UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

|FOR ANNUAL AND TRANSACTION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|----------------------------------------------------------------------------------------------------------
|ý                                                                                                         
|For the Fiscal year ended December 31, 2007                                                               
|or                                                                                                        
|o                                                                                                         
|For the transition period
from                             to                                             

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Commission file number 333-138178

INDALEX HOLDINGS FINANCE, INC.(Exact name of registrant as specified in its charter)

|Delaware(State or other jurisdiction of incorporation or organization)                                                |  | 3350(Primary Standard Industrial Classification Number)                                |  | 20-3730880(IRS Employer Identification No.)
|--------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------- |  | -------------------------------------------
|                                                                                                                      |  | 75 Tri-State International, Suite 450
Lincolnshire, IL 60069
Telephone: (847) 810-3000 |  |                                            
|(Address, including zip code, and telephone number, including area code, of registrants' principal executive offices)

Securities registered pursuant to Section 12(b) of the Act: None

Securities
registered pursuant to Section 12(g) of the Act: None

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes o    No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o    No ý

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 ý    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of
"large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

|Large accelerated filer o |  | Accelerated filer o |  | Non-accelerated filer ý (Do not check if a smaller reporting company) |  | Smaller reporting company o
|------------------------- |  | ------------------- |  | --------------------------------------------------------------------- |  | ---------------------------

Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes o    No ý

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The aggregate market value of the registrant's common stock held by non-affiliates of the registrant as of June 30, 2007 was $6.9 million.

The
number of shares of the registrant's common stock outstanding as of March 14, 2008 was 1,000,024.



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TABLE OF CONTENTS

|PART I   |          | 3 
|-------- | -------- | --
|         | ITEM 1.  |   
|         | ITEM 1A. |   
|         | ITEM 1B. |   
|         | ITEM 2.  |   
|         | ITEM 3.  |   
|         | ITEM 4.  |   
|PART II  |          | 42
|         | ITEM 5.  |   
|         | ITEM 6.  |   
|         | ITEM 7.  |   
|         | ITEM 7A. |   
|         | ITEM 8.  |   
|         | ITEM 9.  |   
|         | ITEM 9A. |   
|         | ITEM 9B. |   
|PART III |          | 74
|         | ITEM 10. |   
|         | ITEM 11. |   
|         | ITEM 12. |   
|         | ITEM 13. |   
|         | ITEM 14. |   
|PART IV  |          | 97
|         | ITEM 15. |   

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PART I

ITEM 1. BUSINESS

Our Company

We are the second largest aluminum extruder, and the largest independent aluminum extruder, in the United States and Canada, based on shipment volume data
compiled by the Aluminum Association, the Aluminum Extruders Council and management estimates. As an independent aluminum extruder, we are not involved in aluminum mining, refining or smelting. In
2007, approximately 94% of our products were customized, made-to-order aluminum extrusions for use in a wide array of end-user markets. In addition to aluminum
extrusion, we also offer a broad range of services, including fabrication, painting and anodizing. For the year ended December 31, 2007, our net sales and loss from operations were
$1,105.3 million and $29.2 million, respectively, and our net loss was $7.0 million.

We
serve over 3,700 customers, including a broad spectrum of national, regional and local accounts, with our largest customer accounting for approximately 6% of our net sales in 2006 and
approximately 7% of our net sales in 2007. We offer a wide range of products that are sold into a wide array of end-user markets, none of which represented more than 32% of our shipment
volume in 2007. The following chart identifies the percentage of our 2006 and 2007 shipment volume and the principal products sold in each of the end-user markets we serve.

|End-user markets served                  |  | Principal products                                                               |  | Percent of 2007 Shipment Volume |   | Percent of 2006 Shipment Volume |  
|---------------------------------------- |  | -------------------------------------------------------------------------------- |  | ------------------------------- | - | ------------------------------- | -
|Transportation (exclusive of automotive) |  | Components used in truck trailers, trucks and recreational vehicles              |  | 32                              | % | 31                              | %
|Residential building and construction    |  | Components used in windows, doors, sunrooms and skylights                        |  | 27                              | % | 28                              | %
|Distribution channel                     |  | Products sold in other end-user markets through distributors                     |  | 13                              | % | 14                              | %
|Electric and cable                       |  | Components used in heat sinks, cable sheathing, electrical fixtures and conduit  |  | 7                               | % | 7                               | %
|Commercial building and construction     |  | Components used in commercial windows, store fronts and railings                 |  | 8                               | % | 7                               | %
|Consumer durables                        |  | Components used in office furniture, refrigerators and pleasure boats            |  | 6                               | % | 6                               | %
|Machinery and equipment                  |  | Components used in ladders, scaffolds and industrial equipment such as conveyors |  | 5                               | % | 5                               | %
|Automotive                               |  | Components used in passenger cars and light trucks                               |  | 2                               | % | 2                               | %

At
the end of 2006, based on the latest available shipment volume data compiled by the Aluminum Association, the Aluminum Extruders Council and management estimates, we held the number
one market position in the residential building and construction end-user market and the number two market position in the transportation (inclusive of automotive) end-user
market. The transportation (inclusive of automotive) and the residential building and construction end-user markets each represented approximately 29% and 24%, respectively, of the
aluminum extrusion industry's annual shipment volume in 2006 in the United States and Canada according to data compiled by the Aluminum Association and management estimates. We believe we offer a very
attractive value proposition to our customers, and believe we have grown our market share in the U.S. and Canadian

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aluminum
extrusion market, measured by shipment volume, from approximately 13% in 2001 to approximately 16% in 2007 according to data compiled by the Aluminum Association and management estimates.

Aluminum
extrusion is the process of shaping aluminum billet into product or component parts by heating it and forcing it to flow through a shaped die at the end of an extrusion press.
The principal raw materials in the aluminum extrusion process are aluminum billets and ingot, which represented approximately $763.9 million or 66% of our cost of sales in 2006 and
approximately $709.7 million or 68% of our cost of sales in 2007. We manage the risk of base aluminum price increases through one of four pricing mechanisms and through several hedging
programs. The "base aluminum" price consists of two components: the price quoted for primary aluminum ingot on the London Metals Exchange, or the "LME," and the Midwest Transaction Premium, or the
"MWP," a market price for the cost of aluminum shipping and warehousing. On approximately 90% of our shipment volume, we are insulated from base aluminum price volatility or specifically hedge the
cost of base aluminum that is charged to our customers. Our four pricing mechanisms and our estimate of the shipment volume attributable to each are as follows:



We
operate an extensive network of manufacturing facilities in the United States and Canada, consisting of 13 facilities and two casting facilities with approximately 750 million
pounds of annual production capacity. From the beginning of 2000 to the end of 2007, we rationalized our operations, reducing the number of our facilities from 23 to 15. In addition, we are in the
process of closing our Girard, Ohio facility, which will be closed during the first quarter of 2008. We believe that as a result of these restructuring activities we are well positioned to react to
changes in market demand, with sufficient available capacity to benefit from an increase in demand for our products without significantly increasing our fixed operating costs. At the same time, we
believe that opportunities exist to further rationalize operations by combining facilities or expanding our outsourcing relationships into other countries with lower production costs as necessary to
react to changing market conditions.

Since
2000, we have imported aluminum extrusions from China to take advantage of the lower cost structure of Chinese extruders and to provide additional capacity during periods of peak
demand. Through our "Asia Secure" program, we are able to offer our customers security of supply by committing our facilities as a backup producer if the Chinese supply chain were to be disrupted by
external factors. We currently import aluminum extrusions from four suppliers in China, although the majority of our imports from China comes from AAG, a large aluminum extruder operating five
production facilities in China, in which we formerly held an approximately 25% ownership interest. We sold our equity method investment in AAG in May of 2007. We have a non-exclusive
supply agreement with AAG that provides for arms length pricing.

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In
this report, references to "Indalex," "we" "us" and "our" are to Indalex Holdings Finance, Inc. and its subsidiaries, and references to "Holdings" are to Indalex Holdings
Finance, Inc., exclusive of its subsidiaries. Our fiscal year consists of a 52-week period ending on the Sunday closest to December 31. The fiscal years presented in this
report for 2005, 2006 and 2007 are for the 52-week periods ending December 31, 2005, December 31, 2006, and December 31, 2007, respectively. References to an
"independent" aluminum extruder refer to an aluminum extruder that does not have an aluminum smelting operation; references to the "aluminum extrusion market" refer to the soft alloy aluminum
extrusion market and not to the hard alloy aluminum extrusion market; and references to "United States and Canada" refer to the United States market and the Canada market collectively and not
individually, unless the context otherwise requires.

Our Competitive Strengths

We enjoy the following competitive strengths:

Leading industry position

We are the second largest aluminum extruder, and the largest independent aluminum extruder, in the United States and Canada, based on shipment volume data
compiled by the Aluminum Association and management estimates, with approximately 750 million pounds of annual production capacity. We believe our leading industry position gives us the ability
to attract and retain large national accounts that require extensive product and service capabilities not provided by many of our local and regional competitors.

Significant purchasing power

We believe we are the largest independent third-party buyer of aluminum billets, the raw material for the extrusion process, in the United States and Canada
according to data compiled by the Aluminum Association, the Aluminum Extruders Council and management estimates. We purchased approximately 510 million pounds of aluminum billet in 2007, and we
have a diversified supplier base of approximately 19 suppliers located in North America, South America and the Middle East, with no billet supplier representing more than 21% of our purchases in 2007.
The cost of aluminum billet is based upon three components: the LME, the MWP and a "billet premium," which is a cost that is added to the base aluminum price and represents the charge from the smelter
for converting aluminum ingot to billet. We are generally able to negotiate favorable supply agreements with smelters for billet premiums that represent a discount to prevailing market prices. We
believe we are the largest buyer of paint used in aluminum extrusions in the United States and Canada, providing us with a competitive advantage over smaller extruders with lower requirements for
paint.

Customer solutions and centralized sales force

One of our business strategies is to focus on adding value for the customer rather than solely building shipment volume and supplying standard aluminum
extrusions. We have a centralizedsales force, with sales personnel designated to serving the needs of specific customers rather thanto increasing production at any one of our manufacturing facilities.
We believe that our solution-based approach and centralized sales force differentiates us from other large aluminum extrudersand has enhanced our customer relationships. For example, our largest
customer, Utility Trailer Manufacturing Co., has
multiple locations throughout the United States. We have been able toprovide a single point of contact for sales to facilitate ordering and fulfillment, to develop offshoresourcing solutions and to
monitor routing of orders to the appropriate location. We believe that manyof our smaller competitors are unable to provide these capabilities, which we believe are importantto this customer.

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Established and diversified customer base in a variety of end-user markets

We have long-standing relationships with large companies in a variety of end-user markets, including Utility Trailer
Manufacturing Co. in the transportation market; Jeld-wen, Inc. in the residential building and construction market; and Ryerson Tull, Inc. in the distribution channel.
Our top ten customers in 2007 have been purchasing our products for an average of more than 20 years. We serve over 3,700 customers across the United States and Canada, including a broad
spectrum of national, regional and local accounts. Our top 10 customers represented approximately 29% of our net sales in 2006, with our largest customer representing approximately 6% of our net sales
in that year, and our top 10 customers represented approximately 29% of our net sales in 2007, with our largest customer representing approximately 7% of our net sales in that period. We serve a
variety of customers in the United States and Canada, including customers in the transportation, residential and commercial building and construction, electrical and cable, consumer durables and
machinery and equipment end-user markets. Our broad customer base diversifies our revenue stream and reduces our exposure to downturns in any of the specific end-user markets
we serve.

Insulation from base aluminum price volatility

Through various pricing mechanisms and hedging programs, we are generally able to insulate ourselves from increases in the price of base aluminum. Approximately
60% of our shipment volume is priced by a formula pricing mechanism based on the prior month's base aluminum price plus a conversion margin for our services. We use hedge instruments to mitigate our
exposure to changes in the base aluminum price for the time period between our purchase of aluminum billet and when we process it for a customer order. For approximately 25% of our shipment volume, we
enter into fixed price contracts and specifically hedge our base aluminum price risk under those contracts. The remaining 15% of our shipment volume is through tolling arrangements or is based on spot
prices, which we review monthly and adjust for changes in the base aluminum price periodically. Our ability to pass through the cost of base aluminum enables us to maintain our gross margins even when
base aluminum prices increase. In addition, our in-house billet casting capabilities, which supply approximately 28% of our needs, enable us to recycle and reuse our production scrap in
our extrusion business. We are able to achieve cost savings of approximately 20% by using aluminum billet produced from scrap from our
extrusion business when compared to the billet premium that we would be charged by aluminum smelters.

Extensive manufacturing network

We maintain a network of 13 coordinated manufacturing facilities in the United States and Canada. Our geographic reach places us in close proximity to many of our
customers, better ensuring on-time delivery and reducing our freight costs. Our ability to deliver products throughout the United States and Canada through a single customer contact is a
key differentiator for large, geographically-dispersed customers. Through our coordinated manufacturing facilities, our ability to shift production among our 13 facilities, subject to the constraints
of freight costs and disparities in the production capabilities of our facilities, and our centralized customer service organization, we are able to cost effectively serve national customers as they
expand and to substantially reduce utilization disparities among our facilities.

Effective outsourcing strategy

Our volume of products imported from China has grown rapidly since 2000; in 2007 we imported approximately 5% of our volume from that country. We believe that the
relationships we have developed in China and our experience in managing the supply chain positions us well to take advantage of the lower production cost structure in China. Using aluminum extruders
from China such as AAG has enabled us to eliminate some of our more costly domestic operations while maintaining

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our
shipment volume. In addition, our relationship with Chinese suppliers provides us incremental capacity to meet seasonal demands. Conversely, if demand for our products were to decline, we have the
flexibility to limit the number of orders we outsource to China and fill more of our orders through our own manufacturing facilities because we typically maintain duplicate extrusion dies and have the
manufacturing capabilities to produce most of the orders we import from China in our own facilities. We believe that we can use our supply model in other lower production cost countries and we are
currently exploring various alternatives to supplement our existing Chinese sourcing strategy.

Experienced and committed management team

The eight members of our senior management team have an average of approximately 14 years of extrusion industry experience both with Indalex and other
leading global industrial organizations. Led by Timothy R.J. Stubbs, who has 16 years of aluminum extrusion industry experience, the senior
management team has been successful at focusing on customers, rationalizing operations and improving employee productivity. Our entire management team owns common stock and stock options representing
approximately 7% of Holdings on a fully-diluted basis.

Our Business Strategy

We have identified several growth opportunities that we believe will allow us to continue to gain market share and increase net sales, cash flow and
profitability.

Expand service offerings to existing customers

We intend to further penetrate our existing customer base through sales of higher value-added products. For example, in the transportation end-user
market, where we have historically experienced strong sales, we have been able to expand our service offerings by providing fabrication and finishing services to existing customers that had
historically purchased existing mill finish, or extrusion only, products. Only 41% of our shipment volume in 2006 and 37% of our shipment volume in 2007 underwent painting, anodizing or fabrication.
We believe there is an opportunity for us to increase this percentage, and we intend to pursue opportunities to provide additional value-added services to our customers. We believe our strong customer
relationships will facilitate additional sales to our existing customers.

Continued emphasis on rationalizing operations and enhancing productivity

We intend to continue to focus on efficiency and on increasing capacity utilization. From the beginning of 2000 to the end of 2007, we reduced the number of our
facilities from 23 to 15, divested two non-core businesses and reduced overhead by approximately 350 employees, and through these reductions, together with the centralization of shared
services, reduced our annual fixed costs, excluding depreciation, by approximately $10 million despite increases in insurance and benefits costs. During this same period, we increased our
productivity per employee by approximately 50%, based on shipment volume per employee, and we increased our outsourced manufacturing as a percentage of shipment volume. In addition, on
January 9, 2008, we announced that our Girard, Ohio facility will close by the end of the first quarter of 2008. We continue our review of future rationalization and overhead reduction
programs, which may include closing higher cost facilities, combining facilities or expanding our outsourcing relationships into other countries with lower production costs. As a result of our efforts
over the last few years, we believe that we are now better able to withstand an economic downturn.

Target incremental growth in select end-user segments and regions

We intend to continue to pursue additional market share in targeted high growth segments of our end-user markets and in regions of the United States
in which we do not have a significant presence.

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We
are currently focusing on the transportation end-user market, particularly the truck trailer manufacturing segment, and the commercial building and construction end-user
markets, as well as on selling our products through distribution channels, because we believe these markets present a significant opportunity for growth. For example, from the beginning of 2002 to the
end of 2007, our annual shipment volume to truck trailer manufacturers grew approximately 400%, from approximately 24 million pounds to approximately 115 million pounds. This segment is
the second largest user of aluminum extrusion in the United States and Canada according to data compiled by the Aluminum Association. In the residential and commercial building and construction
end-user markets, we enhanced our paint capabilities by adding a powder paint line, which is more durable than wet paint and will permit our door and window customers to offer their
customers longer product warranties at a lower price. We are also targeting incremental growth in regions of the country in which we do not have a significant presence, such as the Southwestern United
States. We intend to pursue growth opportunities by selectively acquiring existing facilities, constructing new facilities or partnering with others to develop new operations.

Cultivate smaller OEM customers

We believe that substantial opportunities exist to increase sales to our smaller original equipment manufacturer, or "OEM," accounts, which only accounted for
approximately 11% of our net sales in 2007, and are focused in particular on the consumer durables and machinery and equipment end-user markets. The smaller OEMs are primarily
served by local owner-operated extrusion facilities or by independent distributors. These customers are typically more concerned with quality and on-time delivery, and tend to be less
price-sensitive, and as a result, the profit margin on sales to these smaller customers tends to be greater than that for our larger customers. In 2004, we created a designated sales group focused on
smaller OEM customers, which is targeting these customers for customized extrusion and value-added services in an effort to add incremental, high margin business. This program added approximately 400
new accounts in 2007, and these new accounts represented additional shipment volume of approximately 5.9 million pounds in that year.

Selectively pursue acquisitions

We believe there are a select number of strategic acquisition opportunities. We regularly evaluate potential acquisition candidates that we believe could fit our
business strategy, any of which may or may not be material in size and scope. We intend to apply a selective and disciplined acquisition strategy, which is focused on diversifying our customer base,
adding manufacturing capabilities in low cost markets and further penetrating new geographic regions of the United States by leveraging our existing infrastructure. We continuously evaluate
acquisition opportunities as they present themselves. At this time, we have not entered into a material agreement with any party.

Focus on cash flow management and debt reduction

In the past, we have successfully pursued organic and external growth opportunities and increased profitability while maintaining working capital and capital
expenditure discipline. We are focused on generating cash and on pursuing opportunities to reduce the amount of working capital necessary to operate our business. We have historically used cash on
hand to pay for our assets, and we expect to make greater use of leasing arrangements to manage the timing and amount of our cash outflows on our capital spending in the future.

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Corporate History

The Indalex group of companies was first formed when Caradon plc, a U.K.-based conglomerate with an existing aluminum extrusion business, purchased
Easco Inc., an Ohio-based aluminum products manufacturer, in September 1999. The acquisition of Easco Inc. gave Caradon a total of 15 extrusion facilities and three casting
facilities in the United States. In May 2000, Caradon acquired the California aluminum extrusion businesses of Columbia Ventures Corporation, which provided Caradon with three extrusion facilities in
California and one additional cast house. Caradon was renamed Novar plc in November 2000. In March, 2005, Honeywell International Inc. acquired Novar plc (the "Honeywell
Acquisition") and announced its intention to sell the aluminum extrusion business. On February 2, 2006, Indalex, a wholly-owned direct subsidiary of Holdings, an entity controlled by affiliates
of Sun Capital Partners, Inc., acquired all of the outstanding capital stock of Indalex Inc. and Indalex Limited from Honeywell International Inc. (the "Holdings Acquisition")

Industry Overview

An alloy is a material made up of two or more metals. Aluminum alloy used for extrusion contains aluminum and small amounts of other elements which are added to
enhance the natural properties of aluminum with certain specific characteristics. The different types of aluminum alloy are characterized using a four-digit system. Aluminum alloy in the
1,000 series, which has no other elements, aluminum alloy in the 3,000 series, which is typically alloyed with manganese, and aluminum alloy in the 6,000 series, which is typically alloyed with
magnesium and silicon, are referred to as "soft alloy." Soft alloy is heat treatable and has a good strength to weight ratio and corrosion resistance. Aluminum alloy in the 2,000 and 7,000 series,
which is typically alloyed with copper and zinc, respectively, is referred to as "hard alloy." Hard alloy is heat treatable and has very high strength characteristics. Hard alloy aluminum extrusions
are commonly used in the aerospace industry. All of our extrusions are soft alloy extrusions and all references in this report to aluminum extrusions are to soft alloy aluminum extrusions only.

Unless
otherwise indicated, information contained in this report concerning the aluminum extrusion industry and its end-user markets and segments and our market position
within them are based on management estimates. These estimates are derived from publicly available information released by third-party sources, as well as data from our own internal research and
assumptions we have made based on that data and our knowledge of the aluminum extrusion industry and its end-user markets and segments, which we believe to be reasonable. References to the
"Aluminum Association" are to The Aluminum Association, an industry trade association for producers of primary aluminum, recyclers and producers of rolling, casting and extrusion products, as well as
suppliers, and references to data compiled by the Aluminum Association are to data included in the "Aluminum Statistical Review for 2006" report dated August 2007 and other data compiled by the
Aluminum Association. Our internal research and other sources have not been verified by any independent source, and we and the initial purchasers have not independently verified any third-party
information and cannot assure you of its accuracy or completeness. In addition, while we believe the market position information included herein is generally reliable, such information is inherently
imprecise. Estimates of historical growth rates in the markets in which we operate are not necessarily indicative of future growth rates in those markets. While we are not aware of any misstatements
regarding the industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed under the
"Item 1A. Risk Factors".

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China
and the United States and Canada are the second and third largest markets in the global aluminum extrusion industry, accounting for an estimated 48% of the global market.
Approximately 3.7 billion pounds of aluminum extrusions were produced in the United States and Canada in 2007. There is no reliable industry data for the Chinese market, but we believe that
approximately 5 billion
pounds of aluminum extrusions were produced in that market in 2007, and that it has experienced a faster growth rate than the U.S. and Canadian market in recent years.

Despite
recent consolidation, the U.S. and Canadian market remains fragmented, with approximately four to six large aluminum extruders shipping over 200 million pounds per year
and an estimated 120 to 150 small to mid-sized regional aluminum extruders shipping lesser amounts. Given the cost of freight, small to mid-sized competitors generally compete
for smaller volume orders with customers within their geographic reach. They do not benefit from scale advantages, and generally have a higher cost structure than larger competitors.

We
estimate the demand for aluminum extrusions in the United States and Canada fell by approximately 16% in 2007, measured by shipment volume. We believe that this reduction was caused
by general weakness in the economy, including the recent slowdown in residential construction activity.

In
2007, approximately 10% of the total aluminum extrusions, measured by shipment volume, sold in the United States and Canada were imported from China. While we expect this percentage
to grow over the long term, we believe there are several constraints that will limit the penetration of Chinese imports to the United States and Canada. First, savings in labor and manufacturing costs
must offset significant incremental freight and duty costs. Second, outsourcing to China is less cost effective in the production of low volume, customized extrusions. Third, certain types of aluminum
extrusions do not fit easily or at all into standard shipping containers, making it impractical to import them to the United States and Canada. In addition, as the Chinese yuan has increased in value
relative to the U.S. dollar, prices for goods imported from China have increased. While we believe that China will continue to be an opportunity to outsource certain of our products, we believe these
constraints will limit the threat of losing U.S. customers to Chinese extruders.

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Processes

We offer a broad range of services, including aluminum extrusion, fabrication, painting and anodizing. In 2007, approximately 94% of our products were customized,
made-to-order aluminum extrusions for use in a wide array of end-user markets.

The
figure below illustrates the aluminum extrusion process. Our operations are represented by the area surrounded by a dashed line.

GRAPHIC

Aluminum extrusion.Aluminum extrusion is the process of shaping aluminum into products or component
parts by heating it and forcing it to flow through a shaped die at the end of an extrusion press. In the aluminum extrusion process, an aluminum billet is first heated to approximately 900 degrees
Fahrenheit, placed into an extrusion press, and then forced, or extruded, through a uniquely shaped die to produce a piece of metal in the shape of the die. Most of the extrusions we produce for our
customers have their own steel die designed according to their specifications. We currently have approximately 45,000 dies for our customers. Extrusions are then straightened by stretching and cut to
the required lengths which range from a few inches to more than 50 feet. Most extrusions are hardened by aging in large ovens for approximately six to 12 hours where they are
re-heated to a temperature of approximately 400 degrees Fahrenheit. These extrusions are then packaged and shipped, or receive one or more of the other services we provide, such as
fabrication, painting or anodizing as specified by the customer. Typically, approximately 75% of the results of the aluminum extrusion process are salable products, and the remaining 25% are aluminum
scrap, which we either recast into aluminum billet in one of our two casting facilities or sell on the open market to metal dealers.

We
offer both custom and standard aluminum extrusions in a wide variety of shapes, including solid, semi-hollow and hollow designs. These shapes are offered as elongated
products or short parts

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cut
from lengthy longer extrusions, and can be produced with considerable precision and tight tolerances. If a customer needs a customized shape, we have the capability to engineer a die that will
meet the specified requirements, including parts that hinge, interlock or self-assemble.

We
refer to both custom and standard aluminum extrusions that have not received any of our value-added services as "mill finish" extrusions. Mill finish extrusions represented
approximately 59% of our shipment volume in 2006 and 63% of our shipment volume in 2007. Approximately 41% of our shipment volume in 2006 and 37% of our shipment volume in 2007 underwent an additional
fabrication, painting or anodizing process.

Fabricated components.Once the aluminum billet has been shaped through the extrusion process, it is
often fabricated to make the raw metal suitable for the end user. We use a variety of fabrication processes, including cutting, punching, notching, bending, drilling, tight tolerance cutting,
computerized numerical control, machining and manual and robotic welding and assembly to serve a customized need or fit a certain use. We have the fabrication knowledge and facilities to transform
extruded aluminum into precisely engineered components. Examples of fabricated products include a simple cut-to-length extrusion notched and punched for use as a door frame, a
step assembly for a truck cab, a curved and fully formed trim cap for use on an office partition and components used in heat sinks for use in key electronics. Our fabrication capabilities range from
assistance with concept design to the delivery of a finished, ready-to-assemble part. We believe our fabrication operations are attractive to customers interested in
outsourcing certain manufacturing in order to better control operating costs, manage inventory or accommodate growth. Approximately 11% of our shipment volume in 2006 and 12% of our volume in 2007
underwent a fabrication process.

Our
mill finish extrusions and fabricated components can then be either painted or anodized.

Paint services.We believe we are the leading painter of extruded aluminum in the United States and
Canada according to Aluminum Extruders Council data and management estimates. We have five wet paint lines and one powder coat line in our facilities in the United States and Canada. The majority of
our paint lines have multiple paint booths, providing quick throughput for multi-coat applications such as Kynar®, a high value-added wet paint used in commercial building and
construction applications. We have the ability to supply small batches of custom color or high volume runs on standard colors, using a wide variety of types of liquid paint from acrylic to polyester
to fluoropolymer finishers. Wet paint's primary advantage is its ability to be custom made to meet the specific color and durability requirements of specific projects. Approximately 28% of our
shipment volume in 2006 and 24% of our volume in 2007 was painted in one of our painting facilities.

We
have installed in our Gainesville, Georgia facility, what we believe to be one of the first vertical powder coat paint lines in the United States. Powder paint is more durable than
wet paint and will permit our door and window customers to offer longer warranties. In powder coating, a powdered paint is sprayed and bonded electrostatically. We have a purchase agreement with one
of the leading global paint and coating manufacturers to supply us with powder paint. We are jointly developing and co-branding a specially formulated high-performance powder
that requires only one coat compared to up to four coats for wet paints. Pursuant to the terms of our agreement, the supplier has co-invested in the powder paint line and their investment
will be repaid by the end of 2008.

Anodizing services.Anodizing is an electro-chemical process that converts aluminum surface into
aluminum oxide, a ceramic-like material. We offer a range of anodizing capabilities, including basic etching, architectural anodizing and Bright Dip, a type of anodizing which provides a
polished, mirrored finish in a variety of colors. We have three anodizing facilities in the United States and Canada, each with a range of capabilities. Approximately 7% of our shipment volume in 2006
and in 2007 underwent an anodizing process.

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End Users

Our aluminum extrusions are sold to a wide array of end-users that use aluminum products in the transportation, residential and commercial building
and construction, electric and cable, consumer durables and machinery and equipment industries.

|End-user markets Served               |  | Primary customers                                |  | Principal products                                                              
|------------------------------------- |  | ------------------------------------------------ |  | --------------------------------------------------------------------------------
|Transportation
(non-automotive)       |  | Manufacturers of vehicles and their suppliers    |  | Components used in truck trailers, trucks and recreational vehicles             
|Residential building and construction |  | Manufacturers, assemblers and contractors        |  | Components used in windows, doors, sunrooms and skylights                       
|Distribution channel                  |  | Distributors of aluminum extrusions              |  | Products sold in other end-user markets through distributors                    
|Electric and cable                    |  | Electrical equipment manufacturers and utilities |  | Components used in heat sinks, cable sheathing, electrical fixtures and conduit 
|Commercial building and construction  |  | Manufacturers, assemblers and contractors        |  | Components used in commercial windows, store fronts and railings                
|Consumer durables                     |  | Manufacturers and assemblers of finished goods   |  | Components used in office furniture, refrigerators and boats                    
|Machinery and equipment               |  | Manufacturers of machinery and equipment         |  | Components used in ladders, scaffolds and industrial equipment such as conveyors
|Automotive                            |  | Automotive suppliers                             |  | Components used in passenger cars and light trucks                              

Transportation (non-automotive).We provide components for truck trailers, truck bodies,
recreational vehicles, railcars, delivery vehicles, van conversions, emergency vehicles, military vehicles, livestock trailers and motor homes to manufacturers of vehicles and their suppliers. Our
principal focus is on truck trailer and recreational vehicle manufacturing, and we provide products to most major trailer and recreational vehicle manufacturers in the United States and Canada.
Aluminum extrusions sold to trailer and recreational vehicle manufacturers represented approximately 76% of our shipment volume within this end-user market in 2006 and 79% of our shipment
volume within this end-user market in 2007. These customers have multiple production locations and typically require their suppliers to have manufacturing capabilities in close proximity
to their location. We believe recent increases in steel and fuel prices have caused manufacturers to find ways to use aluminum as a cheaper and lighter substitute for steel. For example, by
substituting aluminum for steel, trailer manufacturers can increase the fuel efficiency of their trailers as increased aluminum content reduces the weight of a trailer, which in turn reduces fuel
costs. We believe that customers in the transportation and other end-user markets we serve will continue to find new ways to replace heavier, more expensive steel components with aluminum.
Our products sold to the transportation end-user market accounted for approximately 31% of our shipment volume in 2006 and 32% of our shipment volume in 2007, and 28% and 29% of our net
sales in 2006 and in 2007.

We
believe the recent increase in fuel prices may provide an additional incentive for our customers in the transportation end-user market to substitute aluminum for steel in
certain applications, which would result in an increase in the demand for aluminum extrusions.

Residential building and construction.We provide components for new and replacement windows, storm
door frames, storm shutters, railings, structural beams, patio enclosures, sunrooms, sky lights, tub

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enclosures,
hurricane security shelters, boat docks and other products for manufacturers, assemblers and contractors in the residential building and construction market. Components used in doors and
windows represented approximately 55% and 58% of our shipment volume within this end-user market in 2006 and in 2007. Residential construction represented the second largest
end-user market for aluminum extrusions in 2006 according to data compiled by the Aluminum Association and management estimates. Our products sold to the residential building and
construction end-user market accounted for approximately 28% of our shipment volume in 2006 and 27% of our shipment volume in 2007, and 30% and 28% of our net sales in 2006 and in 2007.

