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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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(Mark One)



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

For the quarterly period ended September 30, 2006

OR



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

For the transition period from  to

Commission File Number
333-123636



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ASG
Consolidated LLC

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 20-1741364                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

Market Place Tower

2025 First Avenue

Suite 900

Seattle, Washington 98121

(Address
of principal executive offices)

(Zip Code)

(206) 374-1515

(Registrants telephone number, including area code)



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

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



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##### Table of Contents

TABLE OF CONTENTS



|                             |  |                                                                                       |  |   
|---------------------------- |  | ------------------------------------------------------------------------------------- |  | --
|PART IFINANCIAL INFORMATION |  |                                                                                      
|                             |  |                                                                                      
|Item 1.                      |  | Unaudited Condensed Consolidated Financial Statements                                 |  | 3 
|                             |  |                                                                                      
|                             |  | Balance Sheets                                                                        |  | 3 
|                             |  |                                                                                      
|                             |  | Statements of Operations                                                              |  | 4 
|                             |  |                                                                                      
|                             |  | Statements of Cash Flows                                                              |  | 5 
|                             |  |                                                                                      
|                             |  | Notes to Financial Statements                                                         |  | 6 
|                             |  |                                                                                      
|Item 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 23
|                             |  |                                                                                      
|Item 3.                      |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 36
|                             |  |                                                                                      
|Item 4.                      |  | Controls and Procedures                                                               |  | 36
|                             | 
|PART IIOTHER INFORMATION    |  |                                                                                      
|                             |  |                                                                                      
|Item 1.                      |  | Legal Proceedings                                                                     |  | 37
|                             |  |                                                                                      
|Item 1A.                     |  | Risk Factors                                                                          |  | 37
|                             |  |                                                                                      
|Item 6.                      |  | Exhibits                                                                              |  | 37
|                             | 
|SIGNATURES                   |  | 38                                                                                   



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##### Table of Contents

PART IFINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

ASG CONSOLIDATED LLC AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)



|                                                                 |  |                   |          |   |                    |   |          |  
|---------------------------------------------------------------- |  | ----------------- | -------- | - | ------------------ | - | -------- | -
|                                                                 |  | December 31, 2005 |          |   | September 30, 2006 |  
|ASSETS                                                           |  |                   |          |   |                    |   |          |  
|Current assets:                                                  |  |                   |          |   |                    |   |          |  
|Cash and cash equivalents                                        |  | $                 | 8,015    |   |                    | $ | 2,303    |  
|Trade accounts receivable, net of allowance of $1,952 and $1,676 |  |                   | 37,758   |   |                    |   | 40,062   |  
|Receivables from related parties                                 |  |                   | 93       |   |                    |   | 66       |  
|Inventories                                                      |  |                   | 55,440   |   |                    |   | 119,997  |  
|Deferred operating costs and prepaid expenses                    |  |                   | 13,298   |   |                    |   | 13,095   |  
|Fair value of derivatives                                        |  |                   | 12,822   |   |                    |   | 21,968   |  
|Other                                                            |  |                   | 4,968    |   |                    |   | 6,630    |  
|                                                                 |  |                   |          |   |                    |   |          |  
|Total current assets                                             |  |                   | 132,394  |   |                    |   | 204,121  |  
|                                                                 |  |                   |          |   |                    |   |          |  
|Property, vessels and equipment, net                             |  |                   | 171,479  |   |                    |   | 150,896  |  
|Capital projects in process                                      |  |                   | 2,003    |   |                    |   | 6,109    |  
|Other assets:                                                    |  |                   |          |   |                    |   |          |  
|Cooperative and fishing rights, net                              |  |                   | 88,324   |   |                    |   | 86,140   |  
|Goodwill                                                         |  |                   | 33,521   |   |                    |   | 33,521   |  
|Fair value of derivatives                                        |  |                   | 16,942   |   |                    |   | 30,535   |  
|Deferred financing costs, net                                    |  |                   | 15,391   |   |                    |   | 5,252    |  
|Other intangibles, net                                           |  |                   | 3,342    |   |                    |   | 2,953    |  
|Other                                                            |  |                   | 7,807    |   |                    |   | 9,486    |  
|                                                                 |  |                   |          |   |                    |   |          |  
|Total other assets                                               |  |                   | 165,327  |   |                    |   | 167,887  |  
|                                                                 |  |                   |          |   |                    |   |          |  
|Total assets                                                     |  | $                 | 471,203  |   |                    | $ | 529,013  |  
|                                                                 |  |                   |          |   |                    |   |          |  
|LIABILITIES AND MEMBERS EQUITY (DEFICIT)                        |  |                   |          |   |                    |   |          |  
|Current liabilities:                                             |  |                   |          |   |                    |   |          |  
|Accounts payable and accrued expenses                            |  | $                 | 35,274   |   |                    | $ | 44,411   |  
|Current portion of long-term debt                                |  |                   | 8,431    |   |                    |   | 7,922    |  
|Fair value of derivatives                                        |  |                   | 3,422    |   |                    |   | 591      |  
|                                                                 |  |                   |          |   |                    |   |          |  
|Total current liabilities                                        |  |                   | 47,127   |   |                    |   | 52,924   |  
|Long-term liabilities:                                           |  |                   |          |   |                    |   |          |  
|Long-term debt, net of current portion and discounts on notes    |  |                   | 587,446  |   |                    |   | 604,055  |  
|Fair value of derivatives                                        |  |                   | 1,959    |   |                    |   | 14,842   |  
|                                                                 |  |                   |          |   |                    |   |          |  
|Total liabilities                                                |  |                   | 636,532  |   |                    |   | 671,821  |  
|                                                                 |  |                   |          |   |                    |   |          |  
|Commitments and contingencies                                    |  |                   |          |   |                    |   |          |  
|                                                                 |  |                  
|Members deficit:                                                |  |                   |          |   |                    |   |          |  
|Members deficit                                                 |  |                   | (178,110 | ) |                    |   | (167,805 | )
|Accumulated other comprehensive income                           |  |                   | 12,781   |   |                    |   | 24,997   |  
|                                                                 |  |                   |          |   |                    |   |          |  
|Total members deficit                                           |  |                   | (165,329 | ) |                    |   | (142,808 | )
|                                                                 |  |                   |          |   |                    |   |          |  
|Total liabilities and members deficit                           |  | $                 | 471,203  |   |                    | $ | 529,013  |  
|                                                                 |  |                   |          |   |                    |   |          |  

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



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##### Table of Contents

ASG CONSOLIDATED LLC AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)



|                                                                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|----------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                                                      |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                                                                      |  | 2005                            |         |   | 2006                           |   |         | 2005 |  |   | 2006    |  
|Net sales and other revenue:                                                                          |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Seafood sales                                                                                         |  | $                               | 99,634  |   |                                | $ | 101,387 |      |  | $ | 376,511 |   |  | $ | 394,036 |  
|Other                                                                                                 |  |                                 | 769     |   |                                |   | 1,318   |      |  |   | 845     |   |  |   | 1,684   |  
|                                                                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total sales and other revenue                                                                         |  |                                 | 100,403 |   |                                |   | 102,705 |      |  |   | 377,356 |   |  |   | 395,720 |  
|                                                                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Cost of sales:                                                                                        |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Cost of sales, including depreciation and amortization of $5,286, $6,391, $27,406 and $27,949         |  |                                 | 62,390  |   |                                |   | 65,235  |      |  |   | 241,002 |   |  |   | 255,102 |  
|Cost of salesrelated parties                                                                         |  |                                 | 8,797   |   |                                |   | 9,970   |      |  |   | 20,317  |   |  |   | 20,568  |  
|Shipping and handling costs                                                                           |  |                                 | 7,815   |   |                                |   | 8,444   |      |  |   | 24,919  |   |  |   | 29,077  |  
|                                                                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Gross profit                                                                                          |  |                                 | 21,401  |   |                                |   | 19,056  |      |  |   | 91,118  |   |  |   | 90,973  |  
|                                                                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Operating expenses:                                                                                   |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Selling, general and administrative expenses, excluding equity-based compensation and related parties |  |                                 | 8,682   |   |                                |   | 10,208  |      |  |   | 27,666  |   |  |   | 32,206  |  
|Selling, general and administrative expensesrelated parties                                          |  |                                 | 464     |   |                                |   | 866     |      |  |   | 1,261   |   |  |   | 1,978   |  
|Equity-based compensation                                                                             |  |                                 | (160    | ) |                                |   | 270     |      |  |   | 996     |   |  |   | 6,554   |  
|Other amortization and depreciation                                                                   |  |                                 | 772     |   |                                |   | 836     |      |  |   | 2,369   |   |  |   | 2,434   |  
|                                                                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Operating income                                                                                      |  |                                 | 11,643  |   |                                |   | 6,876   |      |  |   | 58,826  |   |  |   | 47,801  |  
|                                                                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Other income (expense), net:                                                                          |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Interest expense, net of interest income of $27, $143, $98 and $355                                   |  |                                 | (14,569 | ) |                                |   | (16,610 | )    |  |   | (43,166 | ) |  |   | (38,045 | )
|Write-off of financing costs and redemption premium                                                   |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   | (17,754 | )
|Foreign exchange gains, net                                                                           |  |                                 | 4,940   |   |                                |   | 8,357   |      |  |   | 18,717  |   |  |   | 11,716  |  
|Other derivatives gains, net                                                                          |  |                                 | 4,499   |   |                                |   | 1,722   |      |  |   | 13,084  |   |  |   | 2,548   |  
|Other                                                                                                 |  |                                 | (447    | ) |                                |   | 207     |      |  |   | (962    | ) |  |   | 80      |  
|                                                                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Other income (expense), net                                                                           |  |                                 | (5,577  | ) |                                |   | (6,324  | )    |  |   | (12,327 | ) |  |   | (41,455 | )
|                                                                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income before income taxes                                                                            |  |                                 | 6,066   |   |                                |   | 552     |      |  |   | 46,499  |   |  |   | 6,346   |  
|Income tax provision                                                                                  |  |                                 | 13      |   |                                |   | 27      |      |  |   | 30      |   |  |   | 33      |  
|                                                                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Net income                                                                                            |  | $                               | 6,053   |   |                                | $ | 525     |      |  | $ | 46,469  |   |  | $ | 6,313   |  
|                                                                                                      |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  

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



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ASG CONSOLIDATED LLC AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



|                                                                                                             |  |                                |         |   |      |   |          |  
|------------------------------------------------------------------------------------------------------------ |  | ------------------------------ | ------- | - | ---- | - | -------- | -
|                                                                                                             |  | Nine Months EndedSeptember 30, |        
|                                                                                                             |  | 2005                           |         |   | 2006 |  
|Cash flows from operating activities:                                                                        |  |                                |         |   |      |   |          |  
|Net income                                                                                                   |  | $                              | 46,469  |   |      | $ | 6,313    |  
|Adjustments to reconcile net income to net cash provided by operating activities:                            |  |                                |         |   |      |   |          |  
|Depreciation and amortization                                                                                |  |                                | 29,775  |   |      |   | 30,383   |  
|Write-off of financing costs                                                                                 |  |                                |        |   |      |   | 8,894    |  
|Amortization of debt discount                                                                                |  |                                | 11,120  |   |      |   | 12,436   |  
|Equity-based compensation                                                                                    |  |                                | 996     |   |      |   | 6,554    |  
|Amortization of deferred financing costs                                                                     |  |                                | 4,429   |   |      |   | 1,245    |  
|Unrealized gains on derivatives, net                                                                         |  |                                | (23,722 | ) |      |   | (544     | )
|Provision for doubtful accounts and promotion allowances                                                     |  |                                | (348    | ) |      |   | (276     | )
|Other                                                                                                        |  |                                | 13      |   |      |   | 230      |  
|Change in operating assets and liabilities:                                                                  |  |                                |         |   |      |   |          |  
|Accounts receivables including related parties                                                               |  |                                | 4,180   |   |      |   | (2,001   | )
|Inventories, net of depreciation and amortization component                                                  |  |                                | (47,903 | ) |      |   | (57,353  | )
|Accounts payable and accrued expenses including related parties                                              |  |                                | 14,849  |   |      |   | 9,137    |  
|Deferred operating costs, prepaid expenses and other, net                                                    |  |                                | (4,817  | ) |      |   | (2,323   | )
|                                                                                                             |  |                                |         |   |      |   |          |  
|Net cash provided by operating activities                                                                    |  |                                | 35,041  |   |      |   | 12,695   |  
|                                                                                                             |  |                                |         |   |      |   |          |  
|Cash flows from investing activities:                                                                        |  |                                |         |   |      |   |          |  
|Purchases of property, vessels and equipment                                                                 |  |                                | (11,313 | ) |      |   | (11,708  | )
|Net increase in capital projects in process                                                                  |  |                                | (1,042  | ) |      |   | (5,828   | )
|Purchases of fishing rights and related acquisition costs                                                    |  |                                | (1,581  | ) |      |   | (1,002   | )
|Proceeds from disposals of property, plant and equipment                                                     |  |                                |        |   |      |   | 203      |  
|Restricted cash deposits and other, net                                                                      |  |                                | 32      |   |      |   | (984     | )
|                                                                                                             |  |                                |         |   |      |   |          |  
|Net cash used in investing activities                                                                        |  |                                | (13,904 | ) |      |   | (19,319  | )
|                                                                                                             |  |                                |         |   |      |   |          |  
|Cash flows from financing activities:                                                                        |  |                                |         |   |      |   |          |  
|Proceeds from debtterm loans                                                                                |  |                                |        |   |      |   | 180,000  |  
|Repayment of debt                                                                                            |  |                                |        |   |      |   | (175,000 | )
|Principal payments on long-term debt                                                                         |  |                                | (31,876 | ) |      |   | (15,275  | )
|Net borrowings on revolving debt facility                                                                    |  |                                | 17,500  |   |      |   | 13,939   |  
|Tax and other distributions to members                                                                       |  |                                | (1,228  | ) |      |   | (2,743   | )
|Payment of financing costs                                                                                   |  |                                | (878    | ) |      |   | (9       | )
|                                                                                                             |  |                                |         |   |      |   |          |  
|Net cash provided by (used in) financing activities                                                          |  |                                | (16,482 | ) |      |   | 912      |  
|                                                                                                             |  |                                |         |   |      |   |          |  
|Net increase (decrease) in cash and cash equivalents                                                         |  |                                | 4,655   |   |      |   | (5,712   | )
|Cash and cash equivalents at beginning of period                                                             |  |                                | 1,960   |   |      |   | 8,015    |  
|                                                                                                             |  |                                |         |   |      |   |          |  
|Cash and cash equivalents at end of period                                                                   |  | $                              | 6,615   |   |      | $ | 2,303    |  
|                                                                                                             |  |                                |         |   |      |   |          |  
|Non-cash investing and financing activities:                                                                 |  |                                |         |   |      |   |          |  
|Reclassification of prior period capital projects in progress and deposit to property, vessels and equipment |  | $                              | 1,856   |   |      | $ | 1,722    |  
|Capital contribution adjustment for equity-based compensation and other expenses                             |  | $                              | 1,156   |   |      | $ | 6,735    |  



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



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##### Table of Contents

ASG CONSOLIDATED LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



|Note 1. | Basis of Presentation
|------- | ---------------------

The accompanying unaudited
condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the rules and regulations of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and notes required by U.S. generally accepted accounting principles for annual financial statements. The unaudited condensed consolidated financial statements include all adjustments
(consisting only of normal recurring adjustments) that the management of ASG Consolidated LLC (ASG Consolidated) and its subsidiaries (collectively referred to herein as the Company) believes necessary for fair presentation of the
Companys condensed consolidated financial position, results of operations and cash flows for the periods presented.

ASG Consolidated
is an intermediate holding company, and all of its activities are conducted through American Seafoods Group LLC (ASG) and its subsidiaries. ASG Consolidated was formed in September 2004 in connection with its offering of Senior Discount Notes as
further described in Note 8.

