May 12, 2004 when the Euro to US Dollar
        exchange rate was 1.19:1.00, the Company entered into additional foreign
        currency option contracts. The Company provided a $1,900 letter of credit
        in
        support of the foreign currency option contracts. To the extent that the
        quarter
        end exchange rate fell between the Euro Collar exchange rates, fulfillment
        of
        the Euro Collar exchange contracts would have resulted in offsetting foreign
        currency gains and losses upon expiration. For each reporting period, the
        Company recorded the fair value, as determined by independent financial
        institutions, of open obligations and the resultant gains and losses were
        recorded in the Statement of Operations. The final option contracts expired
        during the second quarter of 2005. For the three months ended March 31, 2005,
        the Company recorded an unrealized gain on foreign currency options of $138.
 
 Upon
        expiration of the option contracts in the second quarter of 2005, the $1,900
        letter of credit described above expired.
 
 
 **4.**  **INTANGIBLE
        ASSETS**
 
 A
        summary
        of intangible assets identified by the Company follows **:**
  
 **Customer**
                **Contracts**
              
              **Customer**
                **Relationships**
              
              **Technology**
              
              **Intangible**
                **Pension
                  Asset**
              
              **Tradename
                  /**
                **Trademark**
              
              **Deferred**
                **Financing
                  Costs**
              
              **Total**Amortization
                  period in years
              
              *8
                  - 10*
              
              *15
                  - 21*
              
              *10*
              
              *15*
              
              *Indefinite*
              
              *7
                  - 8*Balance
                  at December 31, 2005
              
              $
              30,989
              
              $
              30,643
              
              $
              13,183
              
              $
              466
              
              $
              7,070
              
              $
              4,977
              
              $
              87,328Additions
              
              
              —
              
              
              —
              
              
              1
              
              
              —
              
              
              —
              
              
              100
              
              
              101Foreign
                  currency translation
              
              
              19
              
              
              303
              
              
              (3
              )
              
              —
              
              
              33
              
              
              6
              
              
              358Amortization
              
              
              (1,078
              )
              
              (519
              )
              
              (450
              )
              
              —
              
              
              —
              
              
              (262
              )
              
              (2,309
              )Balance
                  at March 31, 2006
              
              $
              29,930
              
              $
              30,427
              
              $
              12,731
              
              $
              466
              
              $
              7,103
              
              $
              4,821
              
              $
              85,478
 
 Amortization
        expense of identifiable intangible assets for the three months ended March
        31,
        2006 was $2,309, which included $262 of amortization of deferred financing
        costs
        included in interest expense.
 
 6
 **CHAAS
              ACQUISITIONS, LLC**
 **NOTES
              TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**
 **(Dollars
              in thousands)**
 **(Unaudited)**
 
 **5.**
            **RESTRUCTURING
                COSTS** 
 On
        March
        8, 2006 the Company announced its intention to close the Greenwood, Mississippi
        facility. Current production will be transferred to other locations. The
        costs
        to close the facility will include severance, cost to move equipment and
        ongoing
        lease costs and are estimated to be from $1,700 to $2,500.
  During
        the first quarter of 2006 the Company accrued $58 as a ratable portion of
        the
        employee termination costs. No payments were made against this accrual and
        the
        liability at March 31, 2006 was $58. The Company anticipates that the closure
        will be complete during the third quarter of 2006.
 
 
 **6.**
              **CONDENSED
                  CONSOLIDATING INFORMATION**
 
 On
        May
        23, 2003, the Company’s 100%-owned subsidiaries, Advanced Accessory Systems, LLC
        and AAS Capital Corporation, issued and sold 103⁄4% Senior Notes - Series A due
        2011. On November 18, 2003, these notes were exchanged for 103⁄4% Senior Notes -
        Series B , (the "103⁄4% Senior Notes") having substantially the same terms. The
        103⁄4% Senior Notes are guaranteed on a full, unconditional and joint and several
        basis by the Company and all of the Company’s direct and indirect wholly-owned
        domestic subsidiaries.
 
 The
        following condensed consolidating financial information presents the financial
        position, results of operations and cash flows of (i) the Company (the
        "Parent"), as of March 31, 2006 and December 31, 2005 and for the three months
        ended March 31, 2006 and 2005 as if it accounted for its subsidiaries on
        the
        equity method, (ii) Advanced Accessory Systems, LLC and AAS Capital Corporation
        as issuers; (iii) guarantor subsidiaries which are domestic, 100%-owned
        subsidiaries and include SportRack LLC, Valley Industries, LLC, AASA Holdings,
        LLC and ValTek, LLC; and (iv) the non-guarantor subsidiaries which are foreign,
        100%-owned subsidiaries and include Brink International B.V. and its
        subsidiaries, SportRack Accessories, Inc. and its subsidiary, and SportRack
        Automotive GmbH and its subsidiaries.
 
  7
 **CHAAS
            ACQUISITIONS, LLC**
 **NOTES
            TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**
 **(Dollars
            in thousands)**
 **(Unaudited)**
  **6.**
              **CONDENSED
                  CONSOLIDATING INFORMATION —
(continued)**
 
 **CONDENSED
        CONSOLIDATING BALANCE SHEET**
 **March
        31, 2006**
 
 
 **Parent**
              
              **Issuers**
              
              **Guarantor**
                **subsidiaries**
              
              **Non-guarantor**
                **subsidiaries**
              
              **Eliminations/**
                **adjustments**
              
              **Consolidated****ASSETS**Current
                  assetsCash
              
              $
              16
              
              $
              —
              
              $
              1,258
              
              $
              3,001
              
              $
              —
              
              $
              4,275Accounts
                  receivable
              
              
              —
              
              
              —
              
              
              45,293
              
              
              32,725
              
              
              —
              
              
              78,018Inventories
              
              
              —
              
              
              —
              
              
              25,517
              
              
              35,400
              
              
              —
              
              
              60,917Other
                  current assets
              
              
              —
              
              
              1,781
              
              
              2,741
              
              
              2,215
              
              
              —
              
              
              6,737Total
                  current assets
              
              
              16
              
              
              1,781
              
              
              74,809
              
              
              73,341
              
              
              —
              
              
              149,947Property
                  and equipment, net
              
              
              —
              
              
              155
              
              
              27,424
              
              
              33,867
              
              
              —
              
              
              61,446Intangible
                  assets, net
              
              
              —
              
              
              4,338
              
              
              62,148
              
              
              18,992
              
              
              —
              
              
              85,478Deferred
                  income taxes and other noncurrent assets
              
              
              252
              
              
              14,024
              
              
              3,114
              
              
              1,167
              
              
              —
              
              
              18,557Investment
                  in and advances to subsidiaries
              
              
              44,548
              
              
              240,832
              
              
              13,840
              
              
              249
              
              
              (299,469
              )
              