Commercial building and construction.We provide components for replacement windows, wall partitions,
door frames, balcony railings, structural beams, skylights, curtain wall and store fronts to manufacturers, assemblers and contractors for use in the construction of commercial buildings. Similar to
the residential building and construction end-user market, aluminum extrusion products for the commercial building and construction end-user market typically have higher than
average margins. Our products sold to the commercial building and construction end-user market accounted for approximately 7% of our shipment volume in 2006 and 8% of our shipment volume
in 2007, and 7% and 8% of our net sales in 2006 and in 2007.

Electric and cable.We provide components for heat sinks, cable sheathing, conduit, lighting fixtures
and electrical fixtures to electrical equipment manufacturers and utilities. We have been selling branded aluminum conduit, which is the metal pipe used to enclose electrical wire in compliance with
applicable fire code regulations, under the Indalex Rigid Aluminum Conduit private label, for approximately 25 years. Historically, aluminum conduit had not been price competitive with steel
conduit, but recent rises in steel costs and an understanding of the benefits of aluminum have increased acceptance of aluminum conduit in commercial markets because it provides superior corrosion
resistance and longer usable product life, and its material costs are up to approximately 20% to 50% less expensive than rigid steel. In addition, due to aluminum's lighter weight and ease of
handling, the cost of installation labor is up to 35% less expensive than rigid steel. Cable sheathing is used as the protective cover for underground cable systems and has very little substitution
risk because it is thin walled and flexible, which facilitates installation. The inherent advantages of aluminum, such as its weight to strength ratio and its corrosion resistance, are additional
factors reducing aluminum's substitution risk in cable sheathing. Our products sold to the electrical and cable end-user market accounted for approximately 7% of our shipment volume in
2006 and in 2007, and 7% and 8% of our net sales in 2006 and in 2007.

Consumer durables.We typically provide components for office furniture and partitions,
refrigerators, boats, healthcare equipment and sporting and athletic goods to manufacturers and assemblers of consumer goods. These customers are increasingly using aluminum to give their products a
decorative appearance while improving resistance to corrosion and mechanical wear. The aluminum content in each of these products tends to be low, and customers are typically less concerned with price
and more
concerned with on-time delivery. We serve a majority of these customers through our Indalex Direct program, which focuses on customers that purchase low volumes of extrusions and place
more emphasis on quality and on-time delivery than on price sensitivity. Our products sold to the consumer durables end-user market accounted for approximately 6% of our
shipment volume in 2006 and in 2007, and 5% of our net sales in 2006 and in 2007.

Machinery and equipment.We provide components for ladders, scaffolds and industrial equipment such
as conveyors to manufacturers of machinery and equipment. There is a significant amount of fabrication work required for these products, and, as a result, there is typically a long development process
to design the extrusion to be used in manufacturing machinery and equipment. Our engineering team works with the customer to develop product design and specifications. Our products sold to the

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machinery
and equipment end-user market accounted for approximately 5% of our shipment volume in 2006 and in 2007, and 5% of our net sales in 2006 and in 2007.

Automotive.We provide components to suppliers who produce component systems for automobile and light
truck manufacturers. While the automotive market is not a primary focus for Indalex, we selectively pursue niche automotive applications where we can provide higher margin value-added services.
Aluminum extrusions sold to automotive manufacturers and suppliers represented approximately 2% of our shipment volume in 2006 and in 2007, and 2% of our net sales in 2006 and in 2007.

Distribution.We also ship products through distributors, who in turn sell those products to end
users. These products are both standard aluminum extrusions such as rod, bar, angles, channels and tubes and custom aluminum extrusions. The distributors of standard aluminum extrusions typically sell
to small end users, who may buy as little as 50 pounds at a time, providing a valuable stock carrying service. The distributors of custom aluminum extrusions provide aggregating services such as short
lead times, credit or, in some cases, value-added services such as painting or fabricating. Our products sold through distributors accounted for approximately 14% of our shipment volume in 2006 and
13% of our shipment volume in 2007, and 13% of our net sales in 2006 and 12% of our net sales in 2007.

Customers

We serve over 3,700 customers, including a broad spectrum of national, regional and local accounts. Our largest customer represented approximately 6% of our net
sales in 2006 and 7% of our net sales in 2007, and our top 10 customers represented 29% of our net sales in 2006 and 29% of our net sales in 2007.

We
focus our efforts on customer service and product innovation, which we believe have helped us to establish and maintain long-standing relationships across various
end-user markets. We develop our relationships with customers by offering them a network of manufacturing facilities in the United States and Canada, developing customized products and
solutions and focusing our sales efforts at the customer level. We have specific dies, paint colors and other custom features for the production of highly specialized products for many of our
customers. We work with our customers to understand their needs, and we often retool our facilities to provide a customized set of solutions. Our top ten customers in 2007 have been purchasing our
products for an average of more than 20 years. We sell standard aluminum extrusions through distributors for use in a wide variety of end-user markets.

Due
to the high volume of made-to-order business our stocking requirements to support order fulfillment are minimal. The customer's right to return relates to
production defects or variances from specification that are to be reported within 30 days of shipment. Standard payment terms are also 30 days from shipment.

Raw Materials

Aluminum

Our principal raw material is aluminum billet purchased on the open market or supplied by one of our two casting facilities, which use aluminum scrap and ingot to
produce billet. Aluminum is a commodity and, as such, has a value based upon a variety of market driven factors. The price of aluminum ingot is primarily set by supply and demand on the London Metal
Exchange, or the "LME." Like many exchange-traded commodities, the price is subject to periodic fluctuation in the short-term, often due to the actions of commodity market speculators.
Aluminum billet and ingot represented $763.9 million or 66% of our cost of sales in 2006 and $709.7 million or 68% of our cost of sales in 2007. Aluminum scrap is generated in our
extrusion operations and is used, together with purchases of aluminum ingot from third parties, in our casting facilities to manufacture aluminum billets.

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We
have aluminum billet casting capability at two casting facilities. In 2006, we sold approximately 10%, or 19 million pounds, of our manufactured billet to third party
customers, which represented approximately 1% of our net sales in 2006. In 2007, we sold less than 1%, or about 1 million pounds, of our manufactured billet to third party customers, which
represented less than 1% of our net sales in 2007. The first step in the casting process is to melt primary aluminum ingot and aluminum scrap in a large furnace. Molten aluminum must be at least 10%
to 15% aluminum ingot with approximately 80% to 90% aluminum scrap to meet the purity requirement for 6000 series soft alloy aluminum. The molten aluminum is either directly alloyed in the furnace or
transferred to another furnace where the alloying materials are added. The aluminum is then cast into logs of varying diameters with lengths of up to 16 feet. These logs are heated and then cooled at
a controlled rate to allow the cast aluminum to achieve the optimally distributed chemical composition for extrusion. Afterwards, the aluminum logs are either cut into shorter lengths called aluminum
billets, the primary raw material for the production of aluminum extrusions, or transferred to our extrusion plant in log form for subsequent production of aluminum extrusions as well as to third
party customers. Our in-house billet casting capabilities supplied us with approximately 21% of our aluminum billet needs in 2006 and 28% of our aluminum billet needs in 2007.

We
seek to reduce our exposure to the volatility in base aluminum prices by passing cost increases through to customers or by hedging against committed fixed price sales. We limit our
hedging activities to committed purchases and sales and do not engage in speculative hedging. We also seek to maintain inventory at levels consistent with operating needs through centralized
purchasing and logistics.

Electricity and Natural Gas

We use electricity and natural gas to heat aluminum billets as part of the extrusion process. We also use electricity and natural gas at our casting facilities to
produce aluminum billets. We purchase natural gas used for heating during the extrusion process from a third party using 36-month forward purchase contracts that we enter into on a monthly
basis. We purchase a portion of our electricity requirements pursuant to long term contracts in the regions in which we operate. A number of our facilities are located in regions with regulated
prices. We spent approximately $31.2 million on electricity and natural gas in 2006, which represented approximately 2.7% of our cost of sales for that year, and $29.1 million in 2007,
which represented 2.8% of our cost of sales for that period.

Paint

We purchase paint for use in our painting operation in four of our facilities. Paint is currently purchased in liquid or powder form and applied by spraying in
large vertical paint booths. We spent approximately $12.8 million on paint in 2006, which represented approximately 1% of our cost of sales for that year, and approximately $11.9 million
in 2007, which represented approximately 1% of our cost of sales for that period.

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Principal Suppliers

Our principal raw material, aluminum billet, is a global commodity and is widely available. There are a large number of global, large scale aluminum billet
suppliers for the extrusion industry. We purchase our aluminum billet from approximately 19 different suppliers around the world, including suppliers in the United States, Canada, South America and
the Middle East, including Bahrain. Approximately 80% of our aluminum billet that we purchased from third parties was purchased in the United States and Canada in 2007. We purchased approximately 20%
of our aluminum billet requirements that we purchased from third parties from South America and the Middle East in 2007. We purchased 78% of our annual aluminum billet requirements from five suppliers
in 2007. Our largest billet supplier is Alcoa Inc. which represented 21% of our aluminum billet supply in 2007. We purchased approximately 510 million pounds of aluminum billet from
third parties in 2007, which permits us to maintain numerous strategic sourcing arrangements and capitalize on regional price and supply imbalances and source low cost aluminum billet without
sacrificing quality. Furthermore, our internal casting capabilities, which provide low cost billet by converting production scrap generated through the extrusion process, provided 28% of our total
aluminum billet supply in 2007. The casting facilities provide greater certainty of supply during periods of aluminum billet shortages.

Our
largest supplier of liquid paint, PPG Industries, provides us with the majority of our paint requirements. Our contract with PPG Industries expires in 2008. We purchase paint from
five other suppliers, and since liquid paint is largely a commodity, we can shift our purchases among suppliers.

Asia Aluminum Group

Prior to May 15, 2007, we owned a 25.01% ownership interest in Asia Aluminum Group Limited, or "AAG," by virtue of an investment decision by a prior owner.
Our principal investment partner, Asia Aluminum Holdings Limited, or "AAH," was founded in 1992 and was a publicly traded company listed on the Main Board of The Stock Exchange of Hong Kong, until it
was privatized in 2006.

On
May 15, 2007 we sold our investment in AAG to OK Spring Roll Limited Partnership, an investment vehicle in association with ORIX Corporation. We received $151.2 million
in cash, net of transaction costs, plus an additional $2.0 million of special dividends. We used the proceeds from the sale of our
investment in AAG in accordance with the terms of the indenture governing our 111/2% second priority senior secured notes ("The notes") to repurchase $71.9 million aggregate
principal amount of the notes, and distributed $76.6 million to our stockholders.

We
have a non-exclusive long-term supply arrangement with AAG to import aluminum extrusions. Purchases under this agreement are done by purchase order. This
non-exclusive supply agreement with AAG provides for arms-length pricing, which is based on the prevailing three month forward price quoted on the LME at the time our order is
confirmed plus a processing fee based on the complexity of the extrusion products. The agreement does not require us to purchase any specified quantity and does not require AAG to supply any specified
quantity. We used AAG for approximately 93% and 78% of our total import volume in 2006 and for 2007, respectively. Our orders represented approximately 5% of AAG's sales for its fiscal year ended
June 30, 2007. See our combined financial statements and the related notes included elsewhere in this report.

Pricing and Hedging

We offer our customers four basic pricing alternatives. On approximately 90% of our shipment volume, we either pass on the cost of base aluminum directly to our
customers or specifically hedge the

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cost
of base aluminum that is charged to our customers. Our four pricing mechanisms and our estimates of the percentage of our shipment volume attributable to each are as follows:



Sales and Marketing

Traditionally, sales personnel worked at each manufacturing facility and were responsible only for the production of aluminum extrusions at their respective
facilities. In 2002, we shifted our efforts from selling plant capacity to selling customer solutions by centralizing our sales effort and assigning sales personnel to a specific customer.

In
2004, we further refined our sales effort by segmenting the sales personnel by customer type as well as by service. We created a structure with three customer groups: National,
Regional and Indalex Direct. This sales structure keeps the sales force focused on customers based on how those customers purchase from us.

Our
sales force divisions are responsible for the three customer groups as follows:



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To
further develop our relationship with customers, we launched our Products Team in 2004. The Products Team is a group of field-based experts focusing on the fabrication, painting and
anodizing businesses which report to each of the sales force groups.

Competition

Our competitors in the United States and Canadian market include SAPA AB, Norsk Hydro ASA, Kaiser Aluminum Corporation and Tredegar Corporation. We also compete
with approximately 120 to 150 small to mid-sized regional operators. The North American aluminum extruding industry is highly competitive, with pressure coming from international producers
looking to grow their North American capabilities. Despite some recent consolidation, the aluminum extrusion industry remains fragmented, with a handful of major competitors and many smaller, regional
and local operators. We have historically competed against fully integrated aluminum providers as well as other independent aluminum extruders.

We
compete on the basis of product quality, on-time delivery performance and price, with price representing a more important factor for our larger customers and for sales of
standard aluminum extrusions. Smaller OEM customers tend to be more concerned with on-time delivery, whereas larger customers that order large volume shipments tend to be more price
sensitive.

In
2007, approximately 10% of the total aluminum extrusions sold in the United States and Canada were imported from China, up from less than 1% in 2000. While we expect this percentage
to grow over the long term, we believe there are several constraints that will limit the penetration of Chinese imports to the United States and Canada. First, savings in labor and manufacturing costs
must offset significant incremental freight and duty costs. Second, outsourcing to China is less cost effective in the production of low volume, customized extrusions. Third, certain types of aluminum
extrusions do not fit easily or at all into standard shipping containers. While we believe that China will continue to be an opportunity to outsource certain products, we believe these constraints
will limit the threat of losing U.S. customers to Chinese suppliers.

Employees

As of December 31, 2007, we had approximately 2,700 employees, approximately 1,660, or 61%, of whom were covered under union contracts. Our facilities are
covered by 12 union agreements, with no one agreement covering more than 10% of our overall work force. The contracts covering our Mississauga, Ontario; Calgary, Alberta; Vancouver, British Columbia;
Niles, Ohio; and Burlington, North Carolina facilities were all successfully renegotiated during 2007. Three more contracts will expire in 2008, including expirations of our contracts covering our
Connersville, Indiana plant which will expire on June 1, 2008; our North York, Ontario casting facility which will expire on November 30, 2008; and our Montreal, Quebec plant which will
expire on December 21, 2008. We have historically

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maintained
satisfactory relations with all of our unions. We have experienced four work stoppages in the last ten years, including a one week stoppage at our Mountaintop, Pennsylvania facility in
2006, and prior to that, a one-week work stoppage in Mississauga, Ontario in 2003. We are currently in negotiations with a union representing certain office employees at our Montreal,
Quebec facility.

Backlog

We have a backlog of orders, which during the summer months is typically equal to more than our average monthly shipment volume during that period. The backlog
allows us to effectively plan our production shifts and to transfer business around our network of facilities. Our backlog is generally lower in the winter months but generally does not fall below 60%
of our monthly shipments during that
period. As of December 31, 2007, our backlog had a value of approximately $78 million, all of which is expected to ship during 2008. As of December 31, 2006, our backlog had a
value of approximately $77.0 million.

Environmental Matters

We are subject to extensive and evolving environmental laws, regulations and rules that have been enacted in response to technological advances and increased
concern over environmental issues. These regulations are administered by the U.S. Environmental Protection Agency, or the "EPA," and other federal, state and local environmental, transportation and
health and safety agencies. We believe that over time there will continue to be increased legislation, regulation and regulatory enforcement actions.

In
order to operate our business, we must obtain and maintain one or more permits for each of our facilities and comply with complex regulations and rules governing air emissions, waste
water discharges, the use, storage, treatment and disposal of solid and hazardous wastes and other items which might affect environmental quality. As a result, we are, from time to time, required to
make expenditures for pollution control equipment and for other purposes related to our permits and compliance. From time to time we are subject to enforcement actions or penalties for failing to
comply with environmental regulations. For example, we paid an $80,000 penalty to the EPA in January 2005 to settle allegations that our facility in Modesto, California had failed to accurately report
certain chemicals handled at that facility.

We
are responsible for the cleanup of a formerly owned property where a release of hazardous substances occurred. There is the possibility of a claim for natural resources damages at the
site and it is likely that we will have an obligation to pay compensation for that damage if the claim is asserted. The amount of natural resource damages to be paid would be determined by a formula.
Based on the application of that formula, we estimate the total liability ranges from $0.5 million to $1.9 million. We believe that the ultimate liability will be in the lower limits of
the range. Also, an additional $0.1 million has been reserved to cover the costs of further groundwater monitoring at this site. We have recorded a reserve of $0.6 million for this site.

Among
the laws that may affect us are the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, or "CERCLA," and analogous state laws that, in certain
circumstances, may impose joint and several liability, without regard to fault, on persons who own or operate locations where there has been, or is threatened to be, a release of hazardous substances
into the environment, as well as on persons who disposed of or arranged for the disposal of such substances at such locations. These persons may become liable for the costs of investigating and
remediating contamination at these locations. There are often also substantial legal and administrative expenses incurred in dealing with remediation claims and activities. Hazardous substances have
been detected at some of our current and former properties, as well as at sites to which we have sent wastes for disposal. As part of our environmental management program, we are currently involved in
investigatory or remedial actions at certain of these properties. We have been identified as potentially responsible

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party
under CERCLA with respect to approximately nineteen offsite locations to which we sent waste materials for disposal in the past. For those sites where we are judged likely to share
responsibility for cleanup and other costs, we have reserved a total of $0.5 million.

We
have installed groundwater-monitoring wells in one of our California facilities, and we perform semi-annual monitoring of those wells. Results to date indicate that a few
constituents of materials used in our processes are present in groundwater slightly above the selected screening criteria. However, this condition is very localized (within the boundaries of our
property), and the source of those constituents has been eliminated. In conjunction with the Regional Water Quality Control Board, we have agreed to continue to monitor the groundwater. Based on the
results to date, no remediation is indicated. We have established a reserve of $0.1 million within a range of costs of $30,000 to $350,000 for this site.

We
cannot predict what environmental legislation or regulations will be enacted in the future, how existing and future laws or regulations will be administered or interpreted, or what
environmental conditions may be found to exist. Enactment of more stringent laws or regulations or more strict interpretation of existing laws and regulations could require additional expenditures by
us, some of which could be material. We are not a party to any judicial or administrative proceedings relating to environmental issues.

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ITEM 1A. RISK FACTORS

Risk Factors Related to the Notes

Our substantial amount of indebtedness may adversely affect our cash flow and our ability to operate our business, remain in compliance with debt covenants and make payments on
our indebtedness, including the notes.

We
are a highly leveraged company, and our substantial level of indebtedness increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of our
indebtedness, including the notes. The aggregate amount of our outstanding indebtedness was $268.9 million as of December 31, 2007. Our substantial indebtedness, combined with our other
financial obligations and contractual commitments could have other important consequences to holders of the notes. For example, it could:



Any
of the above listed factors could materially adversely affect our business, cash flows, financial condition and results of operations.

To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control, and any failure to meet our
debt service obligations could harm our business, financial condition and results of operations.

We
may not generate sufficient cash to satisfy our debt service obligation. Our ability to make payments on and to refinance our indebtedness, including our revolving credit facility and
the notes, and to fund our operations, working capital, capital expenditures and acquisitions will principally depend upon our ability to generate cash flow from operations in the future. To a certain
extent, our cash flow is subject to general economic, industry, financial, competitive, operating, legislative, regulatory and other factors, many of which are beyond our control. In addition, all of
our indebtedness under our revolving credit facility bears interest at floating rates, and therefore if interest rates increase, our debt service requirements will also increase.

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If
we do not generate sufficient cash flow from operations or if future borrowings under our revolving credit facility or from other sources are not available to us in an amount
sufficient to satisfy our debt service obligations, including payments on the notes, or to fund our other liquidity needs, we may have to take actions, such as refinancing or restructuring our
indebtedness, including the notes, selling assets, reducing or delaying capital expenditures and acquisitions or seeking to raise additional capital, any of which could have a material adverse effect
on our operations. Additionally, we cannot assure you that
we will be able to effect any of these actions, if necessary, on commercially reasonable terms, or at all. Our ability to restructure or refinance our indebtedness, including our revolving credit
facility and the notes, will depend on the condition of the capital markets and our financial condition at such time.

Any
refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of
existing or future debt instruments, including the credit agreement governing our revolving credit facility and the indenture governing the notes, may limit or prevent us from taking any of these
actions. In addition, any failure to make scheduled payments of interest and principal on our outstanding indebtedness would likely result in a reduction of our credit rating, which could harm our
ability to incur additional indebtedness on commercially reasonable terms or at all. Our inability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance or
restructure our obligations on commercially reasonable terms or at all, would have an adverse effect, which could be material, on our business, financial condition and results of operations, as well
as on our ability to satisfy our obligations in respect of the notes or the revolving credit facility.

Despite our substantial indebtedness, we may still incur significantly more debt, which could further exacerbate the risks described above.

Although
covenants under the credit agreement governing our revolving credit facility and the indenture governing the notes limit our ability and the ability of our present and future
subsidiaries to incur additional indebtedness, the terms of the credit agreement and the indenture permit us to incur significant additional indebtedness, including unused availability under our
revolving credit facility, which could further exacerbate the risk that we may be unable to meet our debt service obligations. As of December 31, 2007, we had $52.3 million available for
additional borrowing under our revolving credit facility (after giving effect to $67.5 million of borrowings and $9.2 million of outstanding undrawn letters of credit), all of which was
first-priority secured, and therefore, effectively senior to the notes. In addition, neither the credit agreement nor the indenture prevent us from incurring obligations that do not constitute
indebtedness as defined in those documents. To the extent that we incur additional indebtedness or such other obligations, the risks associated with our substantial indebtedness described above,
including our possible inability to service our debt, would increase.

Indalex Holding Corp. is a holding company, and therefore its ability to repay its indebtedness, including the notes, is dependent on cash flow generated by its subsidiaries
and their ability to make distributions to Indalex Holding Corp.

In
the event that Indalex Holding Corp. does not receive distributions from our subsidiaries, or to the extent that the earnings from, or other available assets of, its subsidiaries are
insufficient, it may be unable to make required principal and interest payments on our indebtedness, including the notes. Indalex Holding Corp. is a holding company with no significant operations or
material assets other than the capital stock of its subsidiaries. As a result, its ability to repay its indebtedness, including the notes, is dependent on the generation of cash flow by our
subsidiaries and their ability to make such cash available to Indalex Holding Corp., by dividend, debt repayment or otherwise. Unless they are
guarantors of the notes, its subsidiaries do not have any obligation to pay amounts due on the notes or to make funds available for that purpose.

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Further,
while Holdings and each of our domestic subsidiaries unconditionally guarantee the notes and the guarantees are secured on a second-priority basis by substantially all of the
guarantors' assets, such guarantees and the related security interests could be rendered unenforceable for the reasons described below. In the event that such guarantees and security interests were
rendered unenforceable, the holders of the notes would lose their direct claim against the entities holding substantially all of our operating assets.

In
addition, our subsidiaries may not be able to, or be permitted to, make distributions to enable us to make payments in respect of our indebtedness, including the notes. Each of our
subsidiaries is a distinct legal entity and, under certain circumstances, legal and contractual restrictions, as well as the financial condition and operating requirements of our subsidiaries, may
limit our ability to obtain cash from our subsidiaries. While the indenture governing the notes limits the ability of our subsidiaries to incur consensual restrictions on their ability to pay
dividends or make other intercompany payments to us, these limitations are subject to certain qualifications and exceptions. For example, under the indenture governing the notes, Indalex Holding
Corp.'s foreign subsidiaries are permitted to incur indebtedness in an aggregate amount not to exceed $15 million and the terms of such indebtedness may include, among other things,
restrictions on their ability to make distributions to their parent entities and Indalex Holding Corp.'s foreign subsidiaries are permitted to incur purchase money indebtedness, subject to the limits
described under "Description of the Notes," that limits their ability to transfer the assets being financed.

In
addition, Holdings also guarantees the notes. However, Holdings is also a holding company whose entire operating income and cash flow is derived from Indalex Holding Corp. and whose
only material asset is the capital stock of Indalex Holding Corp. Therefore, you should not place undue reliance on Holdings' guarantee in evaluating whether to invest in the notes.

There may not be sufficient collateral to pay all or any of the notes.

In
the event of a foreclosure, liquidation, bankruptcy or similar proceeding, the proceeds from any sale or liquidation of the collateral may be insufficient to pay our obligations under
the notes, in full or at all, after first satisfying our obligations in full under the first-priority lien obligations and any other obligations secured by a first-priority lien on the collateral.
Indebtedness under the U.S. portion of our revolving credit facility, guarantees by the guarantors of the notes of the indebtedness under the Canadian revolving credit sub-facility and
obligations in respect of hedging obligations or certain cash management services are secured by (i) a first-priority lien on substantially all of the assets
directly owned by Indalex Holding Corp. and each guarantor and (ii) a first-priority pledge of 100% of the capital stock of Indalex Holding Corp. and Indalex Holding Corp.'s domestic
subsidiaries and of 65% of the capital stock of Indalex Holding Corp.'s foreign subsidiaries directly owned by Indalex Holding Corp. or any of its domestic subsidiaries. In addition, indebtedness
under the Canadian revolving credit sub-facility is secured by substantially all of the assets of Indalex Holding Corp., each guarantor of the notes and certain foreign subsidiaries of
Indalex Holding Corp. and by a first-priority pledge of 100% of the capital stock of Indalex Holding Corp., each guarantor of the notes and all foreign subsidiaries of Indalex Holding Corp. The notes
are secured by a second-priority lien on the assets directly owned by Indalex Holding Corp. and each guarantor to the extent such assets secure the borrowings under our revolving credit facility and a
second-priority pledge of 100% of Indalex Holding Corp.'s and its domestic subsidiaries' capital stock and 65% of the capital stock of our foreign subsidiaries directly owned by Indalex Holding Corp.
or any domestic subsidiary (in each case, subject to certain limitations). In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding against us or any existing or
future domestic subsidiary, the assets and capital stock that are pledged as shared collateral securing the first-priority lien obligations and the notes must be used first to pay the applicable
first-priority lien obligations in full before making any payments on the notes.

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As
of December 31, 2007, Indalex Holding Corp.'s senior indebtedness was $268.9 million, all of which was secured. Of the $268.9 million in secured indebtedness,
$5.2 million were capital lease obligations, and $67.5 million were first-priority lien obligations and, therefore, effectively senior in right of payment to the notes. In addition, the
credit agreement governing our revolving credit facility and the indenture governing the notes allow us to incur a significant amount of additional first-priority lien obligations, including the
remaining availability of our revolving credit facility, and additional second-priority secured indebtedness in an amount that may be significant. Any additional indebtedness or obligations secured by
a lien on the collateral securing the notes (whether senior to or equal with the second-priority lien of the notes) will adversely affect the relative position of the holders of the notes with respect
to the collateral securing the notes.

The
assets owned by our foreign subsidiaries are not part of the initial collateral securing the notes but certain of such assets do, as of the closing date, secure the Canadian
Borrower's borrowings under the Canadian revolving credit sub-facility. As of December 31, 2007, our foreign subsidiaries had $170.4 million of total assets and
$110.0 million of total indebtedness and other liabilities, including trade payables. Our foreign subsidiaries are permitted to incur substantial indebtedness in compliance with the covenants
under our revolving credit facility and the indenture governing the notes. Although the notes are secured by a second-priority pledge of 65% of the capital stock of Indalex Holding Corp.'s foreign
subsidiaries directly owned by Indalex Holding Corp. or any of its domestic subsidiaries, in the event of a liquidation, bankruptcy or similar proceeding, the holders of notes would not receive any
amounts with respect to the notes from the assets of such foreign subsidiary until after the payment in full of such foreign subsidiaries' creditors, including preferred stockholders, and the lenders
under our revolving credit facility. With respect to those assets that are not part of the collateral securing the notes but which secure other obligations, the notes are effectively junior to these
obligations to the extent of the value of such assets. There is no requirement that the holders of the first-priority lien
obligations first look to these excluded assets before foreclosing, selling, or otherwise acting upon the collateral shared with the notes.

The
value of the collateral at any time will depend on market and other economic conditions, including the availability of suitable buyers for the collateral. By their nature, some or
all of the pledged assets may be illiquid and may have no readily ascertainable market value. The value of the assets pledged as collateral for the notes could be impaired in the future as a result of
changing economic conditions, our failure to implement our business strategy, competition and other future trends. Accordingly, there may not be sufficient collateral to pay all or any of the amounts
due on the notes. Any claim for the difference between the amount, if any, realized by holders of the notes from the sale of the collateral securing the notes and the obligations under the notes will
rank equally in right of payment with all of our other unsecured unsubordinated indebtedness and other obligations, including trade payables.

Holders of notes will not control decisions regarding collateral.

The holders of the first-priority lien obligations control substantially all matters related to the collateral securing the first-priority lien obligations and
the notes. To the extent shared collateral is released from securing the first-priority lien obligations, the second-priority liens securing the notes will also automatically be released. JPMorgan
Chase Bank, N.A., the intercreditor agent under the intercreditor agreement and the collateral agent under the first-lien security agreements, is one of the principal lenders under our
revolving credit facility. The holders of the first-priority lien obligations may cause the collateral agent to dispose of, release or foreclose on, or take other actions with respect to the shared
collateral with which holders of the notes may disagree or that may be contrary to the interests of holders of the notes. In addition, the security documents generally provide that, so long as the
first-priority lien obligations are in effect, the holders of the first-priority lien obligations may change, waive, modify or vary the security documents without the consent of the holders of the
notes,

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provided
that any such change, waiver or modification does not materially adversely affect the rights of the holders of the notes and not the other secured creditors in a like or similar manner.

Furthermore,
the security documents generally allow us and our subsidiaries to remain in possession of, retain exclusive control over, to freely operate, and to collect, invest and
dispose of any income from, the collateral securing the notes. In addition, to the extent we sell any assets that constitute collateral, the proceeds from such sale will be subject to the
second-priority lien securing the notes only to the extent such proceeds would otherwise constitute "collateral" securing the notes under the security documents. To the extent the proceeds from any
such sale of collateral do not constitute "collateral" under the security documents, the pool of assets securing the notes would be reduced and the notes would not be secured by such proceeds. In
addition, if we sell any of our domestic assets which constitute collateral securing the notes and, with the proceeds from such sale, purchase assets which would not constitute collateral, the holders
of the notes would not receive a security interest in such assets purchased.

The capital stock securing the notes will automatically be released from the second-priority lien and no longer be deemed to be collateral to the extent the pledge of such
capital stock would require the filing with the SEC of separate financial statements for the Issuer or any of its subsidiaries.

Rule 3-16
of Regulation S-X promulgated by the SEC requires financial statements of an entity to be provided if the capital stock or other
securities of such entity constitute collateral for a class of registered securities and if the greatest of the par value, book value or market value of such capital stock or securities equals 20% or
more of the principal amount of the secured class of securities. As a result, the indenture governing the notes and the security documents provide that, to the extent that separate financial
statements of Indalex Holding Corp. or any of its subsidiaries would be required by the rules of the SEC (or any other governmental agency) due to the fact that Indalex Holding Corp.'s or such
subsidiary's capital stock or other securities secure the notes, then such capital stock or other securities will automatically be deemed not to be part of the collateral securing the notes to the
extent necessary to not be subject to such requirement. In such event, the security documents may be amended, without the consent of any holder of notes, to the extent necessary to release the
second-priority liens on such capital stock or securities. The book value and market value of the capital stock of Indalex Inc. and the market value of the capital stock of Indalex Holding
Corp. currently exceed 20% of the aggregate principal amount of the notes. As a result, the pledge of the capital stock and other securities of these entities with respect to the notes is limited such
that the percentage of the capital stock of each such entity that is pledged has a value of less than 20% of the aggregate principal amount of the notes. As of December 31, 2007 the net book
value of the capital stock securing the notes was $58.4 million and the book value of all other property and assets securing the notes was $231.6 million.

Rights of holders of notes in the collateral may be adversely affected by bankruptcy proceedings.