The Companys business is seasonal and subject to fluctuations in timing of the production of the
Companys products and revenue recognition. A significant portion of net income relating to the Companys at-sea processing segment is recorded within the first two quarters of the year during which time the Company completes its fishing
operations for the pollock A season. Therefore, results of operations for the three and nine months ended September 30, 2005 and 2006 are not indicative of the results of operations expected for the complete fiscal year or any other period. The
unaudited condensed consolidated financial statements included herein should be read in conjunction with the annual audited consolidated financial statements and notes thereto for the year ended December 31, 2005, contained in the
Companys Annual Report on Form 10-K as filed with the Securities and Exchange Commission on April 11, 2006.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

Significant estimates impacting the financial statements include the estimated
fair values of the assets and liabilities acquired in connection with acquisitions, depreciable lives of property, vessels, and equipment, overhead included in inventory, the amortization lives of cooperative and fishing rights and other
intangibles, the fair values of hedges against risks of foreign currency, the fair value of American Seafood, L.P. (ASLP) units, vesting of performance-based unit options, and other assumptions used to calculate equity-based compensation, estimated
accruals for contingent liabilities and collectibility of receivables.

Accounting for Equity Based Compensation

The Company maintains a unit option equity incentive plan (Unit Option Plan) under which it may grant non-qualified unit options in its parent company,
ASLP, to employees, non-employee directors and consultants. Prior to its January 1, 2006 adoption of Financial Accounting Standards Board (FASB) Statement No. 123(R), Share-Based Payment (SFAS 123R), the Company accounted for
equity-based compensation using the intrinsic value method prescribed in Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Options Issued to Employees, and related interpretations. Under this method, if the unit
option grant price equaled the market price on the original date of grant, no compensation expense was recognized by the Company until the awards were modified, at which time such awards were accounted for under the variable accounting method. As



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ASG CONSOLIDATED LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



permitted by SFAS No. 123, Accounting for Stock- Based Compensation (SFAS 123), equity-based compensation was included as a pro forma
disclosure in the notes to the consolidated financial statements.

Effective January 1, 2006, the Company adopted the fair value
recognition provisions of SFAS 123R using the nonpublic prospective method. As a result, for options granted on or after January 1, 2006, fair value is determined at grant date and, under normal circumstances, is not adjusted for future periods.
Compensation expense is recognized based upon this fair value over the vesting period of the option grant. In the event of a modification, the fair value of the grant immediately before and after the modification is determined and the difference in
values, if any, is also recognized over the remaining vesting period. In accordance with the prospective method, results for prior periods have not been restated and there was no cumulative effect upon adoption.

The Unit Option Plan provides for accelerated vesting of unit options upon certain triggering events or at the sole discretion of the Board of Directors.
The acceleration of option grants is considered to be a modification. Prior to the adoption of SFAS 123R, the intrinsic value of accelerated options was recognized on the date of acceleration with continued application of variable accounting on any
options of the same class that were not accelerated over their remaining vesting period. With the Companys adoption of SFAS 123R, compensation expense for any accelerated options is determined in the same manner as before the adoption. The
calculation of compensation expense for options of the same class that are not accelerated, however, differs in that the intrinsic value of such options determined on the date of acceleration is amortized on a straight line basis over the remaining
vesting period of those options absent any future modification. In addition, the difference, if any, in the fair value of the remaining options that were not accelerated before and after the modification is also amortized over the remaining vesting
period of those options.

On February 27, 2006, acceleration of certain option grants was approved by the Board of Directors in accordance
with the provisions of the Unit Option Plan. As the acceleration was considered to be a modification of the option grants, the Company immediately recognized the entire intrinsic value associated with the accelerated options as compensation expense
and continues to amortize the intrinsic value of the remaining options that were not accelerated over their remaining vesting period. There was no difference in the fair value of the remaining options that were not accelerated before and after the
modification.

There were no option grants during the nine months ended September 30, 2005 and 2006.

The fair value for accelerated unit option awards was estimated at the date of modification using the Black-Scholes option valuation model with the
following weighted average assumptions:



|                               |  |      |  
|------------------------------ |  | ---- | -
|Expected term in years         |  | 3.6  |  
|Expected unit price volatility |  | 31.8 | %
|Risk free interest rate        |  | 4.71 | %
|Expected distribution yield    |  | 14.0 | %

The expected term of the unit options represents the estimated period of time until exercise and
is based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. For 2006, expected unit price volatility is determined using the fair value method
based on the historical volatility of a peer group of publicly-traded companies over the expected term of the unit options. Prior to the adoption of SFAS 123R, expected unit price volatility was estimated at zero. The risk-free



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ASG CONSOLIDATED LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term. The expected distribution yield
excludes the effect of forecasted future tax distributions to the members.

The Black-Scholes option valuation model was developed for use
in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, particularly for the expected term and expected
unit option price volatility. The ASLP unit options have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair value estimate. Because the unit options do
not trade on a secondary exchange, employees do not derive a benefit from holding unit options unless there is an increase, above the grant price, in the market price of ASLPs partnership units. See Note 9 for additional details.

Loss contingencies

Loss
contingencies are accounted for in accordance with SFAS 5, Accounting for Loss Contingencies, and its interpretations. Accordingly, if a loss contingency exists, an estimated loss is accrued by a charge to earnings if information available
prior to issuance of the financial statements indicates that it is probable that an asset has been impaired or a liability has been incurred at the date of the financial statements and the amount of loss can be estimated within a reasonable range.
Estimated recoveries from insurance providers or other parties are considered in estimating the amount of the net loss. When some amount within the range appears to be a better estimate than any other amount within the range, that amount is accrued.
When no amount within the range is a better estimate than any other amount, the minimum amount in the range is accrued.

Legal costs
associated with loss contingencies are expensed as incurred to the extent such costs are not recoverable from an insurance provider or another party.

Reclassification and Revisions

Contribution of American Seafoods Europe. In November 2005,
American Seafoods Consolidated LLC and ASC, Inc. contributed American Seafoods Europe ApS (ASE), a Danish limited partnership, to ASG Consolidated, which, in turn, contributed ASE to its wholly-owned subsidiary, ASG. The purpose of the contribution
was to bring all sales and operating entities under the control of one subsidiary. ASE is included in the Companys consolidated financial statements for all periods presented as required under the guidance of SFAS No. 141, Business
Combinations, for transactions involving the transfers of net assets between entities under common control. The effect of these revisions to prior periods was immaterial.

During the quarter ended September 30, 2006, the Company determined that it had incorrectly classified certain selling expenses that arose in prior
periods. The effect of this misclassification was to reduce revenues and selling, general and administrative expenses by $0.7 million and $0.8 million in the quarters ended March 31, 2006 and June 30, 2006, respectively. The misclassification had no
effect on net income for the periods. The Company has corrected the misclassification of revenue and selling expenses on a year-to-date basis in the accompanying unaudited consolidated statements of operations for the nine months ended September 30,
2006.

Also during the third quarter of 2006, the Company identified out-of-period adjustments related to the misallocation of overhead
costs to inventory and cost of sales, the write-off of certain receivables pertaining to protection and indemnity claims and the timing of expense recognition related to certain lease arrangements and estimated employee performance incentives. The
effect of these out-of period adjustments would have been to reduce net income by $0.2 million for the year ended December 31, 2005 and reduce net income by $0.6 million



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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



for the quarter ended June 30, 2006. The aggregate of all such adjustments was $0.8 million and has been recorded as a reduction to net income in the
accompanying unaudited consolidated statements of operations for the quarter ended September 30, 2006. The adjustments for the quarters ended June 30 and September 30, 2006 were primarily attributable to the misallocation of depreciation expense to
inventory.

Certain other prior year items have been reclassified to conform to the current year presentation. The effect of these
revisions is not material to the financial statements.

Recently Issued Accounting Pronouncements

In September 2006, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 108,Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial Statements (SAB 108), to address diversity in practice in quantifying financial statement misstatements. SAB 108 requires that the quantification of misstatements based on
their impact on each of the Companys financial statements and related disclosures. SAB 108 is effective as of the end of the Companys 2006 fiscal year, allowing a one-time transitional cumulative effect adjustment to retained earnings as
of January 1, 2006 for errors that were not previously deemed material, but are material under the guidance in SAB 108. The Company is currently evaluating the impact, if any, of adopting SAB 108 on its financial statements.

In September 2006, the FASB issued SFAS 157Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value,
and expands disclosures about fair value measurements. The provisions of SFAS 157 are effective as of the beginning of the Companys 2008 fiscal year. The Company is currently evaluating the impact, if any, of adopting SFAS 157 on its financial
statements.

In September 2006, the FASB issued FASB Staff Position AUG AIR-1,Accounting for Planned Major Maintenance Activities
(FSP AUG AIR-1). FSP AUG AIR-1 amends the guidance on accounting for planned major maintenance activities; specifically it precludes the use of the previously acceptable accrue in advance method. The Company will be required to adopt FSP
AUG AIR-1 in the first quarter of fiscal year 2007. The Company is currently evaluating the impact, if any, of adopting FSP AUG AIR-1 on its financial statements.

In June 2006, the FASB ratified a consensus on the EITF Issue No. 06-03 (EITF 06-03) related to the classification of certain sales, value added and excise taxes within the income statement. This EITF would become
effective for the Company in the first quarter of fiscal year 2007. The Company is in the process of evaluating the impact, if any, of this EITF on its presentation of such taxes on the statement of operations.



|Note 2. | Inventories
|------- | -----------

Inventories at December 31, 2005
and September 30, 2006 consist of the following (in thousands):



|                                                   |  |                   |        |                    |   |        
|-------------------------------------------------- |  | ----------------- | ------ | ------------------ | - | -------
|                                                   |  | December 31, 2005 |        | September 30, 2006
|Fish blocks, surimi and roe                        |  | $                 | 30,020 |                    | $ | 86,239 
|Finished seafood products                          |  |                   | 19,279 |                    |   | 25,795 
|Breading, batter, additives and packaging supplies |  |                   | 6,141  |                    |   | 7,963  
|                                                   |  |                   |        |                    |   |        
|                                                   |  | $                 | 55,440 |                    | $ | 119,997
|                                                   |  |                   |        |                    |   |        

The carrying amount of inventories fluctuates during the year primarily as a result of the
seasonal nature of the Companys business. Historically, such amount is highest at the end of the first and third quarters of the year.



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|Note 3. | Deferred Operating Costs and Prepaid Expenses
|------- | ---------------------------------------------

Deferred operating costs and prepaid expenses at December 31, 2005 and September 30, 2006 consist of the following (in thousands):



|                                                  |  |                   |        |                    |   |       
|------------------------------------------------- |  | ----------------- | ------ | ------------------ | - | ------
|                                                  |  | December 31, 2005 |        | September 30, 2006
|Fish quota purchases and fishing cooperative dues |  | $                 | 193    |                    | $ | 752   
|Prepaid insurance                                 |  |                   | 2,078  |                    |   | 2,984 
|Vessel supplies                                   |  |                   | 5,757  |                    |   | 2,639 
|Fuel                                              |  |                   | 2,890  |                    |   | 4,736 
|Deposits                                          |  |                   | 246    |                    |   | 272   
|Permits, license and property taxes               |  |                   | 277    |                    |   | 269   
|Other                                             |  |                   | 1,857  |                    |   | 1,443 
|                                                  |  |                   |        |                    |   |       
|                                                  |  | $                 | 13,298 |                    | $ | 13,095
|                                                  |  |                   |        |                    |   |       



|Note 4. | Accounts Payable and Accrued Expenses
|------- | -------------------------------------

Accounts
payable and accrued expenses at December 31, 2005 and September 30, 2006 consist of the following (in thousands):



|                             |  |                   |        |                   |   |       
|---------------------------- |  | ----------------- | ------ | ----------------- | - | ------
|                             |  | December 31, 2005 |        | September 30,2006
|Accounts payable             |  | $                 | 13,076 |                   | $ | 15,932
|Accrued payroll and benefits |  |                   | 6,946  |                   |   | 15,441
|Deferred compensation        |  |                   | 5,626  |                   |   | 5,139 
|Interest payable             |  |                   | 3,881  |                   |   | 265   
|Alaska landing tax payable   |  |                   | 904    |                   |   | 1,373 
|Other accrued liabilities    |  |                   | 4,841  |                   |   | 6,261 
|                             |  |                   |        |                   |   |       
|                             |  | $                 | 35,274 |                   | $ | 44,411
|                             |  |                   |        |                   |   |       

The carrying amount of accounts payable and accrued expenses fluctuates during the year primarily
as a result of the seasonal nature of the Companys business. Historically, accounts payable, accrued payroll and benefits and interest payable are highest at the end of the first and third quarters of the year due to the timing of vendor
payments, crew payroll cycle and interest payments on the Companys Senior Subordinated Notes. As a result of the redemption of the Senior Subordinated Notes in April 2006, interest payments are now made at the end of each quarter.



|Note 5. | Derivative Instruments
|------- | ----------------------

Foreign Exchange
Contracts

The Company has a significant amount of Japanese yen-denominated sales and a lesser amount of euro-denominated sales.
Therefore, its earnings, cash flows and financial position are exposed to foreign currency risk. The Company attempts to manage foreign currency risk by using foreign currency forward exchange contracts to hedge the variability of future cash flows
associated with yen-denominated and euro-denominated sales. These contracts are arranged so that the Company sells yen and euros to the counterparty at a fixed exchange rate and receives U.S. dollars in return. It is the Companys risk
management policy to hedge a target level of 80% of its forecasted yen sales over the next 12 months, 65% over months 13 to 24, 50% over months 25 to 36, and 35% over months 37 to 48. It is the Companys risk management policy to hedge up
to 100% of its euro sales that are scheduled to occur over the next 12 months.



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In specific circumstances, the Company may elect to redesignate hedges as speculative instruments as
follows:



| |  |  | Redesignation due to the sale or termination of the underlying instrument, or the execution of offsetting swap positions, that effectively eliminates the related hedge contracts,
even if the forecasted transaction is still considered to be probable. In these circumstances, the amount of unrealized gain or loss recorded in other comprehensive income (loss) as of the time of redesignation is held in other comprehensive income
(loss) until the underlying forecasted transaction occurs in accordance with the requirements of SFAS 133. During the nine months ended September 30, 2006, the Company had two contracts that had been redesignated under this criteria in
2005 for which the underlying designated transaction occurred in whole or in part. The amount reclassified to earnings for these contracts was a loss of approximately $5.2 million. As of September 30, 2006, there was an unrealized gain of
approximately $3.9 million held in other comprehensive income (loss) related to six contracts that had been terminated in 2005 for which the underlying forecasted transactions are still expected to occur. As of September 30, 2006, these
forecasted transactions are scheduled to occur within twelve months. The aggregate notional amount of these contracts was $69.0 million.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Redesignation upon determination that the underlying forecasted transaction is no longer considered to be probable by the end of the original period of the hedge or an additional
two month period following. In accordance with SFAS 133, all unrealized gains or losses due to changes in the net present value of these contracts are recorded in the unaudited condensed consolidated statements of operations as a component of
unrealized gains or losses from foreign exchange contracts. The Company did not have any such contract positions as of September 30, 2006.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Redesignation due to the sale or termination of the underlying instrument, or the execution of offsetting swap positions, that effectively eliminates the related hedge contracts and
it is determined that the underlying forecasted transaction is no longer considered to be probable by the end of the original period of the hedge or an additional two month period following. In accordance with SFAS 133, all unrealized gains or
losses due to changes in net present value of these contracts are recorded in the unaudited condensed statements of operations as a component of unrealized gains or losses from foreign exchange contracts. The Company did not have any such contract
positions as of September 30, 2006.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of September 30, 2006, the Company had an aggregate notional amount of $455.0
million in foreign exchange contracts designated as hedges. In addition, in connection with these foreign currency forward exchange contracts, the Company also had agreements to extend certain foreign exchange agreements that expire between March
2009 and December 2010, between June 2010 and December 2011 and between March 2010 and September 2011 with an aggregate notional amount of $150.0 million. These extension agreements would become binding and effective only if the spot rate falls
below ¥95.0 per U.S. dollar on or before September 2008 and June 2009 and below ¥99.5 on or before December 2009, respectively. If the spot rate does not reach the trigger on or before these dates, neither the Company nor the
counterparty shall have any right or obligation with respect to any of these extension agreements.