              —Total
                  assets
              
              $
              44,816
              
              $
              261,130
              
              $
              181,335
              
              $
              127,616
              
              $
              (299,469
              )
              $
              315,428**LIABILITIES
                  AND MEMBERS’ EQUITY**Current
                  liabilitiesCurrent
                  maturities of long-term debt
              
              $
              —
              
              $
              —
              
              $
              80
              
              $
              4,270
              
              $
              —
              
              $
              4,350Accounts
                  payable
              
              
              —
              
              
              —
              
              
              29,146
              
              
              16,624
              
              
              —
              
              
              45,770Accrued
                  liabilities and deferred income taxes
              
              
              (24
              )
              
              5,021
              
              
              8,112
              
              
              15,610
              
              
              —
              
              
              28,719Total
                  current liabilities
              
              
              (24
              )
              
              5,021
              
              
              37,338
              
              
              36,504
              
              
              —
              
              
              78,839Deferred
                  income taxes and other noncurrent liabilities
              
              
              —
              
              
              17,066
              
              
              (15,525
              )
              
              7,611
              
              
              —
              
              
              9,152Long-term
                  debt, less current maturities
              
              
              —
              
              
              150,000
              
              
              40,516
              
              
              17,804
              
              
              —
              
              
              208,320Intercompany
                  debt
              
              
              25,723
              
              
              —
              
              
              —
              
              
              57,440
              
              
              (83,163
              )
              
              —Members’
                  equity
              
              
              19,117
              
              
              89,043
              
              
              119,006
              
              
              8,257
              
              
              (216,306
              )
              
              19,117Total
                  liabilities and members’ equity
              
              $
              44,816
              
              $
              261,130
              
              $
              181,335
              
              $
              127,616
              
              $
              (299,469
              )
              $
              315,428
 
  8
 **CHAAS
            ACQUISITIONS, LLC**
 **NOTES
            TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**
 **(Dollars
            in thousands)**
 **(Unaudited)**
  **6.**
              **CONDENSED
                  CONSOLIDATING INFORMATION —
(continued)**
 
 **CONDENSED
        CONSOLIDATING BALANCE SHEET**
 **December
        31, 2005**
 
 
 **Parent**
              
              **Issuers**
              
              **Guarantor**
                **subsidiaries**
              
              **Non-guarantor**
                **subsidiaries**
              
              **Eliminations/**
                **adjustments**
              
              **Consolidated****ASSETS**Current
                  assetsCash
              
              $
              16
              
              $
              3⁄4
              
              $
              7,041
              
              $
              6,372
              
              $
              —
              
              $
              13,429Accounts
                  receivable
              
              
              —
              
              
              —
              
              
              38,977
              
              
              25,341
              
              
              —
              
              
              64,318Inventories
              
              
              —
              
              
              —
              
              
              24,326
              
              
              33,987
              
              
              —
              
              
              58,313Deferred
                  income taxes and other current assets
              
              
              —
              
              
              1,670
              
              
              2,858
              
              
              2,026
              
              
              —
              
              
              6,554Total
                  current assets
              
              
              16
              
              
              1,670
              
              
              73,202
              
              
              67,726
              
              
              —
              
              
              142,614Property
                  and equipment, net
              
              
              —
              
              
              170
              
              
              28,885
              
              
              33,816
              
              
              —
              
              
              62,871Intangible
                  assets, net
              
              
              —
              
              
              4,442
              
              
              63,894
              
              
              18,992
              
              
              —
              
              
              87,328Deferred
                  income taxes and other noncurrent assets
              
              
              252
              
              
              14,024
              
              
              3,116
              
              
              1,241
              
              
              —
              
              
              18,633Investment
                  in and advances to subsidiaries
              
              
              49,194
              
              
              219,175
              
              
              13,666
              
              
              249
              
              
              (282,284
              )
              
              3⁄4Total
                  assets
              
              $
              49,462
              
              $
              239,481
              
              $
              182,763
              
              $
              122,024
              
              $
              (282,284
              )
              $
              311,446**LIABILITIES
                  AND MEMBERS’ EQUITY**Current
                  liabilitiesCurrent
                  maturities of long-term debt
              
              $
              —
              
              $
              —
              
              $
              80
              
              $
              3,860
              
              $
              —
              
              $
              3,940Accounts
                  payable
              
              
              —
              
              
              —
              
              
              25,323
              
              
              14,714
              
              
              —
              
              
              40,037Accrued
                  liabilities and deferred income taxes
              
              
              606
              
              
              1,162
              
              
              8,324
              
              
              14,129
              
              
              —
              
              
              24,221Total
                  current liabilities
              
              
              606
              
              
              1,162
              
              
              33,727
              
              
              32,703
              
              
              —
              
              
              68,198Deferred
                  income taxes and other noncurrent liabilities
              
              
              —
              
              
              17,066
              
              
              (15,466
              )
              
              8,077
              
              
              —
              
              
              9,677Long-term
                  debt, less current maturities
              
              
              —
              
              
              150,000
              
              
              41,398
              
              
              18,410
              
              
              —
              
              
              209,808Intercompany
                  debt
              
              
              25,093
              
              
              —
              
              
              1,483
              
              
              57,490
              
              
              (84,066
              )
              
              —Members’
                  equity
              
              
              23,763
              
              
              71,253
              
              
              121,621
              
              
              5,344
              
              
              (198,218
              )
              