The
right of the collateral agent to repossess and dispose of the collateral securing the notes upon acceleration is likely to be significantly impaired by federal bankruptcy law if
bankruptcy proceedings are commenced by or against us prior to or possibly even after the collateral agent has repossessed and disposed of the collateral. Consequently, rights of holders of notes in
the collateral may be adversely affected by bankruptcy proceedings. Under the U.S. Bankruptcy Code, a secured creditor, such as the collateral agent, is prohibited from repossessing its security from
a debtor in a bankruptcy case, or from disposing of security repossessed from a debtor, without bankruptcy court approval.

Moreover,
bankruptcy law permits the debtor to continue to retain and to use collateral, and the proceeds, products, rents or profits of the collateral, even though the debtor is in
default under the applicable debt instruments, provided that the secured creditor is given "adequate protection." The meaning of the term "adequate protection" may vary according to circumstances, but
it is intended in general to protect the value of the secured creditor's interest in the collateral and may include cash

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payments
or the granting of additional security, if and at such time as the court in its discretion determines, for any diminution in the value of the collateral as a result of the stay of
repossession or disposition or any use of the collateral by the debtor during the pendency of the bankruptcy case. In view of the broad discretionary powers of a bankruptcy court, it is impossible to
predict how long payments under the notes could be delayed following commencement of a bankruptcy case, whether or when the collateral agent would repossess or dispose of the collateral, or whether or
to what extent holders of the notes would be compensated for any delay in payment of loss of value of the collateral through the requirements of "adequate protection." Furthermore, in the event the
bankruptcy court determines that the value of the collateral is not sufficient to repay all amounts due on the notes, the holders of the notes would have "undersecured claims" as to the difference.
Federal bankruptcy laws do not permit the payment or accrual of interest, costs and attorneys' fees for "undersecured claims" during the debtors bankruptcy case.

Rights of holders of notes in the collateral may be adversely affected by the failure to perfect security interests in certain collateral acquired in the
future.

The
security interest in the collateral securing the notes includes domestic assets, both tangible and intangible, whether now owned or acquired or arising in the future. The failure to
perfect the security interest in after-acquired collateral may result in the loss of the security interest therein or the priority of the security interest in favor of the notes against third parties.
Applicable law requires that certain property and rights acquired after the grant of a general security interest can only be perfected at the time such property and rights are acquired and identified.
The trustee or the collateral agent may fail to monitor our future acquisition of property and rights that constitute collateral, and the necessary action may not be taken to properly perfect the
security interest in such after-acquired collateral.

Restrictive covenants in the credit agreement governing our revolving credit facility and the indenture governing the notes may limit our current and future operations,
particularly our ability to respond to changes in our business or to pursue our business strategies.

Our
credit agreement governing the revolving credit facility and the indenture governing the notes contain, and any future indebtedness of ours may contain, a number of restrictive
covenants that impose significant operating and financial restrictions, including restrictions on our ability to take actions that we believe may be in our interest. Our credit agreement and the
indenture, among other things, limit our ability to:



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Also,
the credit agreement governing our revolving credit facility requires us to maintain compliance with a fixed charge coverage ratio if either an average borrowing availability over
a three-calendar-month period (or twelve-calendar-week period, as the case may be) or actual borrowing availability for four consecutive business days falls below $25.0 million. Our
ability to comply with this ratio may be affected by events beyond our control, and we cannot assure you that we will meet this ratio.

The
restrictions contained in the credit agreement governing the revolving credit facility and in the indenture governing the notes could adversely affect our ability to:



A breach of the restrictive covenants in the credit agreement governing our revolving credit facility or the indenture governing the notes, or our inability to comply with the
fixed charge coverage ratio in the credit agreement, would have adverse consequences to you as a holder of the notes.

A
breach of any of the restrictive covenants or our inability to comply with the fixed charge ratio if either an average borrowing availability over a three-calendar-month period (or
twelve-calendar-week period, as the case may be) or actual borrowing availability for four consecutive business days falls below $25.0 million could result in an event of default
under the credit agreement governing the revolving credit facility. If an event of default occurs that is not cured or waived, the lenders under the revolving credit facility may elect to declare all
outstanding borrowings, together with accrued interest and other fees, to be immediately due and payable, which would result in an event of default under the indenture governing the notes and could
result in a cross default under any of our other material debt agreements.

If,
when required, we are unable to repay or refinance our indebtedness under, or amend the covenants contained in, the credit agreement governing the revolving credit facility, or if a
default otherwise occurs that is not cured or waived, the lenders under the revolving credit facility could elect to terminate their commitments thereunder, cease making further loans, declare all
borrowings outstanding, together with accrued interest and other fees, to be immediately due and payable or institute foreclosure proceedings against those assets that secure the borrowings under the
revolving credit facility. Any such actions could force us into bankruptcy or liquidation, and we cannot provide any assurance that we could repay our obligations under the notes in such an event.

Not all of our subsidiaries are guarantors and therefore the notes are structurally subordinated in right of payment to the indebtedness and other liabilities of our existing
and future subsidiaries that do not guarantee the notes.

The
guarantors include only Holdings and our existing and future domestic subsidiaries that incur indebtedness (subject to certain exceptions), and each of our foreign subsidiaries that
enters into a guarantee of any of our senior indebtedness (other than indebtedness incurred by another foreign subsidiary). In addition, any subsidiary that we properly designate as an unrestricted
subsidiary under the indenture governing the notes, will not provide guarantees of the notes. As of December 31, 2007, each of our domestic subsidiaries and none of our foreign subsidiaries
guaranteed the notes.

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The
claims of creditors of any entity that does not guarantee the notes, including Indalex Limited and our foreign subsidiaries that guarantee the Canadian sub-facility
portion of our revolving credit facility, will be required to be paid before the holders of the notes have a claim, if any, against those subsidiaries and their assets. Therefore, if there was a
dissolution, bankruptcy, liquidation or reorganization of any such subsidiary, the holders of notes would not receive any amounts with respect to the notes from the assets of such subsidiary until
after the payment in full of the claims of creditors, including preferred stockholders, of such subsidiary.

On
apro formabasis, after giving effect to the Honeywell Acquisition and the Transactions, the aggregate net sales and operating income
of our non-guarantor subsidiaries were $450.6 million and $6.2 million for 2006 and net sales and operating loss of our non-guarantor subsidiaries were
$449.7 million and $4.7 million, respectively, for 2007, and their total assets at December 31, 2007 was $170.4 million. As of December 31, 2007, our
non-guarantor subsidiaries had $110.0 million of total indebtedness and other liabilities, including trade payables.

We may not be able to repurchase the notes upon any change of control as required by the indenture governing the notes, which would result in a default under the indenture
governing the notes and would adversely affect our business and financial condition.

Upon
the occurrence of a "change of control", as defined in the indenture governing the notes, we will be required to make an offer to repurchase all outstanding notes at a price equal
to 101% of the principal amount thereof, plus any accrued and unpaid interest, and additional interest, if any, to the date of repurchase. We may not have sufficient funds available to make any
required repurchases of the notes, and restrictions under our credit agreement governing our revolving credit facility may not allow that repurchase. If we fail to repurchase notes in that
circumstance, we will be in default under the indenture governing the notes and, in turn, under our credit agreement.

In
addition, the credit agreement governing our revolving credit facility provides that certain change of control events, including a change of control under the indenture governing the
notes, will constitute an event of default. Such a default under our credit agreement would result in a default under the indenture governing the notes if the administrative agent or the lenders
accelerate the debt under our revolving credit facility. In addition, any future credit agreement or other agreements relating to our indebtedness to which we become a party would likely contain
similar provisions.

If
we experience a change of control, we could seek to obtain a waiver of such default from the lenders or you as a holder of the notes or seek to refinance the indebtedness under our
revolving credit facility
and the notes. We cannot assure you, however, that we would be able to obtain a waiver or to refinance our indebtedness on commercially reasonable terms, if at all, and in the event we are unable to
obtain such a waiver or to refinance our indebtedness on commercially reasonable terms, if at all, such default could result in all amounts outstanding under our revolving credit facility and the
notes being declared due and payable.

Holders of notes may not be able to determine when a change of control has occurred.

Under
the indenture, within 30 days following the date on which a change of control occurs, we are required to send holders of notes and the trustee a notice of the offer to
repurchase the notes. In some cases, such as, for example, a sale of substantially all of our assets, holders of notes may not be able to determine when a change of control giving rise to the right to
have us repurchase notes has occurred, which may adversely affect the ability of holders of notes ability to enforce this provision of the indenture.

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The terms of the notes may not protect you if we enter into transactions including acquisitions, refinancings or other recapitalizations that would not constitute a change of
control under the indenture.

We
may enter into transactions including acquisitions, refinancings, recapitalizations or other highly leveraged transactions. Such a transaction may not be included in the definition of
change of control in the indenture or otherwise restricted by the terms of the indenture but could increase the amount of indebtedness outstanding or otherwise affect our capital structure or credit
ratings and may substantially impair our ability to repay the notes. In such an event, the indenture will not afford holders of notes protection from any adverse aspects of such transaction.

Federal and state statutes allow courts, under specific circumstances, to void the guarantees and security interests, subordinate claims in respect of the guarantees and
security interests and require noteholders to return payments received from the guarantors.

The
notes are guaranteed by Holdings and, subject to limited exceptions, each of Indalex Holding Corp.'s existing and future domestic subsidiaries that incurs indebtedness, and each of
our foreign subsidiaries that enters into a guarantee of any of our senior indebtedness (other than indebtedness incurred by another foreign subsidiary). As of December 31, 2007, each of our
domestic subsidiaries and none of our foreign subsidiaries guaranteed the notes on a second-priority secured basis. The issuance of the guarantees and the related security interest by any guarantor
may be subject to review under state and federal laws if a bankruptcy, liquidation or reorganization case or a lawsuit, including in
circumstances in which bankruptcy is not involved, were commenced at some future date by, or on behalf of, the unpaid creditors of such guarantor. Under the federal bankruptcy laws and comparable
provision of state fraudulent transfer laws, a court may void or otherwise decline to enforce a guarantor's guarantee or the related security interest, subordinate such guarantee to the guarantor's
existing and future indebtedness or take other action detrimental to the noteholders. While the relevant laws may vary from state to state, a court might do so if it found, among other things, that
when the guarantor entered into its guarantee and the related security agreements or, in some states, when payments became due under such guarantee, the guarantor received less than reasonably
equivalent value or fair consideration and either:



The
court might also void a guarantee or the related security interest of a guarantor without regard to any of the above factors, if the court found that the guarantor entered into its
guarantee or the related security interest with actual intent to hinder, delay or defraud its creditors. In addition, any payment by a guarantor pursuant to its guarantee could be voided and required
to be returned to such guarantor or to a fund for the benefit of such guarantor's creditors.

A
court would likely find that a guarantor did not receive reasonably equivalent value or fair consideration for such guarantee and the related security interest if such guarantor did
not substantially benefit directly or indirectly from the issuance of the notes and the applicable guarantee and security interest thereunder. If a court were to void a guarantee and the related
security interest, you would no longer have a claim against the applicable guarantor. Sufficient funds to repay the notes may not be available from other sources, including the remaining guarantors,
if any. In addition, the court might direct you to repay any amounts that you already received from any guarantor.

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The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has
occurred. Generally, however, an entity would be considered insolvent if:



The
indenture governing the notes limits the liability of each subsidiary guarantor on its guarantee to the maximum amount that the subsidiary guarantor can incur without risk that the
guarantee and the related security interest will be subject to avoidance as a fraudulent transfer. We cannot assure you that this limitation will protect the guarantees from fraudulent transfer attack
or, if it does, that the remaining amount due and collectible under the guarantees would suffice, if necessary, to pay the notes when due.

To
the extent a court voids any of the guarantees and the related security interest as fraudulent transfers or holds any of the guarantees or security agreements unenforceable for any
other reason, holders of notes would cease to have any direct claim against the applicable guarantor. If a court were to take this action, the applicable guarantor's assets would be applied first to
satisfy the applicable guarantor's liabilities before its remaining assets, if any, could be applied to the payment of the notes.

Risk Factors Related to our Business

The aluminum extrusion industry is cyclical and highly dependent on economic conditions of end-user markets in the United States and Canada, and the cyclicality and
volatility of these markets could adversely affect us.

Our
profitability depends in part on the varying economic and other conditions of the end-user markets we serve. All of the end-user markets we serve, including
our two largest markets, the transportation and residential building and construction end-user markets, are subject to volatility and, as a result, our customers' demand for our products
may change due to changes in general and regional economic conditions, consumer confidence, the housing market, fuel and energy prices and availability, employment and income growth trends and
interest rates, each of which are beyond our control. In the event of an economic downturn in any of the end-user markets we serve, our customers may delay purchase orders, extend seasonal
shutdowns or discontinue operations at certain of their manufacturing facilities and otherwise reduce production levels. Any of these events would adversely affect our profitability and cash flows.

For
example, in 2001, the 22% decline in shipment volume in the United States and Canada aluminum extrusion market had a negative impact on our net sales, which dropped 21%, and on our
plant operating earnings, which dropped by more than half, compared to 2000. A significant portion of our net sales in the transportation end-user market is to manufacturers of truck
trailers, which experienced shipment volume declines of 48% in the U.S. in 2001 from 2000, which was greater than the overall industry volume decline during the same period. The downturn from 2000 to
2001 was the most significant single year downturn since 1975, when our industry experienced a decline of approximately 31% in shipment volume compared to the prior year. There have been a few less
significant single year downturns since 1975, including 2007. In 2007, we believe that shipment volume in the United States and Canada extrusion market declined by approximately 16%. This
decline had a negative impact on our net sales, which dropped 11%, and on our plant operating earnings, which

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dropped
55%, as compared to 2006. Declines in shipment volume can have a disproportionate impact on our results of operations due to the fixed operating cost requirements inherent in our operations.

Demand
for our products in the residential building and construction end-user market is driven by new residential construction and remodeling activity, which are impacted by
demographic trends, interest rate levels, and overall economic conditions. In recent years, we have experienced strong demand in this end-user market due to strong new housing starts, the
increasing size of new homes and increased remodeling and repair activity. However, after showing strong growth
during recent years, that market slowed considerably during the second half of 2006, and our shipments to that market were down 19% in 2007 as compared to 2006. According to data published by the U.S.
Census Bureau, housing starts in the United States were down 25% year over year in 2007 and were down 27% in the first two months of 2008. Remodeling activity has slowed, as well. We continue to
believe that there is good long-term growth potential for the residential building and construction market, but we cannot be certain of when the current downturn in this market will end.

In
addition, during 2007, we believe that production of truck trailers declined by approximately 22%, although our shipments to that market declined by just 4%. We also believe that
there is good long-term growth potential for the truck trailer market, but we cannot be certain of when the current downturn in this market will end.

In
the event of an economic downturn, we would also expect to experience a higher level of bad debts that usually accompany a downturn. Any decrease in demand within one or more of our
end-user markets may be significant and may last for a lengthy period of time. We cannot provide any assurance that downturns in the economy will not adversely affect our profitability and
as a result of the volatility in any of the end-user markets we serve, we may have difficulty increasing or maintaining our level of sales or profitability if we are not able to divert
sales of our products to customers in other end-user markets when one or more of our end-user markets is experiencing a decline. In addition, we are not able to predict the
timing, extent and duration of the economic cycles in any of the end-user markets in which we operate.

Our
industry historically experiences a seasonally driven slow down, and we experience lower net sales from November through February. This slow down is largely due to the seasonal
nature of the businesses for a large portion of our customer base, slower manufacturing during the holiday period, reduced year end inventory and slow ramp up by our customers. Cold weather during the
winter months causes slow downs in the residential and commercial building and construction industry in Canada and the northern United States. As a result, quarter to quarter comparisons of our net
sales, operating results and cash flows should not be relied on as an indication of future performance, and the results of any quarterly period may not be indicative of expected results for a full
year.

The markets for our products are highly competitive, and our inability to compete effectively in the aluminum extrusion industry could result in the loss of customers, which
would have an adverse effect on our net sales, results of operations and cash flows.

The
aluminum extrusion industry is fragmented and we face intense competition from regional, national and global companies in each of the end-user markets we serve. This
competition could have an adverse effect on our net sales, results of operations and cash flows. Depending on the size of our customer and the type of product we sell, we compete on the basis of
product quality, on-time delivery performance and price, with price representing a more important factor for our larger customers and for sales of standard aluminum extrusions. Our
competitors include other independent aluminum extruders as well as certain vertically integrated aluminum companies that participate in the extrusion industry. Some of our competitors have greater
financial and other resources than we do, and vertically integrated aluminum extruders may be able to obtain aluminum billet at lower prices than we can. Our competitors may foresee the course of
market development more accurately than we do, produce

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similar
products at a lower cost than we can or adapt more quickly to new technologies or industry and customer requirements.

We
operate in a marketplace that is becoming more global, and the threat of lower cost imports is increasing. For example, imports of extrusions from China now represent approximately
10% of the United States and Canada aluminum extrusion market based on shipment volume, up from less than 1% in 2000. Chinese extrusions are typically good quality products that are priced lower than
those manufactured in the United States and Canada. In the future, Chinese aluminum extruders may develop new ways of packaging and transporting aluminum extrusions that could mitigate the freight
cost and other shipping limitations that we believe currently limit their ability to more fully penetrate the U.S. and Canadian aluminum extrusion market. If our customers in any of the
end-user markets we serve shift their production outside the United States and Canada, then those customers would likely source aluminum extrusions overseas, and, as a result, our net
sales and results of operations would be adversely affected.

If
we are not able to continue to differentiate ourselves in ways other than by reducing prices, we may lose market share and suffer reduced profit margins. If our competitors lower
their prices, it could inhibit our ability to compete for customers with higher value-added sales. If our product mix changed as a result of competitive pricing, it could have an adverse impact on our
gross margins and profitability. In addition, our competitive position with the global aluminum extrusion industry may be affected by, among other things, the recent trend towards consolidation among
our competitors. We cannot assure you that we will be able to compete successfully or that competition will not have a material adverse effect on our business.

The willingness of our customers to accept substitutes for our products could adversely affect our financial condition and results from operations.

Aluminum
competes with other materials, such as vinyl, steel, plastics and glass, among others, for various applications in our end-user markets. In the past, customers have
demonstrated a willingness to substitute other materials for aluminum. For example, over the past decade, vinyl, with its penetration of the residential window and door market, has been the most
commonly used substitute
for aluminum extrusions. Steel may be another substitute for aluminum if aluminum costs rise to such an extent that steel becomes a viable economic alternative for certain manufacturing needs,
especially in the transportation market. If steel prices fall or if aluminum prices increase, steel could become more attractive to our customers than aluminum. The steel industry has responded to the
increased use of aluminum as a substitute for steel by developing lighter weight steel products. Lighter weight steel products, lower steel costs or higher aluminum costs could slow or reverse the
rate at which aluminum is used as a substitute for steel. An increase in the use of substitutes for aluminum extrusions could have a material adverse effect on our financial condition, cash flows and
results from operations.

Equipment failures, delays in deliveries or catastrophic loss at any of our facilities could lead to production or service curtailments or shutdowns, which would have an
adverse effect on our sales and results from operations.

We
have 13 manufacturing facilities and two casting facilities in the United States and Canada. An interruption in production or service capabilities at any of these facilities as a
result of equipment failure or other reasons could result in our inability to produce our products, which would reduce our net sales and results from operations. In the event of a stoppage in
production at any of our facilities, even if only temporary, or if we experience delays as a result of events that are beyond our control, delivery times to our customers could be severely affected.
Any significant delay in deliveries to our customers could lead to increased returns or cancellations, could result in damage to our reputation or permanent loss of customers that seek out alternative
suppliers. Furthermore, because many of our customers are, to varying degrees, dependent on deliveries from our facilities, customers that have to reschedule their own production due to our missed
deliveries could pursue financial claims against us.

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Our
facilities are also subject to the risk of catastrophic loss due to unanticipated events such as fires, explosions, adverse weather conditions or other events. We have experienced,
and may experience in the future, periods of reduced production as a result of extrusion press failures, delays in aluminum billet deliveries, prolonged power outages, work stoppages or paint line
fires. If any of these events occur in the future, they could have a material adverse effect on our business, financial condition or results from operations. While we maintain insurance policies
covering, among other things, physical damage, business interruptions and product liability, these policies may not cover all of our losses and we could incur uninsured losses and liabilities arising
from such events. We have six facilities which each contribute from 10% to 25% of our plant operating earnings from manufacturing, and loss of or reduction in production at any of these facilities
would have a material adverse effect on our results of operations. These facilities are located in Burlington, North Carolina; Elkhart, Indiana; Connersville, Indiana; Mountaintop, Pennsylvania;
Montreal, Quebec; and Mississauga, Ontario.

We rely on electricity and natural gas to produce our products, and rising costs or shortages of electric power and natural gas could adversely affect our results from
operations and cash flows.

As
part of the extrusion process, aluminum billets are heated by electric and gas heaters which require a large and continuous supply of electricity and natural gas. In addition, our two
cast houses, which provide us with approximately 28% of our aluminum billets, use significant amounts of natural gas during the billet production process. Interruptions of electricity supply can
result in lengthy production shutdowns, increased costs associated with restarting production and waste of production in progress. In extreme cases, interruptions of electricity supply can also cause
damage to or destruction of our equipment and facilities. We do not maintain back-up generators or other sources of secondary power supply at any of our facilities. Electricity and natural
gas costs were approximately $31.2 million in 2006, and approximately $29.1 million for 2007. While we have hedging arrangements that insulate us in the short term from the recent
increases in natural gas prices, if the recent increases in natural gas prices continue, our financial results and cash flow will be significantly impacted. We do not have electricity contracts at
some of our facilities, we do not have a guaranteed supply and we have experienced rolling power outages in the past. In addition, increases in fuel oil costs have a corresponding increase on our
freight costs. Shortages of electrical generating capacity in our facilities or increases in energy costs could have a significant impact on our results of operations.

Rising costs of aluminum and disruptions in our aluminum supply could adversely impact our financial results.

The
primary raw material in the manufacturing of aluminum extrusions is aluminum billets and ingot, which represented 66% of our cost of sales in 2006 and 68% of our costs of sales for
2007. We have entered into several long-term contracts with metal suppliers to purchase aluminum billet at the market price of base aluminum plus a negotiated billet premium. If our
aluminum supply is disrupted, or if the cost of aluminum increases, our financial results could be adversely impacted. We cannot assure you that we will be able to renew these contracts when they
expire, on terms that are favorable to us or at all.

We
are subject to the short-term commodity risk of carrying aluminum in our inventory which we attempt to mitigate through the use of hedge instruments. Although we seek to
time our hedges to coincide with the period we expect to carry our inventory, we may not accurately predict the timing in all cases. If we experience delays in production or shipments and the market
price of base aluminum declines, we could experience a loss if we have not hedged our exposure to price increases correctly. In addition, because changes in base aluminum prices are generally passed
through to our customers, but our customer billings are carried as receivables for a period of time, increases or decreases in base aluminum prices cause corresponding increases and decreases in
reported net sales and fluctuations in working capital that are unrelated to the level of business activity. As base aluminum prices rise, which causes sales dollars to increase, our customer
receivables and raw material inventory carrying value

34

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increase,
having a negative impact on working capital, and, conversely, as prices and net sales fall, our working capital decreases. We expect that the recent increases in natural gas prices will
affect the billet premiums charged by our suppliers, and since we do not pass the billet premium directly to our customers any unwillingness by our customers to accept higher prices for our products
would have an adverse affect on our results of operations.

Recently,
producers of base aluminum have incurred increased costs of production due to the rising price of energy and alumina, which have increased the price of base aluminum. Aluminum
prices on the LME reached an eighteen-year high of $3,240 per metric ton as of May 11, 2006, and have been near that high in March of 2008. To the extent we are not able to pass the
full cost of base aluminum to customers and we are not able to effectively hedge our exposure to offset the effects of higher base aluminum costs, the increasing price of primary aluminum could
materially affect our financial results. As a result of our increased leverage, our hedge counterparties may cease to trade aluminum futures with us or may choose not to offer credit to us. An
inability to hedge our base aluminum price risk would have a negative impact on our financial results. We are subject to Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Statement Activities," as amended, which requires us to record our hedge instruments at current market value, known as "mark to-market," in our financial
statements. The rules require us to recognize all derivative instruments on the balance sheet at fair value, while the physical position which created the need for the derivative, is not marked to
market value. Due to volatile market prices of base aluminum, this mark-to-market adjustment can result in a material positive or negative adjustment to our operating earnings.

Any
major disruption in the availability of aluminum may cause a shortage of aluminum billets and could adversely affect the billet premium we pay. For example, during 2004, a shortage
of aluminum billets in the United States and Canada caused some of our competitors to have disruptions in supply which resulted in production outages, and we may face similar circumstances in the
future. Furthermore, we purchased approximately 20% of our third party aluminum billet requirements from South America and the Middle East in 2007, and we intend to increase that percentage in the
near future. Shipping billet from overseas suppliers increases transportation risk, and we may not be able to easily replace billet from our suppliers in South America or the Middle East with billet
from other sources. Unexpected delays or losses in the delivery of foreign-sourced billet due to factors such as weather, work stoppages, theft, customs issues or war could cause one or more of our
facilities to run out of billet. A shortage of aluminum billets or an increase in the billet premium could result in temporary or permanent facility shutdowns or higher costs that we may not be able
to pass on to our customers, which would have a significant adverse impact on our financial results.

We have restructured our operations from time to time in the past, and expect to continue to do so from time to time in the future. The charges associated with these
restructurings could materially and adversely affect our earnings and liquidity in future periods.

We
have closed, consolidated or idled seven plants since 1999. We have also worked to centralize our administrative and processing functions and have eliminated a significant number of
administrative positions since 2000. As a result of these actions, we incurred restructuring charges of $0.5 million, $1.8 million, and $3.7 million in 2005, 2006, and 2007
respectively. We currently employ approximately 2,700 employees and currently operate 13 extrusion facilities and two secondary remelt facilities, and within those facilities, operate 34 extrusion
presses, six paint lines and significant processing equipment. There is considerable variation in the age of our equipment and the productivity of our plants and presses. Some of our facilities also
have overlapping customer bases and geographic coverage. As a result, we expect to continue to restructure our operations from time to time in an ongoing effort to make our operations more productive
and more profitable. While restructurings are designed to improve our operating results over time, restructuring charges may be incurred before the benefits, if any, are realized. As a result, we may
incur material restructuring costs that adversely impact our profitability and liquidity in future periods. We have not finalized our restructuring plans for 2008, but

35

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expect
to incur restructuring charges in 2008 near the high end of the range of charges that we have incurred over the past five years. Future restructurings may not be successful, and future
restructuring charges may have a material adverse impact on our earnings and liquidity.

Our operations are subject to numerous complex and increasingly stringent environmental laws and regulations, and the costs of complying with environmental laws and
regulations, including participation in assessments and cleanups of sites, are significant and will continue to be so for the future.

We
are subject to a wide variety of federal, state and local environmental laws and regulations, including those governing air emissions, wastewater discharges, the generation, storage,
handling, use and transportation of hazardous materials, and employee health and safety. From time to time, we are subject to fines or penalties assessed for alleged violations of environmental laws
and to claims and litigation based upon those laws. For example, we paid an $80,000 penalty to the EPA in January 2005 to settle allegations that our facility in Modesto, California had failed to
accurately report certain chemicals handled at that facility. As an owner of real property and a generator of hazardous wastes, we are also subject to laws imposing liability for the cleanup of
contaminated property, including our currently and formerly owned or operated properties as well as offsite locations to which we have sent our wastes for disposal. Hazardous substances have been
detected at some of our current and former properties, as well as at sites to which we have sent wastes for disposal. As part of our environmental management program, we are currently involved in
investigatory or remedial actions at certain of these properties.

For
example, we are currently conducting investigatory actions at our owned and operating facility in Watsonville, California and at a property that we formerly owned and operated as a
manufacturing facility in Dayton, New Jersey. We have established a reserve in the amount of $1.2 million to cover the cost of cleaning up contamination at these and certain other current and
former properties. We have also been identified as a potentially responsible party under CERCLA with respect to approximately nineteen offsite locations to which we sent waste materials for disposal
in the past. We have established a reserve totaling $0.5 million to cover our anticipated liabilities at certain of these sites. The total cost of environmental assessment and remediation
depends on a variety of regulatory, technical and factual
issues, some of which cannot be anticipated. While we believe that our reserves are adequate to cover presently identified environmental liabilities, the discovery of additional contaminants or the
imposition of additional cleanup obligations at these or other sites could result in additional costs. We cannot assure you that reserved amounts will be adequate to cover the ultimate costs of these
liabilities or the costs of environmental liabilities that may arise or be identified in the future.

Furthermore,
future environmental regulations are expected to impose stricter compliance requirements on the aluminum industry. However, we cannot estimate the precise effect of future
changes to laws and regulations, and compliance with future requirements may make it necessary, at costs which may be substantial and in excess of our estimates, to retrofit existing facilities with
additional pollution-control equipment and to undertake new measures in connection with the storage, transportation and disposal of by-products and wastes. We are not a party to any
judicial or administrative proceedings relating to environmental issues.

We have liabilities and expenses for pensions and other postretirement benefits and could be required to make unexpected contributions to our defined benefit plans as a result
of adverse changes in interest rates and the capital markets, or if our assumptions relating to our employee workforce are inaccurate.

We
provide a number of qualified and non-qualified and registered defined benefit pension and other postretirement benefit arrangements to certain union,
non-union and executive employees in the United States and Canada and we could be required to make unexpected contributions to these plans. Based on our valuation as of December 31,
2007, the qualified and non-qualified and registered defined benefit pension had an unfunded liability of approximately $10.3 million on a projected benefit obligation basis. In
addition, our unfunded benefit obligation with respect to other postretirement

36

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benefit
obligations, was approximately $4.2 million as of December 31, 2007. In 2007, we made cash payments of $5.7 million and in 2008, we expect to make cash payments of
$4.3 million for these benefit obligations. Our estimates of liabilities and expenses for pensions and other postretirement benefits incorporate a number of significant assumptions including
the rate used to discount our future estimated liability, the long-term rate of return on plan assets and several assumptions relating to our employee workforce, including salary
increases, medical costs, retirement age and mortality. Our results of operations, liquidity or stockholders' equity in a particular period could be adversely affected because of additional required
contributions to the pension and other postretirement benefit plans as a result of capital market returns that are less than their assumed long-term rate of return, by a decline in the
interest rate used to discount our future estimated liability, increased funding requirements or other changes mandated by law or by changes in employee workforce assumptions. In addition, if we are
required to make unexpected cash contributions to our pension plans in the future, we would be prevented from using such cash for other purposes, which may adversely affect our business.

We may be adversely impacted by work stoppages and other labor matters.

As
of December 31, 2007, we had approximately 2,700 employees, approximately 1,660, or 61%, of whom were covered under union contracts. Our facilities are covered by 12 union
agreements, with no one agreement covering more than 10% of our overall work force. The contracts covering our Mississauga, Ontario; Calgary, Alberta; Vancouver, British Columbia; Niles, Ohio and
Burlington, North Carolina facilities were all successfully renegotiated during 2007. Three more contracts will expire in 2008, including expirations of our contracts covering our Connersville,
Indiana plant which will expire on June 1, 2008; our Montreal, Quebec facility which will expire on December 21, 2008 and our North York, Ontario casting facility which will expire on
November 30, 2008. We are currently in negotiations with a union representing certain office employees at our Montreal, Quebec facility. We have historically maintained satisfactory relations
with all of our unions. We may be unable to resolve any of these contract negotiations without work stoppages or significant increases in costs, which could have a material adverse effect on our
financial condition, cash flows and operating results. We have experienced four work stoppages in the last ten years, including a one week stoppage at our Montaintop, Pennsylvania facility in 2006,
and prior to that, a one-week work stoppage in Mississauga, Ontario in 2003. We cannot assure you that our relationships with our employees and their unions will be satisfactory or that we
will not encounter further strikes, unionization efforts or other types of conflicts with labor unions or our employees. Further, existing union agreements may not prevent a strike or work stoppage at
any of our facilities in the future.