The Company had euro foreign exchange
contracts that mature through April 2007 with an aggregate notional amount of $7.0 million at September 30, 2006.



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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following summarizes the activity related to the Companys foreign exchange contracts (in
millions):



|                                         |  |                                 |     |      |                                |      |      |  |   |      |   |  |   |      |  
|---------------------------------------- |  | ------------------------------- | --- | ---- | ------------------------------ | ---- | ---- |  | - | ---- | - |  | - | ---- | -
|                                         |  | Three Months EndedSeptember 30, |     |      | Nine Months EndedSeptember 30, |     
|                                         |  | 2005                            |     | 2006 |                                |      | 2005 |  |   | 2006 |  
|Statements of operations classification: |  |                                 |     |      |                                |      |      |  |   |      |   |  |   |      |  
|Revenue  gains (losses) reclassified    |  | $                               | 0.2 |      | $                              | (0.4 | )    |  | $ | (7.9 | ) |  | $ | (4.7 | )
|Foreign exchange gains (losses), net:    |  |                                 |     |      |                                |      |      |  |   |      |   |  |   |      |  
|Unrealized gains, net                    |  |                                 | 4.7 |      |                                | 6.5  |      |  |   | 11.8 |   |  |   | 6.7  |  
|Realized gains, net                      |  |                                 |    |      |                                | 1.5  |      |  |   | 7.8  |   |  |   | 4.9  |  
|Transaction gains (losses), net          |  |                                 | 0.2 |      |                                | 0.4  |      |  |   | (0.9 | ) |  |   | 0.1  |  
|                                         |  |                                 |     |      |                                |      |      |  |   |      |   |  |   |      |  
|Foreign exchange gains, net              |  |                                 | 4.9 |      |                                | 8.4  |      |  |   | 18.7 |   |  |   | 11.7 |  
|                                         |  |                                 |     |      |                                |      |      |  |   |      |   |  |   |      |  
|Net effect on earnings during the period |  | $                               | 5.1 |      | $                              | 8.0  |      |  | $ | 10.8 |   |  | $ | 7.0  |  
|                                         |  |                                 |     |      |                                |      |      |  |   |      |   |  |   |      |  

The unrealized gains and losses resulting from changes in the spot rate on the effective portion
are recorded in accumulated other comprehensive income (loss) and are reclassified to revenue when the underlying forecasted transaction occurs. The estimated amount of existing net gain as of September 30, 2006 that is expected to be
reclassified into revenue within the next 12 months is approximately $8.9 million, which includes $3.9 million in other comprehensive income related to redesignated and terminated foreign exchange contracts. The unrealized gains and losses resulting
from factors other than changes in the spot rates, including changes in fair value and the time value component of the contracts, and changes in fair value of contracts not designated as hedges are recorded as foreign exchange gains (losses).

Other Derivative Instruments

The following summarizes activity related to the Companys other derivative instruments (in millions):



|                                                  |  |                                 |      |   |                                |   |      |      |  |      |      |  |   |      |  
|------------------------------------------------- |  | ------------------------------- | ---- | - | ------------------------------ | - | ---- | ---- |  | ---- | ---- |  | - | ---- | -
|                                                  |  | Three Months EndedSeptember 30, |      |   | Nine Months EndedSeptember 30, |  
|                                                  |  | 2005                            |      |   | 2006                           |   |      | 2005 |  | 2006 |     
|Statements of operations classification:          |  |                                 |      |   |                                |   |      |      |  |      |      |  |   |      |  
|Interest expense  unrealized gains (losses), net |  | $                               |     |   |                                | $ | (4.3 | )    |  | $    | 0.1  |  | $ | 1.2  |  
|                                                  |  |                                 |      |   |                                |   |      |      |  |      |      |  |   |      |  
|Other derivative gains, net:                      |  |                                 |      |   |                                |   |      |      |  |      |      |  |   |      |  
|Cross currency interest rate swap contracts:      |  |                                 |      |   |                                |   |      |      |  |      |      |  |   |      |  
|Unrealized gains                                  |  | $                               | 1.7  |   |                                | $ | 3.1  |      |  | $    | 6.4  |  | $ | 1.6  |  
|Realized gains (losses)                           |  |                                 | (0.2 | ) |                                |   | 0.9  |      |  |      | 0.4  |  |   | 2.0  |  
|Fuel contracts:                                   |  |                                 |      |   |                                |   |      |      |  |      |      |  |   |      |  
|Unrealized gains (losses)                         |  |                                 | 2.3  |   |                                |   | (3.5 | )    |  |      | 5.4  |  |   | (3.4 | )
|Realized gains                                    |  |                                 | 0.7  |   |                                |   | 1.2  |      |  |      | 0.9  |  |   | 2.3  |  
|                                                  |  |                                 |      |   |                                |   |      |      |  |      |      |  |   |      |  
|Other derivative gains, net                       |  | $                               | 4.5  |   |                                | $ | 1.7  |      |  | $    | 13.1 |  | $ | 2.5  |  
|                                                  |  |                                 |      |   |                                |   |      |      |  |      |      |  |   |      |  

Cross Currency Interest Rate Swap Contracts. As of September 30, 2006, the Company had
outstanding variable to fixed-rate cross currency interest swap contracts with an aggregate notional amount of $75.0 million. Under the terms of these contracts, the Company pays a fixed rate of interest in yen and receives payments on a variable
rate of interest in U.S. dollars based on the three-month LIBOR rate. As these instruments cannot be accounted for as hedges, any unrealized gains and losses resulting from a change in fair value are recognized as a component of other derivatives
gains (losses), net. At September 30, 2006, these contracts had an unrealized net gain of approximately $2.1 million, which represents a $1.6 million increase in unrealized gains from



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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



December 31, 2005. The full amount of this increased gain was recorded as a component of other derivatives gains, net for the nine months ended
September 30, 2006.

Interest Rate Forward Swap Agreements.The Company has entered into three forward interest rate swaps with
an aggregate notional amount of $180.0 million with effective dates of May 2, 2006 and maturity dates through March 2011. As these instruments were not designated as hedges, any unrealized gains and losses resulting from a change in fair value
are recognized as a component of interest expense. At September 30, 2006, these contracts had an unrealized gain of approximately $1.0 million which represents a $1.2 million increase from the $0.2 million in unrealized losses at
December 31, 2005. The full amount of this change was recorded as a reduction to interest expense for the nine months ended September 30, 2006.

Fuel Contracts. The Company has fuel contracts whereby the Company pays a fixed price per gallon and receives a floating price per gallon with payments calculated on the remaining notional amount of
11.6 million gallons over the term of the contracts through October 31, 2008. The Company has not designated these instruments as hedges; however, management believes that these fuel contracts do satisfy their intended purpose of
offsetting fluctuations in fuel prices. At September 30, 2006, these contracts had an unrealized loss of approximately $0.5 million, which represents a $3.4 million decrease from the $2.9 million unrealized gain at December 31, 2005. The
full amount of this decrease was recorded as a component of other derivatives gains, net for the nine months ended September 30, 2006.



|Note 6. | Commitments and Contingencies
|------- | -----------------------------

Legal Matters

General. The Company is from time to time party to litigation, administrative proceedings and employee matters that arise in the
ordinary course of business. Except as described below, the Company does not have pending any litigation that, separately or in the aggregate, would in the opinion of management have a material adverse effect on its operating results or cash flows.
However, given the inherent unpredictability of litigation, it is possible that an adverse outcome could, from time to time, have a material adverse effect on the Companys operating results or cash flows in any particular quarterly or annual
period.

National Marine Fisheries Service Investigation. In 2001 and 2002, management became aware of allegations that certain crew
members may have tampered or attempted to tamper with measurement equipment on board one or more of the Companys vessels. The National Marine Fisheries Service conducted an investigation regarding these allegations, and in consultation with
the National Marine Fisheries Service, the Company also conducted an internal investigation regarding these allegations. In 2004, the Company received additional tampering allegations relating to one of the vessels and the National Marine Fisheries
Service conducted an investigation regarding these allegations. To date, no fines or penalties have been assessed or threatened in connection with any of these allegations. However, the ultimate outcome of these matters is uncertain.

Intervention in U.S. Customs Lawsuit. On September 23, 2005, the Company intervened in a lawsuit brought by Horizon Lines, LLC (Horizon)
against the U.S. Department of Homeland Security and the U.S. Bureau of Customs and Border Protection (UCB) in the United States District Court for the District of Columbia. In its complaint, Horizon challenges the validity of a customs ruling
issued to Sunmar Shipping, Inc. that interprets the Third Proviso of the Jones Act. In general, the Jones Act prohibits the transportation of merchandise between two points in the United States using non-coastwise (foreign-flagged)
vessels. The Third Proviso is an exception to this prohibition and permits the use of foreign-flagged vessels when transporting merchandise between two U.S. ports provided certain conditions are met. The ruling challenged by Horizon, although
not directly involving the Company, is substantially similar to a customs ruling the Company received from the UCB and upon which the



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Company relies to transport products to the East coast of the United States. Horizon seeks to overturn the challenged ruling and, if successful, it may
affect the Companys ability to rely upon its UCB ruling. On February 10, 2006, the court granted Horizons motion for summary judgment and directed UCB to reevaluate its ruling in light of the Courts decision. The Company has
filed a notice of appeal and is currently evaluating other legal and operational alternatives to this decision. If Horizon ultimately prevails in its claim, it could negatively impact the Companys ability to use its current transportation
models, increase its costs, and have an adverse effect on the Companys business and results of operations.

Other lawsuits relate
principally to employment matters and are not expected to be material to the Companys financial position or results of operations.

Protection and Indemnity Claims

The Company has protection and indemnity (P&I) policies for each of its fishing vessels
and self-insures a portion of maritime injury claims through a P&I mutual company. The deductible amounts vary by vessel and by fishing season. Deductible amounts for the policies range as follows:



|                                        |  |                                  
|--------------------------------------- |  | ---------------------------------
|For policy years beginning in February: |  | Deductible per claimor occurrence
|2002                                    |  | $10,000-50,000                   
|2003                                    |  | $10,000-50,000                   
|2004                                    |  | $10,000-45,000                   
|2005                                    |  | $10,000-40,000                   
|2006                                    |  | $10,000-45,000                   

The Company records an estimated expense for maritime injury claims when it becomes aware of them
for amounts up to the deductible, and records payments in excess of the deductible as a receivable from the P&I insurance carrier. As of September 30, 2006, the Company has accrued for additional estimated expenditures on unpaid claims for
amounts up to the deductible or settlement of $2.8 million. The Company estimates that as of September 30, 2006, additional expenditures in excess of the deductibles for open claims that are considered to be reasonably possible or probable
will range between $0.4 million and $5.2 million. The Company believes that these potential future expenditures in excess of the deductible amounts will be recoverable from the P&I insurance carrier.

Fish Purchase Commitments

As of
September 30, 2006, the Company was party to fixed purchase obligation agreements with the following parties:



| |  |  | Alaskan community development groups that provide an exclusive license to harvest and process all or part of the groups portion of the total allowable catch of pollock and
Pacific cod allocated to them under the Alaska Community Development Quota (CDQ) program. Under these agreements, the Company is obligated to make minimum purchases over the three years, which will be based on a percentage of the total allowable
catch for the year;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Third-party catcher vessels that license their pollock fishing rights;
| | - |  | ----------------------------------------------------------------------



| |  |  | The previous owner of Southern Prides catfish operations to purchase up to 5 million pounds of catfish per year, at the option of the previous owner, at a price based on
a market index for a term of ten years ending on January 1, 2013;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other catfish farmers with fixed production and delivery schedules at prices based on a market price within a range of minimum and maximum prices.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following schedule summarizes the Companys estimated outstanding annual fish purchase
commitments as of September 30, 2006, based on (i) the fixed contractual price; (ii) if a range of prices is specified, the high end of the range; (iii) if no price is specified, the average market price during September 2006;
and assuming no change from the current total allowable catch levels in the fisheries in which the Company operates (in millions):



|                       |  |                          |     |      |   |      |  |      |      |      |   |            |  |       |     |  |   |     |  |   |     
|---------------------- |  | ------------------------ | --- | ---- | - | ---- |  | ---- | ---- | ---- | - | ---------- |  | ----- | --- |  | - | --- |  | - | ----
|                       |  | Year Ending December 31, |     |      |   |     
|                       |  | 2006                     |     | 2007 |   | 2008 |  | 2009 |      | 2010 |   | Thereafter |  | Total
|                       |  | (3 months)               |     |      |   |      |  |      |      |      |   |            |  |      
|Source and species:    |  |                          |     |      |   |      |  |      |      |      |   |            |  |       |     |  |   |     |  |   |     
|CDQ pollock and cod    |  | $                        | 2.3 |      | $ | 26.0 |  | $    | 26.0 |      | $ |           |  | $     |    |  | $ |    |  | $ | 54.3
|Farm raised catfish    |  |                          | 5.8 |      |   | 3.6  |  |      | 3.5  |      |   | 3.6        |  |       | 3.5 |  |   | 7.1 |  |   | 27.1
|Catcher vessel pollock |  |                          | 0.6 |      |   | 1.9  |  |      |     |      |   |           |  |       |    |  |   |    |  |   | 2.5 
|                       |  |                          |     |      |   |      |  |      |      |      |   |            |  |       |     |  |   |     |  |   |     
|Totals                 |  | $                        | 8.7 |      | $ | 31.5 |  | $    | 29.5 |      | $ | 3.6        |  | $     | 3.5 |  | $ | 7.1 |  | $ | 83.9
|                       |  |                          |     |      |   |      |  |      |      |      |   |            |  |       |     |  |   |     |  |   |     

Lease Guarantee

The Company has a month-to-month agreement with a stevedoring company in Dutch Harbor, Alaska, to provide moorage, wharfage, warehousing and certain other
operational services, in order to obtain preferential dock space and improve operational efficiency and product security. The Company expects that its operations will represent a significant amount of the stevedoring companys revenue generated
from the Dutch Harbor facility, which consists of land, warehouses, and dock space. The Company has guaranteed the stevedoring companys lease payments on the Dutch Harbor facility for a five-year period ending on June 30, 2010. During the
guarantee period, the lessee is required to pay an annualized base rent of $1.2 million plus taxes, utilities and insurance and perform required maintenance. Upon default under the lease agreement, the lessor must first take action against the
lessee, including recovery of a $0.1 million security deposit held by the lessor, before proceeding against the Company. The lessee has notified the Company that it was in compliance with the terms of the lease based on the most current
information available. The Company has not recorded a liability related to its guarantee because it believes default is remote and, therefore, the fair value of the guarantee is negligible.

Dutch Harbor Avalanches

In February
2006, a series of avalanches of snow and mud destroyed a storage warehouse located in Dutch Harbor that was subleased from the stevedoring company described above and temporarily blocked the main access road, thereby restricting the Companys
access to its primary dock and warehouse facility and a second dock used to load product onto cargo vessels. The avalanches temporarily interrupted the Companys shore operations and damaged or destroyed supplies and packaging inventories and
equipment with a cost of approximately $1.1 million. The Company incurred salvage, clean up and additional operating costs totaling $0.9 million. The Companys property losses and related salvage, clean-up and additional operating
costs incurred are reimbursable from its insurance carriers, net of negligible deductibles. The clean-up process was complete as of June 30, 2006. The Company recorded an insurance claim receivable of $2.2 million, of which $1.3 million
has been reimbursed by insurance as of September 30, 2006. The remaining balance was collected subsequent to the balance sheet date. A net gain of $0.2 million related to the reimbursement of items insured at replacement value was
recognized for the nine months ended September 30, 2006.



|Note 7. | Comprehensive Income
|------- | --------------------

Comprehensive income includes
net income as well as a component comprised of certain gains and losses that under U.S. generally accepted accounting principles are reflected in members deficit but are excluded from



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the determination of net income. The Company has segregated the total accumulated other comprehensive income or loss (specifically, accumulated unrealized
gains and losses on derivative instruments designated as hedges and foreign currency translation adjustments) from the other components of members deficit.