              23,763Total
                  liabilities and members’ equity
              
              $
              49,462
              
              $
              239,481
              
              $
              182,763
              
              $
              122,024
              
              $
              (282,284
              )
              $
              311,446
 
  9
 **CHAAS
            ACQUISITIONS, LLC**
 **NOTES
            TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**
 **(Dollars
            in thousands)**
 **(Unaudited)**
  **6.**
              **CONDENSED
                  CONSOLIDATING INFORMATION —
(continued)**
 
 **CONDENSED
        CONSOLIDATING STATEMENT OF OPERATIONS**
 **For
        the three months ended March 31, 2006**
 
 **Parent**
                
                **Issuers**
                
                **Guarantor**
                  **subsidiaries**
                
                **Non-guarantor**
                  **subsidiaries**
                
                **Eliminations/**
                  **adjustments**
                
                **Consolidated**Net
                    sales
                
                $
                —
                
                $
                —
                
                $
                65,455
                
                $
                41,072
                
                $
                —
                
                $
                106,527Cost
                    of sales
                
                
                —
                
                
                —
                
                
                59,331
                
                
                29,670
                
                
                —
                
                
                89,001Gross
                    profit
                
                
                —
                
                
                —
                
                
                6,124
                
                
                11,402
                
                
                —
                
                
                17,526Selling,
                    administrative and product development expenses
                
                
                —
                
                
                1,352
                
                
                6,005
                
                
                8,058
                
                
                —
                
                
                15,415Amortization
                    of intangible assets
                
                
                —
                
                
                —
                
                
                1,725
                
                
                322
                
                
                —
                
                
                2,047Operating
                    income (loss)
                
                
                —
                
                
                (1,352
                )
                
                (1,606
                )
                
                3,022
                
                
                —
                
                
                64Interest
                    expense
                
                
                —
                
                
                (3,608
                )
                
                (1,015
                )
                
                (1,034
                )
                
                —
                
                
                (5,657
                )Equity
                    in income (loss) of subsidiaries
                
                
                (5,253
                )
                
                —
                
                
                —
                
                
                —
                
                
                5,253
                
                
                —Foreign
                    currency gain, net
                
                
                —
                
                
                17
                
                
                —
                
                
                667
                
                
                —
                
                
                684Other
                    income (expense)
                
                
                —
                
                
                —
                
                
                21
                
                
                (10
                )
                
                —
                
                
                11Income
                    (loss) before income taxes
                
                
                (5,253
                )
                
                (4,943
                )
                
                (2,600
                )
                
                2,645
                
                
                5,253
                
                
                (4,898
                )Provision
                    for income taxes
                
                
                —
                
                
                —
                
                
                16
                
                
                339
                
                
                —
                
                
                355Net
                    income (loss)
                
                $
                (5,253
                )
                $
                (4,943
                )
                $
                (2,616
                )
                $
                2,306
                
                $
                5,253
                
                $
                (5,253
                )
 **CONDENSED
        CONSOLIDATING STATEMENT OF OPERATIONS**
 **For
        the three months ended March 31, 2005**
 
 **Parent**
                
                **Issuers**
                
                **Guarantor**
                  **subsidiaries**
                
                **Non-guarantor**
                  **subsidiaries**
                
                **Eliminations/**
                  **adjustments**
                
                **Consolidated**Net
                    sales
                
                $
                —
                
                $
                —
                
                $
                70,286
                
                $
                40,984
                
                $
                —
                
                $
                111,270Cost
                    of sales
                
                
                —
                
                
                —
                
                
                61,906
                
                
                29,588
                
                
                —
                
                
                91,494Gross
                    profit
                
                
                —
                
                
                —
                
                
                8,380
                
                
                11,396
                
                
                —
                
                
                19,776Selling,
                    administrative and product development expenses
                
                
                —
                
                
                1,666
                
                
                6,618
                
                
                8,301
                
                
                —
                
                
                16,585Amortization
                    of intangible assets
                
                
                —
                
                
                —
                
                
                1,725
                
                
                341
                
                
                —
                
                
                2,066Operating
                    income (loss)
                
                
                —
                
                
                (1,666
                )
                
                37
                
                
                2,754
                
                
                —
                
                
                1,125Interest
                    expense
                
                
                —
                
                
                (3,427
                )
                
                (753
                )
                
                (1,503
                )
                
                —
                
                
                (5,683
                )Equity
                    in income (loss) of subsidiaries
                
                
                (5,875
                )
                
                —
                
                
                —
                
                
                —
                
                
                5,875
                
                
                —Foreign
                    currency loss, net
                
                
                —
                
                
                138
                
                
                7
                
                
                (1,476
                )
                
                —
                
                
                (1,331
                )Other
                    income (expense)
                
                
                —
                
                
                —
                
                
                (3
                )
                
                (7
                )
                
                —
                
                
                (10
                )Income
                    (loss) before income taxes
                
                
                (5,875
                )
                
                (4,955
                )
                
                (712
                )
                
                (232
                )
                
                5,875
                
                
                (5,899
                )Provision
                    (benefit) for income taxes
                
                
                —
                
                
                —
                
                
                15
                
                
                (39
                )
                
                —
                
                
                (24
                )Net
                    income (loss)
                
                $
                (5,875
                )
                $
                (4,955
                )
                $
                (727
                )
                $
                (193
                )
                $
                5,875
                
                $
                (5,875
                )
  
  10
 **CHAAS
            ACQUISITIONS, LLC**
 **NOTES
            TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS**
 **(Dollars
            in thousands)**
 **(Unaudited)**
  **6.**
              **CONDENSED
                  CONSOLIDATING INFORMATION —
(continued)**
 
 
 **CONDENSED
        CONSOLIDATING STATEMENT OF CASH FLOWS**
 **For
        the three months ended March 31, 2006**
  **Parent**
                  
                  **Issuers**
                  
                  **Guarantor**
                    **subsidiaries**
                  
                  **Non-guarantor**
                    **subsidiaries**
                  
                  **Eliminations/**
                    **adjustments**
                  
                  **Consolidated****(Dollar
                      amounts in thousands)**Net
                      cash used for operating activities
                  