We depend on the service of key individuals, the loss of whom could materially harm our business.

Our
success will depend, in part, on the efforts of our executive officers and other key employees, including Timothy R.J. Stubbs, our Chief Executive Officer. Although we do not
anticipate that we will have to replace any of our executive officers in the near future, the loss of the services of any of our executive officers or other key employees could have a material adverse
effect on our business, results of operations and financial condition.

We are controlled by our principal equityholder, which has the power to take unilateral action.

Affiliates
of Sun Capital own 90.4% of our common stock and 100% of our voting common stock, and, as a result, control our business affairs and policies. Four of our directors are
employed by affiliates of Sun Capital. Circumstances may occur in which the interests of affiliates of Sun Capital could be in conflict with the interests of the holders of the notes. In addition,
affiliates of Sun Capital may pursue acquisitions, divestitures or other transactions that may, in their judgment, enhance their equity investment, even though such transactions might involve risks to
holders of the notes. See "Certain Relationships and Related Transactions" and "Security Ownership and Certain Beneficial Owners."

37

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AAG and our other China sources are subject to risks which could affect our ability to effectively outsource aluminum extrusions from them.

Through
our supply arrangement with AAG, we use AAG for approximately 78% of our total import volume, which amounted to approximately 4% of our shipment volume in 2007. AAG and our other
China sources are subject to the risks of China's political, social and economic environment, and these risks could affect our ability to effectively outsource aluminum extrusions from AAG and our
other China sources. The role of the Chinese government in the Chinese economy is significant, and its policies toward economic liberalization could change, resulting in greater restrictions on the
ability of AAG and other China sources to do business with us. The Chinese government reduced its export subsidies during 2007, which make it more costly for us to outsource aluminum extrusions to
China. Aluminum extrusions from AAG and our other China sources are also subject to shipping and other transportation delays and risks, and there may be production disruptions as a result of
construction or other delays at AAG's new facility. If our China sources are unable to provide us with extrusions or if their shipments were to experience prolonged delays or suffer damages while in
transit, we cannot assure you that we would be able to produce an equivalent shipment volume in our United States and Canada facilities. Our supply agreement with AAG does not require AAG to supply us
with any specified quantity of extrusions. If the volume of extrusions AAG is willing to supply us were to decrease, we may not be able to enter into new supply arrangements with other suppliers in a
timely manner to provide a sufficient volume of quality products at prices that are satisfactory to us.

Fluctuations in currency exchange rates may significantly impact our results of operations recorded in U.S. dollars and may materially adversely affect the comparability of our
results between financial periods.

We
have operations in Canada. Approximately 14% of our net sales in 2007 were made in Canadian dollars. We incur currency transaction risk whenever we enter into either a purchase or
sale transaction using a currency other than the local currency of the transacting entity. The U.S. dollar to Canadian dollar exchange rate may vary from the time we invoice the shipment and the time
we are paid, which could result in a realized currency loss in our results of operations if we have not hedged our exposure to currency fluctuations correctly. In addition, we may set prices for our
Canadian business in U.S. dollars and if these prices are not adjusted for changes in the relative values of the currencies, we could experience reduced operating margins. The U.S. dollar value of our
sales in Canada varies with currency exchange rate fluctuations between the U.S. dollar and the Canadian dollar. The results of the operations and the financial position of our Canadian subsidiaries
are reported in Canadian dollars and then translated into U.S. dollars at the applicable exchange rates for inclusion in our combined financial statements. We report our results in U.S. dollars and
our financial results are impacted by currency fluctuations between the U.S. dollar and the Canadian dollar. Changes in currency exchange rates could have an adverse effect on our reported results of
operations. Upon consummation of the Transactions, we will have Canadian-dollar borrowings under our revolving credit facility. To the extent the U.S. dollar declines against the Canadian dollar, our
interest expense for our Canadian dollar-denominated indebtedness will increase for financial reporting purposes.

We will incur substantial ongoing costs to comply with federal securities law requirements.

In
connection with the registration of our 111/2% second-priority senior secured notes, we became subject to the reporting requirements of the Securities Exchange Act of
1934 and the Sarbanes-Oxley Act of 2002. These requirements may place a strain on our management, systems and resources and cause us to incur substantial ongoing costs. The Exchange Act requires that
we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and
internal controls over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal controls over financial reporting, significant
resources and management oversight will be required. This may divert management's attention from other business concerns. Upon

38

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issuance
of the notes, we began to incur substantial ongoing costs as a result of having to comply with the Exchange Act and the Sarbanes-Oxley Act. We currently estimate that we will incur
approximately $1.0 million of costs in 2008 and approximately $0.5 million of costs in 2009 as a result of having to comply with the Sarbanes-Oxley Act. We currently estimate that we
will incur approximately $0.5 million of costs annually as a result of having to comply with the Exchange Act.

We may pursue strategic acquisitions, which could have an adverse impact on our business.

We
may, from time to time, consider acquiring complementary companies or businesses. To do so, we would need to identify suitable acquisition candidates, negotiate acceptable acquisition
terms and obtain appropriate financing. Any acquisition that we pursue, whether or not successfully completed, may involve risks, including:



39

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Forward-Looking Statements

This annual report on Form 10-K contains forward-looking statements within the meaning of the federal securities laws. These statements relate
to analyses and other information, which are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future prospects, developments and
business strategies.

These
forward-looking statements are identified by the use of terms and phrases such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "predict,"
"project," "will" and similar terms and phrases, including references to assumptions. However, these words are not the exclusive means of identifying such statements. These statements are contained in
many sections of this report, including those entitled "Summary," "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Although we believe that our
plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, we cannot assure you that we will achieve those plans, intentions or expectations.
Important factors that could cause actual results to differ materially from the forward-looking statements we make in this report include, but are not limited to:



All
forward-looking statements attributable to Indalex or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this report
under the heading "Risk Factors."

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ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We operate 34 extrusion presses, six electrostatic paint lines and three anodizing lines. The following table provides selected information regarding our
principal facilities:

|Location                     |  | Operations           |  | Approximate square footage |  | Number of presses |  | Ownership interest
|---------------------------- |  | -------------------- |  | -------------------------- |  | ----------------- |  | ------------------
|Burlington, North Carolina   |  | extrusion            |  | 270,000                    |  | 4                 |  | owned             
|Calgary, Alberta             |  | extrusion/ anodizing |  | 56,000                     |  | 1                 |  | owned             
|City of Industry, California |  | extrusion/casting    |  | 184,000                    |  | 3                 |  | owned             
|Connersville, Indiana        |  | extrusion            |  | 109,000                    |  | 1                 |  | owned             
|Elkhart, Indiana             |  | extrusion            |  | 79,000                     |  | 3                 |  | owned             
|Gainesville, Georgia         |  | extrusion/painting   |  | 315,000                    |  | 5                 |  | owned             
|Girard, Ohio                 |  | extrusion/painting   |  | 240,000                    |  | 3                 |  | owned             
|Kokomo, Indiana              |  | extrusion            |  | 234,000                    |  | 2                 |  | leased            
|Modesto, California          |  | extrusion/ anodizing |  | 124,000                    |  | 2                 |  | owned             
|Montreal, Quebec             |  | extrusion/painting   |  | 240,000                    |  | 3                 |  | owned             
|Mountaintop, Pennsylvania    |  | extrusion/anodizing  |  | 291,000                    |  | 3                 |  | owned             
|Mississauga, Ontario         |  | extrusion/painting   |  | 342,000                    |  | 4                 |  | owned             
|Niles, Ohio                  |  | extrusion            |  | 32,000                     |  | 2                 |  | owned             
|Vancouver, British Columbia  |  | extrusion/painting   |  | 90,000                     |  | 1                 |  | owned             
|North York, Ontario          |  | casting              |  | 56,000                     |  |                  |  | owned             

The
casting facilities in City of Industry, California, which are connected to the extrusion facility, and North York, Ontario convert aluminum scrap and aluminum ingot purchased from
third parties into aluminum billet. In 2007, 28% of the aluminum billet we used in production was supplied through those two casting facilities. We resold approximately 1 million pounds, or
less than 1%, of our manufactured aluminum billet to third parties in 2007, which represented less than 1% of our net sales in that year, and the primary purpose of the cast operations is for internal
supply. The benefit of maintaining cast operations is that scrap generated through the manufacturing process can be converted to aluminum billet in a cost-effective manner and
re-used in production.

On
January 9, 2008, we announced that we will close our Girard, Ohio extrusion facility by the end of March 2008. This closure results from our need to realign our production
capacity with the needs of the market. Customers currently serviced from the Girard facility will be served by the Gainesville, Georgia; Mississauga, Ontario; or Montreal, Quebec facilities.

ITEM 3. LEGAL PROCEEDINGS

We are involved in various legal proceedings, claims and litigation arising in the ordinary course of business. We believe that the outcome of each such
proceeding or claim which is pending or known to be threatened will not have a material adverse effect on our financial condition, cash flows or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of stockholders during the fourth quarter of 2007.

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PART II

ITEM 5. MARKET FOR COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

There is no public trading market for our common stock.

Stockholders

There were approximately 23 owners of record of our common stock as of March 1, 2008.

Dividends

We do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of
directors and will be dependent upon then existing conditions, including our financial condition, results of operations, contractual restrictions, capital requirements, business prospects, and other
factors our board of directors deems relevant. In
addition, our current financing arrangements effectively prohibit us from paying cash dividends for the foreseeable future.

Unregistered Sales of Equity Securities

None.

Issuer Purchases of Equity Securities

We did not repurchase any of our common stock during the fourth quarter of 2007.

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ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected historical combined financial data for the periods ended and at the dates indicated below. We have derived the selected
historical combined financial data as of December 31, 2003 and for the year ended December 31, 2003 from our audited combined financial statements and related notes. We have derived the
summary historical combined financial data as of December 31, 2004, and December 31, 2005 and for the year ended December 31, 2004 and the periods from January 1, 2005 to
March 31, 2005 and April 1, 2005 to December 31, 2005 from our audited financial statements and related notes. We have derived the summary historical financial data as of
December 31, 2006 and December 31, 2007 and for the periods from January 1, 2006 to February 1, 2006; from February 2, 2006 to December 31, 2006; and for the
year ended December 31, 2007 from our historical audited condensed consolidated financial statements included elsewhere in this report. In the opinion of management, such unaudited condensed
combined financial data reflects all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the results for those periods. The combined results of
operations for the interim periods are not necessarily indicative of the results to be expected for the full year or any future period.

The
selected historical combined financial data should be read in conjunction with "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations"
and our historical combined financial statements and accompanying notes included elsewhere in this report.

|                                                    |                           | Predecessor 1 |         | Predecessor 2 |   |         |   |   |        
|--------------------------------------------------- | ------------------------- | ------------- | ------- | ------------- | - | ------- | - | - | -------
|
|
|
|
|
|
|
|                                                    | Statement of income data: |               |         |               |   |         |   |   |        
|Net sales                                           |                           | $             | 748,468 |               | $ | 932,696 |   | $ | 239,849
|                                                    | Costs and expenses:       |               |         |               |   |         |   |   |        
|Cost of sales(1)                                    |                           |               | 684,043 |               |   | 854,386 |   |   | 221,542
|Selling, general and administrative                 |                           |               | 47,450  |               |   | 52,619  |   |   | 15,593 
|Management fees to affiliates(2)                    |                           |               | 2,902   |               |   | 2,771   |   |   | 700    
|Amortization of intangibles                         |                           |               |        |               |   |        |   |   |       
|Other (income) expense                              |                           |               | 1,415   |               |   | 2,298   |   |   | 993    
|Restructuring charges(3)                            |                           |               | 2,897   |               |   | 6,086   |   |   | 694    
|Impairment of long-lived assets(4)                  |                           |               |        |               |   | 2,728   |   |   | 381    
|(Gain) loss on disposal of assets(5)                |                           |               | 3,817   |               |   | (675    | ) |   | (274   
|Mark-to-market on derivatives(6)                    |                           |               | (4,167  | )             |   | (3,638  | ) |   | 285    
|                                                    |                           |               |         |               |   |         |   |   |        
|Total costs and expenses                            |                           |               | 738,357 |               |   | 916,575 |   |   | 239,914
|                                                    |                           |               |         |               |   |         |   |   |        
|Income (loss) from operations                       |                           |               | 10,111  |               |   | 16,121  |   |   | (65    
|                                                    | Other income (expense):   |               |         |               |   |         |   |   |        
|Interest to affiliatesnet(7)                       |                           |               | (8,717  | )             |   | (8,637  | ) |   | (1,208 
|External interestnet                               |                           |               | 58      |               |   | 50      |   |   |       
|Deferred financing costs                            |                           |               |        |               |   |        |   |   |       
|Interest income                                     |                           |               |        |               |   |        |   |   |       
|Loss on redemption of notes(8)                      |                           |               |        |               |   |        |   |   |       
|Income from equity method investment in AAG(9)      |                           |               | 7,869   |               |   | 14,807  |   |   | 1,557  
|Gain on sale of equity method investment in AAG(10) |                           |               |        |               |   |        |   |   |       
|Affiliated acquisition fees                         |                           |               |        |               |   |        |   |   |       
|Dividend income from affiliates(11)                 |                           |               | 12,728  |               |   | 15,102  |   |   | 9,077  
|                                                    |                           |               |         |               |   |         |   |   |        
|Income (loss) before income taxes                   |                           |               | 22,049  |               |   | 37,443  |   |   | 9,361  
|Income tax (benefit) provision                      |                           |               | (2,295  | )             |   | (5,808  | ) |   | 9      
|                                                    |                           |               |         |               |   |         |   |   |        
|Income from continuing operations                   |                           |               | 24,344  |               |   | 43,251  |   |   | 9,352  
|Discontinued operations(12)                         |                           |               | 2,540   |               |   | 1,126   |   |   | (50    
|                                                    |                           |               |         |               |   |         |   |   |        
|Net income (loss)                                   |                           | $             | 26,884  |               | $ | 44,377  |   | $ | 9,302  
|                                                    |                           |               |         |               |   |         |   |   |        

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|                                                      |                                        | Predecessor 1 |         | Predecessor 2 |   |         |   |   |        
|----------------------------------------------------- | -------------------------------------- | ------------- | ------- | ------------- | - | ------- | - | - | -------
|
|
|
|
|
|
|                                                      | Balance sheet data (at end of period): |               |         |               |   |         |   |   |        
|Cash and cash equivalents                             |                                        | $             | 18,550  |               | $ | 23,522  |   | $ | 17,775 
|Working capital(13)                                   |                                        |               | 74,483  |               |   | 110,982 |   |   | 124,326
|Total assets                                          |                                        |               | 885,910 |               |   | 895,278 |   |   | 658,903
|Total debt                                            |                                        |               | 276,981 |               |   | 147,725 |   |   | 6,000  
|Total stockholders' equity                            |                                        |               | 439,123 |               |   | 561,852 |   |   | 431,501
|                                                      | Other financial and operating data:    |               |         |               |   |         |   |   |        
|Capital expenditures                                  |                                        |               | 21,480  |               |   | 33,275  |   |   | 8,770  
|Cash flows provided by (used in) operating activities |                                        |               | 35,327  |               |   | 47,363  |   |   | (31,198
|Cash flows provided by (used in) investing activities |                                        |               | (20,684 | )             |   | 873     |   |   | (8,032 
|Cash flows provided by (used in) financing activities |                                        |               | 2,821   |               |   | (37,028 | ) |   | 30,596 
|Cash dividends received from AAG(14)                  |                                        |               | 3,152   |               |   |        |   |   | 4,602  
|Ratio of earnings to fixed charges(15)                |                                        |               | 2.60x   |               |   | 3.07x   |   |   | 8.06x  
|Pounds shipped                                        |                                        |               | 532,000 |               |   | 617,088 |   |   | 154,698

---

44

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45

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The financial information of Indalex Holding Corp. contained in this report is the combined financial information of Indalex Inc., Indalex
America Inc., Indalex West Inc., Indalex Aluminum Solutions Inc. and Indalex Limited and each of their consolidated subsidiaries. On December 31, 2004, Indalex Aluminum
Solutions Inc., Indalex West Inc. and Indalex America Inc. were merged with and into Indalex Inc. On March 31, 2005, Honeywell acquired our former parent company,
Novar plc. On February 2, 2006, Indalex Holding Corp. acquired all of the outstanding capital stock of Indalex Inc. and Indalex Limited in connection with the Holdings
Acquisition.

The
following discussion and analysis of our results of operations covers periods before the Transactions in most cases and, in some cases, before the Honeywell Acquisition on
March 31, 2005. Accordingly, the discussion and analysis of these periods does not reflect the subsequent impact that the Honeywell Acquisition and the Transactions have had on our financial
condition, results of operations and cash flows, including, in the case of the Transactions, our significantly increased debt levels and liquidity requirements. You should read the following
discussion and analysis in conjunction with the information set forth under "Unaudited Pro Forma Condensed Combined Financial Data" set forth in Exhibit 99.1 to this annual report on
Form 10-K and "Item 6. Selected Financial Data" and our combined financial statements and the notes to those statements included elsewhere in this report.

The
statements in the discussion and analysis regarding industry outlook, our expectations regarding the future performance of our business and the other non-historical
statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in
"Item 1A. Risk Factors." Our actual results may differ materially from those contained in any forward-looking statements. You should read the following discussion together with the sections
entitled "Item 1A. Risk Factors," "Unaudited Pro Forma Condensed Combined Financial Data," set forth in Exhibit 99.1 to this annual report on Form 10-K "Item 6.
Selected Financial Data" and our combined financial statements and related notes thereto included elsewhere in this report. See "Forward-Looking Statements."

Overview

We are the second largest aluminum extruder, and the largest independent aluminum extruder, in the United States and Canada, based on shipment volume data
compiled by the Aluminum Association and management estimates. Our aluminum extrusion products are widely used throughout industrial, commercial and residential applications. Unlike a typical
commodity metals business, extruded aluminum products are typically customized to meet end-user specific requirements and underlying commodity prices are passed on to the customer. As a
result, we are largely insulated from aluminum price volatility. In addition to aluminum extrusion, we also offer a broad range of services, including fabrication, painting and anodizing. In 2007,
approximately 94% of our products were customized, made-to-order aluminum extrusions for use in a wide array of end-user markets, including the transportation,
residential building and construction, electric and cable, commercial building and construction, consumer durables and machinery and equipment end-user markets, as well as through
distribution channels.

The Transactions

The Holdings Acquisition

On September 16, 2005, the Indalex Holding Corp., a wholly-owned subsidiary of Indalex Holdings Finance, Inc., entered into a stock purchase
agreement pursuant to which it agreed to acquire all of the outstanding capital stock of Indalex Inc. and Indalex Limited, subsidiaries of Honeywell International Inc., for a total
purchase price of approximately $425.0 million in cash (subject to a

46

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post-closing
working capital adjustment of $5.9 million). Indalex Holding Corp. is a holding company that is a wholly-owned direct subsidiary of Holdings, which is beneficially
owned by affiliates of Sun Capital Partners, Inc. and certain other investors and members of our management team.

On
February 2, 2006, concurrently with the closing of the Holdings Acquisition, the following events occurred. We refer to these events, together with the Holdings Acquisition and
the use of the financing proceeds, as the "Transactions":



The
Holdings Acquisition was accounted for using the purchase method of accounting. As a result, the purchase price was allocated to the tangible and intangible assets acquired and
liabilities assumed based upon their respective fair values as of the date of the Holdings Acquisition. The application of purchase accounting in connection with both the Holdings Acquisition and the
Honeywell Acquisition (as defined below) resulted in new entities for reporting purposes. We refer to the Indalex entities prior to the Honeywell Acquisition as "Predecessor 1" and the Indalex
entities following the Honeywell Acquisition and prior to the Holdings Acquisition as "Predecessor 2." We refer to Indalex following the Holdings Acquisition as "Successor."

As
a result of the Transactions, we substantially increased our debt levels in comparison to historical periods. As a result, our interest expense has increased significantly in the
periods following the consummation of the Transactions. As of December 31, 2007, we had $268.9 million of outstanding indebtedness (excluding unused availability of $52.3 million
under our revolving credit facility). For the fiscal year ended December 31, 2006, after giving pro forma effect to the Transactions, our pro forma interest expense would have been
$38.8 million and for the fiscal year ended December 31, 2007, our interest expense was $35.2 million. See "Item 1A. Risk FactorsOur substantial amount of
indebtedness following this offering may adversely affect our cash flow and our ability to operate our business, remain in compliance with debt covenants and make payments on our indebtedness,
including the notes."

The Honeywell Acquisition

Honeywell acquired our former parent company, Novar plc, on March 31, 2005. Historical financial data for the periods following the Honeywell
Acquisition reflect the application of purchase accounting rules, which required Honeywell to allocate the total cost of the acquisition to the assets acquired and the liabilities assumed on the basis
of their estimated fair values as of the closing date. For a description of the effects of purchase accounting related to the Honeywell Acquisition, see our audited combined financial statements
included in this report. The application of purchase accounting in connection with the Honeywell Acquisition resulted in a new entity for reporting purposes.

As
a result of the Honeywell Acquisition, Indalex Limited exercised a put option to sell its investment in preferred shares of Novar affiliates. The redemption value of the preferred
shares was set

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at
book value, in exchange for a Note receivable of $161.2 million. Novar plc declared a dividend to Indalex Limited of $9.1 million for dividends earned according to the
shareholder agreement. The dividend was reflected on the statement of operations as dividend income for the period from January 1, 2005 through March 31, 2005.

Simultaneously
with this transaction, Novar plc caused Indalex Limited to declare a non-cash dividend of $139.9 million to Novar plc. At the time,
Indalex Limited had a loan outstanding with Novar plc of $30.4 million. The dividend to Novar plc represented the difference between the Note receivable of $161.2 million,
plus dividends of $9.1 million owed to Indalex Limited; less the $30.4 million due owed by Indalex Limited to Novar plc. The dividend owed to Novar plc was accounted for as
a reduction to retained earnings. All of the transactions were net settled and not settled in cash, so they are reported in the statement of cash flows as non-cash activities for the
period from January 1, 2005 through March 31, 2005.

Stand Alone Company

We have historically operated as a business unit of Novar plc and subsequently Honeywell. The financial statements included in this report for periods
prior to the Holdings Acquisition have been derived from the historical consolidated financial statements of Novar plc and, from March 31, 2005 through February 1, 2006,
Honeywell, and include the assets, obligations and activities of indirect wholly-owned subsidiaries of Novar plc and Honeywell, as applicable. The historical financial information included in
this report may not reflect what our results of operations, financial position and cash flows would have been had we operated as a separate, stand-alone company without the shared resources of
Novar plc or Honeywell for the periods presented, and may not be indicative of our future results of operations, financial position and cash flows. See our combined financial statements and
related notes thereto included elsewhere in this report.

The
historical combined financial statements included in this document include amounts specifically attributable to Indalex's operations and a portion of Novar plc's or
Honeywell's, as applicable, shared corporate general and administrative expenses, consisting of certain risk management, tax, legal and treasury services. In addition, a portion of Novar plc's
and Honeywell's, as applicable, shared corporate general and administrative expenses that were not specifically identifiable to Indalex's operations have been allocated to Indalex. Amounts allocated
to Indalex are recorded in the income statements of Predecessor 1 and Predecessor 2 as "Management fees to affiliates." Subsequent to the Holdings Acquisition, "Management fees to affiliates" reflects
the management fee paid to Sun Capital as described below. In connection with the Holdings Acquisition, substantially all of the legacy corporate functions of Honeywell that were employed with respect
to Indalex's operations were retained by Honeywell. We now perform those services internally or through arrangements with third parties, and the costs are reflected in "Management fees to affiliates"
and in additional "Selling, general and administrative expenses" in our income statements. The amounts allocated by Novar plc and Honeywell for 2005 was $1.1 million.

We
are now subject to the reporting requirements of the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002. As a result, we have begun to incur substantial additional one
time and ongoing costs as a result of having to comply with the Exchange Act and the Sarbanes-Oxley Act. In addition, we pay Sun Capital Partners Management III, LP, an affiliate of our equity
sponsor, a management fee equal to the greater of (a) $1 million and (b) 2% of our EBITDA (as defined in the management services agreement) for a given fiscal year. We will also
reimburse Sun Capital Partners Management III, LP for all reasonable out-of-pocket fees and expenses it incurs in performing financial and management consulting services
under the management services agreement. See "Certain Relationships and Related TransactionsManagement Services Agreement."

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For
all periods presented prior to February 2, 2006, Indalex's operations, excluding Indalex Limited and its subsidiaries, were included in the consolidated income tax returns of
Novar USA Holdings Inc. The respective state corporate tax returns of each subsidiary were filed on a separate or combined entity basis. However, in the historical combined financial statements
included in this report, income taxes have been provided based on a calculation of the income tax expense that would have been incurred if we had operated as a separate taxpayer. Indalex Limited and
each of its subsidiaries filed separate tax returns. Income taxes have been provided for all items included in the combined statements of income included herein, regardless of when such items were
reported for tax purposes or when the taxes were actually paid or refunded. From February 2, 2006, Indalex will be filing taxes as a stand-alone company and taxes have been provided for
accordingly.

AAG Investment

Prior to May 15, 2007, we owned a 25.01% interest in Asia Aluminum Group, an aluminum extruder in China, as a result of an investment made in 2001. Under
the equity method of accounting, we recorded income from the investment in AAG of $10.9 million, $12.5 million and $8.9 million in 2005, 2006 and 2007, respectively.

The
dividends we received from AAG have also benefited our cash flow. Pursuant to the shareholders agreement with AAG, we were entitled to receive dividends equal to our approximately
25% share of at least 40% of AAG's net realized profits. Our proportionate share of these dividends was $4.6 million, $4.9 million and $3.9 million for AAG's fiscal years ending
June 30, 2004, 2005 and 2006, respectively. Cash dividends declared in respect of a fiscal period are sometimes paid in a subsequent period. We recognized these dividends in our cash flow
statement in the period in which these dividends were received. Dividends declared by AAG in respect of earnings for AAG's fiscal year ended June 30, 2004 were not paid until 2005 and dividends
declared by AAG in respect of earnings for AAG's fiscal year ended June 30, 2005 were not paid until the second quarter of 2006. We received $3.9 million of dividends declared for AAG's
fiscal year ended June 30, 2006 in the second quarter of 2007.

On
May 15, 2007 we sold our investment in AAG to OK Spring Roll Limited Partnership, an investment vehicle in association with ORIX Corporation. We received $151.2 million
in cash, net of transaction costs, plus an additional $2.0 million of special dividends. We used the proceeds from the sale of our investment in AAG to repurchase $71.9 million aggregate
principal amount of the notes in accordance with the terms of the indenture governing the notes, and distributed $76.6 million to our stockholders.

Factors Affecting Our Results of Operations

End-User Market Demand

Our profitability depends in part on the varying economic and other conditions of the end-user markets we serve. All of the end-user
markets we serve, including our two largest markets, the transportation and residential building and construction end-user markets, are subject to volatility and, as a result, our
customers' demand for our products may change due to changes in general and regional economic conditions, consumer confidence, weather, the housing market, fuel and energy prices and availability,
employment and income growth trends and interest rates, each of which are beyond our control. These factors cause a significant increase or decrease in the demand for our products, which would impact
our shipment
volume and our operating profitability. No single end-user market drives our overall performance, and individual end-user markets are influenced by conditions in their
respective industries.

Demand
for our products in the transportation end-user market generally correlates positively with the overall economy. For example, during the economic downturn from 2000 to
2001, manufacturers of

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truck
trailers experienced shipment volume declines of 48%, which caused a negative impact on our operating profitability. In the period of general economic recovery from 2001 to 2006, shipment volume
to manufacturers of truck trailers grew by a compounded annual growth rate of 12%. However, we believe that volume declined by approximately 22% in 2007, as the overall economy slowed. Rising fuel
costs have a positive impact on demand for aluminum extrusions in truck trailers, because it makes aluminum a desirable lightweight alternative to steel, although higher fuel costs tend to dampen
demand in other transportation uses, such as recreational vehicles. Growth in imports from Asia has driven demand for truck trailers used to haul goods shipped from Asia from the coast to their
destinations in manufacturing centers across the country. In other areas of the transportation end-user market, demographic trends can have an effect on the demand for our products. We
expect the retirement of the aging "baby boom" generation to have a positive impact on demand for recreational vehicles.

Demand
for our products in the residential building and construction end-user market is driven by new residential construction and remodeling activity, which are impacted by
demographic trends, interest rate levels and overall economic conditions. In recent years, we have experienced strong demand in this end-user market due to strong new housing starts, the
increasing size of new homes and increased remodeling and repair activity. However, after showing strong growth during recent years, that market slowed considerably during the second half of 2006, and
our shipments to that market were down 19% in 2007 as compared to 2006. According to data published by the U.S. Census Bureau, housing starts in the United States were down 25% year over year in 2007,
and were down 27% in the first two months of 2008. Remodeling activity has slowed, as well. We continue to believe that there is good long-term growth potential for the residential
building and construction market, but we cannot be certain of when the current downturn in this market will end.

Pricing and Margin

The principal raw materials in the aluminum extrusion process are aluminum billets and ingot. Aluminum is a commodity and, as such, is valued based upon a variety
of market driven factors The price of aluminum ingot is based on the base aluminum price, which consists of two components: the price quoted for primary aluminum ingot on the LME and the MWP. The
price of aluminum billet is based upon the base aluminum price plus the "billet premium," which is a cost that is added to the base aluminum price and represents the charge from the smelter for
converting aluminum ingot to billet. We manage the risk of base aluminum price increases through one of four pricing mechanisms
and through several hedging programs. Our four pricing mechanisms and our estimate of the percentage of our shipment volume attributable to each are as follows:



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We
separately negotiate the billet premium we pay, and changes in the billet premium we pay affect our gross margins.

We
charge our customers a "conversion price," which is based upon our costs to produce, including non-aluminum raw materials costs, the billet premium we pay, shipping costs
and what we charge for our services. We change the conversion price periodically to reflect changes in competitive pricing or escalating costs, or to enhance our operating margin, which can have a
positive impact on our profitability. Conversion price adjustments were relatively infrequent until 2004. Since that time, increasing raw material, freight and energy costs have resulted in more
frequent conversion price changes. Some of our conversion price increases have not been well-received by our customers. For example, in 2004, we raised our conversion prices due to billet
shortages, and in
2005, we selectively scaled back some conversion prices in response to customer feedback. During 2006, we were successful in implementing price increases.

Our
gross margin is also impacted by factors such as product mix, shipping costs, scrap rates and labor costs. Gross margins vary depending on the type of customer, shape complexity and
the amount of additional services provided, such as painting, anodizing and fabrication, and the extent to which we outsource from China. In general, our margins improve as we increase the level of
shape complexity and services provided. In addition, scrap rates are relatively high in our industry, and high scrap rates negatively impact our gross margins. Labor costs, which are difficult to
reduce in the short term, are impacted by benefits, workers compensation and base wage rate changes as well as changes in productivity.

Hedging

The price of aluminum ingot is primarily set by supply and demand balance on the London Metal Exchange, and is subject to periodic short-term
fluctuations. We are largely insulated from this price volatility because the cost of aluminum ingot is generally passed on to our customers based upon prices established on the LME. Aluminum price
volatility impacts our working capital levels significantly. Some of our pricing mechanisms, such as spot pricing, can create short-term price risk on the base aluminum component of sales,
which we seek to mitigate through the use of financial derivatives. Under accounting principles generally accepted in the United States, these derivatives are required to be marked to market monthly,
which can have a significant short-term impact on our operating results, but does not have a corresponding effect on our cash flows.

We
purchase natural gas used for heating during the extrusion process from a third party using 36-month forward purchase contracts that we enter into on a monthly basis.
While this hedging program has insulated us from recent increases in natural gas prices, it could have the opposite impact if natural gas prices decline and our forward purchase price is higher than
the market price in the month of purchase. We build higher energy costs into our conversion margin, but short terms fluctuations in fuel costs can affect our operating results by increasing our costs
of sales. Because Indalex does not own the derivatives, we do not record mark-to-market gains and losses for natural gas.