Comprehensive income for the three and nine months ended September 30, 2005 and 2006 was as follows (in thousands):



|                                                                     |  |                                 |        |                                |      |   |        |  |      |        |  |   |       
|-------------------------------------------------------------------- |  | ------------------------------- | ------ | ------------------------------ | ---- | - | ------ |  | ---- | ------ |  | - | ------
|                                                                     |  | Three Months EndedSeptember 30, |        | Nine Months EndedSeptember 30,
|                                                                     |  | 2005                            |        |                                | 2006 |   | 2005   |  | 2006
|Net income                                                           |  | $                               | 6,053  |                                |      | $ | 525    |  | $    | 46,469 |  | $ | 6,313 
|Unrealized gains on derivative instruments designated as hedges, net |  |                                 | 7,461  |                                |      |   | 12,625 |  |      | 49,080 |  |   | 12,143
|Foreign currency translation adjustment                              |  |                                 | (8     | )                              |      |   | 161    |  |      | 8      |  |   | 73    
|                                                                     |  |                                 |        |                                |      |   |        |  |      |        |  |   |       
|Comprehensive income                                                 |  | $                               | 13,506 |                                |      | $ | 13,311 |  | $    | 95,557 |  | $ | 18,529
|                                                                     |  |                                 |        |                                |      |   |        |  |      |        |  |   |       



|Note 8. | Long - Term Debt
|------- | ----------------

Long-term debt and interest rates
at December 31, 2005 and September 30, 2006 were as follows (in thousands):



|                                                                                                                                        |  |                   |         |                    |   |        
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | ------------------ | - | -------
|                                                                                                                                        |  | December 31, 2005 |         | September 30, 2006
|Credit Facility:                                                                                                                        |  |                   |         |                    |   |        
|Term A loan, interest at 6.28% and 7.25%, respectively, maturity in 2011                                                                |  | $                 | 123,438 |                    | $ | 117,297
|Term B-1 loan, interest at 6.28% and 7.25%, respectively, maturity in 2012                                                              |  |                   | 139,650 |                    |   | 135,467
|Term B-2 loan, interest at 7.25%, maturity in 2012                                                                                      |  |                   |        |                    |   | 175,049
|Revolving Credit Facility, interest at 5.95% and 7.94%, respectively, maturity in 2011                                                  |  |                   | 15,000  |                    |   | 28,939 
|Senior Discount Notes, interest at 111/2%, $196.0 million due at maturity in 2011, net of discount of $53,211 and $40,775, respectively |  |                   | 142,789 |                    |   | 155,225
|Senior Subordinated Notes, interest at 101/8%, repaid in full                                                                           |  |                   | 175,000 |                    |   |       
|                                                                                                                                        |  |                   |         |                    |   |        
|Total long-term debt                                                                                                                    |  |                   | 595,877 |                    |   | 611,977
|Less current portion of long-term debt                                                                                                  |  |                   | 8,431   |                    |   | 7,922  
|                                                                                                                                        |  |                   |         |                    |   |        
|Long-term debt, net of current portion                                                                                                  |  | $                 | 587,446 |                    | $ | 604,055
|                                                                                                                                        |  |                   |         |                    |   |        

Credit Facility

On October 6, 2005, the Company entered into a Third Amended and Restated Credit Agreement (Credit Facility) with a syndicate of banks and other
financial institutions. The Credit Facility provides for borrowings not to exceed $520.0 million. The terms of the Credit Facility are summarized as follows:



| |  |  | Revolving credit facility commitment of $75.0 million, with a sub-credit facility for letters of credit, maturing on September 30, 2011;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Term A loan in the amount of $125.0 million funded at closing, payable in quarterly payments of interest and principal, maturing on September 30, 2011;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Term B-1 loan in the amount of $140.0 million funded at closing, payable in quarterly payments of interest and principal, maturing on September 30, 2012;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Term B-2 loan in the amount of $180.0 million funded on April 26, 2006 to redeem the Senior Subordinated Notes, as further described below, payable in quarterly payments of
interest and principal, maturing on September 30, 2012.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Term A and B loans require additional excess cash flow payments. The first additional excess cash flow payment is due in March 2007.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------

The interest on the revolving credit facility and term loans is determined based on rates that are calculated using a Eurodollar rate or base rate at the
Companys option. For the revolving credit facility and Term A loans the amount of the margin is determined based on the Companys leverage ratio. Such margins range from 1.25% to 1.75% for Eurodollar rate loans and 0.25% to 0.75% for base
rate loans. For the Term B loans, the margins are 1.75% for Eurodollar rate loans and 0.75% for base rate loans.

The Credit Facility is
secured by substantially all of the Companys assets including intangible assets. Under the terms of the Credit Facility, ASG is required to meet certain financial tests, including a maximum leverage ratio and a minimum fixed charge coverage
ratio. ASG is required to maintain a leverage ratio of 4.5 or less through March 31, 2007 decreasing to 3.75 or less beginning with the quarter ending June 30, 2009. ASG is required to maintain a fixed charge coverage ratio of 1.15 or
greater for the duration of the Credit Facility. The leverage ratio is calculated for purposes of the Credit Facility based on the ratio of the EBITDA of ASG to its Consolidated Debt (as defined in the Credit Facility). The Credit Facility contains
certain covenants which, among other things, limit the incurrence of additional indebtedness, liens, and encumbrances, changes of control, changes in the nature of the business, investments, dividends and other restricted payments, prepayments of
certain indebtedness, certain transactions with affiliates, asset sales, acquisitions, capital expenditures, mergers and consolidations, sales of receivables and other matters customarily restricted in such agreements. In addition, the Credit
Facility contains customary negative and affirmative covenants and events of default, funding conditions, representations and warranties and other customary provisions for senior secured credit facilities.

On March 31, 2006, the Company incurred an event of default under its Credit Facility. The event of default consisted of a failure to comply with
the leverage ratio covenant as of March 31, 2006 due to a combination of unexpected delays in the recognition of certain seasonal revenue and in the paydown of the Companys revolving credit facility, as well as the Companys need for
higher liquidity at the beginning of the second quarter, which impacted both the denominator and the numerator of the leverage ratio calculation. The Company was in compliance with the other covenants in the Credit Facility as of March 31,
2006. In a letter dated May 4, 2006, the Company obtained a waiver from its lenders with respect to its failure to meet the leverage ratio covenant. No fee was paid by the Company in order to obtain the waiver. The Company was in compliance
with all covenants in the Credit Facility as of September 30, 2006.

Notwithstanding the above maturity dates, in the event that the
Senior Discount Notes issued by the Company remain outstanding as of May 1, 2011, then all amounts outstanding under the Credit Facility, including revolving credit borrowings, letters of credit and Term A and B loans, will become immediately
due and payable in full on such date.



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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



As of December 31, 2005 and September 30, 2006, available borrowings under the revolving
loan credit facility are summarized as follows (in thousands):



|                                |  |                   |        |                    |   |       
|------------------------------- |  | ----------------- | ------ | ------------------ | - | ------
|                                |  | December 31, 2005 |        | September 30, 2006
|Total revolving credit facility |  | $                 | 75,000 |                    | $ | 75,000
|Less outstanding commitments:   |  |                   |        |                    |   |       
|Outstanding balance             |  |                   | 15,000 |                    |   | 28,939
|Open letters of credit          |  |                   |       |                    |   | 1     
|                                |  |                   |        |                    |   |       
|Total outstanding commitments   |  |                   | 15,000 |                    |   | 28,940
|                                |  |                   |        |                    |   |       
|Available borrowings            |  | $                 | 60,000 |                    | $ | 46,060
|                                |  |                   |        |                    |   |       

The Company pays an annual loan fee, due quarterly, equal to1/2% of the unused portion of available borrowings under the revolving loan component of the Credit Facility.

In the
second quarter of 2006, the Company made additional voluntary principal payments of $11.0 million on the credit facility term loans. There have been no additional voluntary principal payments on the credit facility term loans in 2006.

Senior Subordinated Notes

ASG
redeemed and retired its Senior Subordinated Notes in the amount of $175.0 million on April 27, 2006. The aggregate redemption paid by ASG was $184.5 million which consisted of principal, accrued unpaid interest and a redemption
premium. In conjunction with this redemption, during the second quarter of 2006, ASG recorded a charge of $17.8 million comprised of a write-off of $8.9 million in deferred financing costs and an $8.9 million redemption premium. In order to fund the
redemption, ASG borrowed $180.0 million under its delayed draw Tranche B-2 Term loan facility.

Senior Discount Notes

On October 19, 2004, ASG Consolidated issued and sold 111/2% Senior Discount Notes for gross proceeds of $124.9 million. ASG and its subsidiaries have not guaranteed the repayment of the Senior Discount Notes. The Senior Discount Notes will have an accreted
value of $196.0 million principal amount at maturity in November 2011. The carrying balance on the notes is being accreted using the effective interest method from origination through the period ending November 1, 2008. No interest will be paid
during this period. Thereafter, interest will accrue and be payable semi-annually on May 1 and November 1 of each year, at a fixed annual rate of 111/2%. The first interest-only payment is due on May 1,
2009. During the nine months ended September 30, 2005 and 2006, $11.1 million and $12.4 million of debt discount amortization was charged to interest expense.

The indenture governing ASG Consolidateds Senior Discount Notes impose restrictions similar to the Companys senior credit facility
restrictions on the operation of the business and employs a fixed-charge debt incurrence test based upon the Consolidated EBITDA of ASG Consolidated, as defined in the indenture. The Company was in compliance with the covenants contained in the
Senior Discount Notes indenture at September 30, 2006.



|Note 9. | Equity-Based Compensation
|------- | -------------------------

The Company maintains a
unit option equity incentive plan (Unit Option Plan) under which it may grant non-qualified unit options in its parent company, ASLP, to employees, non-employee directors and consultants.



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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The Unit Option Plan provides for the issuance of various types of unit options including options that vest on certain specified periods of continuing
employment (Series A options); unit options that vest upon achievement of certain earnings before income, tax, depreciation and amortization targets (Series E options); and unit options that vest upon achievement of specified target internal rates
of return (IRR) by certain partners (Series C, D and F options). All outstanding unit options are non-qualified and were granted at prices at or above the fair market value on the date of grant.

Vesting of unit options may be accelerated upon certain triggering events or at the sole discretion of the Board of Directors. On February 27, 2006,
in connection with the purchase of the ownership interest of certain partners of ASLP by other partners of ASLP, the Board of Directors approved the pro-rata acceleration of Series A option grants, which were exercised by grant-holders on that
date. In addition, all outstanding Series C, D and F options vested in accordance with their terms due to achievement of IRR targets by certain Partners of ASLP and were exercised. As a result, only a portion of Series A and Series E unit option
tranches remain outstanding as of September 30, 2006. Equity-based compensation expense was approximately $6.6 million during the nine months ended September 30, 2006. Most of this expense was attributable to the scheduled vesting and to
the pro-rata acceleration of Series A options and the performance based vesting of Series C, D, E and F options in the first quarter of 2006. No amounts were capitalized. During this period ASLP received approximately $2.6 million from the exercise
of the options. No cash was received by the Company.

The pro-rata accelerated vesting of Series A options was considered to be a
modification as defined under the requirements of SFAS 123R. As a result, the remaining outstanding Series A options subsequent to the modification are subject to the requirements of SFAS 123R. The Company recognized compensation expense at the date
of modification for all Series A options vested pursuant to variable accounting under APB 25. The unamortized portion on the date of modification will be amortized on the straight-line method over the remaining vesting periods of the outstanding
options. In addition, the Company has estimated the fair value of each Series A option immediately before and after the modification to determine the incremental value of the modification. This calculation resulted in no additional required
compensation expense as a result of the modification. Compensation expense is recognized only for those options expected to vest, with forfeitures estimated at the date of grant or modification based on the Companys historical experience and
future expectations. Prior to the adoption of SFAS 123R, the effect of forfeitures on the pro forma expense amounts was recognized as the forfeitures occurred. Based on the Companys application of SFAS 123R, total equity-based compensation
cost for the outstanding Series A options was $0.3 million that will be recognized on the straight-line method over an estimated weighted-average remaining life of 43 months. The resulting charge for the nine months ended September 30, 2006 was
approximately $0.1 million.

Holders of outstanding Series A and Series E options who are still employees at the time of exercise will
receive a tax gross-up payment to cover their tax liability in connection with the exercise of their options. In accordance with SFAS 123R, the tax-gross up feature of these awards is recognized at the ASLP level as a liability. ASLP has fully
assumed this liability and contributed this benefit to the Company as a capital contribution. Accordingly, no liability is recognized in the balance sheets of the Company.



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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Activity and price information for the plan for the nine months ended September 30, 2006, are as
follows:



|                                        |  |                        |   |  |                               |   |  |          |   |  |          |   |  |          |   |  |       |   |  |         |   |  |   |       
|--------------------------------------- |  | ---------------------- | - |  | ----------------------------- | - |  | -------- | - |  | -------- | - |  | -------- | - |  | ----- | - |  | ------- | - |  | - | ------
|                                        |  | Number of Unit Options |   |  | WeightedAverageExercise Price
|                                        |  | Series A               |   |  | Series C                      |   |  | Series D |   |  | Series E |   |  | Series F |   |  | Other |   |  | Total   |   | 
|Balance Outstanding, December 31, 2005: |  | 8,357                  |   |  | 5,803                         |   |  | 4,509    |   |  | 36,367   |   |  | 10,957   |   |  | 567   |   |  | 66,560  |   |  | $ | 122.07
|Granted                                 |  |                       |   |  |                              |   |  |         |   |  |         |   |  |         |   |  |      |   |  |        |   |  |   |      
|Exercised                               |  | (4,272                 | ) |  | (5,803                        | ) |  | (4,509   | ) |  | (3,642   | ) |  | (10,957  | ) |  | (567  | ) |  | (29,750 | ) |  |   | 86.90 
|Forfeited                               |  | (940                   | ) |  |                              |   |  |         |   |  | (1,927   | ) |  |         |   |  |      |   |  | (2,867  | ) |  |   | 129.97
|Expired                                 |  |                       |   |  |                              |   |  |         |   |  |         |   |  |         |   |  |      |   |  |        |   |  |   |      
|                                        |  |                        |   |  |                               |   |  |          |   |  |          |   |  |          |   |  |       |   |  |         |   |  |   |       
|Balance Outstanding,September 30, 2006  |  | 3,145                  |   |  |                              |   |  |         |   |  | 30,798   |   |  |         |   |  |      |   |  | 33,943  |   |  | $ | 150.48
|                                        |  |                        |   |  |                               |   |  |          |   |  |          |   |  |          |   |  |       |   |  |         |   |  |   |       
|Balance at September 30, 2006:          |  |                        |   |  |                               |   |  |          |   |  |          |   |  |          |   |  |       |   |  |         |   |  |   |       
|Unvested                                |  | 3,074                  |   |  |                               |   |  |          |   |  | 30,798   |   |  |          |   |  |       |   |  | 33,872  |   |  |   |       
|Exercisable                             |  | 71                     |   |  |                               |   |  |          |   |  |          |   |  |          |   |  |       |   |  | 71      |   |  |   |       
|Contractual term, in years:             |  |                        |   |  |                               |   |  |          |   |  |          |   |  |          |   |  |       |   |  |         |   |  |   |       
|Maximum                                 |  | 9                      |   |  |                               |   |  |          |   |  | 9        |   |  |          |   |  |       |   |  | 9       |   |  |   |       
|Weighted-average remaining              |  | 7                      |   |  |                               |   |  |          |   |  | 6        |   |  |          |   |  |       |   |  | 6       |   |  |   |       

During the nine months ended September 30, 2005 and 2006, the estimated intrinsic value of
the 835 and 29,750 unit options exercised was $0.1 million and $8.6 million, respectively.

As of September 30, 2006, total
unrecognized unit option-based compensation expense related to unvested Series E options was approximately $1.4 million, which is expected to be recognized over a weighted-average period of approximately 12 months under variable accounting in
accordance with APB 25 as these options have not been modified.