                  $
                  (630
                  )
                  $
                  (1,077
                  )
                  $
                  (1,485
                  )
                  $
                  (1,760
                  )
                  $
                  —
                  
                  $
                  (4,952
                  )Cash
                      flows from investing activities:Acquisition
                      of property and equipment
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (1,341
                  )
                  
                  (1,063
                  )
                  
                  —
                  
                  
                  (2,404
                  )Proceeds
                      from disposals
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  65
                  
                  
                  —
                  
                  
                  65Net
                      cash used for investing activities
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (1,341
                  )
                  
                  (998
                  )
                  
                  —
                  
                  
                  (2,339
                  )Cash
                      flows from financing activities:Change
                      in intercompany debt
                  
                  
                  630
                  
                  
                  1,077
                  
                  
                  (1,666
                  )
                  
                  (41
                  )
                  
                  —
                  
                  
                  —Net
                      increase (decrease) in revolving loan
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (1,275
                  )
                  
                  —
                  
                  
                  —
                  
                  
                  (1,275
                  )Repayment
                      of debt
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (16
                  )
                  
                  (753
                  )
                  
                  —
                  
                  
                  (769
                  )Net
                      cash provided by (used for)financing
                      activities
                  
                  
                  630
                  
                  
                  1,077
                  
                  
                  (2,957
                  )
                  
                  (794
                  )
                  
                  —
                  
                  
                  (2,044
                  )Effect
                      of exchange rate changes
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  181
                  
                  
                  —
                  
                  
                  181Net
                      decrease in cash
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (5,783
                  )
                  
                  (3,371
                  )
                  
                  —
                  
                  
                  (9,154
                  )Cash
                      at beginning of period
                  
                  
                  16
                  
                  
                  —
                  
                  
                  7,041
                  
                  
                  6,372
                  
                  
                  —
                  
                  
                  13,429Cash
                      at end of period
                  
                  $
                  16
                  
                  $
                  —
                  
                  $
                  1,258
                  
                  $
                  3,001
                  
                  $
                  —
                  
                  $
                  4,275
 **CONDENSED
        CONSOLIDATING STATEMENT OF CASH FLOWS**
 **For
        the three months ended March 31, 2005**
 **Parent**
                
                **Issuers**
                
                **Guarantor**
                  **subsidiaries**
                
                **Non-guarantor**
                  **subsidiaries**
                
                **Eliminations/**
                  **adjustments**
                
                **Consolidated****(Dollar
                    amounts in thousands)**Net
                    cash provided by (used for) operating activities
                
                $
                —
                
                $
                19,956
                
                $
                (18,067
                )
                $
                (6,050
                )
                $
                —
                
                $
                (4,161
                )Cash
                    flows from investing activities:Acquisition
                    of property and equipment
                
                
                —
                
                
                (10
                )
                
                (4,122
                )
                
                (695
                )
                
                —
                
                
                (4,827
                )Net
                    cash used for investing activities
                
                
                —
                
                
                (10
                )
                
                (4,122
                )
                
                (695
                )
                
                —
                
                
                (4,827
                )Cash
                    flows from financing activities:Net
                    increase (decrease) in revolving loan
                
                
                —
                
                
                (19,946
                )
                
                17,146
                
                
                2,589
                
                
                —
                
                
                (211
                )Repayment
                    of debt
                
                
                —
                
                
                —
                
                
                3
                
                
                (339
                )
                
                —
                
                
                (336
                )Net
                    cash provided by (used for) financing activities
                
                
                —
                
                
                (19,946
                )
                
                17,149
                
                
                2,250
                
                
                —
                
                
                (547
                )Effect
                    of exchange rate changes
                
                
                —
                
                
                —
                
                
                —
                
                
                (485
                )
                
                —
                
                
                (485
                )Net
                    decrease in cash
                
                
                —
                
                
                —
                
                
                (5,040
                )
                
                (4,980
                )
                
                —
                
                
                (10,020
                )Cash
                    at beginning of period
                
                
                16
                
                
                —
                
                
                5,466
                
                
                9,265
                
                
                —
                
                
                14,747Cash
                    at end of period
                
                $
                16
                
                $
                —
                
                $
                426
                
                $
                4,285
                
                $
                —
                
                $
                4,727
 
  11
 **CHAAS
              ACQUISITIONS, LLC**
   **Item2.**
              **Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations**
 
 The
        following discussion of our results of operations and financial condition
        should
        be read in conjunction with our financial statements and notes thereto included
        elsewhere in this Form 10-Q. This Form 10-Q contains forward-looking statements.
        Discussions containing forward-looking statements may be found in the material
        set forth above, in the material set forth below, as well as in this Form
        10-Q
        generally. Forward-looking statements generally can be identified by the
        use of
        terms such as "may," "will," "should," "expect," "anticipate," "believe,"
        "intend," "plan," "estimate," "predict," "potential," "forecast," "project,"
        "will be," "continue" or variations of such terms, or the use of these terms
        in
        the negative.  Our actual results may differ significantly from the results
        discussed in the forward-looking statements, and such differences may be
        material.  General risks that may impact the achievement of such forecasts
        include, but are not limited to: compliance with new laws and regulations,
        general economic conditions in the markets in which we operate, fluctuation
        in
        demand for our products and in the production of vehicles for which we are
        a
        supplier, significant raw material price fluctuations, labor disputes with
        our
        employees or those of our significant customers or suppliers, changes in
        consumer preferences, dependence on significant automotive customers, the
        level
        of competition in the automotive supply industry, pricing pressure from
        automotive customers, our substantial leverage, limitations imposed by our
        debt
        facilities, changes in the popularity of particular vehicle models or towing
        and
        rack systems, the loss of programs on particular vehicle models, risks
        associated with conducting business in foreign countries, other business
        factors
        and other risks detailed from time to time in the Company’s reports filed with
        the Securities & Exchange Commission.  Any such forward-looking
        statements are not guarantees of future performance and involve risks and
        uncertainties.  Actual events or results may differ materially from those
        discussed in the forward-looking statements.  All of these forward-looking
        statements are based on estimates and assumptions made by our management
        which,
        although believed to be reasonable, are inherently uncertain.  Given these
        risks and uncertainties, readers are cautioned not to place undue reliance
        on
        forward-looking statements.  We disclaim any obligation to update any
        forward-looking statements.
 