Seasonality and Cyclicality

We have historically experienced increased demand for our products from March through October and reduced demand for our products and lower net sales from
November through February. This slow down is largely due to the seasonal nature of the businesses for a large portion of our customer base, slower manufacturing during the holiday period, accompanied
by reductions in year end inventory levels and slower ramp up by our customers. Cold weather during the winter months causes slow downs in the residential and commercial building and construction
industry in Canada and the northern United States. As a result, we have excess plant capacity during this time, which usually results in reduced

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operating
results during these months. However, during these months our working capital requirements decline.

Working
capital typically declines during downturns as a result of lower levels of customer receivables. Reductions in working capital mitigate the cash impact of cyclical or seasonal
downturns. Conversely, periods of strong demand require greater levels of working capital.

Globalization

Imports of extrusions from China currently represent approximately 10% of the United States and Canadian aluminum extrusion market, up from less than 1% in 2000.
We believe Chinese suppliers have the ability to increase their market share in the U.S. and Canadian market by at least one percentage point per year. Increased direct participation in the U.S. and
Canadian market by extruders in other countries would increase competition, which could adversely affect our operating results.

Globalization
of the aluminum extrusion industry also represents an opportunity for us to outsource high volume labor-intensive extrusions to lower-cost providers. We
currently outsource approximately 5% of our annual shipment volume to aluminum extruders in China. Outsourcing to China has increased our shipment volume of lower-margin products and has increased our
total operating profit.

Restructuring

On January 5, 2007, the Company announced the closure of its aluminum extrusion facility located in Watsonville, California. The facility ceased operations
in June 2007. As a result of the closure, the Company recorded expense of $2.1 million comprised of $1.3 million for severance and related costs resulting from the termination of 99
employees, and $0.8 million of lease obligations and other exit costs. In addition, we recorded $0.3 million of restructuring expense in 2007 related to the closure of our Girard, Ohio
facility, which was announced in January of 2008.

In
September 2006, the Company initiated an overhead restructuring program. During the year ended December 31, 2007, the Company recorded expense of $1.1 million in
severance and related costs resulting from the termination of 33 people related to that program. In addition, we recorded other restructuring expenses related to severance of $0.1 million
during the year ended December 31, 2007.

We
have historically restructured our overhead and plant operations on an ongoing basis. Since 2002 we have closed two facilities, consolidated certain shared services organizations and
scaled back our fixed administrative and plant overhead. Severance, relocation and other restructuring cost levels have been significant but provide for a lower cost structure going forward,
positively impacting operating results. The driving rationale behind our closures is moving volume from less efficient operations to more cost effective facilities.

In
July 2005, we closed our extrusion press in Fostoria, Ohio, after refurbishing a press in our Connersville, Indiana facility. Also during 2005, we relocated our Canadian credit and
payables functions to Girard, Ohio, reducing overhead costs through lower staffing and lower average wages. We incurred cash restructuring charges of $0.5 million for the 2005 programs and
carryover programs from prior years.

In
October 2004, we closed our two-press Berlin, Connecticut extrusion operation after relocating one press to our Montreal, Quebec facility. Also in 2004, we relocated our
U.S. credit and payables functions from Bannockburn, Illinois, to Girard, Ohio and significantly restructured our administrative management team resulting in large charges. In addition, we began the
process of consolidating our customer service organization in order to reduce costs and enhance service by providing our customers

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with
a "one-stop shop" for customer services related issues. We incurred cash restructuring charges of $6.1 million for the 2004 programs and carryover programs from prior years.

In
2003, we incurred cash restructuring charges of $2.9 million predominantly related to fixed overhead charges. In 2002, we incurred cash restructuring charges of
$2.5 million related to fixed overhead charges and a small carryover of plant closure charges related to our Dolton, Illinois extrusion plant closure. For more information on our restructuring
programs, please see footnote 8 to our audited combined financial statements.

Unaudited Pro Forma Condensed Combined Financial Data

We derived unaudited pro forma condensed combined financial data by applying pro forma adjustments to the historical year-end combined financial
statements of Indalex included elsewhere in this report. The unaudited pro forma condensed combined statements of operations data for the periods presented give effect to the Honeywell Acquisition and
the Transactions, including the offering of the outstanding notes, and the application of the net proceeds therefrom, as if the Honeywell Acquisition and the Transactions had occurred at the beginning
of the periods presented. For a description of the assumptions underlying the adjustments to the pro forma condensed combined financial data, please see Exhibit 99.1Unaudited Pro
Forma Condensed Combined Financial Data.

The
Honeywell Acquisition was accounted for under purchase accounting. As a result, a portion of the total cost of the Honeywell Acquisition was allocated to our assets and liabilities
based upon their fair value as of March 31, 2005, the date of the Honeywell Acquisition. The pro forma adjustments for the Honeywell Acquisition give effect to these purchase accounting
adjustments as of the first day of the periods presented. We have also accounted for the Holdings Acquisition under the purchase method of accounting. The pro forma adjustments related to the purchase
price allocation in connection with the Holdings Acquisition are subject to finalization of the tax indemnification and based on information obtained to date. The actual purchase accounting
adjustments described in the accompanying notes may differ from those reflected in these unaudited pro forma condensed combined financial statements. The actual amounts that we record based on our
final allocation of the purchase price, after giving effect to the tax indemnification, may differ materially from those recorded in our unaudited pro forma condensed combined financial data.

The
unaudited pro forma condensed combined financial data is for informational purposes only and should not be considered indicative of actual results that would have been achieved had
the Honeywell Acquisition or the Transactions been consummated on the date or for the periods indicated and do not purport to indicate results of operations as of any future date or any future period.

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Results of Operations

The following table sets forth the results of operations of Indalex for the periods from January 1, 2005 to March 31, 2005, from April 1,
2005 to December 31, 2005, from January 1, 2006 to February 1, 2006, from February 2, 2006 to December 31, 2006, and for the year ended December 31, 2007. The
data for the period from January 1, 2005 to March 31, 2005 have been derived from the audited combined financial statements of Predecessor 1. The data for the periods from
April 1, 2005 to December 31, 2005 and from January 1, 2006 to February 1, 2006 have been derived from the audited condensed combined financial statements for Predecessor
2. The data for the period from February 2, 2006 to December 31, 2006 and for the year ended December 31, 2007 have been derived from the audited condensed consolidated financial
statements for Successor.

|                            |                                                    | Predecessor 1 |     | Predecessor 2 |   | Successor |         |   |     |         |  
|--------------------------- | -------------------------------------------------- | ------------- | --- | ------------- | - | --------- | ------- | - | --- | ------- | -
|
|
|
|
|
|                            | Statement of income data:                          |               |     |               |   |           |         |   |     |         |  
|                            | Net sales                                          |               | $   | 239,849       |   | $         | 781,521 |   | $   | 100,019 |  
|                            | Costs and expenses:                                |               |     |               |   |           |         |   |     |         |  
|                            | Cost of sales                                      |               |     | 221,542       |   |           | 727,799 |   |     | 95,127  |  
|                            | Selling, general and administrative                |               |     | 15,593        |   |           | 35,933  |   |     | 5,548   |  
|                            | Management fees to affiliates                      |               |     | 700           |   |           | 1,131   |   |     | 125     |  
|Amortization of intangibles |                                                    |               |    |               |   | 8,282     |         |   | 920 |         |  
|Other (income) expense      |                                                    |               | 993 |               |   | (825      | )       |   | 195 |         |  
|                            | Restructuring charges                              |               |     | 694           |   |           | (222    | ) |     |        |  
|                            | Impairment of long-lived assets                    |               |     | 381           |   |           | 636     |   |     |        |  
|                            | (Gain) loss on disposal of assets                  |               |     | (274          | ) |           | (146    | ) |     |        |  
|                            | Mark-to-market on derivatives                      |               |     | 285           |   |           | (1,200  | ) |     | (3,619  | )
|                            |                                                    |               |     |               |   |           |         |   |     |         |  
|                            | Total costs and expenses                           |               |     | 239,914       |   |           | 771,388 |   |     | 98,296  |  
|                            |                                                    |               |     |               |   |           |         |   |     |         |  
|                            | Income (loss) from operations                      |               |     | (65           | ) |           | 10,133  |   |     | 1,723   |  
|                            | Other income (expense):                            |               |     |               |   |           |         |   |     |         |  
|                            | Interest to affiliatesnet                         |               |     | (1,208        | ) |           | (3,712  | ) |     |        |  
|                            | External interestnet                              |               |     |              |   |           | (189    | ) |     | (24     | )
|                            | Deferred financing costs                           |               |     |              |   |           |        |   |     |        |  
|                            | Interest income                                    |               |     |              |   |           |        |   |     |        |  
|                            | Loss on redemption of notes                        |               |     |              |   |           |        |   |     |        |  
|                            | Income (loss) from equity method investment in AAG |               |     | 1,557         |   |           | 9,380   |   |     | 643     |  
|                            | Gain on sale of equity method investment in AAG    |               |     |              |   |           |        |   |     |        |  
|                            | Affiliated acquisition fees                        |               |     |              |   |           |        |   |     |        |  
|                            | Dividend income from affiliates                    |               |     | 9,077         |   |           |        |   |     |        |  
|                            |                                                    |               |     |               |   |           |         |   |     |         |  
|                            | Income (loss) before income taxes                  |               |     | 9,361         |   |           | 15,612  |   |     | 2,342   |  
|                            | Income tax (benefit) provision                     |               |     | 9             |   |           | 1,912   |   |     | 703     |  
|                            |                                                    |               |     |               |   |           |         |   |     |         |  
|                            | Income (loss) from continuing operations           |               |     | 9,352         |   |           | 13,700  |   |     | 1,639   |  
|                            | Discontinued operations                            |               |     | (50           | ) |           |        |   |     |        |  
|                            |                                                    |               |     |               |   |           |         |   |     |         |  
|                            | Net income (loss)                                  |               | $   | 9,302         |   | $         | 13,700  |   | $   | 1,639   |  
|                            |                                                    |               |     |               |   |           |         |   |     |         |  
|                            | Other operating data:                              |               |     |               |   |           |         |   |     |         |  
|                            | Pounds shipped                                     |               |     | 154,698       |   |           | 470,887 |   |     | 52,456  |  

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Year ended December 31, 2007 Compared to Pro Forma Year ended December 31, 2006

Net sales.Net sales decreased by $137.6 million, or 11.1%, from $1,242.9 million in
the pro forma year ended December 31, 2006 to $1,105.3 million in the year ended December 31, 2007. Shipment volume fell 14.6% as a result of weak market demand, particularly in
the Residential Building and Construction, Transportation and Distribution end-user markets. Net sales were positively impacted by higher average base aluminum prices that are largely
passed on to our customers. Base aluminum prices increased on average by 3.7% in the year ended December 31, 2007 as compared to the pro forma year ended December 31, 2006. The increase
in the relative value of the Canadian dollar versus the U.S. dollar resulted in a $17.7 million increase in net sales.

Cost of sales.Cost of sales decreased by $97.1 million, or 8.5%, from $1,146.0 million
in the pro forma year ended December 31, 2006 to $1,048.9 million in the year ended December 31, 2007, due primarily to lower volume, but partially offset by higher base metal
costs, and higher unit labor, natural gas and electricity costs. Application of LIFO valuation to inventories resulted in a $2.3 million decrease in cost of sales. Depreciation decreased by
$0.9 million, or 2.7%, in the year ended December 31, 2007, primarily due to the elimination of depreciation on our Winton and Watsonville facilities.

Selling, general and administrative expenses.Selling, general and administrative expenses decreased
by $8.9 million, or 14.6%, from $60.8 million in the pro forma year ended December 31, 2006 to $51.9 million in the year ended December 31, 2007. The decline was due
to lower employee incentive compensation, reduced overhead and bad debt expenses.

Management fees to affiliates.Management fees to affiliates decreased by $0.6 million, or
38.2%, from $1.7 million in the pro forma year ended December 31, 2006 to $1.1 million in the year ended December 31, 2007, because our EBITDA was lower. Management fees to
affiliates reflects expenses of $1.0 million annually, or 2% of our EBITDA, whichever is greater, payable to an affiliate of Sun Capital Partners.

Amortization of intangibles.Amortization of intangibles decreased by $1.5 million, or 12.8%,
from $11.7 million in the pro forma year ended December 31, 2006 to $10.2 million in the year ended December 31, 2007. The decrease was due to the use of the declining
balance method for amortization. The amortization expense was incurred as a result of the application of purchase accounting in connection with the Honeywell acquisition and the Indalex Holdings
acquisition, which resulted in an increase in the value of a trademark and our customer lists.

Other (income) expense.Other expense for the year ended December 31, 2007 was
$4.6 million, which consisted primarily of foreign currency losses for certain of our Canadian assets and liabilities due to increases in the Canadian dollar versus the U.S. dollar.

Other
expense for the pro forma year ended December 31, 2006 was $0.5 million, which included expenses related to foreign currency losses of $0.4 million for certain
of our Canadian assets and liabilities due to increases in the Canadian dollar versus the U.S. dollar and $0.1 million of other miscellaneous expenses.

Restructuring charges.In the year ended December 31, 2007, we recorded restructuring charges
of $3.7 million, of which $2.2 million was related to the closure of our Watsonville, California facility and $1.1 million was related to an overhead restructuring program
initiated in September of 2006, which resulted in the termination of 33 employees during the year ended December 31, 2007. We also recorded $0.3 million of restructuring expense related
to the closure of our Girard, Ohio facility, which was announced on January 9, 2008. An additional $0.1 million was related to a restructuring program initiated prior to 2006.

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In
the pro forma year ended December 31, 2006, we recorded restructuring charges of $1.8 million, which was related to an overhead restructuring program initiated in
September of 2006.

Impairment of long-lived assets.In the year ended December 31, 2007, we recorded
asset impairments of $3.9 million related to the closure of our Girard, Ohio facility; $2.6 million related to the idling of a paint line and a brite dip anodizing line at our Modesto,
California facility; $2.0 million related to our Watsonville, California facility; $0.4 million related to the teardown of a building at our Connersville, Indiana facility;
$0.2 million related to the scrapping of components of a surplus handling system at our Kokomo, Indiana facility; $0.2 million related to the idling of a small powder coat line at our
Gainesville, Georgia facility; and $0.1 million related to the idling of the paint line at our Calgary, Alberta facility.

In
the pro forma year ended December 31, 2006, we recorded impairment charges of $3.4 million related to the closure of our Watsonville, California plant,
$2.7 million related to the sale of our drawn tube facility in Winton, North Carolina, $0.5 million related to the writedown of a press in our Connersville, Indiana plant, and
$0.4 million related to our closed Fostoria, Ohio plant.

(Gain) loss on disposal of assets.In the year ended December 31, 2007 and in the pro forma
year ended December 31, 2006, we recorded gains and losses incurred in the ordinary course of business.

Mark-to-market on derivatives.In accordance with FAS 133, we recorded
a loss on our forward aluminum hedging contracts of $3.6 million in the year ended December 31, 2007 due to lower market prices in relation to the price at which we established our
hedges. In addition, we recorded a loss of $1.2 million related to interest rate swap contracts for the year ended December 31, 2007. In the pro forma year ended December 31,
2006, we recorded a loss on our derivatives of $3.9 million due to lower market prices in relation to the price at which we established our hedges.

Income (loss) from operations.Income from operations decreased by $38.1 million, from income
of $8.9 million in the pro forma year ended December 31, 2006 to a loss of $29.2 million in the year ended December 31, 2007, primarily as a result of the decrease in
sales, combined with the increase in other expenses, restructuring charges, and mark-to-market expenses, partially offset by lower selling, general and administrative expenses,
and lower amortization expense.

Interest expense.Interest expense decreased by $3.6 million, from $38.8 million in the
pro forma year ended December 31, 2006 to $35.2 million in the year ended December 31, 2007. The decrease was primarily caused by lower interest expense related to the
111/2% Notes, as a result of our repurchase of $71.9 million aggregate principal amount of the notes on June 21, 2007.

Deferred financing costs.Amortization expense for deferred financing costs of $2.3 million is
included in deferred financing costs for the year ended December 31, 2007. In the pro forma year ended December 31, 2006, amortization expense for deferred financing costs was
$2.4 million. The decline was a result of the company's repurchase of notes with an aggregate principal amount of $71.9 million in June of 2007, which resulted in the expense of
$2.8 million of deferred financing costs which were being amortized over eight years during the year ended December 31, 2007. The expense was included in the statement of income as part
of the loss on redemption of notes.

Interest income.In the Year ended December 31, 2007, we recorded interest income of
$0.5 million.

Loss on redemption of notes.On June 21, 2007, we repurchased $71.9 million aggregate
principal amount of the notes with proceeds from the sale of our investment in AAG. The notes were repurchased at a 5% premium plus accrued interest. As a result of the tender offer for the notes, we
recorded a loss of
$7.1 million, including a repurchase premium of $3.6 million, unamortized debt issue costs of $2.8 million, unamortized discount on notes of $0.7 million, and transaction
costs of $32,000.

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Income from equity method investment in AAG.Income from our equity investment in AAG decreased by
$3.6 million, from $12.5 million in the pro forma year ended December 31, 2006 to $8.9 million in the year ended December 31, 2007. The decrease was due to the fact
that we sold our investment in AAG in May of 2007.

Gain on sale of equity method investment in AAG.In the year ended December 31, 2007, we sold
our equity method investment in AAG, resulting in a $51.2 million gain.

Affiliated acquisition fees.In the pro forma year ended December 31, 2006, we incurred
affiliated acquisition expenses of $5.5 million related to the Transactions, payable to an affiliate of Sun Capital Partners.

Income tax provision.We recorded an income tax benefit of $6.2 million in the year ended
December 31, 2007 compared to a tax benefit in the pro forma year ended December 31, 2006 of $6.3 million. The primary reason for the decrease in the income tax benefit was the
FIN 48 position taken related to the sale of our equity method investment in AAG.

In
the year ended December 31, 2007 we eliminated a deferred tax liability of $7.3 million for book to tax differences related to certain inventory amounts. The liability
existed at the time of the Indalex Holdings Finance, Inc. acquisition and was determined to no longer be necessary based on information recently provided by the seller. The liability was
reversed against goodwill in the amount of $3.5 million, reducing goodwill to zero. The remaining liability of $3.7 million was reversed against intangible assets. There was no impact on
the income tax provision for the period.

Results of Predecessor 2 for the period from January 1, 2006 to February 1, 2006

Net sales.Net sales were $100.0 million for the period from January 1, 2006 to
February 1, 2006, with shipments of 52.5 million pounds and an average selling price of $1.91 per pound.

Cost of sales.Cost of sales was $95.1 million for the period from January 1, 2006 to
February 1, 2006, with an average cost of $1.81 per pound shipped.

Selling, general and administrative expenses.Selling, general and administrative expenses were
$5.5 million for the period from January 1, 2006 to February 1, 2006.

Results of Successor for the period from February 2, 2006 to December 31, 2006

Net sales.Net sales were $1,142.8 million for the period from February 2, 2006 to
December 31, 2006, with shipments of 603.2 million pounds and an average selling price of $1.89 per pound.

Cost of sales.Cost of sales was $1,058.7 million for the period from February 2, 2006
to December 31, 2006, with an average cost of $1.76 per pound shipped.

Selling, general and administrative expenses.Selling, general and administrative expenses were
$55.0 million for the period from February 2, 2006 to December 31, 2006.

Pro Forma Year Ended December 31, 2006 Compared to Pro Forma Year Ended December 31, 2005

Net sales.Net sales were $1,242.9 million for the pro forma results for 2006. Shipments were
655.6 million pounds, at an average selling price of $1.90 per pound. Shipment volume grew in the year ended December 31, 2006 as a result of strong market demand, particularly in the
Transportation, Residential Building and Construction, and Commercial Building and Construction end-user markets. Conversion margin was up 2.7 cents per pound in the year ended
December 31, 2006 as compared to the prior year. Net sales were positively impacted by higher average base aluminum prices which are largely passed on to our customers. Base aluminum prices
increased on average by 33.0% in the year

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ended
December 31, 2006 as compared to the prior year. The increase in the relative value of the Canadian dollar versus the U.S. dollar resulted in an increase in net sales of
$23.1 million.

Cost of sales.Cost of sales for the pro forma year ended December 31, 2006 was
$1,146.0 million or 21.2% higher than 2005. During the period, we experienced higher base aluminum prices, higher volume, and, to a lesser extent, higher energy costs, partially offset by lower
unit labor costs as compared to the prior year. We increased our conversion prices in 2006 to counteract the higher freight, natural gas and electricity costs.

Selling, general and administrative expenses.Selling, general and administrative expenses for the
pro forma year ended December 31, 2006 was $60.8 million or 17.5% higher than 2005. During the period, we incurred $4.7 million in one-time costs related to the
Transactions and the registration of the 111/2% Notes, an increase of $1.8 million in employee incentive compensation, and an additional $0.7 million in costs of being a
stand alone company.

Management fees to affiliates.Management fees to affiliates for the pro forma year ended
December 31, 2006 were $1.7 million. Management fees to affiliates reflects expenses of $1.0 million annually, or 2% of our EBITDA, whichever is greater, payable to an affiliate
of Sun Capital Partners.

Amortization of intangibles.Amortization of intangibles for the pro forma year ended
December 31, 2006 was $11.7 million. As a result of the Transactions, we acquired $89.0 million of intangibles, including trademark and customer lists, which are being amortized
over their useful life using a declining balance method.

Other (income)/expense.Other expense for the pro forma year ended December 31, 2006 was
$0.5 million, which included expenses related to foreign currency losses of $0.4 million for certain of our Canadian assets and liabilities due to increases in the Canadian dollar versus
the U.S. dollar and $0.1 million of other miscellaneous expenses.

Restructuring.In the pro forma year ended December 31, 2006, we recorded restructuring
charges of $1.8 million, which was related to an overhead restructuring program initiated in September of 2006.

Impairment of long-lived assets.Impairment of long-lived assets for the pro
forma year ended December 31, 2006 was $7.2 million, as a result of an impairment charge of $3.4 million related to the closure of our Watsonville, California plant; an impairment
charge of $2.7 million related to the sale of our Winton, North Carolina plant, a charge of $0.5 million related to the closure of a press at our Connersville, Indiana plant, and a
charge of $0.4 million related to our closed Fostoria, Ohio plant.

(Gain) loss on disposal of assets.In the pro forma year ended December 31, 2006, we recorded
losses incurred in the ordinary course of business.

Mark-to-market on derivatives.In accordance with FAS 133, we recorded
a loss on our forward aluminum hedging contracts of $3.9 million for the pro forma year ended December 31, 2006 due to lower market prices in relation to the price at which we
established our hedges.

Income from operations.Income from operations for the pro forma year ended December 31, 2006
was $8.9 million, or $2.1 million lower than 2005, primarily as a result of higher asset impairment expenses, higher mark-to-market expenses, one time costs
related to the transactions and higher restructuring costs, partially offset by higher shipment volumes and higher conversion margins.

Interest expense.Interest expense for the pro forma year ended December 31, 2006 was
$38.8 million, including interest expense on the notes and the revolving credit facility.

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Deferred financing costs.Amortization expense for deferred financing costs for the pro forma year
ended December 31, 2006 was $2.4 million. As part of the Transactions, Indalex incurred $16.8 million in debt issue costs, which are being amortized using the straight line method
over the life of the debt.

Income from equity method investment in AAG.Equity income from AAG for the pro forma year ended
December 31, 2006 was $12.5 million, $1.5 million higher than 2005. Higher volumes related to the start up of their new facility were partially offset by costs related to the
startup of the new facility.

Affiliated acquisition fees.Affiliated acquisition fees for the pro forma year ended
December 31, 2006 were $5.5 million, as a result of fees paid to affiliates of Sun Capital Partners related to the Transactions.

Income tax (benefit) provision.Income tax for the pro forma year ended December 31, 2006 was
a benefit of $6.3 million, as interest expense more than offset income from operations, resulting in a loss before income taxes for the period.

Results of Predecessor 1 for the period from January 1, 2005 to March 31, 2005

Net sales.Net sales were $239.8 million for the period from January 1, 2005 to
March 31, 2005, with shipments of 154.7 million pounds and an average selling price of $1.55 per pound.

Cost of sales.Cost of sales was $221.5 million for the period from January 1, 2005 to
March 31, 2005, with an average cost of $1.43 per pound.

Selling, general and administrative expenses.Selling, general and administrative expenses were
$15.6 million for the period from January 1, 2005 to March 31, 2005.

Results of Predecessor 2 for the period from April 1, 2005 to December 31, 2005

Net sales.Net sales were $781.5 million for the period from April 1, 2005 to
December 31, 2005, with shipments of 470.9 million pounds and an average selling price of $1.66 per pound.

Cost of sales.Cost of sales was $727.8 million for the period from April 1, 2005 to
December 31, 2005, with an average cost of $1.55 per pound shipped.

Selling, general and administrative expenses.Selling, general and administrative expenses were
$35.9 million for the period from April 1, 2005 to December 31, 2005.

Liquidity and Capital Resources

Cash Flows

Cash flows from operating activities include cash dividends, if any, received from AAG. We were contractually entitled to receive dividends equal to our 25% share
of at least 40% of AAG's annual net realized profits. There was no requirement as to when these dividends may be paid but we received the annual payment ranging from December to June. We recognized
these dividends in our statements of cash flows in the period in which these dividends were received. These dividends represent a material portion of our annual cash flows from operations.

Cash
flows from operating activities are materially impacted by movements in base aluminum costs which represent a high percentage of both our costs and selling price which also impacts
accounts receivable and inventory. Base aluminum costs have been very volatile over time and in 2007 averaged the highest level in at least thirty years. We pass through these costs to our customers
so they have little impact on our margins but price movements in base aluminum have a material impact on our working capital. Each 1 cent per pound increase in base aluminum will have an approximate

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$0.6 million
impact on our accounts receivable. Inventory and accounts payable tend to offset each other.

Operating activities.Net cash from operations was $21.1 million in the year ended
December 31, 2007, primarily as a result of lower accounts receivable and inventories, partially offset by lower accounts payable.

Net
cash from operations for the period from February 2, 2006 to December 31, 2006 was $31.3 million, as accounts receivable and prepaid expenses dropped
significantly during the period, partially offset by lower accrued expenses, as overall business levels experienced a seasonal decrease toward the end of the period. Cash flow from operations was
$3.3 million for the period from January 1, 2006 to
February 1, 2006, primarily as a result of higher accrued expenses, partially offset by an increase accounts receivable.

In
2005, cash flow from operations was $58.0 million for the period from April 1, 2005 through December 31, 2005. Working capital fell during the period, primarily
as a result of lower inventories and accounts receivable. Cash used in operations was $31.2 million for the period from January 1, 2005 to March 31, 2005. Working capital
increases were driven by higher accounts receivable and inventories.

Investing activities.Net cash from investing activities was $114.6 million in the year ended
December 31, 2007, primarily as a result of the sale of our equity method investment in AAG, which generated $151.2 million in cash, net of transaction costs. Capital expenditures for
the year ended December 31, 2007 were $36.8 million.

Net
cash used in investing activities for the period from February 2, 2006 to December 31, 2006 was $434.5 million. During the period from February 2, 2006 to
December 31, 2006, the Holdings Acquisition used $418.3 million of cash, and $1.7 million of cash was used to pay related transaction costs. Capital expenditures during the period
from February 1, 2006 to December 31, 2006 were $21.3 million, proceeds from the sale of property, plant and equipment were $2.2 million and proceeds from the sale of a
business were $4.5 million. Net cash used in investing activities was $3.0 million for the period from January 1, 2006 to February 1, 2006 which consisted of capital
expenditures.

In
2005, cash flow from investing activities was $18.2 million for the period from April 1, 2005 through December 31, 2005, including capital expenditures of
$20.2 million, and proceeds from the sale of fixed assets of $2.0 million. Cash used in investing activities was $8.0 million for the period from January 1, 2005 to
March 31, 2005, including capital expenditures of $8.8 million, and proceeds from the sale of property, plant and equipment of $0.7 million.

Financing activities.Net cash used in financing activities was $142.8 million in the year
ended December 31, 2007, consisting of a distribution to shareholders of $76.6 million and redemption of notes of $75.5 million, partially offset by revolver borrowings of
$10.5 million.

Net
cash from financing activities for the period from February 2, 2006 to December 31, 2006 was $414.2 million, as a result of net proceeds from the issuance of the
notes of $266.6 million, revolver borrowings of $55.7 million and capital contributions of $111.3 million during this period, partially offset by debt issuance costs of
$16.8 million and a dividend of $1.5 million paid to our shareholders during this period.

Net
cash flow used in financing activities was $8.5 million for the period from January 1, 2006 to February 1, 2006, primarily as a result of a dividend of
$6.8 million paid to Honeywell during the period.

In
2005, cash flow used in financing activities was $46.5 million for the period from April 1, 2005 through December 31, 2005, as a result of $14.7 million
paid on notes payable to affiliates, $25.8 million in dividends and distributions, and the repayment of industrial revenue bonds in the

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amount
of $6.0 million. Cash from financing activities was $30.6 million for the period from January 1, 2005 to March 31, 2005 as a result of collections on notes
receivable from affiliates.

The
primary sources of liquidity for our business are cash flow generated from operations and borrowings under our revolving credit facility. We expect that our principal uses of cash
will be debt service requirements, working capital and capital expenditures.

Debt and Commitments

We have significant debt service obligations. As of December 31, 2007, we had outstanding $268.9 million in aggregate indebtedness, with an
additional $52.3 million of borrowing capacity available under our revolving credit facility, net of $9.2 million of outstanding letters of credit, which reduce availability. Our
liquidity requirements are significant, primarily due to debt service requirements and the cyclicality of our business. Our total interest expense for the fiscal year ended December 31, 2007
was $35.2 million. Our total pro forma interest expense for the fiscal year ended December 31, 2005 and 2006 would have been $36.7 million and $38.8 million, respectively.

Revolving Credit Facility

We entered into the revolving credit facility on February 2, 2006. The revolving credit facility provides for a first-priority secured
five-year asset-based revolving credit facility in an aggregate principal amount of up to $200.0 million, all of which is available in the form of loans denominated in U.S. dollars
to Indalex Holding Corp. and up to $80.0 million of which is available as a revolving credit sub-facility in the form of loans denominated in Canadian dollars and loans denominated
in U.S. dollars to Indalex Limited or bankers' acceptances denominated in Canadian dollars, subject in each case to the borrowing base limitations described below. Up to an aggregate of
$30.0 million will be available to Indalex Holding Corp., Indalex Limited and subsidiaries of Indalex Holding Corp., to the extent that Indalex Holding Corp. or Indalex Limited is a
co-applicant, for the issuance of letters of credit. As of December 31, 2007, borrowings under the revolving credit facility bore interest at a weighted average rate of 7.25% per
annum.

We
used the borrowings under the revolving credit facility, together with the proceeds of the cash equity contribution and the proceeds of the offering of the notes, to pay the purchase
price of the Holdings Acquisition, to pay the fees and expenses in connection with the Transactions and for general corporate purposes, including working capital.

The
aggregate amount of loans permitted to be made to Indalex Holding Corp. under the revolving credit facility may not exceed a borrowing base comprised of the eligible accounts
receivable, inventory, machinery and equipment and real property of Indalex Holding Corp. and its wholly owned domestic subsidiaries, subject to an aggregate total cap, when taken together with loans
made to Indalex Limited, of $200.0 million.

The
aggregate amount of loans permitted to be made to Indalex Limited under the Canadian revolving credit sub-facility may not exceed a borrowing base comprised of the
eligible accounts receivable, inventory, machinery and equipment and real property of Indalex Limited and its wholly owned Canadian subsidiaries, subject to an aggregate sub-cap of
$80.0 million and further subject to an aggregate total cap, when taken together with loans made to Indalex Holding Corp., of $200.0 million.