The Company issues new ASLP units upon exercise of unit options. The Board
of Directors has the right to consider and approve any additional grants at their sole discretion.



|Note 10. | Segment Information
|-------- | -------------------

The Company is principally
engaged in the harvesting, processing, marketing, selling and distribution of fish products. The Companys reportable segments are:



| |  |  | At-Sea Processingprimarily comprised of the harvesting and processing of pollock, yellowfin sole, Pacific cod and Pacific whiting aboard the Companys vessels
operating in the Bering Sea and off the coast of Washington and Oregon; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Land-Based Processingprimarily comprised of the primary processing of catfish at the Companys facilities in Alabama and of scallops at the Companys
facilities in Massachusetts, and the secondary processing of pollock, Pacific cod and other whitefish products at the Companys Massachusetts facilities.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Segment operating results and balances are determined on a basis consistent with the accounting policies used in the consolidated financial statements.
Corporate costs are allocated to each segment based on the total assets of the Companys reporting units, except for gains and losses from foreign exchange and fuel contracts that are allocated only to the at-sea processing segment.



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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Segment information as of and for the three months ended September 30, 2006 is as follows (in
thousands):



|                   |  |                   |         |                       |   |        |              |  |   |                     |   |  |   |        
|------------------ |  | ----------------- | ------- | --------------------- | - | ------ | ------------ |  | - | ------------------- | - |  | - | -------
|                   |  | At-Sea Processing |         | Land-Based Processing |   |        | Eliminations |  |   | Consolidated Totals
|Revenue:           |  |                   |         |                       |   |        |              |  |   |                     |   |  |   |        
|External customers |  | $                 | 44,613  |                       | $ | 58,092 |              |  | $ |                    |   |  | $ | 102,705
|Intersegment       |  |                   | 6,252   |                       |   |       |              |  |   | (6,252              | ) |  |   |       
|                   |  |                   |         |                       |   |        |              |  |   |                     |   |  |   |        
|Total revenue      |  |                   | 50,865  |                       |   | 58,092 |              |  |   | (6,252              | ) |  |   | 102,705
|                   |  |                   |         |                       |   |        |              |  |   |                     |   |  |   |        
|Gross profit:      |  |                   |         |                       |   |        |              |  |   |                     |   |  |   |        
|External customers |  |                   | 14,512  |                       |   | 4,544  |              |  |   |                    |   |  |   | 19,056 
|Intersegment       |  |                   | 3,386   |                       |   |       |              |  |   | (3,386              | ) |  |   |       
|                   |  |                   |         |                       |   |        |              |  |   |                     |   |  |   |        
|Total gross profit |  |                   | 17,898  |                       |   | 4,544  |              |  |   | (3,386              | ) |  |   | 19,056 
|                   |  |                   |         |                       |   |        |              |  |   |                     |   |  |   |        
|Net income (loss)  |  |                   | 2,090   |                       |   | (1,216 | )            |  |   | (349                | ) |  |   | 525    
|Total assets       |  |                   | 446,457 |                       |   | 82,556 |              |  |   |                    |   |  |   | 529,013

Segment information as of and for the three months ended September 30, 2005 is as follows (in
thousands):



|                   |  |                   |         |                       |   |        |              |  |   |                     |   |  |   |        
|------------------ |  | ----------------- | ------- | --------------------- | - | ------ | ------------ |  | - | ------------------- | - |  | - | -------
|                   |  | At-Sea Processing |         | Land-Based Processing |   |        | Eliminations |  |   | Consolidated Totals
|Revenue:           |  |                   |         |                       |   |        |              |  |   |                     |   |  |   |        
|External customers |  | $                 | 49,602  |                       | $ | 50,801 |              |  | $ |                    |   |  | $ | 100,403
|Intersegment       |  |                   | 6,773   |                       |   |       |              |  |   | (6,773              | ) |  |   |       
|                   |  |                   |         |                       |   |        |              |  |   |                     |   |  |   |        
|Total revenue      |  |                   | 56,375  |                       |   | 50,801 |              |  |   | (6,773              | ) |  |   | 100,403
|                   |  |                   |         |                       |   |        |              |  |   |                     |   |  |   |        
|Gross profit:      |  |                   |         |                       |   |        |              |  |   |                     |   |  |   |        
|External customers |  |                   | 17,325  |                       |   | 4,076  |              |  |   |                    |   |  |   | 21,401 
|Intersegment       |  |                   | 3,429   |                       |   |       |              |  |   | (3,429              | ) |  |   |       
|                   |  |                   |         |                       |   |        |              |  |   |                     |   |  |   |        
|Total gross profit |  |                   | 20,754  |                       |   | 4,076  |              |  |   | (3,429              | ) |  |   | 21,401 
|                   |  |                   |         |                       |   |        |              |  |   |                     |   |  |   |        
|Net income (loss)  |  |                   | 7,777   |                       |   | (1,451 | )            |  |   | (273                | ) |  |   | 6,053  
|Total assets       |  |                   | 443,090 |                       |   | 74,037 |              |  |   |                    |   |  |   | 517,127

Segment information for the nine months ended September 30, 2006 is as follows (in
thousands):



|                   |  |                   |         |                       |   |         |              |  |   |                     |   |  |   |        
|------------------ |  | ----------------- | ------- | --------------------- | - | ------- | ------------ |  | - | ------------------- | - |  | - | -------
|                   |  | At-Sea Processing |         | Land-Based Processing |   |         | Eliminations |  |   | Consolidated Totals
|Revenue:           |  |                   |         |                       |   |         |              |  |   |                     |   |  |   |        
|External customers |  | $                 | 223,477 |                       | $ | 172,243 |              |  | $ |                    |   |  | $ | 395,720
|Intersegment       |  |                   | 18,757  |                       |   |        |              |  |   | (18,757             | ) |  |   |       
|                   |  |                   |         |                       |   |         |              |  |   |                     |   |  |   |        
|Total revenue      |  |                   | 242,234 |                       |   | 172,243 |              |  |   | (18,757             | ) |  |   | 395,720
|                   |  |                   |         |                       |   |         |              |  |   |                     |   |  |   |        
|Gross profit:      |  |                   |         |                       |   |         |              |  |   |                     |   |  |   |        
|External customers |  |                   | 77,938  |                       |   | 13,035  |              |  |   |                    |   |  |   | 90,973 
|Intersegment       |  |                   | 10,008  |                       |   |        |              |  |   | (10,008             | ) |  |   |       
|                   |  |                   |         |                       |   |         |              |  |   |                     |   |  |   |        
|Total gross profit |  |                   | 87,946  |                       |   | 13,035  |              |  |   | (10,008             | ) |  |   | 90,973 
|                   |  |                   |         |                       |   |         |              |  |   |                     |   |  |   |        
|Net income (loss)  |  |                   | 14,157  |                       |   | (7,215  | )            |  |   | (629                | ) |  |   | 6,313  



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ASG CONSOLIDATED LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Segment information for the nine months ended September 30, 2005 is as follows (in thousands):



|                   |  |                   |         |                       |   |         |              |  |   |                     |   |  |   |        
|------------------ |  | ----------------- | ------- | --------------------- | - | ------- | ------------ |  | - | ------------------- | - |  | - | -------
|                   |  | At-Sea Processing |         | Land-Based Processing |   |         | Eliminations |  |   | Consolidated Totals
|Revenue:           |  |                   |         |                       |   |         |              |  |   |                     |   |  |   |        
|External customers |  | $                 | 219,047 |                       | $ | 158,309 |              |  | $ |                    |   |  | $ | 377,356
|Intersegment       |  |                   | 16,014  |                       |   |        |              |  |   | (16,014             | ) |  |   |       
|                   |  |                   |         |                       |   |         |              |  |   |                     |   |  |   |        
|Total revenue      |  |                   | 235,061 |                       |   | 158,309 |              |  |   | (16,014             | ) |  |   | 377,356
|                   |  |                   |         |                       |   |         |              |  |   |                     |   |  |   |        
|Gross profit:      |  |                   |         |                       |   |         |              |  |   |                     |   |  |   |        
|External customers |  |                   | 78,590  |                       |   | 12,528  |              |  |   |                    |   |  |   | 91,118 
|Intersegment       |  |                   | 8,596   |                       |   |        |              |  |   | (8,596              | ) |  |   |       
|                   |  |                   |         |                       |   |         |              |  |   |                     |   |  |   |        
|Total gross profit |  |                   | 87,186  |                       |   | 12,528  |              |  |   | (8,596              | ) |  |   | 91,118 
|                   |  |                   |         |                       |   |         |              |  |   |                     |   |  |   |        
|Net income (loss)  |  |                   | 52,222  |                       |   | (5,635  | )            |  |   | (118                | ) |  |   | 46,469 



|Note 11. | Subsequent Events
|-------- | -----------------

Adoption of Incentive Plans

In October 2006 the Board of Directors of ASC Management, Inc., the ultimate parent company of ASG Consolidated, approved two new
incentive plans  the American Seafoods Group LLC Performance Unit Plan (PUP) and the American Seafoods Group Dividend Return Incentive Plan (DRIP).

Awards under the PUP consist of performance units that entitle each holder to a cash payout up to $2.00 per unit based on the financial performance of the Company over a three-year period beginning January 1
of the date of grant. In connection with the adoption of the PUP, the Board authorized the grant of 2,400,000 performance units in 2006. An estimated accrual of $600,000 related to the 2006 PUP awards was recorded as of September 30, 2006,
reflecting the earlier substantive authorization by the Board of Directors.

Awards under the DRIP entitle holders of vested unit options
under ASLP Unit Option Plan to a cash bonus sufficient to compensate such holder for distributions made on the equity of ASLP during the time such unit options were not exercisable. The Company is in the process of determining the effect of
adoption of the DRIP on its consolidated financial statements.



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere
in this report. All statements other than statements of historical fact are forward-looking statements for purposes of federal and state securities laws. Forward-looking statements can include words like may,
will, estimate, intend, continue, believe, expect, plan or anticipate and other similar expressions. Forward-looking statements include, but are not
limited to, statements concerning: future results of operations; future capital expenditures; environmental conditions and regulations; plans or intentions relating to acquisitions; our competitive strengths and weaknesses; future financing needs;
our business strategy; general economic conditions; trends that we anticipate in the industries and economies in which we operate; proposed new products, services or developments; and any assumptions underlying the foregoing. Although we believe
that the expectations reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in our forward-looking statements. Our actual results could differ materially from those
anticipated in the forward-looking statements for many reasons, including those described in our annual audited consolidated financial statements and notes thereto for the year ended December 31, 2005.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We do not intend,
and we undertake no obligation, to revise or update any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made in this
report and in our other filings made with the SEC that attempt to advise interested parties of the risks and factors that may affect our business, prospects and results of operations.

Managements discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial
statements, which have been prepared in accordance with U.S. generally accepted accounting principles for interim condensed financial statements. The preparation of these financial statements requires us to make estimates and judgments that affect
the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our critical accounting policies and estimates and base our estimates on historical
experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different assumptions or conditions.

Business Overview

We are one of the largest integrated seafood companies in the U.S. in terms of revenue. We harvest and process a variety of fish species aboard our
sophisticated catcher-processor and freezer-longliner vessels and at our land-based processing facilities. We market our products to a diverse group of customers in North America, Asia and Europe. We are the largest harvester and at-sea processor of
pollock and Pacific whiting and the largest processor of catfish in the U.S. In addition, we harvest or process additional seafood, including Pacific cod, scallops and yellowfin sole. We maintain an international marketing network through our U.S.,
Japan and Europe offices and have developed long-term relationships with our U.S. and international customer base.

We operate in two
principal operating segments, at-sea processing and land-based processing. The at-sea processing segment includes the harvesting and processing of pollock, Pacific cod, Pacific whiting and yellowfin sole on our vessels while at sea. The land-based
processing segment includes the primary processing of catfish at our facilities in Alabama and of scallops at our facilities in Massachusetts and the secondary processing of pollock, Pacific cod and other whitefish products at our Massachusetts
facilities.

The most significant portion of our revenue and profitability is derived from our at-sea processing segment. The performance
of our at-sea processing segment largely depends on the amount of pollock, Pacific cod and Pacific whiting resources that we harvest and the prevailing market prices for the related products we sell. Pollock represents the most significant portion
of our harvest and the most significant portion of our net sales



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##### Table of Contents

both in terms of volume and revenue. These prices fluctuate from season to season and from year to year as a result of factors such as market conditions,
inventory levels and production volumes.

The remaining portion of our revenue, cost of sales and operating expenses is derived from our
land-based processing segment. The performance of our land-based processing segment largely depends on the amount of catfish, pollock, Pacific cod and scallops that we process each year, the cost of fish we purchase and the prevailing market prices
for the related products we sell.

Revenue and Expenses

At-Sea Processing Segment

At-Sea Processing Revenue. Revenue in our at-sea processing
segment are primarily driven by the following factors:



| |  |  | the volume of pollock and other whitefish harvested annually by our catcher-processors and freezer-longliners;
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | the quantity of finished product we are able to produce (determined by the flesh and roe recovery rates);
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | seasonality and the timing of our sales of fish products;
| | - |  | ---------------------------------------------------------



| |  |  | prevailing market prices for the products we sell, such as roe, surimi (a fish protein paste used in products such as imitation lobster and crabmeat) and fillet block; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the effect of foreign exchange rate fluctuations.
| | - |  | -------------------------------------------------

Harvest volumes. In addition to the portion of the directed pollock catch allocated to us under the Pollock Conservation Cooperative agreement, an agreement among industry participants in the catcher-process sector, we historically
have purchased additional pollock quota from other industry participants up to the 17.5% harvesting limit of the directed pollock catch. In addition, we supplemented our share of the directed pollock catch in 2004, 2005 and 2006 by purchasing 54.0%
of the total community development quota (CDQ) allocated to Alaska Community Development Groups each year, which does not count against the 17.5% harvesting limitation. Our agreements with our pollock CDQ partners expire at the end of 2008.

Recovery rates. Increases in flesh and roe recovery rates, which represent the percentage of finished product produced from a whole
fish, result in higher finished product volumes. Flesh recovery rate means the weight of processed products, other than fishmeal and roe, relative to the weight of fish harvested, expressed as a percentage. Roe recovery rate means the weight of
processed roe, relative to the weight of fish harvested, expressed as a percentage.

Seasonality. The U.S. Bering Sea pollock
fishery is split into two distinct fishing seasons, known as the A and B seasons. The A season opens in January and typically ends in April. During the A season, pollock are spawning and therefore carry more high-value roe,
making this season the more profitable one. During the A season, we also produce other products such as surimi and fillet blocks, although yields on these products are slightly lower in A season compared to B season due to the prioritization of roe
production in the A season. Although the A season typically accounts for approximately 40% of our years total pollock harvest measured by weight, it represents a majority of our revenue for the year due to the higher value roe that is
recovered during the A season.

The pollock B season occurs in the latter half of the year, typically beginning in June and extending
through the end of October. The primary products produced in the B season are surimi and fillet blocks. The B season typically accounts for approximately 60% of our annual total pollock harvest.

The freezer-longliner Pacific cod fishery is also divided into two seasons. Of the annual quota, approximately 60% is allocated to the A season and the
remaining 40% is allocated to the B season. The A season begins January 1st and runs until the season quota is caught, and the B season begins in mid-August and runs until the season quota is caught.



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##### Table of Contents

To illustrate the seasonal impact of our distinct fishing seasons for all of our operations, the table
below shows our quarterly dispersion of our revenue and gross profit, expressed in terms of percentage, for the years ended December 31, 2003, 2004 and 2005:



|              |  |          |   |  |          |   |  |    |   |  |    |  
|------------- |  | -------- | - |  | -------- | - |  | -- | - |  | -- | -
|              |  | A Season |   |  | B Season |  
|              |  | Q1       |   |  | Q2       |   |  | Q3 |   |  | Q4 |  
|Revenue:      |  |          |   |  |          |   |  |    |   |  |    |  
|2003          |  | 27       | % |  | 30       | % |  | 20 | % |  | 23 | %
|2004          |  | 29       |   |  | 28       |   |  | 20 |   |  | 23 |  
|2005          |  | 30       |   |  | 24       |   |  | 19 |   |  | 27 |  
|Gross profit: |  |          |   |  |          |   |  |    |   |  |    |  
|2003          |  | 40       | % |  | 32       | % |  | 18 | % |  | 10 | %
|2004          |  | 47       |   |  | 28       |   |  | 21 |   |  | 4  |  
|2005          |  | 49       |   |  | 19       |   |  | 21 |   |  | 11 |  

Our fishing seasons, including the important January-to-April pollock season, straddle more than
one quarter. Additionally, the timing of our sales fluctuates from quarter to quarter. As a result, the timing of the recognition of significant amounts of revenue can vary from one quarter to another.