 **OVERVIEW**
 
 ***Company
        Background***
 
 We
        believe that we are one of the world’s leading designers and manufacturers of
        exterior accessories for automotive original equipment manufacturers and
        the
        aftermarket. We design and manufacture a wide array of both rack systems
        and
        towing systems and related accessories. Our broad offering of rack systems
        includes fixed and detachable racks and accessories, which can be installed
        on
        vehicles to carry items such as bicycles, skis, luggage, surfboards, and
        sailboards. Our towing products and accessories include trailer hitches,
        trailer
        balls, ball mounts, electrical harnesses, safety chains and locking pins.
        Our
        products are sold to original equipment manufacturers ("OEMs") as standard
        accessories or options for a variety of light vehicles and to the
        aftermarket.
 
 ***Industry
        Trends and Competition***
 
 Several
        trends are affecting the already highly competitive automotive industry,
        including a decline in the US domestic market share with its accompanying
        price
        pressures, worldwide increases in steel, aluminum and resin demand and prices
        and the ongoing financial distress of the US domestic OEMs and supply
        base.
  ***US
        Domestic Market Share***
 
 The
        US
        market share for General Motors and Ford has declined and their US domestic
        vehicle production levels continue to decrease. This affects us in lower
        sales
        volumes to these customers and in increased pressure to lower our selling
        prices. Year-to-year price reductions are common in the industry, and the
        long-term contracts that we use to sell our products often include annual
        price
        reductions. We do not believe that these price reductions will have a material
        adverse impact on our results because we intend to offset such price reductions
        through cost reductions and other productivity increases.
  12
 **CHAAS
              ACQUISITIONS, LLC**
 
 ***Increases
        in Raw Materials Costs***
 
 Worldwide
        market conditions, including the growth of demand from China and other Asian
        countries, and the tensions in the Mid-East have resulted in higher steel,
        aluminum and resin prices in recent years. These increases in demand are
        seen as
        long-term and we do not expect prices to go down in the short term. We are
        focused on mitigating the impact of this trend through commercial agreements
        with our customers, competitive sourcing arrangements, technology advancements
        and improvements in the efficiency of our production processes.
  ***Financial
        Distress of US Domestic OEMs and Suppliers***
 
 The
        declining market share of US domestic OEMs, their high legacy costs, and
        increased raw material prices and higher energy costs have resulted in financial
        losses for them. As well, several large automotive suppliers have filed for
        Chapter 11 bankruptcy protection. A result of these issues is that the US
        domestic automotive industry is experiencing a major structural change. The
        Company is not able to predict how long these industry trends will continue,
        but
        a sustained downturn could have a material adverse affect on the Company's
        results of operations, cash flows and financial position.
  ***The
        Acquisition***
 
 On
        April
        15, 2003, substantially all of the equity interests of Advanced Accessory
        Systems, LLC ("the Predecessor") were acquired by Castle Harlan Partners
        IV,
        L.P. ("the Acquisition"), a private equity investment fund organized and
        managed
        by Castle Harlan Inc., a private New York based equity firm. CHAAS Holdings,
        LLC
        ("CHAAS Holdings") was formed in April 2003 in connection with the Acquisition
        and was the direct parent of CHAAS Acquisitions, LLC ("CHAAS Acquisitions"
        or
        "the Company") which was also formed pursuant to the Acquisition.
 
 In
        January 2004, Advanced Accessory Holdings Corporation ("AAHC") was formed
        by
        CHAAS Holdings. At that time, CHAAS Holdings made a contribution of all of
        its
        equity interests in CHAAS Acquisitions to AAHC in exchange for all the
        outstanding membership units of AAHC. CHAAS Holdings is the direct parent
        of
        AAHC and AAHC is the direct parent of CHAAS Acquisitions and the indirect
        parent
        of the Predecessor. Unless the context otherwise requires, all information
        which
        refers to "we", "our" or "us" refers to CHAAS Acquisitions and its
        subsidiaries.
 
 
 **RESULTS
        OF OPERATIONS**
 
 **Three
        Months Ended March 31, 2006 Compared to the Three Months Ended March 31,
        2005**
 
 *Net
        sales.* Net
        sales for the first quarter of 2006 were $106.5 million, representing a decrease
        of $4.8 million, or 4.3%, compared with net sales of $111.3 million for the
        first quarter of 2005. North American OEM sales decreased approximately $5.3
        million, primarily as a result of general overall volume decline in SUVs
        and
        light trucks. Sales to our aftermarket customers in Europe increased by $3.8
        million as a result of higher unit tow bar sales at Brink and in North America
        decreased by $0.3 million. The sales decrease includes approximately $3.0
        million due to the decrease of the average exchange rates between the US
        Dollar
        and primarily the Euro, the functional currency of Brink and SportRack
        Europe.
 
 *Gross
        profit.* Gross
        profit for the first quarter of 2006 was $17.5 million, which represents
        a
        decrease of $2.3 million, or 11.6%, compared with gross profit of $19.8 million
        for the first quarter of 2005. Gross profit as a percentage of net sales
        was
        16.5% for the first quarter of 2006 and 17.8% for the first quarter of 2005.
        The
        decrease in gross profit and margin reflects the impact of manufacturing
        performance, increases in raw material costs and the impact of exchange.
        Offsetting the decrease was an overall positive product mix on the lower
        sales.
 
 *Selling,
        administrative and product development expenses.* Selling,
        administrative and product development expenses for the first quarter of
        2006
        were $15.4 million, representing a decrease of $1.2 million, or 7.1%, compared
        with $16.6 million for the first quarter of 2005. Excluding the impact of
        exchange of $0.6 million, the decrease was primarily due to lower engineering,
        selling and commission costs as a result of lower overall volumes.
 