Our
obligations under the revolving credit facility are guaranteed on a first-priority secured basis by Holdings and each domestic subsidiary of Indalex Holding Corp. The obligations of
Indalex Limited under the Canadian revolving credit sub-facility will be guaranteed on a first-priority secured basis by Holdings, Indalex Holding Corp., each domestic subsidiary of
Indalex Holding Corp. and certain foreign subsidiaries of the Issuer, other than Indalex Limited.

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Indalex
Holding Corp.'s obligations under the U.S. portion of the revolving credit facility and the guarantees thereof are secured by a first-priority lien on all of the tangible and
intangible assets of Holdings, Indalex Holding Corp. and each domestic subsidiary of Indalex Holding Corp., as well as 100% of the capital stock of Indalex Holding Corp. and our domestic subsidiaries
and 65% of the capital stock of the foreign subsidiaries directly owned by us or any of our domestic subsidiaries. The obligations of Indalex Limited under the Canadian revolving credit
sub-facility and the guarantees thereof are secured by a first-priority lien on all of the tangible and intangible assets of Holdings, Indalex Holding Corp., Indalex Limited, each domestic
subsidiary of Indalex Holding Corp. and certain foreign subsidiaries of Indalex Holding Corp., as well as 100% of the capital stock of Indalex Holding Corp. and its domestic subsidiaries and 100% of
the capital stock of our foreign subsidiaries, including Indalex Limited.

Indalex
Holding Corp. and Indalex Limited may, at their option, increase the aggregate commitments under the revolving credit facility by an additional $40.0 million, subject to
the satisfaction of certain conditions precedent.

111/2% Second-Priority Senior Secured Notes due 2014

Indalex Holding Corp. issued 111/2% second-priority senior secured notes due 2014 (the "notes") on February 2, 2006. As of
December 31, 2007, $198.1 million aggregate principal amount of the notes was outstanding. The notes will mature in 2014 and are guaranteed on a second-priority secured basis by each of
our domestic subsidiaries that incurs indebtedness, and each of our foreign subsidiaries that enters into a guarantee of any of our senior indebtedness (other than indebtedness incurred by another
foreign subsidiary). On the closing date, the notes were guaranteed by each of our domestic subsidiaries and none of our foreign subsidiaries. Interest on the notes is payable
semi-annually in cash.

The
notes are secured by a second-priority lien on substantially all Indalex Holding Corp.'s and the guarantors' assets to the extent that such assets secure the borrowings under our
revolving credit facility and a second-priority pledge of 100% of Indalex Holding Corp.'s and its domestic subsidiaries' capital stock and 65% of the capital stock of our foreign subsidiaries directly
owned by Indalex Holding Corp. or any domestic subsidiary, in each case, subject to certain limitations, including the limitation that the capital stock will constitute collateral securing the notes
only to the extent that such capital stock can secure the notes without Rule 3-16 of Regulation S-X under the Securities Act requiring us to file separate
financial statements with the SEC or any other governmental agency (the "collateral cutback provision").

The
collateral under the security documents includes the capital stock of the following companies: Indalex Holding Corp., Indalex Inc., Indalex Limited, Dolton Aluminum
Company, Inc. and Caradon Lebanon Inc. In accordance with the collateral cutback provision, the collateral securing the notes and the related guarantees includes shares of capital stock
only to the extent that the applicable value of such capital stock, determined on an entity-by-entity basis, is less than 20% of the principal amount of the notes outstanding.
The applicable value of the capital stock of any entity is deemed to be the greatest of its par value, book value or market value. The book value and market value of the capital stock of
Indalex Inc. and the market value of the capital stock of Indalex Holding Corp. exceeded 20% of the principal amount of the notes as of December 31, 2007. As a result, the pledge of the
capital stock of these entities with respect to the notes is limited to capital stock of each such entity with an applicable value of less than 20% of the principal amount of the notes, or
$39.6 million.

The
capital stock of the following companies does not constitute collateral under the security documents: Indalex UK Limited, Indalex Holdings (B.C.) Ltd., 6326765
Canada Inc. and Novar Inc.

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As
of December 31, 2007, the book value of each company whose capital stock constitutes collateral under the security documents was as follows:



In
the case of Indalex Inc., the applicable value capital stock that constitutes collateral under the security documents is limited to less than $39.6 million under the
collateral cutback provision.

The
Company determined the book value of each company whose capital stock constitutes collateral under the security documents based on the book value of the equity securities of each
such company as carried on the Company's balance sheet as of December 31, 2007 prepared in accordance with U.S. GAAP.

Management
estimated that the market value of the capital stock of Indalex Holding Corp. as of December 31, 2007 was $111.3 million. Therefore, the applicable value of
capital stock of Indalex
Holding Corp. that constitutes collateral under the security documents is limited to less than $39.6 million under the collateral cutback provision.

Management
estimated that the market value of the capital stock of Indalex Limited as of December 31, 2007 was $35.0 million, of which 65%, or $22.7 million,
constitutes collateral under the terms of the security documents. The market value of the capital stock of each of Dolton Aluminum Company, Inc. and Caradon Lebanon Inc. is zero because
there are no assets held by these entities.

The
portion of the capital stock of Indalex Holding Corp. and the subsidiaries constituting collateral securing the notes and the related guarantees may decrease or increase as the
applicable value of such capital stock changes. As long as the applicable value of the capital stock of each of Indalex Holding Corp. and Indalex Inc. exceeds 20% of the principal amount of the
notes, the value of the capital stock of each of those entities securing the notes and related guarantees will not change. If the applicable value of the capital stock of any of Indalex Holding Corp.
or Indalex Inc. falls below 20% of the principal amount of the notes, 100% of the capital stock of that entity will secure the notes and related guarantees. As long as the applicable value of
65% of the capital stock of Indalex Limited is less than 20% of the principal amount of the notes, 65% of the capital stock of Indalex Limited will secure the notes and the related guarantees. If the
applicable value of 65% of the capital stock of Indalex Limited exceeds 20% of the aggregate principal amount of the notes, the value of the capital stock of Indalex Limited securing the notes and the
related guarantees will be limited to less than 20% of the aggregate principal amount of the notes. As long as the applicable value of the capital stock of each of Dolton Aluminum Company, Inc.
and Caradon Lebanon Inc. is less than 20% of the principal amount of the notes, 100% of the capital stock of each of those entities will secure the notes and related guarantees. If the
applicable value of the capital stock of either Dolton Aluminum Company, Inc. or Caradon Lebanon Inc. exceeds 20% of the aggregate principal amount of the notes, the value of the capital
stock of that entity securing the notes and related guarantees will be limited to less than 20% of the aggregate principal amount of the notes.

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As
of December 31, 2007, the book value of capital stock, as a percentage of the principal amount of the notes, of each entity whose capital stock constitutes collateral exceeding
10% of the principal amount of the notes was as follows:



The
indenture governing the notes, among other things, limits Indalex Holding Corp.'s ability and the ability of its restricted subsidiaries to: incur additional indebtedness; pay
dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments; enter into agreements that restrict distributions from restricted subsidiaries;
sell or otherwise dispose of assets, including capital stock of restricted subsidiaries; enter into transactions with affiliates; create or incur liens; enter into sale/leaseback transactions; and
merge, consolidate or sell substantially all of our assets. These covenants are subject to important exceptions and qualifications.

Other

Industrial revenue bondsIn November 1998, the Hertford County Industrial Facilities and Pollution
Control Financing Authority issued Industrial Development Revenue Bonds in the amount of $6 million and loaned the proceeds to Indalex to fund an expansion of Indalex's Ahoskie, North Carolina,
billet casting facility. The bonds were tax-exempt with interest at a variable rate, which repriced every seven days, and were secured by an irrevocable letter of credit in the amount of
$6.1 million between Indalex and the bond-paying agent. As of December 31, 2004 and 2003, the interest rate on the bonds was approximately 1.8% and 1.4%, respectively.
Interest was payable monthly and amounted to $0.1 million per year for 2003, 2004 and 2005. The bonds were scheduled to mature on November 1, 2013. However, due to the inactivity at the
facility, Indalex was not in compliance with the original terms of the bonds, and the bonds were classified as a current liability as of December 31, 2004 and 2003. The bonds were repaid on
November 1, 2005.

Indebtedness with affiliatesIndalex had notes payable to Novar plc and other affiliated
companies totaling $141.7 million at December 31, 2004.

As
of December 31, 2005, there were no notes payable to Novar plc or any of its affiliates outstanding. Any notes payable outstanding on the closing date were cancelled in
connection with the closing of the Honeywell Acquisition.

Off-balance sheet arrangementsAt December 31, 2006 and at December 31,
2007, we did not have any relationships with unconsolidated entities (other than AAG) or financial partnerships, such as entities often referred to as structured finance or special purpose entities,
which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Pursuant
to the AAG shareholders agreement, we agreed in certain limited circumstances upon the request of AAG's lenders to provide guarantees of certain borrowings of AAG that were
outstanding on June 8, 2001, the date we entered into the AAG shareholders agreement, in proportion to our approximately 25% equity ownership in AAG in the event that any of such borrowings are
cancelled by a lender or are required by a lender to be restructured or renewed. We have not guaranteed or been asked to guarantee any borrowings of AAG under this provision since the execution of the
AAG shareholders agreement on June 8, 2001. As a result of the sale of our equity method investment in AAG, we are no longer subject to any guarantees of AAG's borrowings.

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Capital Expenditures

We
made $36.8 million in capital expenditures in 2007. Our spending was for dies, quality and efficiency projects and replacement projects, and included $10.8 million
related to an expansion at our Connersville, Indiana plant; $2.1 million related to a capacity expansion at our Modesto, California plant; $1.1 million for a material handling system
upgrade at our Mountaintop, Pennsylvania plant; $1.0 million for billet casting upgrades at our City of Industry, California plant; $0.4 million for a billet saw at our Burlington, North
Carolina plant, and $0.4 million for a billet furnace and saw at our Elkhart, Indiana plant.

We
made $24.3 million in capital expenditures in 2006. Our spending was for dies, quality and efficiency projects and replacement projects, and included $2.7 million in
expenditures related to the addition of the powder coat line in Gainesville, Georgia as well as $1.6 million for a material handling system in our Burlington, North Carolina plant, and
$1.3 million for an efficiency project in our Toronto, Ontario casting facility.

We
made $29.0 million in capital expenditures in 2005. Our spending supported a number of growth and cost savings initiatives, such as a powder coat line, a shipping
expansion/line improvement in Vancouver and a packing line upgrade in Connersville, Indiana. The remaining spending was for dies, quality projects and replacement projects.

Capital
expenditures for 2008 are expected to be approximately $35.0 million.

We
believe that funds generated from operations and anticipated borrowing capacity under our revolving credit facility will be adequate to fund debt service requirements, capital
expenditures and working capital requirements. Our ability to continue to fund these items may be affected by general economic, financial, competitive, legislative and regulatory factors outside of
our control.

Contractual Obligations Summary

The following table reflects our contractual obligations and commitments as of December 31, 2007.

Contractual Obligations and Commitments by Fiscal Year

Total

Less than
1 Year

1-3 Years

3-5 Years

More than
5 Years(in millions)Letters of credit

$
9.2

$


$


$


$
9.2Revolving credit facility


67.5








67.5


Operating leases


7.7


2.9


3.4


1.0


0.4Capital leases


5.7


2.0


3.7





Purchase obligations


337.4


291.4


46.0





Long-term debt


198.1











198.1Fixed interest payments


148.1


22.8


45.6


45.6


34.1Total

$
773.7

$
319.1

$
98.7

$
114.1

$
241.8


The
table above does not reflect variable rate interest payments on our revolving credit facility. Based on the weighted average interest rate of 7.25% and outstanding borrowings of
$67.5 million as of December 31, 2007, our annual variable interest rate payments would be $4.9 million.

The
Company has uncertain tax benefits of $19.3 million as of December 31, 2007. Uncertain tax benefits are excluded from the table since we are unable to estimate the
timing of payments.

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Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires the appropriate application of certain accounting policies, many of which require us to
make estimates and assumptions about future events and their impact on amounts reported in the financial statements and related notes. Since future events and the impact of those events cannot be
determined with certainty, the actual results will inevitably differ from our estimates. These differences could be material to the financial statements.

We
believe our application of accounting policies, and the estimates inherently required therein, are reasonable. These accounting policies and estimates are constantly reevaluated, and
adjustments are made when facts and circumstances dictate a change. Historically, our application of accounting policies has been appropriate, and actual results have not differed materially from
those determined using necessary estimates.

The
following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.

Derivative Financial Instruments

Derivative financial instruments are used to hedge existing aluminum inventory and anticipated purchases of aluminum and natural gas and are, therefore, held for
purposes other than trading. These instruments may involve elements of credit and market risk in excess of the amounts recognized in the financial statements. We monitor our positions and the credit
quality of counterparties, consisting primarily of major financial institutions, and do not anticipate nonperformance by any counterparty.

To
manage foreign currency exposure, we enter into foreign currency forward contracts. The contracts are reported in the combined financial statements at fair value using a mark to
market valuation.

We
account for financial instruments in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 138, Accounting
for Certain Derivative Instruments and Certain Hedging Activities.

SFAS
No. 133 requires that an entity recognize all derivatives as either assets or liabilities measured at fair value. In accordance with our risk management policy, derivatives
are limited to futures, forwards, swaps and options, which are used to mitigate commodity price fluctuations specifically related to
aluminum and natural gas. These hedging relationships do not qualify for hedge accounting as defined by SFAS No. 133. Therefore, the derivatives are marked to market through the income
statement.

As
of December 31, 2007, we had 297 contracts to purchase 62.3 million pounds of aluminum at prices per pound between $1.09 and $1.29. These purchase contracts were
scheduled to mature between January 2008 and June 2009, and the notional amount was $65.3 million. As of December 31, 2007, we had 39 contracts to sell 108.9 million pounds of
aluminum at prices between $1.07 and $1.20. These sales contracts were scheduled to mature between January 2008 and June 2008, and the notional amount was $117.9 million.

We
sell products manufactured in Canada to U.S. customers, which gives rise to a foreign exchange rate risk. The purpose of our foreign currency hedging activity is to protect us from
the risk that the eventual U.S. dollar net cash outflows resulting from foreign purchases or net cash inflows denominated in foreign currency will be adversely affected by the changes in exchange
rates. These hedging relationships do not qualify for hedge accounting as defined by SFAS No. 133. Therefore, the derivatives are marked to market through the income statement. As of
December 31, 2007, we had nine contracts to buy $10.5 million Canadian dollars (CAD) at prices per US dollar between CAD

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$0.98
and CAD $1.02 (actual). These purchase contracts were scheduled to mature between January 2008 and February 2008, and the notional amount was $10.5 million. In addition, as of
December 31, 2007, we had two contracts to purchase 8.5 million Swedish Krona (SEK) at prices per US dollar between SEK 6.72 and SEK 6.73 (actual). These purchase contracts were
scheduled to mature between January 2008 and March 2008, and the notional amount was $1.3 million.

The
Company's short-term debt consists of a revolving credit facility providing for borrowings up to $200.0 million. (See Note 15.) In order to manage the mix
of fixed and floating rates in its revolving credit facility, the Company has entered into interest rate swaps to change the characteristics of interest rate payments from short-term
LIBOR-based variable rate payments to fixed-rate payments for a portion of its total revolver balance. As of December 31, 2007, the Company had three interest rate swap contracts
with a weighted average fixed rate of 5.1%. The contracts are scheduled to mature between July 2009 and September 2009, and the notional amount was $57,500.

Allowance for Doubtful Accounts

The allowance for doubtful accounts is determined by management based on the Company's historical losses, specific customer circumstances, and general economic
conditions. Periodically, management reviews accounts receivable and adjusts the allowance based on current circumstances and charges off uncollectible receivables when all attempts to collect have
failed.

Pension Obligations

We maintain various defined benefit pension plans which provide retirement benefits for certain employees including various supplemental executive retirement
plans. The assets of the plans are invested primarily in bond-based funds, debt and equity securities, and short-term cash investments.

Pension
costs are calculated using the accrued benefit model of actuarial valuation with projected earnings where appropriate. For accounting purposes, the pension plan is actuarially
valued annually, with the measurement date being the last day of the fiscal year and adjustments resulting from these valuations are reflected in earnings over the expected average remaining service
life of the relevant employee group.

The
pension plans are valued using the projected unit credit method of actuarial valuation. Funding requirements are adjusted to reflect the results of plan actuarial valuations, which
are done annually. For funding purposes, surpluses are offset against annual contributions until exhausted, while deficits are funded over periods prescribed by law.

In
connection with the purchase of Indalex by Novar plc, we acquired the unfunded defined benefit plans, which provide health care and life insurance benefits upon retirement for
substantially all salaried employees of Indalex. The extent of benefits provided is dependent upon the retiree's years of service, compensation, age and retirement date.

The
Medicare Prescription Drug, Improvement and Modernization Act of 2003 was reflected as of January 1, 2004 assuming that Indalex, Inc. will continue to provide a
prescription drug benefit to participants who retired prior to January 1, 2000 that is at least actuarially equivalent to Medicare Part D and that Indalex, Inc. will receive the
federal subsidy. The prescription drug benefit for all other retirees is assumed to not meet the actuarial equivalence test (equivalent to Medicare part D) and therefore no subsidy savings is
reflected. As a result of reflecting the effects of Medicare reform as of January 1, 2004, the accumulated pension benefit obligation at January 1, 2004 decreased by $0.8 million
from $9.7 million to $8.9 million. The net periodic postretirement benefit cost decreased by $0.1 million from $0.9 million to $0.8 million.

We
contributed $5.7 million to pension and other post-retirement benefit plans during 2007.

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Our
investment committee reviews our benefit obligations no less than annually with the objective of maintaining a fully funded status for both the accumulated benefit obligation and the
projected benefit obligation. The performance goal set for the plans' assets is to achieve a long-term rate of return no less than 7.0%.

For
measurement purposes, an 9.0% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2006. The health care inflation rate is assumed to
increase to 9.5% for 2007 and decline to an ultimate rate of 5.0% in 2013.

Environmental Remediation

We accrue for costs associated with environmental remediation obligations when such costs are probable and reasonably estimable. Costs of future expenditures for
environmental remediation obligations are not discounted to their present value.

We
are subject to a wide variety of environmental laws, which continue to be adopted and amended. While the ultimate extent of our liability for pending or potential fines, penalties,
remedial costs, claims and litigation relating to environmental laws and health and safety matters and future capital expenditures that may be associated with environmental laws cannot be determined
at this time, management, with the assistance of outside environmental consultants, periodically assesses our environmental contingencies. As of December 31, 2007, we have established reserves
in the amount of $1.7 million for anticipated cleanup costs at certain owned and operated properties, formerly owned and operated properties and offsite waste disposal locations. We are not a
party to any judicial or administrative proceedings relating to environmental issues.

Accounting for the Impairment of Long-Lived Assets

We account for impairment of long-lived assets in accordance with SFAS No. 144,Accounting for the Impairment or
Disposal of Long Lived Assets.This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. At least annually,
we evaluate whether events and circumstances have occurred that indicate the remaining estimated useful lives of our long-lived assets may warrant revision or that the remaining balance of
such assets may not be recoverable. We use an estimate of the related undiscounted cash
flows over the remaining life of the asset to measure whether the asset is recoverable. If the sum of the future cash flows is less than the carrying amount of the related asset, an impairment loss is
recognized equal to the excess of the carrying amount of the asset over its fair value.

Restructurings

From time to time through the evaluation of our business operations, we execute certain restructuring plans. These plans could include actions such as closing
facilities, consolidating shared services, scaling back fixed administrative and plant overhead. We account for these items by considering the net book value of the assets impacted, the payroll,
severance and benefit costs and costs associated with holding the facility.

Other Reserves

We are involved in various legal proceedings, claims and litigation arising in the ordinary course of business. While any litigation contains an element of
uncertainty, management presently believes that the outcome of each such proceeding or claim which is pending or known to be threatened, or all of them combined, will not have a material adverse
effect on our combined financial position or on our combined results of operations or cash flows in a given year.

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Recent Accounting Pronouncements

Recent Accounting PronouncementsIn June 2006, the Financial Accounting Standards Board ("FASB") issued FIN 48, which
establishes a single model to address accounting for uncertain tax positions. FIN 48 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required
to meet before being recognized in the financial statements. FIN 48 also provides guidance on derecognition, measurement classification, interest and penalties, accounting in interim periods,
disclosure and transition. The adoption of FIN 48 which occurred on January 1, 2007 had no effect on our consolidated financial position and results of operations. See Note 19 in the
Notes
to Consolidated Financial Statements included in this annual report on Form 10-K for additional information related to FIN 48.

In
May 2007, the FASB issued FASB Staff Position ("FSP") FIN 48-1 "Definition of Settlement in FASB Interpretation No. 48" (FSP FIN 48-1). FSP FIN
48-1 provides guidance on how to determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. FSP FIN 48-1 is
effective retroactively to January 1, 2007. The implementation of this standard had no effect on our consolidated financial position or results of operations.

In
September 2006, the FASB issued FSP AUG AIR-1 "Accounting for Planned Major Maintenance Activities" (FSP AUG AIR-1). FSP AUG AIR-1 amends
the guidance on the accounting for planned major maintenance activities; specifically it precludes the use of the previously acceptable "accrue in advance" method. FSP AUG AIR-1 is
effective for fiscal years beginning after December 15, 2006. The implementation of this standard had no effect on our consolidated financial position or results of operations.

In
September 2006, the FASB issued Statement of Financial Accounting Standard ("SFAS") No. 157, "Fair Value Measurements" (SFAS No. 157). SFAS No. 157
establishes a common definition for fair value to be applied to US GAAP requiring use of fair value, establishes a framework for measuring fair value, and expands disclosure about such fair value
measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007.

In
February 2008, the FASB issued FSP 157-2 "Partial Deferral of the Effective Date of Statement 157" (FSP 157-2). FSP 157-2 delays the
effective date of SFAS No. 157, for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually) to fiscal years beginning after November 15, 2008. We are currently assessing the impact of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities on
our consolidated financial position and results of operations. The implementation of this standard, for financial assets and financial liabilities, will not have a material impact on our consolidated
financial position and results of operations.

In
February 2007, the FASB issued SFAS No. 159 "The Fair Value Option for Financial Assets and Financial Liabilities" (SFAS No. 159). SFAS No. 159 permits
entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in
earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The implementation of this standard will not have a material impact on our consolidated financial
position and results of operations.

In
March 2007, the FASB ratified Emerging Issues Task Force ("EITF") Issue No. 06-10 "Accounting for Collateral Assignment Split-Dollar Life Insurance
Agreements" (EITF 06-10). EITF 06-10 provides guidance for determining a liability for
postretirement benefit obligations as well as recognition and measurement of the associated asset on the basis of the terms of the collateral assignment agreement. EITF 06-10 is effective
for fiscal years beginning after December 15, 2007. The implementation of this standard will not have a material impact on our consolidated financial position and results of operations.

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In
June 2007, the FASB ratified EITF 06-11 "Accounting for the Income Tax Benefits of Dividends on Share-Based Payment Awards" (EITF 06-11). EITF
06-11 provides that tax benefits associated with dividends on share-based payment awards be recorded as a component of additional paid-in capital. EITF 06-11 is
effective, on a prospective basis, for fiscal years beginning after December 15, 2007. The implementation of this standard will not have a material impact on our consolidated financial position
and results of operations.

In
December 2007, the FASB issued SFAS No. 141(revised 2007), "Business Combinations" (SFAS No. 141R). SFAS No. 141R provides revised guidance on how
acquirers recognize and measure the consideration transferred, identifiable assets acquired, liabilities assumed, noncontrolling interests, and goodwill acquired in a business combination. SFAS
No. 141R also expands required disclosures surrounding the nature and financial effects of business combinations. SFAS No. 141R is effective, on a prospective basis, for fiscal years
beginning after December 15, 2008. We will apply the standard when required and applicable.

In
December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements" (SFAS No. 160). SFAS No. 160 establishes
requirements for ownership interests in subsidiaries held by parties other than the Company (sometimes called "minority interests") be clearly identified, presented, and disclosed in the consolidated
statement of financial position within equity, but separate from the parent's equity. All changes in the parent's ownership interests are required to be accounted for consistently as equity
transactions and any noncontrolling equity investments in deconsolidated subsidiaries must be measured initially at fair value. SFAS No. 160 is effective, on a prospective basis, for fiscal
years beginning after December 15, 2008. We will apply the standard when required and applicable.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISKS

Market risk represents the risk of changes in the value of a financial instrument, derivative or non-derivative, caused by fluctuations in interest
rates, foreign exchange rates and commodity prices. Changes in these factors could cause fluctuations in the results of our operations and
cash flows. In the ordinary course of business, we are, or will be, exposed to commodity (i.e., aluminum), interest rate, and foreign currency risks. These risks primarily relate to purchases
and sales of aluminum, changes in interest rates on long-term debt and changes in foreign currency exchange rates.

Commodity price riskAluminum is a commodity and, as such, is valued based upon a variety of market
driven factors. Although the raw material cost of aluminum is largely passed through to our customers (based upon London Metal Exchange established rates), different selling methods can create
short-term price risk on the aluminum component of sales. We hedge our exposure to protect margins from the volatility of the underlying aluminum price. We continuously monitor our
position and the credit quality of counterparties, consisting primarily of major financial institutions, and do not anticipate nonperformance by any counterparty. At December 31, 2007, we had
net financial instruments for 46.6 million pounds of aluminum billet at prices between $1.07 and $1.29. These financial instruments are scheduled to mature between January 2008 and June 2009.

The
effect of a reduction of 10% in base aluminum prices on our aluminum forward contracts outstanding at December 31, 2007 would be to decrease our income from operations over
the period ended December 31, 2007 by approximately $5.1 million. The effect of a 10% increase in base aluminum prices on our aluminum forward contracts outstanding at
December 31, 2007 would be to increase our income from operations over the period ended December 31, 2007 by approximately $5.1 million. These results reflect a 10% reduction or
increase from the three-month LME aluminum price of $2,405 per metric ton on December 31, 2007.

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To
mitigate our exposure to the volatility in prices of natural gas markets, we commit to purchase natural gas for up to 36 months going forward. A third party does the hedging on
our behalf. As of December 31, 2007, we had commitments to purchase $28.4 million worth of natural gas.

Interest rate riskOur obligations under our revolving credit facility have a floating interest rate,
and thus will expose us to changes in short-term interest rates. As of December 31, 2007, our total debt was $268.9 million, of which $67.5 million was variable rate
debt and $201.4 million was fixed rate debt. Our total interest expense for the fiscal year ended December 31, 2007 was $35.2 million. Our total pro forma interest expense for the
fiscal year ended December 31, 2005 and 2006 would have been $36.7 million and $38.8 million, respectively. A 0.125% variance in the actual cash interest rate on our revolving
credit facility would cause a corresponding increase or decrease in our annual interest expense of $0.1 million and, assuming an effective tax rate of 35%, in our annual net income of
$0.1 million.

Foreign exchange riskWe consider the U.S. dollar to be the reporting currency for all of our
entities. We have operations in Canada and approximately 14% of our net sales in 2007 were made in Canadian dollars. We incur currency transaction risk whenever we enter into either a purchase or sale
transaction using a currency other than the local currency of the transacting entity. The U.S. dollar to Canadian dollar exchange rate may vary from the time we invoice the shipment and the time we
are paid, which could result in a realized currency loss in our results of operations if we have not hedged our exposure to currency fluctuations correctly. In addition, we may set prices for our
Canadian business in U.S. dollars and if these prices are not adjusted for changes in the relative values of the currencies, we could experience reduced operating margins. The U.S. dollar value of our
sales in Canada varies with currency exchange rate fluctuations between the U.S. dollar and the Canadian dollar. The results of the operations and the financial position of our Canadian subsidiaries
are reported in Canadian dollars and then translated into U.S. dollars at the applicable exchange rates for inclusion in our combined financial statements. We report our results in U.S. dollars and
our financial results are impacted by currency fluctuations between the U.S. dollar and the Canadian dollar. Changes in currency exchange rates could have an adverse effect on our reported results of
operations. Upon consummation of the Transactions, we will have Canadian-dollar borrowings under our revolving credit facility. To the extent the U.S. Dollar declines against the Canadian dollar, our
interest expense for our Canadian dollar-denominated indebtedness will increase for financial reporting purposes.

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ITEM 8.    CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Index to Financial Information on page F-1.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.    CONTROLS AND PROCEDURES

Under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, we have carried out an evaluation of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based on
that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to
ensure that information we are required to disclose in reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in
the rules and forms specified by the Securities and Exchange Commission. There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) of the Exchange Act) that occurred during the period covered in this report that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Indalex Holdings Finance, Inc. (the "Company") is responsible for establishing and maintaining adequate internal control over financial
reporting. The Company's internal control system was designed to provide reasonable assurance to the Company's management and board of directors regarding the preparation and fair presentation of
published financial statements.

All
internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation.

Company
management assessed the effectiveness of its internal control over financial reporting as of December 31, 2007. In making this assessment, it used the criteria established in Internal Control-Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment, we
believe that, as of December 31, 2007, the Company's internal control over financial reporting was effective based on those criteria.

This
annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was
not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only Management's
report in this annual report.

|/s/TIMOTHY R. J. STUBBSTimothy R. J. Stubbs
Chief Executive Officer
March 31, 2008 |  | /s/PATRICK LAWLORPatrick Lawlor
Chief Financial Officer
March 31, 2008
|---------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------

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ITEM 9B.    OTHER INFORMATION

None.

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PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors, Executive Officers and Key Employees

The directors of Holdings, the executive officers and key employees of Holdings and Indalex Holding Corp. and their positions and ages as of December 31,
2007 were as follows:

Name

Age

PositionTimothy R.J. Stubbs

40

President, Chief Executive Officer and DirectorPatrick Lawlor

43

Chief Financial Officer and DirectorJerry W. Nies

39

Vice President, ManufacturingDale Tabinowski

59

Senior Vice President, Human ResourcesJoseph Valvo

54

Senior Vice President of Sales, National AccountsKeith Burlingame

50

Senior Vice President of Sales and MarketingSat Adusumilli

43

Vice President, Operations EffectivenessJames Piperato

48

Vice President, Planning and Supply ChainMichael E. Alger

50

DirectorClarence E. Terry

61

DirectorLynn R. Skillen

52

DirectorM. Steven Liff

37

Director


Timothy R.J. Stubbshas served as our President and Chief Executive Officer since February 2004 and as a Director since February 2006.
Mr. Stubbs joined Indalex in February 2000 and has 16 years experience in the aluminum extrusion industry. During his tenure at Indalex, Mr. Stubbs has held several positions
within Indalex including Eastern Region President, Senior Vice President of Sales and Marketing and Chief Operations Officer. Before joining Indalex, Mr. Stubbs held multiple positions at Sapa
AB. Mr. Stubbs currently sits on the board of the Aluminum Association, which promotes the benefits of aluminum over other metals.

Patrick Lawlorjoined us as our Chief Financial Officer in September of 2007, and has served as a Director since October of 2007.
Mr. Lawlor has 15 years of experience in the aluminum industry. From 2001 until joining Indalex, he held the position of Vice President/General Manager of Hydro Aluminum North America,
Midwest Division, where he had full responsibility for five operating units. Hydro Aluminum North America, a producer of extruded products and extrusion billet, is a unit of Norsk Hydro ASA. From 1992
to 2001, Mr. Lawlor held various finance and operations management positions with Norsk Hydro ASA.

Jerry W. Niesserved as Vice President, Manufacturing from October of 2007 to December of 2007. During that period, he was responsible for
all of our manufacturing operations. Prior to that, Mr. Nies served as Vice President and General Manager, Mill Finish and Specialty Products from October 2006 to October of 2007; as Vice
President, Customer Fulfillment and Supply Chain from February 2006 to October 2006; as Vice President of Operations and General Manager from 2005 to February 2006, and as Vice President
of Operations and General Manager, Transportation and Distribution from 2003 to 2005. Mr. Nies has been with Indalex for over 15 years, and has over 15 years of experience in the
aluminum extrusion industry. Mr. Nies has held numerous operations and sales positions throughout his career. Effective January 1, 2008, Mr. Nies has assumed the role of General
Manager, Gainesville Operations.