Market prices. Market prices for our at-sea processed products are primarily influenced by the aggregate supply of products produced in any given
year, the grade mix we produce, the anticipated inventory carryover for that year and changes in demand.

During fiscal years 2001 to 2005,
our average pollock surimi prices have typically fluctuated within a range of approximately 200 to 300 Japanese yen per kilogram. In the second half of 2003 and the first half of 2004, our average pollock surimi price was at the low end of this
range, though surimi prices have risen since that time. This trend continued through 2005 and prices have remained relatively stable for the first three quarters of 2006. Pollock surimi prices are sensitive to grade mix composition, anticipated
seasonal production, overall inventory levels and buyers speculation of anticipated price levels.

Our pollock roe is typically sold
through an auction process. Between the years 2001 and 2004, our average roe prices decreased primarily due to a decline in our grade mix. As a result of producing improved grades of roe in 2005, we realized higher average prices from our roe
auctions over 2004. On a grade-by-grade basis, pollock roe market prices for the years 2001 through 2005 remained relatively stable. For the 2006 A season, the average market price for pollock roe declined by approximately 15% compared to the 2005 A
season average roe price primarily due to the higher supply of roe produced in the Alaskan and Russian fisheries in the 2006 A season as compared to the 2005 A season. Our roe recovery rates in the 2006 A season were higher than in the 2005
A season resulting in approximately 20% higher roe production volume, which largely offset the effect of the lower average price.

Below is a chart illustrating average prices achieved for the years 2001 through 2005 for our pollock surimi, pollock roe, deepskin and pollock block pin bone out products. The surimi and roe prices are noted in Japanese yen
(¥) per kilogram, which is the unit price we receive from our Japanese customers. The pollock deepskin and block pin bone out are noted in U.S. dollars per pound, which is the unit price we receive from our customers.



|                                |  |      |       |      |   |       |  |      |       |      |   |       |  |   |      
|------------------------------- |  | ---- | ----- | ---- | - | ----- |  | ---- | ----- | ---- | - | ----- |  | - | -----
|                                |  | 2001 |       | 2002 |   | 2003  |  | 2004 |       | 2005
|Pollock surimi ¥/kg             |  | ¥    | 212   |      | ¥ | 278   |  | ¥    | 222   |      | ¥ | 197   |  | ¥ | 271  
|Pollock roe ¥/kg(1)             |  | ¥    | 2,247 |      | ¥ | 1,906 |  | ¥    | 1,778 |      | ¥ | 1,685 |  | ¥ | 1,692
|Pollock deepskin $/lb           |  | $    | 1.25  |      | $ | 1.24  |  | $    | 1.25  |      | $ | 1.24  |  | $ | 1.26 
|Pollock block pin bone out $/lb |  | $    | 0.88  |      | $ | 1.06  |  | $    | 1.04  |      | $ | 1.01  |  | $ | 1.14 

---

|(1) | Average roe prices are for the A season only as this represents more than 95% of the total roe value for each year.
|--- | -------------------------------------------------------------------------------------------------------------------



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Exchange rate effects. Because we sell large quantities of roe and surimi to Japanese customers
and surimi and block products to European customers, a significant portion of our revenue is denominated in yen and to a lesser extent euros. Consequently, we could be at risk that any increase or decrease in the value of the yen or euro relative to
the dollar would increase or decrease the amount of dollar revenue we record on the sales of our products in Japan and Europe. To mitigate the potentially adverse effect of fluctuations in the yen and euro to U.S. dollar spot exchange rates, we
enter into forward foreign currency contracts. It is our risk management policy to hedge a target level of 80% of our forecasted yen sales over the next 12 months, 65% over months 13 to 24, 50% over months 25 to 36, and 35% over months 37 to
48. It is also our policy to hedge up to 100% of our euro-denominated sales that are scheduled to occur over the next 12 months.

Our
profitability depends in part on revenue received in yen as a result of sales in Japan and, to a lesser extent, on the revenue received in euros as a result of certain sales in Europe. Yen-denominated sales represented 24.9%, 27.0% and 26.7% of our
total revenue in 2003, 2004 and 2005, respectively, while our euro denominated sales represented less than 5% of our total revenue in 2003, 2004 and 2005, respectively. A decline in the value of yen and euro against the U.S. dollar would adversely
affect our earnings from sales in Japan and euro-denominated sales in Europe. While we conduct hedging activities to mitigate the risk of currency fluctuations, fluctuations in currency exchange rates are beyond our control and are unpredictable.
Accordingly, these hedging activities may not be sufficient to provide complete protection against loss and accordingly, any such fluctuations could adversely affect our revenue. During the nine months ended September 30, 2006, the value of the
dollar strengthened slightly against the yen from ¥117.9 per U.S. dollar at the beginning of the period to ¥118.1 per U.S. dollar at the end of the period. During the nine months ended September 30, 2006, the value of the
dollar decreased by 4.8% against the euro, from 0.827 euro per U.S. dollar at the beginning of the period to 0.787 euro per U.S. dollar at the end of the period.

At-Sea Processing Expenses.The operating cost structure of our at-sea processing operations includes four main cost categories:



| |  |  | variable costs driven by revenue or product volume, such as crew compensation, product freight and storage, packaging and additives;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | vessel-related depreciation and amortization of cooperative and fishing rights;
| | - |  | -------------------------------------------------------------------------------



| |  |  | fixed costs that are incurred whether or not the vessel is deployed, such as quota purchases, insurance, repair and maintenance, moorage and general supplies; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | operating costs driven by vessel operations, such as fuel, nets and gear supplies, galley supplies, equipment rental, crew travel, observers and technicians.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------

After depreciation expense, crew compensation represents the largest operating cost for the vessel operations and is
primarily a variable cost, structured to reward each crew member based upon an estimated value of the product. Quota purchase costs are calculated as an amount per ton harvested and are incurred when we purchase quota amounts from our Alaska
Community Development partners, catcher vessel owners and other third party fishery participants. Product freight is incurred when we transport the product to either our customer or a cold storage facility. Storage costs are incurred for product
entering a cold storage facility.

Land-Based Processing Segment

Land-Based Processing Revenue. Revenue from our land-based processing segment are primarily a function of our throughput volume of pollock, cod,
catfish and scallops that we process and the prevailing market prices for those products.

Land-Based Processing Expenses. Operating
costs related to our land-based processing operations are principally comprised of the cost of raw material purchases, labor and operating costs. Operating costs include depreciation expense related to equipment and facilities used for processing
and transportation.



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##### Table of Contents

Enterprise Expense Summary

Costs of sales include operating costs such as crew and factory personnel compensation, quota purchase costs, seafood purchases, vessel fuel, packaging,
insurance, product freight, other operating-related expenses, amortization of cooperative and fishing rights and depreciation applicable to property, vessels and equipment used in production. Selling, general and administrative expenses include
employee compensation and benefits, rent expense, professional fees, promotional costs, depreciation of office equipment and amortization of leasehold improvements and other intangibles, and other expenses, such as office equipment and supplies, not
directly involved in the production process.

Consolidated EBITDA

Certain covenant measures in our Senior Discount Note indenture and senior credit agreement incorporate a financial measure referred to as earnings before
interest, taxes, depreciation and amortization (EBITDA). In our indenture, EBITDA is defined as the earnings of ASG Consolidated before net interest expense, income taxes, depreciation, amortization, unrealized foreign exchange and other derivatives
gains or losses, equity-based compensation expense, loss from debt repayment including redemption premiums, the write-off of certain financing costs and goodwill and other non-cash charges or gains (Consolidated EBITDA). Our senior credit agreement
(Credit Facility) employs a similar definition, except that value-added or similar taxes and certain ASG Consolidated administrative charges are added back to Consolidated EBITDA to determine the EBITDA of American Seafoods Group LLC (ASG), our
wholly-owned subsidiary, which is the relevant measure for purposes of the covenant calculations contained in our credit agreement.

Consolidated EBITDA Margin is calculated as the percentage of Consolidated EBITDA to our net sales.

Consolidated EBITDA should
not be considered as an alternative to any measure of operating results as promulgated under accounting principles generally accepted in the United States (such as operating income or net income), nor should it be considered as an indicator of our
overall financial performance. Consolidated EBITDA does not fully consider the impact of investing or financing transactions as it specifically excludes depreciation and interest charges, which should also be considered in the overall evaluation of
results. Additionally, our method of calculating Consolidated EBITDA may be different from the method used by other companies, and therefore, comparability may be limited. Consolidated EBITDA has not been provided as a measure of liquidity.

We include Consolidated EBITDA in this report because we believe it provides useful supplemental information to investors since it
excludes the impact of changes in working capital, investing and financing transactions on our operating cash flow, and we understand it is used by some investors to determine a companys historical ability to service indebtedness and fund
ongoing capital expenditures, and because certain covenant measures in our Senior Discount Note indenture are based upon Consolidated EBITDA. We believe the line item entitled: Net Income as presented in our financial statements is the
most directly comparable U.S. generally accepted accounting principles (GAAP) measure to Consolidated EBITDA.



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##### Table of Contents

Results of Operations

Overview of Operating Results

The following table compares selected statements of operations
data and provides a reconciliation of net income to Consolidated EBITDA, in millions, for the three and nine months ended September 30, 2005 and 2006:



|                                                          |  |                                 |       |   |                                |   |       |      |  |   |       |   |  |   |       |  
|--------------------------------------------------------- |  | ------------------------------- | ----- | - | ------------------------------ | - | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                          |  | Three Months EndedSeptember 30, |       |   | Nine Months EndedSeptember 30, |  
|                                                          |  | 2005                            |       |   | 2006                           |   |       | 2005 |  |   | 2006  |  
|Net sales and other revenue                               |  | $                               | 100.4 |   |                                | $ | 102.7 |      |  | $ | 377.4 |   |  | $ | 395.7 |  
|Cost of sales                                             |  |                                 | 79.0  |   |                                |   | 83.7  |      |  |   | 286.3 |   |  |   | 304.7 |  
|                                                          |  |                                 |       |   |                                |   |       |      |  |   |       |   |  |   |       |  
|Gross profit                                              |  |                                 | 21.4  |   |                                |   | 19.1  |      |  |   | 91.1  |   |  |   | 91.0  |  
|Gross profit percentage                                   |  |                                 | 21    | % |                                |   | 19    | %    |  |   | 24    | % |  |   | 23    | %
|                                                          |  |                                 |       |  
|Operating expenses                                        |  |                                 | 9.8   |   |                                |   | 12.2  |      |  |   | 32.3  |   |  |   | 43.2  |  
|                                                          |  |                                 |       |   |                                |   |       |      |  |   |       |   |  |   |       |  
|Operating income                                          |  |                                 | 11.6  |   |                                |   | 6.9   |      |  |   | 58.8  |   |  |   | 47.8  |  
|Other income (expense), net                               |  |                                 | (5.5  | ) |                                |   | (6.4  | )    |  |   | (12.3 | ) |  |   | (41.5 | )
|                                                          |  |                                 |       |   |                                |   |       |      |  |   |       |   |  |   |       |  
|Net income                                                |  | $                               | 6.1   |   |                                | $ | 0.5   |      |  | $ | 46.5  |   |  | $ | 6.3   |  
|Interest expense, net                                     |  |                                 | 14.6  |   |                                |   | 16.6  |      |  |   | 43.2  |   |  |   | 38.0  |  
|Depreciation and amortization                             |  |                                 | 6.0   |   |                                |   | 7.2   |      |  |   | 29.8  |   |  |   | 30.4  |  
|Unrealized losses (gains) on derivatives, net             |  |                                 | (8.7  | ) |                                |   | (5.6  | )    |  |   | (23.6 | ) |  |   | 0.7   |  
|Equity-based compensation expense                         |  |                                 | (0.2  | ) |                                |   | 0.3   |      |  |   | 1.0   |   |  |   | 6.6   |  
|Write-off of financing fees and early redemption premiums |  |                                 |      |   |                                |   |      |      |  |   |      |   |  |   | 17.8  |  
|Other                                                     |  |                                 | (0.2  | ) |                                |   | 0.2   |      |  |   | (0.3  | ) |  |   | 0.2   |  
|                                                          |  |                                 |       |   |                                |   |       |      |  |   |       |   |  |   |       |  
|Consolidated EBITDA                                       |  | $                               | 17.6  |   |                                | $ | 19.2  |      |  | $ | 96.6  |   |  | $ | 100.0 |  
|                                                          |  |                                 |       |   |                                |   |       |      |  |   |       |   |  |   |       |  
|                                                          |  |                                 |       |  
|Consolidated EBITDA Margin                                |  |                                 | 18    | % |                                |   | 19    | %    |  |   | 26    | % |  |   | 25    | %

Consolidated EBITDA.Consolidated EBITDA increased 9% for the three months ended
September 30, 2006 to $19.2 million as compared to $17.6 million during the three months ended September 30, 2005. Consolidated EBITDA increased 4% for the nine months ended September 30, 2006 to $100.0 million as compared
to $96.6 million during the nine months ended September 30, 2005. The increases in both periods were primarily due to higher net sales, which were partially offset by higher fuel and freight costs, an increase in selling, general and
administrative expenses, excluding non-cash, equity-based compensation, that were primarily associated with an increase in performance-related employee bonuses and other compensation expenses, and higher net settlement gains on foreign exchange
transactions due to the strengthening of the U.S. dollar.



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Revenue. The following table compares selected segment revenue data presented in amount for the
three and nine months ended September 30, 2005 and 2006, and presents the corresponding change in amount and percentage between the periods (amounts in millions):



|                             |  |                                  |       |   |                     |   |       |                                 |  |   |                     |   |  |      |    |  |      |       |   |        |   |       |         |  |   |      |   |  |     |  
|---------------------------- |  | -------------------------------- | ----- | - | ------------------- | - | ----- | ------------------------------- |  | - | ------------------- | - |  | ---- | -- |  | ---- | ----- | - | ------ | - | ----- | ------- |  | - | ---- | - |  | --- | -
|                             |  | Three months ended September 30, |       |   | Increase (Decrease) |   |       | Nine months ended September 30, |  |   | Increase (Decrease) |  
|                             |  | 2005                             |       |   | 2006                |   |       | Amount                          |  |   | Percent             |   |  | 2005 |    |  | 2006 |       |   | Amount |   |       | Percent | 
|Net sales and other revenue: |  |                                  |       |   |                     |   |       |                                 |  |   |                     |   |  |      |    |  |      |       |   |        |   |       |         |  |   |      |   |  |     |  
|At-sea processing            |  | $                                | 56.4  |   |                     | $ | 50.9  |                                 |  | $ | (5.5                | ) |  | (10  | )% |  | $    | 235.1 |   |        | $ | 242.2 |         |  | $ | 7.1  |   |  | 3   | %
|Land-based processing        |  |                                  | 50.8  |   |                     |   | 58.1  |                                 |  |   | 7.3                 |   |  | 14   |    |  |      | 158.3 |   |        |   | 172.2 |         |  |   | 13.9 |   |  | 9   |  
|Intersegment elimination     |  |                                  | (6.8  | ) |                     |   | (6.3  | )                               |  |   | 0.5                 |   |  | 7    |    |  |      | (16.0 | ) |        |   | (18.7 | )       |  |   | (2.7 | ) |  | (17 | )
|                             |  |                                  |       |   |                     |   |       |                                 |  |   |                     |   |  |      |    |  |      |       |   |        |   |       |         |  |   |      |   |  |     |  
|Total revenue                |  | $                                | 100.4 |   |                     | $ | 102.7 |                                 |  | $ | 2.3                 |   |  | 2    | %  |  | $    | 377.4 |   |        | $ | 395.7 |         |  | $ | 18.3 |   |  | 5   | %
|                             |  |                                  |       |   |                     |   |       |                                 |  |   |                     |   |  |      |    |  |      |       |   |        |   |       |         |  |   |      |   |  |     |  

At-sea processing sales decreased in the third quarter of 2006 compared to 2005 primarily due to
lower sales volume of pollock surimi product and pollock block product. At-sea processing sales increased in the first nine months of 2006 compared to 2005 primarily as a result of higher sales volumes of pollock roe, Pacific whiting, and yellowfin
sole, and higher surimi and pollock block prices. These factors were partially offset by lower sales prices for pollock roe and lower sales volume of pollock block and pollock surimi. Land-based processing sales increased in the three and nine
months ended September 2006 compared with the prior year primarily due to higher sales volume for secondary processed and scallop products and higher sales prices generated from scallop and catfish products. These increases were partially offset by
lower sales volume of catfish products.