 13
 **CHAAS
              ACQUISITIONS, LLC**
  *Operating
        income.* Our
        operating income for the first quarter of 2006 was $0.1 million representing
        a
        decrease of $1.0 million, or 90.9%, compared with operating income of $1.1
        million for the first quarter of 2005. The decrease resulted from decreased
        gross profit offset slightly by lower selling, administrative and product
        development expenses, as discussed above.
 
 *Interest
        expense.* Interest
        expense for both the first quarter of 2006 and the first quarter of 2005
        was
        $5.7 million. The impact of exchange of the first quarter of 2006 over the
        first
        quarter of 2005 was favorable by $0.1 million, which was offset by slightly
        higher interest rates.
 
 *Foreign
        currency gain (loss).* Foreign
        currency gain in the first quarter of 2006 was $0.7 million compared to a
        foreign currency loss of $1.3 million in the first quarter of 2005. Both
        the
        gain and loss were primarily attributable to the US Dollar denominated
        intercompany indebtedness of Brink, whose functional currency is the Euro.
        The
        intercompany indebtedness for our Canadian subsidiaries is deemed to be
        permanently invested and therefore changes in the intercompany balances for
        these subsidiaries caused by foreign currency fluctuations have been recorded
        in
        the currency translation adjustment account and included in other comprehensive
        income.
 
 *Provision
        for (benefit from) income taxes.* During
        the first quarter of 2006 we recorded a loss before income taxes of $4.9
        million
        and recorded an income tax provision of $0.4 million. The effective tax rate
        differs from the US federal income tax rate primarily due to changes in
        valuation allowances on the deferred tax assets (including current net operating
        losses) of all North American operations and differences in the tax rates
        of
        foreign operations.  During the first quarter of 2005 we had a net
        loss before taxes of $5.9 million and recorded an income tax benefit of $24,000.
 
 *Net
        loss* .
        We
        recorded a net loss of $5.3 million in the first quarter of 2006 and $5.9
        million in the first quarter of 2005. The net losses were a result of the
        items
        discussed above related to net sales, gross profit, foreign currency loss
        and
        the other expense and income items.
 
 
 **LIQUIDITY
        AND CAPITAL RESOURCES**
 
 Our
        principal liquidity requirements are to service our debt and meet our working
        capital and capital expenditure needs. Our indebtedness at March 31, 2006
        was
        $212.7 million including current maturities of $4.4 million.
 
 Although
        we were able to meet our senior leverage covenant for the quarter ended December
        31, 2005, we anticipated that we would be unable to meet our fixed charge
        coverage ratio covenant for the quarter ended December 31, 2005 and future
        quarters.
 
 On
        March
        29, 2006, we entered into the Seventh Amendment to the Amended and Restated
        Credit Agreement (the "Seventh Amendment") with General Electric Capital
        Corporation individually as a lender and as agent for the lenders referred
        to
        therein to modify the fixed charge coverage ratio covenant and the senior
        secured leverage ratio covenant.
 
 Prior
        to
        this modification, the required minimum fixed charge coverage ratios for
        all
        borrowers and their subsidiaries were 1.05 to 1.00 for the fiscal quarter
        ended
        December 31, 2005 and 1.15 to 1.00 for each fiscal quarter ending thereafter.
        The required minimum fixed charge coverage ratios for the European borrowers
        and
        their subsidiaries were 1.25 to 1.00 for the fiscal quarters ended March
        31,
        2005, June 30, 2005 and September 30, 2005. Under the modified fixed charge
        coverage ratio covenant, the required minimum fixed charge coverage ratio
        for
        all borrowers and their subsidiaries range from 1.15 to 1.00 for the fiscal
        quarter ending March 31, 2007 and for each fiscal quarter ending thereafter.
        The
        required minimum fixed charge coverage ratios for European borrowers and
        their
        subsidiaries are 1.25 to 1.00 for the fiscal quarter ended December 31, 2005
        and
        1.15 to 1.00 for the following fiscal quarters through December 31, 2006.
        The
        actual fixed charge coverage ratio for the fiscal quarter ended March 31,
        2006
        was 1.53 to 1.00 and we were in compliance with the modified covenant as
        of
        March 31, 2006.
 
 14
 **CHAAS
              ACQUISITIONS, LLC**
  Prior
        to
        the modification of the senior secured leverage ratio covenant, the required
        maximum leverage ratios for all borrowers and their subsidiaries were 1.75
        to
        1.00 for the fiscal quarters ended March 31, 2005 and June 30, 2005; 1.50
        to
        1.00 for the fiscal quarter ended September 30, 2005; and 1.25 to 1.00 for
        each
        fiscal quarter ending thereafter. Under the modified senior secured leverage
        ratio covenant, the required maximum leverage ratios for all borrowers and
        their
        subsidiaries range from 2.00 to 1.00 for fiscal quarters ended March 31,
        2006
        and June 30, 2006; 1.75 to 1.00 for the fiscal quarter ending September 30,
        2006; 1.50 to 1.00 for the fiscal quarter ending December 31, 2006; and 1.25
        to
        1.00 for each fiscal quarter ending thereafter. The actual leverage ratio
        for
        the quarter ended March 31, 2006 was 1.68 to 1.00 and we were in compliance
        with
        the modified covenant as of March 31, 2006.
 
 In
        addition, the Seventh Amendment modified the definition of "Obligations"
        under
        the credit agreement to include obligations of any credit party in favor
        of any
        lender party to the credit agreement arising under (i) certain bank products
        offered by such lender or (ii) any agreement with such lender to fix or hedge
        foreign currency risk of up to an aggregate maximum amount of $2.4 million.
        A
        copy of the Seventh Amendment was attached as an exhibit to the Annual Report
        filed on Form 10-K as of December 31, 2005.
 