Dale Tabinowskihas served as our Senior Vice President, Human Resources, since December 1, 2006. Before joining Indalex,
Mr. Tabinowski served as Vice President, Human Resources, for the Worldwide Heating and Cooling business unit of Lennox International, a provider of climate control solutions, from April 2002
through early 2006. Prior to Lennox International, Mr. Tabinowski served as

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Vice
President, International Human Resources and Corporate Labor Relations for Sunbeam Corporation, a designer, manufacturer and marketer of branded consumer products, from 1994 through 2002.

Joseph Valvoserved as our Senior Vice President of Sales, National Accounts from February 2006 to December 2007, and has been with
Indalex since August 1996. Mr. Valvo has over 30 years of extrusion industry experience. Mr. Valvo was responsible for our National Accounts Sales team, which accounts for
approximately 30% of our sales. Prior to his current position, Mr. Valvo served as Vice President of Sales, National Accounts from March 2004 to February 2006 and prior to that, as Director of
SalesEast Business Unit from December 1999 to February 2004. Mr. Valvo has held numerous positions in sales and operations throughout his career. Effective January 2008,
Mr. Valvo has assumed the role of Senior Vice President, Distribution, where he is responsible for our sales to the distribution market.

Keith Burlingameserved as Senior Vice President of Sales and Marketing from February 2006 to December 2007, and has over
11 years of aluminum extrusion industry experience. Mr. Burlingame is responsible for our sales organization. Prior to that, Mr. Burlingame served as Vice President of Sales,
Regional Accounts from October 2004 to February 2006 and prior to October 2004, as Vice President of Sales, South Region. Mr. Burlingame originally joined Indalex in 1996, rejoined Indalex in
August 2001 after spending 18 months at Albex Aluminum and has held numerous sales and marketing positions throughout his career. Effective January 2008, Mr. Burlingame has
assumed the role of Senior Vice President, Sales and Customer Service.

Sat Adusumillihas served as our Vice President, Operations Effectiveness since November of 2007. Prior to joining Indalex,
Mr. Adusumilli held numerous positions with Hydro Aluminum North America,
most recently as Regional Vice President of Operations for the Upper Midwest Region. In this position, he held multiple plant responsibility for safety, profitability, operational performance, sales
growth and team development. Prior to this role, Mr. Adusumilli held progressively responsible operations assignments with Hydro Aluminum North America. He was Operations Manager of the
Kalamazoo facility, Vice President of Operations Extrusion at the Adrian plant, and led Lean Manufacturing for the Precision Tubing Division. Hydro Aluminum North America, a producer of extruded
products and extrusion billet, is a unit of Norsk Hydro ASA.

James Piperatohas served as our Vice President, Planning and Supply Chain since October of 2007. Prior to that, Mr. Piperato
served as our Vice President and General Manager, B&C East Operations since February 2006, with responsibility for five extrusion plants. Prior to that, Mr. Piperato served as Director of
Operations from January 2003 to February 2006 and prior to January 2003, as Director of Logistics. Mr. Piperato joined Indalex in May of 2002. Mr. Piperato held the position of Director
of Finance with Alcoa Engineered Products from October 1999 until May 2002. Mr. Piperato has over 14 years of aluminum extrusion experience.

Michael E. Algerhas served as a Director since February of 2006. Since September of 2007, Mr. Alger has served as Vice
PresidentOperations for Sun Capital. Prior to joining Sun Capital, Mr. Alger served as our Chief Financial Officer from April of 2000 until August of 2007, as our Executive Vice
President since June 2002, and as our Secretary and Treasurer and a Director since February 2006. Mr. Alger has over six years of aluminum extrusion experience. Prior to joining Indalex,
Mr. Alger served as Vice President of Finance for Favorite Brands International Inc. and has held numerous other financial positions throughout his career. Mr. Alger is also a director
of Exopack Holding Corp.

Clarence E. Terryhas served as a Director since February 2006. Since September 1999, Mr. Terry has served as Managing Director of
Sun Capital, and he has more than 31 years of operating experience. Prior to joining Sun Capital, Mr. Terry served as Vice President at Rain Bird Sprinkler Manufacturing, Inc., a
manufacturer of irrigation products. Mr. Terry has served as Chief Executive

75

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Officer
on an interim basis for several of Sun Capital's portfolio companies. Mr. Terry is also a director of Loud Technologies, Inc., Real Mex Restaurants, Inc., SAN
Holdings, Inc. and a number of private companies.

Lynn R. Skillenhas served as a Director since July of 2007. Mr. Skillen is a Managing Director of Sun Capital. Prior to joining
Sun Capital in 2002, Mr. Skillen served as Chief Financial Officer of two of Sun Capital Partners' portfolio companies, Catalina Lighting and Celebrity. Mr. Skillen is also a director of Loud
Technologies, Inc.

M. Steven Liffhas served as a Director since February 2006. Since February, 2005, Mr. Liff has served as a Managing Director of
Sun Capital, and is currently the head of Sun Capital's Los Angeles office.
Prior to joining Sun Capital in March 2000, Mr. Liff spent six years at Bank of America, focusing on marketing, underwriting and closing new leveraged transactions.

Board of Directors

The board is currently composed of six directors, none of whom is likely to qualify as an independent director based on the definition of independent director set
forth in Rule 4200(a)(15) of the Nasdaq Marketplace rules. Because affiliates of Sun Capital own 100% of the voting common stock of Holdings, we would be a "controlled company" within the
meaning of Rule 4350(c)(5) of the Nasdaq Marketplace rules, which would qualify us as a private company, for exemptions from certain corporate governance rules of The Nasdaq Stock
Market LLC, including the requirement that the board of directors be composed of a majority of independent directors.

Compensation Committee Interlocks and Insider Participation

Because our stock is not publicly traded, we do not have a compensation committee. Our board is currently composed of six directors, all of whom are officers of
Holdings, and all of whom participated in deliberations of the board concerning executive officer compensation during 2007. For a description of the transactions between us and our directors, and
entities affiliated with such directors, see the sections entitled "Compensation of Executive Officers" and "Certain Relationships and Related Transactions." None of our executive officers has served
as a member of the board of directors or compensation committee of another entity that had one or more of its executive officers serving as a member of our board of directors.

Code of Ethics

We have adopted a code of ethics applicable to directors, officers and employees. Information regarding our code of ethics is attached as Exhibit 14 to our
annual report on Form 10-K for the year ended December 31, 2006. You can also request a copy by contacting us at 75 Tri-State International, Suite 450,
Lincolnshire, IL 60069 or (telephone) 847-810-3000.

Audit Committee

In July of 2007, our board created an audit committee. The audit committee has a charter, and the audit committee's primary duties and responsibilities are:



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The
members of the committee are Lynn R. Skillen and Michael Alger, and Mr. Alger is our audit committee financial expert. Neither Mr. Alger nor Mr. Skillen are likely to qualify as an independent
director based on the definition of independent director set forth in Rule 4200(a)(15) of the Nasdaq Marketplace rules.

ITEM 11.    EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview

On February 2, 2006, Indalex Holding Corp. acquired all of the outstanding capital stock of Indalex Inc. and Indalex Limited, subsidiaries of
Honeywell International Inc. Indalex Holding Corp. is a holding company that is a wholly-owned direct subsidiary of Holdings, which is beneficially owned by affiliates of Sun Capital, certain
other investors and members of our management team. Our "named executive officers" for 2007, include Mr. Stubbs, our chief executive officer; Mr. Lawlor, our chief financial officer; and
Messrs. Burlingame, Nies and Tabinowski, the three most highly compensated officers other than Mr. Stubbs and Mr. Lawlor, who were serving as executive officers as of the end of
2007. Mr. Alger, our former chief financial officer, resigned effective September 25, 2007 to accept a position with an affiliate of Sun Capital Partners, our equity sponsor. In
accordance with the SEC's executive compensation disclosure rules, Mr. Alger is also considered a "named executive officer" for 2007.

Our
board of directors consists of four non-employee directors who are employed by affiliates of Sun Capital and two employee directors; Mr. Stubbs, our chief
executive officer, and Mr. Lawlor, our chief financial officer. Clarence E. Terry, one of our directors who is employed by affiliates of Sun Capital, is responsible for the oversight,
implementation and administration of all of our executive compensation plans and programs. Mr. Terry determines all of the components of compensation of our chief executive officer, and, in
consultation with our chief executive officer, determines the compensation of the remaining executive officers. Our board does not have a compensation committee. To date, we have not engaged in the
benchmarking of executive compensation but we may do so in the future.

Compensation Policies and Practices

The
primary objectives of our executive compensation program are to:



Our
executive compensation programs are designed to encourage our executive officers to operate the business in a manner that enhances stockholder value. An objective of our compensation
program is to align interests of our executive officers with our stockholders' short and long term interests by providing a significant portion of our executive officers' compensation through
equity-based awards. In addition, a substantial portion of our executive's overall compensation is tied to our financial performance, specifically operating earnings and earnings before interest,
taxes, depreciation and amortization, or EBITDA. Our compensation philosophy provides for a direct relationship between compensation and the achievement of our goals and seeks to include management in
upside rewards. Prior to determining any compensation package or award, Mr. Terry takes into account the impact of

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accounting
and tax treatments of each particular compensation package or award, including the accounting and tax treatment of stock options.

We
have sought to achieve an overall compensation program that provides foundational elements such as base salary and benefits that are generally competitive with the median of the
marketplace, as well as an opportunity for variable incentive compensation that is significantly above market when short and long term performance goals are met. Our executive compensation consists of
the following components:



Base Salary.Base salary is established based on the experience, skills, knowledge and
responsibilities required of the executive officers in their roles. When establishing the 2007 base salaries of the executive officers, a number of factors were considered, including the years of
service of the individual, individual's duties and responsibilities, the ability to replace the individual, the base salary at the individual's prior employment, and market data on similar positions
with competitive companies as information becomes available to us informally through recruitment/search consultants in connection with our recent hiring efforts, and through our directors' experience
with Sun Capital's affiliated portfolio companies. We seek to maintain base salaries that are competitive with the marketplace, to allow us to attract and retain executive talent.

Salaries
for executive officers are reviewed on an annual basis, at the time of a promotion or other change in level of responsibilities, as well as when competitive circumstances may
require review. Increases in salary are based on evaluation of factors such as the individual's level of responsibility, performance and level of compensation compared to comparable companies owned
and managed by Sun Capital affiliates.

Annual Cash Bonus Incentive.The objective of the annual cash bonus incentive is to reward executive
officers for our performance, as measured by EBITDA or operating earnings. The corporate EBITDA target for 2007 was set at $84.0 million and the corporate operating earnings target for 2007 was
set at $54.0 million. EBITDA is calculated as GAAP net income plus interest, taxes, depreciation and amortization and certain other non-cash or non-recurring expenses.
Operating earnings are based on our management income statement, which does not include taxes, interest, amortization and certain other expenses. None of the named executive officers were paid a bonus
under the 2007 bonus plans because actual EBITDA for 2007 was $41.1 million and actual operating earnings for 2007 was $9.0 million, which did not meet the pre-determined
thresholds in order to earn a bonus. The targets under the bonus plans were established based on our budgeted EBITDA or operating earnings for 2007.

Annual
target cash bonuses are determined initially as a percentage of each executive officer's base salary for the fiscal year, and the payment of target cash bonuses depends upon the
achievement of certain pre-determined performance targets. The target cash bonus is established based on an individual's level of responsibility. For 2007, the cash bonus payable to
Mr. Stubbs in connection with the achievement of a pre-determined EBITDA target was established at 75% of his base salary for 2007. For 2007, the cash bonus payable to
Mr. Alger in connection with the achievement of a pre-determined EBITDA target was established at 60% of his base salary for 2007. For 2007, the cash bonus payable for
Mr. Lawlor and Mr. Burlingame in connection with the achievement of a pre-determined operating earnings target was established at 50% of their base salary for 2007. For 2007,
the cash bonus payable for Mr. Tabinowski in connection with the achievement of a pre-determined operating earnings target was established at 45% of his base salary for 2007. For
2007, the cash bonus payable for Mr. Nies in connection with the achievement of a pre-determined operating

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earnings
target was established at 40% of his base salary for 2007. 50% percent of the cash bonus for Mr. Nies was based on the achievement of the corporate operating earnings target and 50%
was based on the achievement of the Mill Finish Group operating earnings target of $32.1 million. The cash bonus payout for Mr. Lawlor for 2007 would have been pro-rated
based on the portion of the year during which he was employed by us. Depending on our performance relative to the applicable predetermined target, the actual cash bonus for our executive officers may
be less than or greater than the target cash bonus. All cash bonuses will be limited to a pre-determined maximum, as described below.

Long Term Incentive Awards.All of our executive officers have received equity compensation awards in
the form of non-qualified stock options. We grant long term incentive awards in the form of stock options because it is a common method for privately-held companies to provide
equity incentives to executive officers. The options are designed to align the interests of our executive officers with our stockholders' long-term interests by providing them with
equity-based awards that vest over a period of time and become exercisable upon the occurrence of certain events, as well as to reward executive officers for performance. In connection with the
Holdings Acquisition, the board adopted a stock option plan on February 2, 2006. The board amended and restated the stock option plan on May 19, 2006. Stock options granted by us have an
exercise price equal to the fair market value of our common stock on the date of grant. We granted options to Messrs. Stubbs, Alger, Burlingame and Nies in connection with and as a reward for
the successful completion of the Holdings Acquisition. These stock options have an exercise price equal to the fair market value of our common stock on the date of the Holdings Acquisition, as
determined by the purchase price paid per share of Holdings common stock in that transaction. We have granted options to Messrs. Tabinowski and Lawlor in connection with the start of their
employment with Indalex. These stock options have an exercise price equal to the fair market value of our common stock on the date of their hire, as determined in good faith by representatives of our
board of directors. Future grants of stock options will be at the discretion of our board of directors. Because all of the options are non-qualified stock options, we will be entitled to a
tax deduction in the year in which the non-qualified stock option is exercised in an amount equal to the amount by which the fair market value of the shares underlying the option on the
date of exercise exceeds the option exercise price.

Special Bonus Agreements for Certain Option Holders:On September 14, 2007, we entered into
bonus agreements ("Bonus Agreements") with certain option holders. On July 18, 2006 we paid a dividend of $1.52 per share to our stockholders, and on June 1, 2007, we paid a dividend of
$76.63 per share to our stockholders. In connection with these dividends, we made an arrangement with our option holders to set aside a special bonus consisting of the dividends the holder would have
received had his or her options been exercised in full immediately prior to the time the dividends were paid. The special bonus is payable only upon a change of control. If an option holder's
employment with us is terminated for any reason, the option holder will not be entitled to receive the special bonus, subject to the important exceptions noted below. This award is intended to align
the interests of our executive officers with our stockholders' short-term and long-term interests by providing them an opportunity to share in the benefit of these dividends
upon a change in control of the Company.

Other Programs.We also provide our Named Executive Officers with life and medical insurance, 401(k)
matching and a car allowance program.

Compensation Committee Report

I have reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management, and based on such
review and discussion, I have recommended to the board of directors that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K.

| |  | Clarence E. Terry, Director
| |  | ---------------------------

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Summary Compensation Table

|Name and
Principal Position                                                     |  | Year      |  | Salary
($)(1) |                 | Bonus
($) |   | Stock
Awards
($) |  | Option Awards
($)(2) |  | Non-Equity
Incentive
Plan
Compensation
($) |                 | Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($) |   | All
Other
Compen-
sation
($) (5) |  | Total
($)
|------------------------------------------------------------------------------- |  | --------- |  | ------------- | --------------- | --------- | - | ---------------- |  | -------------------- |  | ------------------------------------------ | --------------- | --------------------------------------------------------------------------- | - | -------------------------------- |  | ---------
|Timothy R.J. Stubbs
President and Chief Executive Officer                       |  | 2007
2006 |  | $             | 400,000
394,829 |           | $ | 
382,536(3)(4)  |  |                     |  | $                                          | 394,811
529,297 |                                                                             | $ | 
552,000                        |  | $$       
|Michael E. Alger(6)
Former Executive Vice President and Chief Financial Officer |  | 2007
2006 |  |               | 219,322
293,906 |           |   | 
318,780(3)(4)  |  |                     |  |                                            | 480,494
250,720 |                                                                             |   | 
331,200                        |  |          
|Patrick Lawlor
Executive Vice President and Chief Financial Officer             |  | 2007      |  |               | 76,923          |           |   |                 |  |                     |  |                                            | 9,600           |                                                                             |   |                                 |  |          
|Keith Burlingame
Senior Vice President, Sales and Marketing                     |  | 2007      |  |               | 209,423         |           |   |                 |  |                     |  |                                            | 27,006          |                                                                             |   |                                 |  |          
|Jerry Nies
Vice President, Manufacturing(7)                                     |  | 2007      |  |               | 190,000         |           |   |                 |  |                     |  |                                            | 27,006          |                                                                             |   |                                 |  |          
|Dale R. Tabinowski
Senior Vice President, Human Resources                       |  | 2007
2006 |  |               | 195,000
15,750  |           |   | 
              |  |                     |  |                                            | 12,512
        |                                                                             |   | 
10,622                         |  |          

---

Car
Allowance

Matching
Contributions
Under 401(k)
Savings Plan

Supplemental
401(k)
Matching
Contributions (a)

Life
Insurance
Premiums

Relocation/
Other (b)Timothy R.J. Stubbs

$
12,000

$
10,125

$
32,715

$
1,296

Michael E. Alger


7,454


10,125


14,649


722

Patrick Lawlor


3,138


577





270

48,297Keith Burlingame


10,200


10,125


4,141


679

Jerry Nies


10,200


10,125


2,886


622

2,000Dale R. Tabinowski


10,200


8,578





632






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Grants of Plan-Based Awards

The following table summarizes information regarding our 2007 bonus plans and awards granted under our stock option plan during 2007:

|                                                                             |  |          |  |         |  |     |  |   |           |  |   | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) |  |               |  |       
|---------------------------------------------------------------------------- |  | -------- |  | ------- |  | --- |  | - | --------- |  | - | -------------------------------------------------------------------- |  | ------------- |  | ------
|
|
|
|
|Timothy R.J. Stubbs
President and Chief Executive Officer                    |  |          |  |         |  | 
 |  | $ | 
300,000 |  | $ | 
600,000                                                            |  | 
           |  | 
   
|Michael E. Alger
Former Executive Vice President and Chief Financial Officer |  |          |  |         |  | 
 |  |   | 
180,000 |  |   | 
360,000                                                            |  | (10,800)(3)
 |  | 
   
|Patrick Lawlor
Executive Vice President and Chief Financial Officer          |  | 11/16/07 |  | 9/27/07 |  |     |  |   | 125,000   |  |   | 250,000                                                              |  | 5,000         |  | 111.25
|Keith Burlingame
Senior Vice President, Sales & Marketing                    |  |          |  |         |  |     |  |   | 110,000   |  |   | 220,000                                                              |  |              |  |      
|Jerry W. Nies
Vice President Manufacturing                                   |  |          |  |         |  |     |  |   | 76,000    |  |   | 152,000                                                              |  |              |  |      
|Dale R. Tabinowski
Senior Vice President, Human Resources                    |  | 7/25/07  |  | 9/11/06 |  |    |  |   | 87,750    |  |   | 175,500                                                              |  | 2,000         |  | 185.00

---

2007 Bonus Plan for Messrs. Stubbs and Alger

The 2007 bonus plan for Mr. Stubbs provides for a base salary of $400,000 and a target cash bonus of $300,000. The 2007 bonus plan for Mr. Alger
provides for a base salary of $297,000 and a target cash bonus of $180,000. In 2007, the cash bonuses for Messrs. Stubbs and Alger are based entirely on the amount by which EBITDA exceeds
certain pre-determined levels for such year. They will earn no bonus if EBITDA is below a pre-determined threshold, 100% of their target cash bonuses if EBITDA meets the target
and up to 200% of their target cash bonuses if EBITDA meets or exceeds a pre-determined maximum. The bonuses are pro rated between threshold and target and between target and maximum and
cannot exceed 200% of the target cash bonus. Messrs. Stubbs and Alger were not paid any bonus in 2008 in respect of 2007 as EBITDA did not meet the pre-determined minimum threshold.

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2007 Bonus Plan for Messrs. Tabinowski, Lawlor, Burlingame, and Nies

On August 11, 2007, Mr. Lawlor entered into a letter agreement with us providing for a base salary of $250,000 and participation in the Indalex
Management Incentive Plan (hereinafter referred to as "the MIP') providing a full year target cash bonus of $125,000. Messers Burlingame, Tabinowski and Nies each participated in the Indalex
Management Incentive Plan for 2007 providing for target cash bonus amounts of $110,000, $87,750 and $76,000, respectively. Under the terms of the MIP, full year bonus targets are pro-rated
based on the amount of base salary earned and the portion of the year during which the participants were employed by us.

Under
the 2007 MIP, the cash bonuses for Messrs. Lawlor, Burlingame and Tabinowski are based entirely on the amount by which corporate operating earnings exceeds certain pre-determined
levels for such year. They earn no bonus if operating earnings is below a pre-determined threshold, 100% of their target cash bonuses if operating earnings meets the target and up to 200% of their
target cash bonuses if operating earnings meets or exceeds a pre-determined maximum. The bonuses are pro-rated between the threshold and the target and between the target and the maximum and cannot
exceed 200% of the target cash bonus. Messrs. Lawlor, Burlingame and Tabinowski were not paid a bonus in 2007, as corporate operating earnings did not meet the predetermined threshold.

In
2007, fifty percent (50%) of the cash bonus for Mr. Nies was based on corporate operating earnings for 2007 and fifty percent (50%) of his cash bonus was based on the Mill
Finish Group operating earnings for 2007. He earns no bonus if operating earnings for the corporation or Mill Finish Group is
below a pre-determined threshold, 100% of his target cash bonus if operating earnings for corporate or the Mill Finish Group meet their respective targets and up to 200% of his cash bonus if corporate
and Mill Finish Group operating earnings each meet or exceed a predetermined maximum. Mr. Nies' bonus is pro-rated between the threshold and the target and between the target and the maximum
and cannot exceed 200% of the target cash bonus for each component. Mr. Nies was not paid a bonus in 2008 in respect of 2007, as operating earnings for both corporate and the Mill Finish Group did not
meet the pre-determined thresholds.

Special Bonus for Certain Option Holders

The Bonus Agreements dated September 14, 2007, between us and certain of our option holders contain the following potential bonuses for our named executive
officers. The special bonus is payable only upon a change in control. If an option holder's employment with us is terminated for any reason,

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the
option holder will not be entitled to receive the special bonus, subject to the important exceptions noted below.

Name and Principal Position

Maximum Special BonusTimothy R. J. Stubbs
President and Chief Executive Officer

$
2,969,584 (1
)Michael E. Alger
Former Executive Vice President and Chief Financial Officer

$
1,406,645 (2
)Patrick Lawlor
Executive Vice President and Chief Financial Officer


Keith Burlingame
Senior Vice President, Sales and Marketing

$
156,294 (3
)Jerry W. Nies
Vice President, Manufacturing

$
156,294 (3
)Dale R. Tabinowski
Senior Vice President, Human Resources

$
153,251 (4
)


---

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2006 Stock Option Plan

In connection with the Holdings Acquisition, we adopted a stock option plan, which provides for the grant to our directors, officers, key employees and
consultants of options to purchase non-voting shares of our common stock. A committee composed of two or more non-employee directors administers the stock option plan. The
committee has broad powers under the stock option plan, including exclusive authority to determine:



Options
awarded under the stock option plan will be exercisable for shares of our non-voting common stock. The total number of shares of non-voting common stock
as to which options may be granted may not exceed 100,000 shares.

If
we undergo a dividend, recapitalization, or a spin-off, split-up, combination or exchange of shares or other change in shares of our non-voting
common stock, the committee shall appropriately adjust the aggregate number and kind of shares subject to the stock option plan and the aggregate number and kind of shares subject to each outstanding
option and the exercise price thereof. If we undergo a merger, consolidation, or sale of all or substantially all of
our assets, the committee may cause options awarded under the stock option plan to become immediately exercisable. 64,600 stock options were outstanding as of December 31, 2007.

Of
the options granted to Messrs. Stubbs and Alger, 20% of the shares subject to the option vested on the grant date, with the remaining shares vesting 20% incrementally,
commencing on the second anniversary of the grant date with full vesting occurring on the fifth anniversary of the grant date. The options granted to other officers vest in 20% increments on each
anniversary date of the grant date, commencing on the first anniversary of the grant date with full vesting occurring on the fifth anniversary of the grant date. The exercise of options is
specifically limited and may not occur until the earlier of the end of the option term, a change of control of Holdings, the termination of the executive officer's employment without cause, or the
termination of the executive officer's employment due to death or disability.

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Outstanding Equity Awards at Fiscal Year-End

The following table summarizes the outstanding equity awards held by our Named Executive Officers:

|                                                                             |  | Option Awards
|---------------------------------------------------------------------------- |  | -------------
|
|Timothy R.J. Stubbs
President and Chief Executive Officer                    |  | 7,600        
|Michael E. Alger
Former Executive Vice President and Chief Financial Officer |  | 3,600        
|Patrick Lawlor
Exeutive Vice President and Chief Financial Officer           |  |             
|Keith K. Burlingame
Senior Vice President, Sales & Marketing                 |  | 400          
|Jerry W. Nies
Vice President, Manufacturing                                  |  | 400          
|Dale R. Tabinowski
Senior Vice President, Human Resources                    |  | 400          

---

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Pension Benefits

The
following table summarizes pension benefits for each of our Named Executive Officers:

|Name                                                                         |  | Plan Name                                                                                                                             |  | Number of
Years
Credited
Service
(#) |  | Present
Value of
Accumulated
Benefit
($) |                             | Change in
Pension
Value
($) |  
|---------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------ |  | ---------------------------------------- | --------------------------- | --------------------------- | -
|Timothy R.J. Stubbs
President and Chief Executive Officer                    |  | Indalex USA Pension Plan
Indalex USA Supplemental
Retirement Plan
Canadian Registered Pension Plan
Canadian Supplemental Pension Plan |  | 1
6
1
1                              |  | $                                        | 8,446
166,189
20,646
61,054 |                             | $
|Michael E. Alger
Former Executive Vice President and Chief Financial Officer |  | Indalex USA Pension Plan
Indalex USA Supplemental
Retirement Plan                                                                     |  | 3
3                                  |  |                                          | 47,944
17,891               |                             |  
|Patrick Lawlor
Executive Vice President and Chief Financial Officer          |  |                                                                                                                                      |  |                                     |  |                                          |                            |                             |  
|Keith Burlingame
Vice President, Sales
& Marketing                           |  | Indalex USA Pension Plan                                                                                                              |  | 5                                    |  |                                          | 58,321                      |                             |  
|Jerry W. Nies
Vice President, Manufacturing                                  |  | Indalex USA Pension Plan                                                                                                              |  | 10                                   |  |                                          | 42,395                      |                             |  
|Dale R. Tabinowski
Senior Vice President, Human Resources                    |  |                                                                                                                                      |  |                                     |  |                                          |                            |                             |  

The present value calculations presented in the table above assume benefits commence once the Named Executive Officer is eligible for unreduced
early retirement at age 62. The assumptions used in the calculations are as follows: discount rate = 6.41% (an estimate of the December 31, 2007 rate); mortality table = RP2000
Combined Table Projected to 2006; and retirement age = Age 62; Canadian benefits converted to U.S. dollars as CAD $1 = US $1.01204.

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Non-Qualified Deferred Compensation

The
following table summarizes the benefits to our Named Executive Officers under the Indalex USA Benefit Equalization Plan (BEP):

|Name                                                                            |  | Executive
Contributions
in Last FY
($) |  | Registrant
Contributions
in Last FY
($) |        | Aggregate
Earnings in
Last FY
($) |   | Aggregate
Withdrawals/
Distributions
($) |  | Aggregate
Balance
at Last
FYE
($)
|------------------------------------------------------------------------------- |  | -------------------------------------- |  | --------------------------------------- | ------ | --------------------------------- | - | ---------------------------------------- |  | ---------------------------------
|Timothy R.J. Stubbs(1)
President and Chief Executive Officer                    |  |                                       |  | $                                       | 32,715 |                                   | $ | 32,676                                   |  |                                 
|Michael E. Alger(2)
Former Executive Vice President and Chief Financial Officer |  |                                       |  |                                         | 14,649 |                                   |   | 17,665                                   |  | (67,508)                         
|Patrick Lawlor
Executive Vice President and Chief Financial Officer             |  |                                       |  |                                         |       |                                   |   |                                         |  |                                 
|Keith Burlingame(3)
Senior Vice President, Sales & Marketing                    |  |                                       |  |                                         | 4,141  |                                   |   | 1,607                                    |  |                                 
|Jerry W. Nies(4)
Vice President, Manufacturing                                  |  |                                       |  |                                         | 2,886  |                                   |   | 731                                      |  |                                 
|Dale R. Tabinowski
Senior Vice President, Human Resources                       |  |                                       |  |                                         |       |                                   |   |                                         |  |                                 

---

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Termination and Change in Control Arrangements

Assuming each executive officer's employment was terminated under each of the circumstances set forth below, or a change in control occurred, on
December 31, 2007, the estimated values of payments and benefits to each named executive officer are set forth in the following table:

|Name                                                                            |  | Benefit                                             |  | Termination
without
Cause Prior
to a Change
in Control |             | Termination
without
Cause
Following a
Change in
Control |    | Voluntary
Termination |  | Death or
Disability |             | Change in
Control
|------------------------------------------------------------------------------- |  | --------------------------------------------------- |  | ------------------------------------------------------ | ----------- | ------------------------------------------------------- | -- | --------------------- |  | ------------------- | ----------- | -----------------
|Timothy R.J. Stubbs
President and Chief Executive Officer(3)                    |  | Cash Severance
Special Bonus
Value of Equity Awards |  | $                                                      | 400,000

 |                                                         | $$ | 400,000
2,969,584
   |  | $                   | 400,000

 |                  
|Michael E. Alger
Former Executive Vice President and Chief Financial Officer(3) |  | Cash Severance
Special Bonus
Value of Equity Awards |  |                                                        | 

       |                                                         |    | 
1,406,645
         |  |                     | 

       |                  
|Patrick Lawlor
Executive Vice President & Chief Financial Officer               |  | Cash Severance                                      |  |                                                        | 125,000     |                                                         |    | 125,000               |  |                     |            |                  
|Keith Burlingame
Senior Vice President, Sales & Marketing(3)                    |  | Cash Severance
Special Bonus                        |  |                                                        | 
         |                                                         |    | 
156,294             |  |                     | 
         |                  
|Jerry W. Nies(4)
Vice President, Manufacturing(3)                               |  | Cash Severance
Special Bonus                        |  |                                                        | 
         |                                                         |    | 
156,294             |  |                     | 
         |                  
|Dale R. Tabinowski
Senior Vice President Human Resources(3)                     |  | Cash Severance
Special Bonus                        |  |                                                        | 195,000
   |                                                         |    | 195,000
5,751         |  |                     | 
         |                  

---

In addition to these benefits, Messrs. Stubbs, Burlingame and Nies would be entitled to their account balance under the BEP in the event of termination,
death, or disability. See "Non-Qualified Deferred Compensation."

Timothy R.J. Stubbs.On May 31, 2006, Mr. Stubbs entered into a letter agreement with us. The agreement
provides that if Mr. Stubbs resigns or if Mr. Stubbs' employment is terminated by us without cause, he is entitled to receive his base salary for a period of twelve months following his
resignation or termination of employment without cause. The letter agreement provides that Mr. Stubbs is entitled to receive the severance payment as long as certain conditions are met,
including that Mr. Stubbs sign a

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general
release of Indalex and that Mr. Stubbs has not breached any of the terms or provisions of his stock option grant agreement dated May 31, 2006. Mr. Stubbs' stock option
grant agreement provides that Mr. Stubbs will not compete with us during the term of his employment and for a twelve-month period thereafter. The stock option grant agreement also contains
certain non-solicitation and non-disparagement agreements. The letter agreement also provides that Indalex shall have the option, by delivering written notice to
Mr. Stubbs within nine months after Mr. Stubbs ceases to be an employee, to extend the severance period for an additional twelve-month period, during which Mr. Stubbs will
continue to receive the severance payments, and automatically extend the non-competition period prescribed in the option grant agreement for the additional twelve-month period.