Gross Profit.The following table compares selected segment gross profit data
presented in amount for the three and nine months ended September 30, 2005 and 2006, and presents the corresponding change in amount and percentage between the periods (amounts in millions):



|                         |  |                                  |      |   |                     |   |      |                                 |  |   |                     |   |  |      |    |  |      |      |   |        |   |       |         |  |   |      |   |  |     |  
|------------------------ |  | -------------------------------- | ---- | - | ------------------- | - | ---- | ------------------------------- |  | - | ------------------- | - |  | ---- | -- |  | ---- | ---- | - | ------ | - | ----- | ------- |  | - | ---- | - |  | --- | -
|                         |  | Three months ended September 30, |      |   | Increase (Decrease) |   |      | Nine months ended September 30, |  |   | Increase (Decrease) |  
|                         |  | 2005                             |      |   | 2006                |   |      | Amount                          |  |   | Percent             |   |  | 2005 |    |  | 2006 |      |   | Amount |   |       | Percent | 
|Gross profit:            |  |                                  |      |   |                     |   |      |                                 |  |   |                     |   |  |      |    |  |      |      |   |        |   |       |         |  |   |      |   |  |     |  
|At-sea processing        |  | $                                | 20.8 |   |                     | $ | 17.9 |                                 |  | $ | (2.9                | ) |  | (14  | )% |  | $    | 87.2 |   |        | $ | 87.9  |         |  | $ | 0.7  |   |  | 1   | %
|Land-based processing    |  |                                  | 4.1  |   |                     |   | 4.5  |                                 |  |   | 0.4                 |   |  | 10   |    |  |      | 12.5 |   |        |   | 13.0  |         |  |   | 0.5  |   |  | 4   |  
|Intersegment elimination |  |                                  | (3.5 | ) |                     |   | (3.3 | )                               |  |   | 0.2                 |   |  | 6    |    |  |      | (8.6 | ) |        |   | (10.0 | )       |  |   | (1.4 | ) |  | (16 | )
|                         |  |                                  |      |   |                     |   |      |                                 |  |   |                     |   |  |      |    |  |      |      |   |        |   |       |         |  |   |      |   |  |     |  
|Total gross profit       |  | $                                | 21.4 |   |                     | $ | 19.1 |                                 |  | $ | (2.3                | ) |  | (11  | )% |  | $    | 91.1 |   |        | $ | 90.9  |         |  | $ | (0.2 | ) |  |    | %
|                         |  |                                  |      |   |                     |   |      |                                 |  |   |                     |   |  |      |    |  |      |      |   |        |   |       |         |  |   |      |   |  |     |  

At-sea processing gross profit and gross profit as a percentage of sales for the third quarter of
2006 compared to 2005 decreased primarily due to revenue factors described above and also due to higher fuel and freight costs in 2006. At-sea processing gross profit for the first nine months increased primarily due to the revenue factors described
above partially offset by higher costs. Gross profit as a percentage of sales remained consistent. Land-based processing gross profit for the three and nine months ended September 30, 2006 compared to the prior year increased due to the revenue
factors described above, partially offset by higher production and product freight costs.



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Operating Expenses. The following table compares selected operating expenses in amount for the
three and nine months ended September 30, 2005 and 2006 (amounts in millions):



|                                    |  |                                  |      |                     |      |   |                                 |  |                     |     |  |      |   |      |   |        |  |         |      |  |   |      |  |    |  
|----------------------------------- |  | -------------------------------- | ---- | ------------------- | ---- | - | ------------------------------- |  | ------------------- | --- |  | ---- | - | ---- | - | ------ |  | ------- | ---- |  | - | ---- |  | -- | -
|                                    |  | Three months ended September 30, |      | Increase (Decrease) |      |   | Nine months ended September 30, |  | Increase (Decrease) |    
|                                    |  | 2005                             |      |                     | 2006 |   | Amount                          |  | Percent             |     |  | 2005 |   | 2006 |   | Amount |  | Percent |     
|Operating expenses:                 |  |                                  |      |                     |      |   |                                 |  |                     |     |  |      |   |      |   |        |  |         |      |  |   |      |  |    |  
|Selling, general and administrative |  | $                                | 9.2  |                     |      | $ | 11.1                            |  | $                   | 1.9 |  | 21   | % |      | $ | 28.9   |  | $       | 34.2 |  | $ | 5.3  |  | 18 | %
|Equity-based compensation           |  |                                  | (0.2 | )                   |      |   | 0.3                             |  |                     | 0.5 |  |     |   |      |   | 1.0    |  |         | 6.6  |  |   | 5.6  |  |   |  
|Amortization and depreciation       |  |                                  | 0.8  |                     |      |   | 0.8                             |  |                     |    |  |     |   |      |   | 2.4    |  |         | 2.4  |  |   |     |  |   |  
|                                    |  |                                  |      |                     |      |   |                                 |  |                     |     |  |      |   |      |   |        |  |         |      |  |   |      |  |    |  
|Total operating expenses            |  | $                                | 9.8  |                     |      | $ | 12.2                            |  | $                   | 2.4 |  | 25   | % |      | $ | 32.3   |  | $       | 43.2 |  | $ | 10.9 |  | 34 | %
|                                    |  |                                  |      |                     |      |   |                                 |  |                     |     |  |      |   |      |   |        |  |         |      |  |   |      |  |    |  

Selling, general and administrative expenses increased for the three and nine months ended
September 30, 2006 compared to the prior year primarily due to increases in bonus expense accrual, certain costs associated with employee organizational changes, and compensation expense. The increase in year to date equity-based compensation
for 2006 over 2005 resulted primarily from compensation expense recognized related to the accelerated vesting of options in connection with the acquisition of partnership interests of certain partners of ASLP and the change in the estimated fair
value of options accounted for under variable accounting.

Other Income (Expense), net. The following table compares selected other
income (expense), net in amount for the three months and nine months ended September 30, 2005 and 2006, and presents the corresponding change in amount and percentage between the periods (amounts in millions):



|                                             |  |                                  |       |   |                     |   |       |                                 |  |   |                     |   |  |      |   |  |      |       |   |        |   |       |         |  |   |       |   |  |     |   
|-------------------------------------------- |  | -------------------------------- | ----- | - | ------------------- | - | ----- | ------------------------------- |  | - | ------------------- | - |  | ---- | - |  | ---- | ----- | - | ------ | - | ----- | ------- |  | - | ----- | - |  | --- | --
|                                             |  | Three months ended September 30, |       |   | Increase (Decrease) |   |       | Nine months ended September 30, |  |   | Increase (Decrease) |  
|                                             |  | 2005                             |       |   | 2006                |   |       | Amount                          |  |   | Percent             |   |  | 2005 |   |  | 2006 |       |   | Amount |   |       | Percent | 
|Other income (expense), net:                 |  |                                  |       |   |                     |   |       |                                 |  |   |                     |   |  |      |   |  |      |       |   |        |   |       |         |  |   |       |   |  |     |   
|Interest expense, net                        |  | $                                | (14.6 | ) |                     | $ | (16.6 | )                               |  | $ | 2.0                 |   |  | 14   | % |  | $    | (43.2 | ) |        | $ | (38.0 | )       |  | $ | (5.2  | ) |  | (12 | )%
|Foreign exchange gains                       |  |                                  | 4.9   |   |                     |   | 8.4   |                                 |  |   | 3.5                 |   |  | 71   |   |  |      | 18.7  |   |        |   | 11.7  |         |  |   | (7.0  | ) |  | (37 | ) 
|Other derivatives gains                      |  |                                  | 4.5   |   |                     |   | 1.7   |                                 |  |   | (2.8                | ) |  | (62  | ) |  |      | 13.1  |   |        |   | 2.5   |         |  |   | (10.6 | ) |  | (81 | ) 
|Write-off recapitalization transaction costs |  |                                  |      |   |                     |   |      |                                 |  |   |                    |   |  |     |   |  |      |      |   |        |   | (17.8 | )       |  |   | 17.8  |   |  |    |   
|Other, net                                   |  |                                  | (0.4  | ) |                     |   | 0.2   |                                 |  |   | 0.6                 |   |  |     |   |  |      | (0.9  | ) |        |   | 0.1   |         |  |   | 1.0   |   |  |    |   
|                                             |  |                                  |       |   |                     |   |       |                                 |  |   |                     |   |  |      |   |  |      |       |   |        |   |       |         |  |   |       |   |  |     |   
|Other income (expense), net                  |  | $                                | (5.6  | ) |                     | $ | (6.3  | )                               |  | $ | 0.7                 |   |  | 13   | % |  | $    | (12.3 | ) |        | $ | (41.5 | )       |  | $ | 29.2  |   |  |    |   
|                                             |  |                                  |       |   |                     |   |       |                                 |  |   |                     |   |  |      |   |  |      |       |   |        |   |       |         |  |   |       |   |  |     |   

Interest expense increased in the three months ended September 30, 2006 compared with the
prior year primarily due to a decrease in unrealized gains related to our forward interest rate swaps, a higher weighted-average debt balance and an increase in the discount accretion of our Senior Discount Notes, partially offset by the effect of a
decrease in the average interest rate related to our variable rate debt. Interest expense for the nine month period ended September 30, 2006 decreased slightly compared to the prior year due primarily to the lower weighted average interest
rate, largely offset by the factors described above.



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The following table compares the weighted average outstanding debt levels and interest rates on borrowed
funds for the three and nine months ended September 30, 2005 and 2006 (amounts in millions):



|                                  |  |                                  |      |   |                     |   |      |                                 |  |         |                     |  |      |   |  |      |     |   |        |   |         |   |  |   |    |  |   |  
|--------------------------------- |  | -------------------------------- | ---- | - | ------------------- | - | ---- | ------------------------------- |  | ------- | ------------------- |  | ---- | - |  | ---- | --- | - | ------ | - | ------- | - |  | - | -- |  | - | -
|                                  |  | Three Months Ended September 30, |      |   | Increase (Decrease) |   |      | Nine Months Ended September 30, |  |         | Increase (Decrease) | 
|                                  |  | 2005                             |      |   | 2006                |   |      | Amount                          |  | Percent |                     |  | 2005 |   |  | 2006 |     |   | Amount |   | Percent |  
|Weighted-average outstanding debt |  | $                                | 578  |   |                     | $ | 597  |                                 |  | $       | 19                  |  | 3    | % |  | $    | 589 |   |        | $ | 630     |   |  | $ | 41 |  | 7 | %
|Weighted-average interest rate    |  |                                  | 8.81 | % |                     |   | 9.26 | %                               |  |         |                     |  |      |   |  |      | 8.5 | % |        |   | 8.52    | % |  |   |    |  |   |  

In 2005 and 2006, we had net foreign exchange gains due to a stronger average U.S. dollar relative
to the yen. The incremental effect of the strengthening of the U.S. dollar was greater during the three months ended September 30, 2006 than in the prior year, but less overall for the nine months ended September 30, 2006 than in the prior
year. Other derivative gains decreased during the three and nine months ended September 30, 2006 compared to 2005 resulting from a decrease in the fair value of fuel hedges partially offset by unrealized net gains on cross currency interest
rate swaps and realized gains on fuel hedge settlements resulting from the effects of rising fuel prices.

In conjunction with the
redemption of our Senior Subordinated Notes in April 2006, we recorded a charge in the second quarter of 2006 for $17.8 million, comprised of a write-off of $8.9 million in deferred financing costs and an $8.9 million redemption premium. Other
expenses, net, decreased in 2006 compared to 2005 due to a decrease in aircraft expense associated with an aircraft lease which was cancelled in March of 2006.

Liquidity and Capital Resources

Overview

Our long-term debt as of September 30, 2006 consists of amounts borrowed pursuant to our Credit Facility and our Senior Discount Notes.

Our Credit Facility provides for: (i) a revolving credit facility commitment of $75.0 million, with a sub-credit facility for letters of credit,
maturing on September 30, 2011, and (ii) term debt loans in the amount of $265.0 million funded at closing, payable in quarterly payments of interest and principal, with $125.0 million of the term loans maturing on September 30, 2011
and $140.0 million on September 30, 2012. In addition, the Credit Facility provides a term debt commitment of $180.0 million, which we drew down on April 26, 2006, in connection with the redemption of our Senior Subordinated Notes. This
term loan requires quarterly payments of interest and principal and matures on September 30, 2012. Notwithstanding the above maturity dates, in the event the Senior Discount Notes remain outstanding as of May 1, 2011, then all amounts
outstanding under the Credit Facility, including revolving credit borrowings, letters of credit and the term loans, will become immediately due and payable in full on such date.

Our short-term and long-term liquidity needs arise largely from interest payments on our debt, which we expect to be between $16.0 million and $18.0
million for the last quarter of 2006, and principal repayments of our debt. The following schedule summarizes our scheduled future principal payments, including the full principal amount of $196.0 million of our Senior Discount Notes (amounts in
millions):



|                             |  |                   |     |      |   |      |  |      |      |      |   |            |  |       |      |  |   |       |  |   |      
|---------------------------- |  | ----------------- | --- | ---- | - | ---- |  | ---- | ---- | ---- | - | ---------- |  | ----- | ---- |  | - | ----- |  | - | -----
|                             |  | Three months 2006 |     | 2007 |   | 2008 |  | 2009 |      | 2010 |   | Thereafter |  | Total
|Scheduled principal payments |  | $                 | 0.9 |      | $ | 10.2 |  | $    | 14.9 |      | $ | 19.6       |  | $     | 32.9 |  | $ | 574.4 |  | $ | 652.9
|                             |  |                   |     |      |   |      |  |      |      |      |   |            |  |       |      |  |   |       |  |   |      

Beginning in March 2007, the Credit Facility requires excess cash flow principal payments, which
have not been included in the above schedule. Under our previous credit agreement, we made excess cash flow payments of $10.0 million during March 2005. Under the New Credit Facility, we may be required to make excess cash



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flow payments beginning in March 2007. We increased our net borrowings under our revolving credit facility by $13.9 million during the nine months ended
September 30, 2006.

Additional cash may be needed to support our working capital requirements resulting from the seasonality of our
business and potential acquisitions to support business growth. We expect to fund our liquidity needs primarily with cash generated from operations and, to the extent necessary, through borrowings under our revolving line of credit, which matures in
2011. At September 30, 2006, we have $46.1 million available for immediate unconditional borrowing under our revolving credit facility. As a policy, we repay our debt as required by our loan covenants, and we pay down our revolving and
term debt to reduce our interest cost and improve our leverage ratio as cash is available from our operating activities.