 
 **Working
        Capital and Cash Flows**
 
 Working
        capital and key elements of the consolidated statement of cash flows
        are:
 
 March
                  31, 2006
              
              December
                  31,
                2005(in
                  thousands)Working
                  Capital
              
              $
              71,108
              
              $
              74,416
 
 Three
                  months ended March 31,2006
              
              2005(in
                  thousands)Cash
                  flows used for operating activities
              
              $
              (4,952
              )
              $
              (4,161
              )Cash
                  flows used for investing activities
              
              $
              (2,339
              )
              $
              (4,827
              )Cash
                  flows used for financing activities
              
              $
              (2,044
              )
              $
              (547
              )
 
 *Working
        capital*
 
 Working
        capital decreased by $3.3 million to $71.1 million at March 31, 2006 from
        $74.4
        million at December 31, 2005. This decrease is primarily due to a decrease
        in
        cash of $9.2 million and increases in accounts payable and accrued liabilities
        of $5.7 million and $4.5 million, respectively. These were offset by increases
        in accounts receivable and inventories of $13.7 million and $2.6 million,
        respectively. The net working capital decrease was favorably impacted by
        the
        increased exchange rate between the US Dollar and local currencies, especially
        the Euro, as of March 31, 2006 as compared with the exchange rate as of December
        31, 2005.
 
 The
        major
        components of the working capital change were accounts receivable, inventory
        and
        accounts payable. The increase in these three components was attributable
        to
        increased sales and production levels on a year-to-date basis as compared
        with
        the last several months of 2005.
 
 *Investing
        activities*
 
 Cash
        flow
        used for investing activities for the first three months of 2006 and 2005
        represented acquisitions of property and equipment of $2.4 million and $4.8
        million, respectively, and were primarily for the expansion of capacity,
        productivity, process improvements and maintenance.
 
 15
 **CHAAS
              ACQUISITIONS, LLC**
  *Capital
        expenditures*
 
 Our
        capital expenditures for 2005 were $9.3 million. Approximately $8.0 million
        was
        spent in connection with the expansion of capacity, productivity and process
        improvements and maintenance of machinery, equipment and tooling, $0.9 million
        was spent on furniture, fixtures and computers, $0.4 million on uncompleted
        construction in process and $0.1 million on repairs and improvements to land
        and
        buildings. Our 2005 capital expenditures were paid for from cash flows provided
        by operating activities or borrowings against our revolving credit facilities.
        We estimate that capital expenditures for 2006 will be approximately $11.3
        million, primarily for the expansion of capacity, productivity and process
        improvements and maintenance. Our 2006 capital expenditures are anticipated
        to
        be paid for from our current cash and cash provided by operating
        activities.
 
 *Financing
        activities*
 
 During
        the first three months of 2006, financing cash flows included a decrease
        in
        borrowings under the revolving line of credit of $1.3 million and repayment
        of
        debt of $0.8 million. For the same period in 2005 the financing cash flows
        included a reduction in the revolving line of credit of $0.2 million and
        repayment of debt of $0.3 million.
 
 *Off-balance
        sheet arrangements*
 
 The
        Company is not party to off-balance sheet arrangements as defined in SEC
        Regulation SK, Item 303(a).
 
 *Contractual
        Obligations*
 
 The
        following table represents our contractual commitments associated with our
        debt
        and other obligations disclosed above as of December 31, 2005.
 
 **Payments
                  due by year****Total**
              
              **Year
                  1**
              
              **Years
                  2-3**
              
              **Years
                  4-5**
              
              **Thereafter**Long-term
                  debt obligations - fixed rate
              
              $
              160,000
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              160,000Long-term
                  debt obligations - variable rate
              
              
              43,189
              
              
              3,256
              
              
              39,933
              
              
              —
              
              
              —Interest
                  on long-term fixed rate debt obligations
              
              
              105,747
              
              
              16,125
              
              
              32,250
              
              
              32,250
              
              
              25,122Capital
                  lease obligations (including interest)
              
              
              7,927
              
              
              917
              
              
              1,786
              
              
              1,699
              
              
              3,525Operating
                  lease obligations
              
              
              41,201
              
              
              7,258
              
              
              12,997
              
              
              6,688
              
              
              14,258Total
              
              $
              358,064
              
              $
              27,556
              
              $
              86,966
              
              $
              40,637
              
              $
              202,905
 
 In
        addition to the above, our senior credit facility includes obligations subject
        to variable interest rates. Borrowings under the credit facility, at the
        Company’s election, may be made as "index rate" loans or LIBOR rate loans, plus
        an applicable margin. As both the interest rate and the relative balances
        of the
        variable rate debt are not determinable, the interest related to the variable
        rate debt is not reflect in the above table. At December 31, 2005 the
        outstanding variable rate obligations were $43.2 million and the weighted
        average interest rate for those obligations was 7.65%.
 
 **Debt
        and Credit Sources**
 
 Our
        indebtedness at March 31, 2006 was $212.7 million. We expect that our primary
        sources of cash will be from operating activities and borrowings under our
        revolving credit facilities. As of March 31, 2006, we had borrowings under
        the
        revolving credit facilities totaling $37.8 million and had $12.1 million
        of
        available borrowing capacity. Standby letters of credit totaling $3.3 million
        providing security for our US workers compensation program reduced borrowing
        availability.
 
 On
        March
        29, 2006 we entered into the Seventh Amendment to the Amended and Restated
        Credit Agreement. See the discussion of the amendment to the credit facility
        in
        "- Liquidity and Capital Resources".
 
 16
 **CHAAS
              ACQUISITIONS, LLC**
  *International
        operations*
 
 We
        conduct operations in several foreign countries including Canada, the Czech
        Republic, Denmark, France, Germany, Italy, The Netherlands, Poland, Spain,
        Sweden and the United Kingdom. Net sales from international operations during
        the first three months of 2006 were $41.1 million, or 38.6% of our net sales.
        At
        March 31, 2006, assets associated with these operations were approximately
        40.5%
        of total assets, and we had indebtedness denominated in currencies other
        than
        the US Dollar of approximately $22.1 million.
 
 Our
        international operations may be subject to volatility because of currency
        fluctuations, inflation and changes in political and economic conditions
        in
        these countries. Most of the revenues and costs and expenses of our operations
        in these countries are denominated in the local currencies. The financial
        position and results of operations of the Company's foreign subsidiaries
        are
        measured using the local currency as the functional currency.
 
 *Currency
        contracts*
 
 We
        have
        significant operations in Europe where the functional currency is the Euro.
        On
        February 12, 2004, when the Euro to the US Dollar exchange rate was 1.28:1.00,
        we entered into a series of foreign currency forward option contracts related
        to
        the Euro ("Euro Collar"), which matured quarterly on a staggered basis. On
        May
        12, 2004 when the Euro to US Dollar exchange rate was 1.19:1.00, we entered
        into
        additional foreign currency option contracts. We provided a $1.9 million
        letter
        of credit in support of the foreign currency option contracts. To the extent
        that the quarter end exchange rate fell between the Euro Collar exchange
        rates,
        fulfillment of the Euro Collar exchange contracts would have resulted in
        offsetting foreign currency gains and losses upon expiration. For each reporting
        period we recorded the fair value, as determined by independent financial
        institutions, of open obligations and the resultant gains and losses were
        recorded in the Statement of Operations. The final option contracts expired
        during the second quarter of 2005. For the three months ended March 31, 2005,
        the Company recorded an unrealized gain on foreign currency options of
        $138,000.
 
 Upon
        expiration of the option contracts in the second quarter of 2005, the $1.9
        million letter of credit described above expired.
 
 *Recently
        issued accounting standards*
 
 In
        December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment," which
        requires compensation costs related to share-based payment transactions to
        be
        recognized in the financial statements. This statement also establishes fair
        value as the measurement objective for share-based payment transactions with
        employees. The intrinsic value method prescribed by APB 25, "Accounting for
        Stock Issued to Employees" approximates the fair value method per SFAS No.
        123(R) and there is no additional expense to disclose. Therefore, the cumulative
        impact of adopting this standard effective January 1, 2006 was not significant
        to the Company’s operating results.
 
 
 **Item3.**  **Quantitative
        and Qualitative Disclosures About Market Risk**
 
 In
        May
        2004, we executed several foreign currency option contracts. See " -
        Management’s Discussion and Analysis of Financial Condition and Results of
        Operations - Debt and Credit Sources - Currency Contracts".
 
 
 **Item4.**  **Controls
        and Procedures**
 
 Under
        the
        supervision and with the participation of management, including our principal
        executive officer and principal financial officer, the Company has evaluated
        the
        effectiveness of the design and operation of its disclosure controls and
        procedures as of March 31, 2006 and, based on their evaluation, the principal
        executive officer and principal financial officer have concluded that these
        controls and procedures are effective. There were no changes in internal
        controls or in other factors that could significantly affect these controls
        during the quarter.
 
 17
 **CHAAS
              ACQUISITIONS, LLC**
  Disclosure
        controls and
        procedures are the Company’s controls and other procedures that are designed to
        ensure that information required to be disclosed by the Company in the reports
        that it files or submits under the Securities Exchange Act of 1934, as amended
        (the "Exchange Act"), is recorded, processed, summarized and reported, within
        the time periods specified in the Securities and Exchange Commission’s rules and
        forms. Disclosure controls and procedures include, without limitation, controls
        and procedures designed to ensure that information required to be disclosed
        in
        the reports that the Company files under the Exchange Act is accumulated
        and
        communicated to management, including the principal executive officer and
        principal financial officer, as appropriate to allow timely decisions regarding
        required disclosure.
 
 **PART
        II. OTHER INFORMATION AND SIGNATURE**
 
 
 **Item1.**  **Legal
        Proceedings**
 
 From
        time
        to time, we are subject to routine legal proceedings incidental to the operation
        of our business. The outcome of any threatened or pending proceedings is
        not
        expected to have a material adverse effect on our financial condition, operating
        results or cash flows, based on our current understanding of the relevant
        facts.
        The Company maintains insurance coverage against claims in an amount that
        it
        believes to be adequate.
 
 
 **Item1A.
        Risk Factors**
 
 Not
        Applicable
 
 
 **Item2.**  **Unregistered
        Sales of Equity Securities and Use of Proceeds**
 
 None
 
 
 **Item3.**  **Defaults
        Upon Senior Securities**
 
 None
 
 
 **Item4.**  **Submission
        of Matters to a Vote of Security-Holders**
 
 None
 
 
 **Item5.**  **Other
        Information**
 
 None
 
 
 **Item6.**  **Exhibits**
 
 Exhibit
                  31.1
              Certification
                  of Chief Executive Officer Pursuant to Rules 13a-14 and 15d-14,
                  as Adopted
                  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 Exhibit
                  31.2
              Certification
                  of Chief Financial Officer Pursuant to Rules 13a-14 and 15d-14,
                  as Adopted
                  Pursuant to Section 302 of the Sarbanes-Oxley Act of
                  2002
 
 Exhibit
                  32.1
              Certification
                  of Chief Executive Officer Pursuant To 18 U.S.C. Section 1350,
                  as Adopted
                  Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002
 
 Exhibit
                  32.2
              Certification
                  of Chief Financial Officer Pursuant To 18 U.S.C. Section 1350,
                  as Adopted
                  Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002
 
 
  18
 **CHAAS
              ACQUISITIONS, LLC**
   
 Pursuantto
        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 thereunto duly authorized.
 
 
 
 CHAAS
                  ACQUISITIONS, LLCDate:
                  May 12, 2006
              /s/
                  Ronald J. GardhouseRonald
                  J. GardhouseChief
                  Financial Officer(Principal
                  Financial Officerand
                  Authorized Signatory)
 
 
  19
 **CHAAS
            ACQUISITIONS, LLC**
 
 **EXHIBIT
            INDEX**
  
 
 
 Exhibit
              Description31.1
              Certification
                  of Chief Executive Officer Pursuant to
                  Rules 13a-14 and 15d-14, as Adopted Pursuant to Section 302 of
                  the
                  Sarbanes-Oxley Act of 200231.2
              Certification
                  of Chief Financial Officer Pursuant to
                  Rules 13a-14 and 15d-14, as Adopted Pursuant to Section 302 of
                  the
                  Sarbanes-Oxley Act of 200232.1
              Certification
                  of Chief Executive Officer Pursuant to 18
                  U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 200232.2
              Certification
                  of Chief Financial Officer Pursuant to 18
                  U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002