Historical
Cash Flow

Cash flows. The following table compares selected cash flow information for the nine months ended September 30,
2005 and 2006, and presents the corresponding change in amount and percentage between the periods (amounts in millions):



|                                                |  |                                |       |   |                              |   |       |        |  |   |         |   |  |     |   
|----------------------------------------------- |  | ------------------------------ | ----- | - | ---------------------------- | - | ----- | ------ |  | - | ------- | - |  | --- | --
|                                                |  | Nine MonthsEnded September 30, |       |   | Cash FlowIncrease (Decrease) |  
|                                                |  | 2005                           |       |   | 2006                         |   |       | Amount |  |   | Percent |  
|Cash flows provided by (used in):               |  |                                |       |   |                              |   |       |        |  |   |         |   |  |     |   
|Operating activities                            |  | $                              | 35.0  |   |                              | $ | 12.7  |        |  | $ | (22.3   | ) |  | (64 | )%
|Investing activities                            |  |                                | (13.9 | ) |                              |   | (19.3 | )      |  |   | (5.4    | ) |  | (39 | ) 
|Financing activities                            |  |                                | (16.5 | ) |                              |   | 0.9   |        |  |   | 17.4    |   |  |    |   
|                                                |  |                                |       |   |                              |   |       |        |  |   |         |   |  |     |   
|Net increase (decrease) in cash and equivalents |  | $                              | 4.6   |   |                              | $ | (5.7  | )      |  | $ | (10.3   | ) |  |    |   
|                                                |  |                                |       |   |                              |   |       |        |  |   |         |   |  |     |   

Cash flow from operating activities decreased during the first nine months of 2006 compared to the
prior year due to a decrease in net income, changes in components of working capital primarily composed of increases in accounts receivable and seasonal increases in inventories and deferred operating costs, prepaid and other expenses, which is
partially offset by decreases in accounts payable and accrued liabilities.

Cash flow used in investing activities was higher during the
first nine months of 2006 compared to the prior year primarily due to an increase in purchases of capital assets and higher capital expenditures due to delays in major scheduled shipyard projects, a shorter shipyard period available as compared to
the prior year and capital projects in our land-based processing divisions, which is partially offset by a decrease in the acquisition of fishing rights in 2006 compared to 2005.

Cash flow provided by financing activities was higher during the first nine months of 2006 compared to the prior year principally because of the
incurrence of higher net borrowings under our credit facility and lower financing costs partially offset by higher tax distributions to members. We pay down our revolving and term debt to reduce our interest cost and improve our leverage ratio as
cash is available from our operating activities.

Historically, we have limited fishing activity during the last quarter of the year and
begin fishing again during our first quarter. As a result, the carrying amount of at-sea processing inventories is lower at the end of the fourth quarter and increases with our first and third quarters of fishing operations. Similarly, in our first
and third quarters, accounts payable and accrued expenses increase primarily because of the accrual of crew share compensation and other operational expenses that are not present when we are not fishing.

At September 30, 2006, we had $2.3 million of cash and cash equivalents, and $46.1 million available for immediate and unconditional borrowing under
our revolving credit facility. We believe that the cash we expect to



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generate from operations and borrowing capabilities under our revolving credit facility will be sufficient to meet our liquidity requirements in the
foreseeable future.

Other Factors Impacting Liquidity

Cross Currency Interest Rate Swaps.In November 2005 and in May 2006 we entered into three fixed-rate cross currency interest swap contracts with an aggregate notional amount of $75.0 million. Under the terms
of these contracts, we pay a fixed rate of interest in Japanese yen and receive payments on a variable rate of interest in U.S. dollars based on the U.S. dollar three-month LIBOR rate. The objective of these instruments is to reduce our exposure to
interest rate risk related to our Credit Facility and to provide additional risk management against Japanese currency fluctuations related to our yen-denominated sales.

Interest Rate Forward Swap Agreements.In November 2005 and December 2005 we entered into three forward interest rate swaps with an aggregate notional amount of $180.0 million with an effective date of
May 2, 2006 with maturity dates through March 2011. Under the terms of these contracts, we pay a fixed rate of interest based on the U.S. dollar three-month LIBOR rate. The objective of these instruments is to reduce our exposure to interest
rate risk related to our Credit Facility.

Fuel Contracts.We have entered into fuel contracts with a notional amount of
11.6 million gallons whereby we pay a fixed price per gallon and receive a floating price per gallon over the term of the contracts through October 2008. The objective of these instruments is to reduced our exposure to fuel cost risk related to
the operation of our vessels.

Tax Matters. We and our significant subsidiaries are flow-through entities for income tax
purposes. We have been and will continue to be obligated under our limited liability agreement to make distributions to our members for the tax liabilities they may incur on their allocated portion of our taxable income. More specifically, ASG will
make distributions to us, as allowed by our credit facilities, in amounts equal to the theoretical tax on our taxable income (determined without regard to deductions for interest on the notes or other deductions incurred by entities above ASG),
which we may in turn distribute to our members (without regard to the actual tax status of each member).

Capital Expenditures. The
majority of our capital expenditures relates to our catcher-processor fleet and includes items such as fishing gear and improvements to vessel factory processing equipment which occur when the vessels are in the shipyard. Capital expenditures have
been funded from cash flows from operations and borrowings under our revolving credit facility. These costs are capitalized and depreciated over the estimated useful lives of the capital expenditures.

Capital expenditures reflected below are additions to property, vessels and equipment that have been placed in service. Capital projects in process will
be reclassified to property, vessels and equipment when completed and placed in service. The following table summarizes our capital expenditures and capital projects in process and repairs and maintenance expense for the nine months ended September
30, 2005 and 2006 (in millions):



|                                                                          |  |                               |      |      |   |     
|------------------------------------------------------------------------- |  | ----------------------------- | ---- | ---- | - | ----
|                                                                          |  | Nine MonthsEndedSeptember 30,
|                                                                          |  | 2005                          |      | 2006
|Capital expenditures:                                                     |  |                               |      |      |   |     
|Purchase of property, vessels and equipment                               |  | $                             | 11.3 |      | $ | 11.7
|Reclassification of prior period capital projects in progress and deposit |  |                               | 1.9  |      |   | 1.7 
|                                                                          |  |                               |      |      |   |     
|Total capital expenditures                                                |  |                               | 13.2 |      |   | 13.4
|Net change in capital projects in process                                 |  |                               | 1.0  |      |   | 4.1 
|                                                                          |  |                               |      |      |   |     
|Total capital expenditures and capital projects in process                |  | $                             | 14.2 |      | $ | 17.5
|                                                                          |  |                               |      |      |   |     
|Repairs and maintenance expense                                           |  | $                             | 8.9  |      | $ | 8.1 
|                                                                          |  |                               |      |      |   |     



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The $3.1 million increase in the net change in capital expenditures and capital projects in process was
primarily attributable to the delay of completion of major scheduled shipyard projects attributable to delays in procurement of necessary parts and contract labor as well as a shorter shipyard period available as compared to the prior year.

Business Development. From time to time, we may acquire businesses and operating assets such as vessels with fishing rights. We
expect that these acquisitions will be funded from cash flow from operations or borrowings under our credit facility.

Debt Covenants

The Credit Facility is secured by substantially all of our assets, including intangible assets. Under the terms of the Credit Facility, ASG is required to
meet certain financial tests, including a maximum leverage ratio and a minimum fixed charge coverage ratio. ASG is required to maintain a leverage ratio of 4.5 or less through March 31, 2007 decreasing to 3.75 or less beginning with the quarter
ending June 30, 2009. ASG is required to maintain a fixed charge coverage ratio of 1.15 or greater for the duration of the Credit Facility. The leverage ratio is calculated for purposes of the Credit Facility based on the ratio of the EBITDA of ASG
(ASG EBITDA) to ASGs Consolidated Debt (as defined in the Credit Facility).

Accordingly, we have included a method of calculating
ASG EBITDA in this report because we believe it provides useful supplemental information to investors by allowing them to assess our compliance with our covenants under the Credit Facility. We believe the net income of ASG is the most directly
comparable GAAP measure to ASG EBITDA. ASG EBITDA should not be considered as an alternative to any measure of operating results as promulgated under U.S. GAAP (such as operating income or net income), nor should it be considered as an indicator of
our or ASGs overall financial performance. ASG EBITDA does not fully consider the impact of investing or financing transactions as it specifically excludes depreciation and interest charges, which should also be considered in the overall
evaluation of results. Additionally, our method of calculating ASG EBITDA may be different from the method used by other companies, and therefore, comparability may be limited. ASG EBITDA has not been provided as a measure of liquidity.

For the three and nine months ended September 30, 2006, ASG EBITDA was higher than our Consolidated EBITDA as reported herein by $0.8 million and $2.2
million, respectively, as a result of adding back expenses related to value-added and similar taxes and ASG Consolidateds administrative costs. For the three and nine months ended September 30, 2005, ASG EBITDA was higher than Consolidated
EBITDA by $0.7 million and $2.0 million, respectively, for the same reasons. Net income for ASG was higher than ASG Consolidateds net income for the three and nine months ended September 30, 2006 by $4.7 million and $13.6 million,
respectively, due to the accretion on the Senior Discount Notes, which was offset, in part, by $0.3 million and $0.7 million of administrative costs at ASG Consolidated. For the three and nine months ended September 30, 2005, ASGs net income
was higher than ASG Consolidateds net income by $4.0 million and $11.5 million, respectively, due solely to the accretion on the Senior Discount Notes.

The Credit Facility also contains certain other covenants which, among other things, limit the incurrence of additional indebtedness, liens, and encumbrances, changes of control, changes in the nature of the business,
investments, dividends and other restricted payments, prepayments of certain indebtedness, certain transactions with affiliates, asset sales, acquisitions, capital expenditures, mergers and consolidations, sales of receivables and other matters
customarily restricted in such agreements. In addition, the Credit Facility contains customary negative and affirmative covenants and events of default, funding conditions, representations and warranties and other customary provisions for senior
secured credit facilities.

The Senior Discount Note indenture imposes similar restrictions on the operation of business and employs a
fixed-charge debt test based upon the our Consolidated EBITDA. We were in compliance with the covenants contained in the Senior Discount Note indenture of September 30, 2006.



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On March 31, 2006, we incurred an event of default under our Credit Facility. The event of default
consisted of a failure to comply with the leverage ratio covenant as of March 31, 2006 due to a combination of unexpected delays in the recognition of certain seasonal revenue and in the paydown of our revolving credit facility, as well as our
need for higher liquidity at the beginning of the second quarter, which impacted both the denominator and the numerator of the leverage ratio calculation. We were in compliance with the other covenants in the Credit Facility as of March 31,
2006. In a letter dated May 4, 2006, we obtained a waiver from our lenders with respect to our failure to meet the leverage ratio covenant. We did not pay a fee in order to obtain the waiver. As of September 30, 2006, we were in compliance
with all covenants in the Credit Facility and our Senior Discount Note indenture.

Critical Accounting Policies and Contractual Obligations

There have been no material changes in our critical accounting policies as disclosed in our annual report on Form 10-K as filed with
the Securities and Exchange Commission on April 11, 2006, except for the adoption of SFAS 123R, as discussed below. See Liquidity and Capital Resources for material changes in our debt obligations from the redemption of our Senior Subordinated
Notes funded by additional borrowings under our Credit Facility in April 2006.

Equity-Based Compensation

We account for equity-based compensation in accordance with the fair value recognition provisions of SFAS 123R. We use the Black-Scholes option-pricing
model to determine the fair value of newly granted unit options and those modified subsequent to the adoption of SFAS 123R, which requires the input of highly subjective assumptions. These assumptions include estimating the length of time employees
will retain their vested unit options before exercising them, and the estimated volatility. Changes in the subjective assumptions can materially affect the estimate of fair value of unit option-based compensation and consequently, the related amount
recognized in the consolidated statements of operations. We account for options granted prior to the adoption of SFAS 123R and not subsequently modified, utilizing the variable accounting method based upon changes in intrinsic value.

Recently Issued Accounting Pronouncements

In September 2006, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 108,Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (SAB
108), to address diversity in practice in quantifying financial statement misstatements. SAB 108 requires that we quantify misstatements based on their impact on each of our financial statements and related disclosures. SAB 108 is effective as of
the end of our 2006 fiscal year, allowing a one-time transitional cumulative effect adjustment to retained earnings as of January 1, 2006 for errors that were not previously deemed material, but are material under the guidance in SAB 108. We are
currently evaluating the impact, if any, of adopting SAB 108 on our financial statements.

In September 2006, the FASB issued SFAS 157Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of SFAS 157 are effective as of the beginning of our 2008 fiscal year. We
are currently evaluating the impact, if any, of adopting SFAS 157 on our financial statements.

In September 2006, the FASB issued FASB
Staff Position AUG AIR-1,Accounting for Planned Major Maintenance Activities (FSP AUG AIR-1). FSP AUG AIR-1 amends the guidance on accounting for planned major maintenance activities; specifically it precludes the use of the previously
acceptable accrue in advance method. We will be required to adopt FSP AUG AIR-1 in the first quarter of fiscal year 2007. The implementation of this standard will not have a material effect on the companys consolidated financial
position or annual results of operations. We are currently evaluating the impact, if any, of adopting FSP AUG AIR-1, on our financial statements.



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In June 2006, the FASB ratified a consensus on the EITF Issue No. 06-03 (EITF 06-03) related to the
classification of certain sales, value added and excise taxes within the income statement. This EITF would become effective for us in the first quarter of our fiscal year 2007. We are in the process of evaluating the impact, if any, of this EITF on
our presentation of such taxes on the statement of operations.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

Our exposure to financial market risk results primarily from fluctuations in pollock and catfish market prices, yen foreign currency exchange rates, interest rates and diesel fuel prices. For a description of our market risks, see
Item 7A, Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the fiscal year ended December 31, 2005. There have been no material changes to our market risks as disclosed in our
Annual Report.



|Item 4. | Controls and Procedures
|------- | -----------------------

We maintain disclosure
controls and procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934 (Exchange Act) is recorded, processed, summarized, and reported
within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure.

As of the end of the period covered by this report, we evaluated, under the supervision and with
the participation of our Disclosure Practices Committee and management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange
Act Rule 13a-15. In the evaluation, we considered the material weaknesses disclosed in Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and the resulting audit adjustments made. Because we are still in
the process of remediating these material weaknesses, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2006.

There were no other changes in our internal controls over financial reporting during the quarter ended September 30, 2006 that have materially
affected, or are reasonably likely to materially affect, our internal controls over financial reporting.



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PART IIOTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

We are from time to time party
to litigation, administrative proceedings and grievances that arise in the ordinary course of our business. Except as described in previous reports, we do not have pending any litigation that, separately or in the aggregate, would in the opinion of
management have a material adverse effect on our results of operations or financial condition. However, given the inherent unpredictability of litigation, it is possible that an adverse outcome could, from time to time, have a material adverse
effect on our operating results or cash flows in any particular quarterly or annual period.

See Note 6 to our Financial Statements
for a discussion of other litigation in which we are involved.



|Item 1A. | Risk Factors
|-------- | ------------

There are no material changes from the risk factors disclosed in our Annual Report
on Form 10-K for the fiscal year ended December 31, 2005.



|Item 6. | Exhibits
|------- | --------



|              |  |                                                                                                                                                                                                        
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                            
|              | 
|3.1           |  | Certificate of Formation of ASG Consolidated LLC(1)                                                                                                                                                    
|              | 
|3.2           |  | Amended and Restated Limited Liability Company Agreement of ASG Consolidated LLC(1)                                                                                                                    
|              | 
|4.1           |  | Indenture, dated as of October 19, 2004, among ASG Consolidated LLC, ASG Finance, Inc. and Wells Fargo Bank, National Association, as trustee, relating to the 111/2% Senior discount Notes due 2011(1)
|              | 
|10.1          |  | American Seafoods Group LLC Performance Unit Plan(2)                                                                                                                                                   
|              | 
|10.2          |  | American Seafoods Group LLC 2006 Dividend Return Incentive Plan(2)                                                                                                                                     
|              | 
|31.1          |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                    
|              | 
|31.2          |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                    
|              | 
|32.1          |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                    
|              | 
|32.2          |  | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                    

---

|(1) | Filed as an exhibit to ASG Consolidated LLCs Form S-4 on March 28, 2004
|--- | ------------------------------------------------------------------------

|(2) | Filed as an exhibit to ASG Consolidated LLCs Form 8-K on October 12, 2006
|--- | --------------------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                        |  |  |  |                      |  |                      |  |                                                         
|----------------------- |  |  |  | -------------------- |  | -------------------- |  | --------------------------------------------------------
|                        |  |  |  | ASG Consolidated LLC
|                        |  |  | 
|Date: November 20, 2006 |  |  |  | By:                  |  | /S/    BRAD
BODENMAN
|                        |  |  |  |                      |  |                      |  | Brad Bodenman Chief Financial Officer Authorized Officer



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