Upon
a change in control, the vested portion of Mr. Stubbs' option shall become exercisable, but if the consideration for a change in control transaction consists primarily of
cash, 100% of the total number of shares subject to the option shall vest immediately prior to and become exercisable upon the consummation of a change in control. If Mr. Stubbs' employment is
terminated by us other than for cause, then the vested portion of Mr. Stubbs' option may be exercised after the date of termination but on or before the 15th day of the third calendar
month following the date of termination. If Mr. Stubbs'
employment terminates due to death or disability, the vested portion of Mr. Stubbs' option may be exercised after the date of termination but on or before the later of
(a) December 31 of that year or (B) the 15th day of the third calendar month after the date of termination (unless Mr. Stubbs is a "specified employee" as defined in
Section 409A(a)(2)(B)(i) of the Internal Revenue Code, in which case the option shall be exercisable on the date that is six months after the date of termination). In addition, upon a sale of
Holdings prior to the time his options are fully vested, Mr. Stubbs will be entitled to receive any portion of a special bonus attributable to unvested options as described under "Special Bonus
for Option Holders" above.

Michael E. Alger.On May 31, 2006, Mr. Alger entered into a letter agreement with us. The letter agreement
provides that if Mr. Alger resigns or if Mr. Alger's employment is terminated by us without cause, he is entitled to receive his base salary for a period of twelve months following his
resignation or termination of employment without cause. The letter agreement provides that Mr. Alger is entitled to receive the severance payment as long as certain conditions are met,
including that Mr. Alger sign a general release of Indalex and that Mr. Alger has not breached any of the terms or provisions of his stock option grant agreement dated May 31,
2006. Mr. Alger's stock option grant agreement provides that Mr. Alger will not compete with us during the term of his employment and for a twelve-month period thereafter. The stock
option grant agreement also contains certain non-solicitation and non-disparagement agreements. In connection with Mr. Alger's resignation effective September 25,
2007, the letter agreement dated May 31, 2006 was cancelled.

Upon
a change in control, the vested portion of Mr. Alger's option shall become exercisable, but if the consideration for a change in control transaction consists primarily of
cash, 100% of the total number of shares subject to the option shall vest immediately prior to and become exercisable upon the consummation of a change in control. If Mr. Alger's employment is
terminated by us other than for cause, then the vested portion of Mr. Alger's option may be exercised after the date of termination but on or before the 15th day of the third calendar
month following the date of termination. If Mr. Alger's employment terminates due to death or disability, the vested portion of Mr. Alger's option may be exercised after the date of
termination but on or before the later of (a) December 31 of that year or (B) the 15th day of the third calendar month after the date of termination (unless
Mr. Alger is a "specified employee" as defined in Section 409A(a)(2)(B)(i) of the Internal Revenue Code, in which case the option shall be exercisable on the date that is six months
after the date of termination). In addition, upon a sale of Holdings prior to the time his options are fully vested, Mr. Alger will be entitled to receive any portion of a special bonus
attributable to unvested options as described under "Special Bonus for Option Holders" above.

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Dale R. Tabinowski.The letter agreement, dated November 27, 2006, between Mr. Tabinowski and us provides that
Mr. Tabinowski is entitled to receive to his base salary for six months or a lump sum equivalent if we terminate him without cause within the first six months of his employment and for a period
of twelve months if we terminate him without cause thereafter. In addition, the letter agreement provides that Mr. Tabinowski will not compete with us or provide services to any of our
competitors
during the term of his employment and for a period of six months thereafter. The letter agreement also contains certain non-solicitation agreements.

Patrick Lawlor.The letter agreement, dated August 11, 2007, between Mr. Lawlor and us provides that
Mr. Lawlor is entitled to receive his base salary for six months or a lump sum equivalent if we terminate him without cause within the first six months of his employment and for a period of
twelve months or a lump sum equivalent if we terminate him without cause thereafter. In addition, the letter agreement provides that Mr. Lawlor will not compete with us or provide services to
any of our competitors during the term of his employment and for a period of six months thereafter. The letter agreement also contains certain non-solicitation agreements.

Jerry W. Nies,On January 1, 2008, Mr. Nies entered into a letter agreement dated December 22, 2007 with us. The
letter agreement provides that Mr. Nies is entitled to receive his base salary for six months or a lump sum equivalent if we terminate him without cause within the first six months of his
employment and his base salary for a period of twelve months or a lump sum equivalent if we terminate him without cause thereafter. In addition, the letter agreement provides that Mr. Nies will
not compete with us or provide services to any of our competitors during the term of his employment and for a period of six months thereafter. The letter agreement also contains certain
non-solicitation agreements.

Compensation of Directors

None of our directors receive fees for services as directors. In the future, we may compensate directors who are neither our employees nor affiliates of Sun
Capital Partners. All of our directors are reimbursed for out-of-pocket expenses incurred in connection with attending all board and other committee meetings.

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ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

As of March 1, 2008, Holdings had 904,061 shares of voting common stock and 95,963 shares of non-voting common stock outstanding and a total of
non-voting common stock option currently exercisable or exercisable by our executive officers as a group within 60 days of March 1, 2008. The following table sets forth
certain information regarding the beneficial ownership of common stock of Holdings as of March 1, 2008 by:



To
our knowledge, each such stockholder has sole voting and investment power as to the common stock shown unless otherwise noted. Beneficial ownership of the common stock listed in the
table has been determined in accordance with the applicable rules and regulations promulgated under the Securities Exchange Act of 1934 (the "Exchange Act").

|                                                               |  | Indalex Holdings Finance, Inc. | 
|-------------------------------------------------------------- |  | ------------------------------ | 
|
|Principal Stockholders:                                        |  |                                | 
|Sun Indalex, LLC(1)                                            |  | 904,061                        | 
|Indalex Co-Investment, LLC(2)                                  |  |                               | 
|Directors and Named Executive Officers:                        |  |                                | 
|Timothy R.J. Stubbs                                            |  |                               | 
|Patrick Lawlor                                                 |  |                               | 
|Dale R. Tabinowski                                             |  |                               | 
|Jerry W. Nies                                                  |  |                               | 
|Keith Burlingame                                               |  |                               | 
|Michael Alger                                                  |  |                               | 
|Lynn R. Skillen                                                |  |                               | 
|Clarence E. Terry                                              |  |                               | 
|M. Steven Liff                                                 |  |                               | 
|All Directors and Executive Officers as a group (9 persons)(1) |  |                               | 

---

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Equity Compensation Plan Information

|                                                           |       | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) |        | Weighted-average exercise price of outstanding options, warrants and rights (b) |        | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
|---------------------------------------------------------- | ----- | ----------------------------------------------------------------------------------------------- | ------ | ------------------------------------------------------------------------------- | ------ | -----------------------------------------------------------------------------------------------------------------------------------------------
|Plan Category                                              |       |                                                                                                 |        |                                                                                 |        |                                                                                                                                                
|Equity compensation plans approved by security holders     |       |                                                                                                |        |                                                                                 |       |                                                                                                                                                
|Equity compensation plans not approved by security holders |       | 64,600                                                                                          |        | $                                                                               | 113.53 |                                                                                                                                                
|                                                           |       |                                                                                                 |        |                                                                                 |        |                                                                                                                                                
|                                                           | Total |                                                                                                 | 64,600 |                                                                                 |        |                                                                                                                                                

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Stock Purchase Agreement

On February 2, 2006, Indalex Holding Corp. acquired all of the outstanding capital stock of Indalex Inc. and Indalex Limited, subsidiaries of
Honeywell International Inc., for a total purchase price of approximately $419.1 million in cash ($425.0 million less a $5.9 million post-closing working
capital adjustment) (the "Holdings Acquisition"). Indalex Holding Corp. is a holding company that is a wholly-owned direct subsidiary of Holdings, which is beneficially owned by affiliates of Sun
Capital Partners, Inc., or the "equity sponsor," and certain other investors and members of our management team, whom we collectively refer to as the "equity investors." Pursuant to a letter
agreement dated December 21, 2005 among the parties to the stock purchase agreement, it was agreed that the shares of Indalex Inc. would be distributed to Honeywell prior to the
agreed-upon dissolution of Novar USA Holdings Inc. and that, upon such distribution, Honeywell would be substituted for Novar USA Holdings Inc. for all purposes under the
stock purchase agreement. The distribution of the shares of Indalex Inc. to Honeywell and the subsequent dissolution of Novar USA Holdings Inc. were effected prior to the closing of the
Holdings Acquisition. The Issuer is a holding company beneficially owned by

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affiliates
of Sun Capital Partners, Inc., certain other investors and certain members of our management team.

The
stock purchase agreement contains customary indemnification provisions. Honeywell's indemnification obligations for breaches of representations and warranties are, subject to
exceptions as specified in the stock purchase agreement, triggered if the aggregate losses associated with such breaches exceed $4.25 million, and Honeywell will be liable only to the extent
the losses exceed $2.5 million up to a limit of $100 million. Our indemnification obligations for breaches of representations and warranties are, subject to exceptions as specified in
the stock purchase agreement, capped at $100 million. The representations and warranties in the stock purchase agreement generally survive for 18 months following the closing date,
subject to exceptions as specified in the stock purchase agreement.

Registration Agreement

Holdings, the management investors and the other stockholders of Holdings, including Sun Indalex, LLC, entered into a registration agreement in connection
with the consummation of the Holdings Acquisition. Pursuant to the registration agreement, Sun Indalex, LLC, the management investors and the other investors will have piggyback registration
rights, under certain circumstances, in the event Holdings registers any of its securities under the Securities Act. Furthermore, Sun Indalex, LLC has the right, under certain circumstances, to
request registration under the Securities Act of all or any portion of its securities in Holdings. The management investors and the other investors may, subject to certain exceptions, participate in
any such registration requested by Sun Indalex, LLC.

Management Services Agreement

We entered into a management services agreement with Sun Capital Partners Management III, LP, which we refer to as "Sun Management," in connection with the
consummation of the Holdings Acquisition. Pursuant to the management services agreement, Sun Management will provide financial and management consulting services in exchange for an annual fee, payable
in quarterly installments, equal to the greater of (a) $1 million and (b) 2% of our EBITDA (as defined in the management services agreement) for a given fiscal year. We will also
reimburse Sun Management for all reasonable out-of-pocket fees and expenses it incurs in performing financial and management consulting services under the management services
agreement. During the year ended December 31, 2007, we incurred expenses of $1.1 million in management fees payable to Sun Management. During the period from February 2, 2006
through December 31, 2006, we incurred expenses of $1.6 million in management fees payable to Sun Management.

In
addition to an annual fee, Sun Management will receive a management consulting fee equal to 1% of the consideration paid to or by us in connection with certain corporate transactions,
including, without limitation, any refinancings, restructurings, equity or debt offerings, acquisitions, mergers, consolidations, business combinations, and sales and divestitures involving us. During
the year ended December 31, 2007, we paid fees of $1.5 million related to the sale of our equity method investment in AAG to Sun Management.

Stockholders' Agreement

Holdings, the management investors and the other stockholders of Holdings, including Sun Indalex, LLC, entered into a stockholders' agreement in connection
with the consummation of the Holdings Acquisition. The stockholders' agreement includes the following terms:



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Purchase of Notes by Sun Capital Securities Offshore Fund, Ltd.

Sun Capital Securities Offshore Fund, Ltd., an affiliate of Sun Capital, purchased $15.0 million of notes in the offering of the notes at a price
equal to the price set forth on the cover. In connection with the Transactions, we paid a closing fee to Sun Capital Securities Offshore Fund, Ltd. in the amount of $375,000. On July 18,
2006, Sun Capital Securities Offshore Fund, Ltd. sold the $15.0 million of notes to unaffiliated purchasers.

During
2007, Sun Capital Securities Offshore Fund, Ltd. purchased $10.1 million of notes on the open market.

Policies and Procedures for Related Party Transactions

As a private company, our board of directors generally reviews our related party transactions, although we have not historically had formal policies and
procedures regarding the review and approval of related party transactions.

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ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table presents fees for services provided by Crowe Chizek and Company LLC for fiscal year 2007. All Audit-Related Fees, Tax Fees and Other
Fees shown below were pre-approved by the Board of Directors in accordance with its established procedures.

|(In thousands)        |       | 2007
|--------------------- | ----- | ----
|Audit Fees(a)         |       | $   
|Audit-Related Fees(b) |       |     
|Tax Fees(c)           |       |     
|                      |       |     
|                      | Total |     
|                      |       |     

The
following table presents fees for services provided by Crowe Chizek and Company LLC for fiscal year 2006. All Audit-Related Fees, Tax Fees and Other Fees shown below were
pre-approved by the Board of Directors in accordance with its established procedures.

|(In thousands)        |       | 2006
|--------------------- | ----- | ----
|Audit Fees(a)         |       | $   
|Audit-Related Fees(b) |       |     
|Tax Fees(c)           |       |     
|                      |       |     
|                      | Total |     
|                      |       |     

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PART IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1)
Financial Statements:

(a)(2)
Financial Statement Schedules:

SCHEDULE IVALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED
DECEMBER 31, 2007, 2006 AND 2005

Allowance for doubtful accounts:

| | Ending Balance December 31, 2004 |                              | $ | 5,483 |       
| | -------------------------------- | ---------------------------- | - | ----- | ------
| |                                  | Provisions charged to income |   |       | 829   
| |                                  | Deductions from reserves     |   |       | (435  
| |                                  |                              |  
| | Ending Balance March 31, 2005    |                              |   | 5,877 |       
| |                                  | Provisions charged to income |   |       | 294   
| |                                  | Deductions from reserves     |   |       | (1,931
| |                                  |                              |  
| | Ending Balance December 31, 2005 |                              |   | 4,240 |       
| |                                  | Provisions charged to income |   |       | 215   
| |                                  | Deductions from reserves     |   |       |      
| |                                  |                              |  
| | Ending Balance February 1, 2006  |                              |   | 4,455 |       
| |                                  | Provisions charged to income |   |       | 466   
| |                                  | Deductions from reserves     |   |       | (459  
| |                                  |                              |  
| | Ending Balance December 31, 2006 |                              |   | 4,462 |       
| |                                  | Provisions charged to income |   |       | 4     
| |                                  | Deductions from reserves     |   |       | (604  
| |                                  |                              |  
| | Ending Balance December 31, 2007 |                              | $ | 3,862 |       
| |                                  |                              |  

Deductions from reserves include uncollectible accounts written off, recoveries, and translation adjustments.

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EXHIBIT INDEX

| | EXHIBIT
NO. |  | DESCRIPTION                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2.1         |  | Stock Purchase Agreement, dated September 16, 2005, among Indalex Holding Corp., Novar USA Holdings Inc., Novar Overseas Holdings B.V. and Honeywell International Inc. (incorporated by reference to the
Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on October 24, 2006).                                                                                                                                       
| | 2.2         |  | Sale and Purchase Agreement, dated May 14, 2007, among Indalex UK Limited, OK Spring Roll Limited Partnership and Indalex Limited (incorporated by reference to the Company's Current Report on Form 8-K, File No. 333-138178, filed on
May 18, 2007.)                                                                                                                                                                                                 
| | 3.1         |  | Amended and Restated Certificate of Incorporation of Indalex Holdings Finance, Inc. (the "Company") (incorporated by reference to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on October 24,
2006).                                                                                                                                                                                                           
| | 3.2         |  | By-laws of Indalex Holdings Finance, Inc. (incorporated by reference to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on October 24, 2006).                                                                                                                                                                                                                                                                     
| | 4.1         |  | Indenture, dated as of February 2, 2006, among Indalex Holding Corp., the note guarantors named therein and U.S. Bank National Association, as trustee (incorporated by reference to the Company's Registration Statement on Form S-4,
Registration No. 333-138178, filed on October 24, 2006).                                                                                                                                                        
| | 4.2         |  | Registration Rights Agreement, dated February 2, 2006, among Indalex Holding Corp., the note guarantors named therein and J.P. Morgan Securities Inc., on behalf of itself and as representative of Harris Nesbitt Corp., Credit Suisse
Securities (USA) LLC, Piper Jaffray & Co. and Morgan Joseph & Co. Inc. (incorporated by reference to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on
October 24, 2006).
| | 4.3         |  | Form of Senior Note (attached as exhibit to Exhibit 4.1) (incorporated by reference to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on October 24, 2006).                                                                                                                                                                                                                                                      
| | 4.4         |  | Security Agreement, dated February 2, 2006, among Indalex Holdings Finance, Inc., Indalex Holding Corp., the Subsidiary Parties defined therein and U.S. Bank National Association (incorporated by reference to Amendment No. 1 to the
Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on December 15, 2006).                                                                                                        
| | 4.5         |  | Intercreditor Agreement, dated February 2, 2006, among JPMorgan Chase Bank, N.A., U.S. Bank National Association, Indalex Holdings Finance, Inc., and each Subsidiary listed on Schedule I attached thereto (incorporated by reference to
Amendment No. 1 to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on December 15, 2006).                                                                               
| | 10.1        |  | Credit Agreement, dated as of February 2, 2006, among Indalex Holdings Finance, Inc., Indalex Holding Corp., 6461948 CANADA INC., the other subsidiaries of Indalex Holding Corp. party thereto, the lenders party thereto and JPMorgan
Chase Bank, N.A., as administrative agent (incorporated by reference to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on October 24, 2006).                             
| | 10.2        |  | Management Services Agreement, dated as of February 2, 2006, by and among Indalex Holding Corp., Indalex Limited and Sun Capital Partners Management III, LP (incorporated by reference to the Company's Registration Statement on Form S-4,
 Registration No. 333-138178, filed on October 24, 2006).                                                                                                                                                 

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| | 10.3  |  | Stockholders Agreement, dated as of February 2, 2006, by and among Sun Indalex, LLC, each person whose name appears on the signature page thereto under the heading "Minority Stockholders" or who otherwise becomes a party thereto and Indalex
Holdings Finance, Inc. (incorporated by reference to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on October 24, 2006).
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.4  |  | Registration Agreement, dated as of February 2, 2006, by and among Indalex Holdings Finance, Inc., Sun Indalex, LLC and each person whose name appears on the signature pages attached thereto or who otherwise becomes a party thereto
(incorporated by reference to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on October 24, 2006).                                
| | 10.5  |  | Securities Purchase Agreement, dated as of February 2, 2006, by and between Indalex Holdings Finance, Inc. and Sun Indalex, LLC (incorporated by reference to the Company's Registration Statement on Form S-4, Registration
No. 333-138178, filed on October 24, 2006).                                                                                                                                        
| | 10.6  |  | Securities Purchase Agreement, dated as of February 2, 2006, by and among Indalex Holdings Finance, Inc. and each person whose name appears on the signature page thereto under the heading "Purchasers" (incorporated by reference to the
Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on October 24, 2006).                                                               
| | 10.7  |  | Securities Purchase Agreement, dated as of May 8, 2006, by and among Indalex Holdings Finance, Inc., Indalex Co-Investment, LLC and each person whose name appears on the signature page thereto under the heading "Sellers" (incorporated
by reference to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on October 24, 2006).                                           
| | 10.8  |  | Indalex Holdings Finance, Inc. 2006 Stock Option Plan (incorporated by reference to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on October 24, 2006).                                                                                                                                                                                                                  
| | 10.9  |  | Form of Stock Option Grant Agreement for Timothy R.J. Stubbs (incorporated by reference to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on October 24, 2006).                                                                                                                                                                                                           
| | 10.10 |  | Form of Stock Option Grant Agreement for other employees (incorporated by reference to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on October 24, 2006).                                                                                                                                                                                                               
| | 10.11 |  | Indalex Holdings Finance, Inc. 2006 Employee Stock Purchase Plan (incorporated by reference to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on October 24, 2006).                                                                                                                                                                                                       
| | 10.12 |  | Letter Agreement, dated May 31, 2006, between Timothy Stubbs and Indalex Holdings Finance, Inc. (incorporated by reference to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on October 24,
2006).                                                                                                                                                                        
| | 10.13 |  | Letter Agreement, dated May 31, 2006, between Michael Alger and Indalex Holdings Finance, Inc. (incorporated by reference to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on October 24,
2006).                                                                                                                                                                         
| | 10.14 |  | Termination Agreement, dated July 12, 2005, between Jerry Nies and Indalex Inc. (incorporated by reference to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on October 24,
2006).                                                                                                                                                                                        

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| | 10.15 |  | Amended and Restated Stock Option Agreement for Michael E. Alger, dated December 14, 2007.                                                                                                                                                                                                                                                                                                                                                                      
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.16 |  | Letter Agreement, dated May 8, 2006, among Sun Indalex, LLC, Indalex Co-Investment, LLC and Indalex Holdings Finance, Inc. (incorporated by reference to the Company's Registration Statement on Form S-4, Registration
No. 333-138178, filed on October 24, 2006).                                                                                                                                                                                             
| | 10.17 |  | Shareholders Agreement, dated June 8, 2001, between Global Applied Technologies Holdings Limited (now known as Asia Aluminum Holdings Limited), Indalex UK Limited, Indalex, Inc., and China Aluminum Group Holdings (BVI) Limited (now known as
Asia Aluminum Group Limited) (English Translation) (incorporated by reference to Amendment No. 1 to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on December 15, 2006).
| | 10.18 |  | Stock Purchase Agreement, dated April 25, 2001, between Indalex UK Limited, Global Applied Technologies Holdings Limited (now known as Asia Aluminum Holdings Limited) and Indalex, Inc. (English Translation) (incorporated by reference to
Amendment No. 1 to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on December 15, 2006).                                                                                     
| | 10.19 |  | Supply Agreement, dated April 29, 2004, between Indalex, Inc. and Asia Aluminum Group Limited (incorporated by reference to Amendment No. 1 to the Company's Registration Statement on Form S-4, Registration No. 333-138178,
filed on December 15, 2006).                                                                                                                                                                                                      
| | 10.20 |  | Letter Agreement, dated September 11, 2006, between Dale Tabinowski and Indalex Holding Corp (incorporated by reference to Amendment No. 2 to the Company's Registration Statement on Form S-4, Registration No. 333-138178, filed on
January 17, 2007).                                                                                                                                                                                                        
| | 10.21 |  | 2007 Management Incentive Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | 10.22 |  | 2007 Bonus Plan for Timothy R.J. Stubbs and Michael E. Alger.                                                                                                                                                                                                                                                                                                                                                                                                   
| | 10.23 |  | Letter agreement, dated August 11, 2007 between Patrick Lawlor and Indalex Inc. (incorporated by reference to the Company's Current Report on Form 8-K, File No. 333-138178, filed on August 24, 2007.)                                                                                                                                                                                                                                                         
| | 10.24 |  | Letter agreement, dated December 22, 2007, between Indalex Inc. and Jerry Nies                                                                                                                                                                                                                                                                                                                                                                                  
| | 10.25 |  | Bonus agreement for Timothy Stubbs dated September 14, 2007 (incorporated by reference to the Company's Current Report on Form 8-K, File No. 333-138178, filed on September 14, 2007).                                                                                                                                                                                                                                                                          
| | 10.26 |  | Bonus agreement for Michael Alger dated September 14, 2007 (incorporated by reference to the Company's Current Report on Form 8-K, File No. 333-138178, filed on September 14, 2007).                                                                                                                                                                                                                                                                           
| | 10.27 |  | Bonus agreement for Keith Burlingame dated September 14, 2007                                                                                                                                                                                                                                                                                                                                                                                                   
| | 10.28 |  | Bonus agreement for Jerry Nies dated September 14, 2007                                                                                                                                                                                                                                                                                                                                                                                                         
| | 10.29 |  | Bonus agreement for Dale Tabinowski dated September 14, 2007 (incorporated by reference to the Company's Current Report on Form 8-K, File No. 333-138178, filed on September 14, 2007).                                                                                                                                                                                                                                                                         
| | 10.31 |  | Supplemental Deed, dated May 14, 2007, among Indalex UK Limited, Timothy Stubbs and Asia Aluminium Holdings Limited (incorporated by reference to the Company's Current Report on Form 8-K, File No. 333-138178, filed on May 18,
2007).                                                                                                                                                                                                                        

100

---



| | 12.1 |  | Computation of ratio of earnings to fixed charges.                                                                                                 
| | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | 14.1 |  | Code of Ethics (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2006, filed on April 2, 2007)
| | 21.1 |  | Subsidiaries of Indalex Holdings Finance, Inc.                                                                                                     
| | 31.1 |  | Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.                
| | 31.2 |  | Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.                
| | 32.1 |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. 
| | 32.2 |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. 
| | 99.1 |  | Unaudited Pro Forma Condensed Combined Financial Data.                                                                                             

101

---





SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Lincolnshire, State of Illinois, on March 31, 2008.

| |  | Indalex Holdings Finance, Inc.
| |  | ------------------------------
| |  | By:                           
| |  | Name:                         
| |  | Title:                        

* * * * *

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates
indicated on March 31, 2008.

|Signature                                 |  | Title                                                                            
|----------------------------------------- |  | ---------------------------------------------------------------------------------
|                                          |  |                                                                                  
|/s/TIMOTHY R.J. STUBBSTimothy R.J. Stubbs |  | President, Chief Executive Officer
(principal executive officer) and Director    
|/s/PATRICK LAWLORPatrick Lawlor           |  | Chief Financial Officer (principal financial and
accounting officer) and Director
|/s/CLARENCE E. TERRYClarence E. Terry     |  | Director                                                                         
|/s/MICHAEL E. ALGERMichael E. Alger       |  | Director                                                                         
|M. Steven Liff                            |  | Director                                                                         
|/s/LYNN SKILLENLynn Skillen               |  | Director                                                                         

102

---





Index to Financial Statements

|Indalex Audited Consolidated and Combined Financial Statements                                                                                                                                                                                                                             |  |     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|Report of Crowe Chizek and Company LLC, independent registered public accounting firm                                                                                                                                                                                                      |  | F-2 
|Audited consolidated balance sheets as of December 31, 2007 and 2006                                                                                                                                                                                                                       |  | F-4 
|Audited consolidated and combined statements of income for the year ended December 31, 2007, and for the periods January 1, 2006 to February 1, 2006, February 2, 2006 to December 31, 2006, January 1, 2005 to
March 31, 2005 and April 1, 2005 to December 31, 2005                      |  | F-5 
|Audited consolidated and combined statements of cash flows for the year ended December 31, 2007, and for the periods January 1, 2006 to February 1, 2006, February 2, 2006 to December 31, 2006, January 1, 2005 to
March 31, 2005 and April 1, 2005 to December 31, 2005                  |  | F-6 
|Audited consolidated and combined statements of stockholders' equity for the year ended December 31, 2007, and for the periods January 1, 2006 to February 1, 2006, February 2, 2006 to December 31, 2006, January 1, 2005
to March 31, 2005 and April 1, 2005 to December 31, 2005        |  | F-8 
|Audited consolidated and combined statements of comprehensive income (loss) for the year ended December 31, 2007, and for the periods January 1, 2006 to February 1, 2006, February 2, 2006 to December 31, 2006, January 1,
2005 to March 31, 2005 and April 1, 2005 to December 31, 2005 |  | F-11
|Notes to consolidated and combined financial statements                                                                                                                                                                                                                                    |  | F-12
|Asia Aluminum Group Audited Financial Statements                                                                                                                                                                                                                                           |  |     
|Consolidated income statements for the years ended June 30, 2007, 2006 and 2005                                                                                                                                                                                                            |  | F-66
|Consolidated balance sheets as of June 30, 2007 and June 30, 2006                                                                                                                                                                                                                          |  | F-67
|Consolidated statements of changes in stockholders' equity for the years ended June 30, 2007, 2006 and 2005                                                                                                                                                                                |  | F-68
|Consolidated cash flow statements for the years ended June 30, 2007, 2006 and 2005                                                                                                                                                                                                         |  | F-69
|Notes to financial statements                                                                                                                                                                                                                                                              |  | F-70

F-1

---





Report of Independent Registered Public Accounting Firm

Stockholders
and Board of Directors of
    Indalex Holdings Finance, Inc.
Lincolnshire, Illinois

We
have audited the accompanying consolidated and combined balance sheets of Indalex Holdings Finance, Inc. (Successor), and prior to February 2, 2006, a Combination of
Indirect Wholly Owned Subsidiaries of Honeywell International, Inc. (Predecessor 2), and prior to April 1, 2005, a Combination of Indirect Wholly Owned Subsidiaries of
Novar plc (Predecessor 1), collectively referred to as "Indalex" or "the Company," as of December 31, 2007 and 2006 (Successor) and the related consolidated and combined
statements of income, stockholders' equity, comprehensive income (loss), and cash flows for the year ended December 31, 2007 (Successor), for the periods from January 1, 2006 to
February 1, 2006 (Predecessor 2), from February 2, 2006 to December 31, 2006 (Successor), from January 1, 2005 to March 31, 2005 (Predecessor 1), and from
April 1, 2005 to December 31, 2005 (Predecessor 2). In connection with our audits of the consolidated and combined financial statements, we also audited the consolidated and
combined financial statement schedule listed in Item 15. These consolidated and combined financial statements and the consolidated and combined financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated and combined financial statements and the consolidated and combined financial statement
schedule based on our audits.

We
did not audit the financial statements of Asia Aluminum Group ("AAG") in which Indalex had an investment that was accounted for by the equity method. Indalex sold its investment in
AAG on May 15, 2007. The accompanying financial statements of Indalex include its investment in the net assets of AAG and its equity method income from AAG through May 15, 2007.
Indalex's investment in the net assets of AAG was approximately $96,950,000 as of December 31, 2006 (Successor), and its equity method income from AAG was approximately $8,937,000, $643,000,
$11,841,000, $1,557,000, and $9,380,000 for the periods from January 1, 2007 to May 15, 2007 (Successor), from January 1, 2006 to February 1, 2006 (Predecessor 2),
from February 2, 2006 to December 31, 2006 (Successor), from January 1, 2005 to March 31, 2005 (Predecessor 1), and from April 1, 2005 to December 31,
2005 (Predecessor 2),
respectively. The financial statements of AAG for each of the fiscal years ended June 30, 2006 and 2005, prepared on the basis of accounting principles generally accepted in Hong Kong, were
audited by other auditors whose report has been furnished to us, and our audit report, insofar as it relates to the amounts included for AAG, is based on the reports of such other auditors and the
procedures we considered necessary in the circumstances with respect to the inclusion of Indalex's equity investment and equity method income in the accompanying financial statements, taking into
consideration differences between accounting principles generally accepted in Hong Kong and those generally accepted in the United States of America and the differences in the fiscal year.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

F-2

---



In
our opinion, based upon our audits and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of
Indalex Holdings Finance, Inc. as of December 31, 2007 and 2006 (Successor), and the results of its operations and its cash flows for the year ended December 31, 2007 (Successor),
and for the periods from January 1, 2006 to February 1, 2006 (Predecessor 2), from February 2, 2006 to December 31, 2006 (Successor), from January 1, 2005 to
March 31, 2005 (Predecessor 1), and from April 1, 2005 to December 31, 2005 (Predecessor 2), in conformity with U.S. generally accepted accounting principles. Also,
in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated and combined financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.

As
discussed in Notes 2 and 19 to the consolidated and combined financial statements, effective January 1, 2007, the Company adopted FASB Interpretations 48, Accounting for Uncertainty in Income TaxesAn
Interpretation of FASB Statement No. 109.

/s/
Crowe Chizek and Company LLC

Oak
Brook, Illinois
March 31, 2008

F-3

---





INDALEX HOLDINGS FINANCE, INC.        CONSOLIDATED BALANCE SHEETS        As of December 31, 2007 and December 31, 2006        (Dollars in thousands)

|                                        |                                                                          | December 31, 2007               |                                            | December 31, 2006 |        
|--------------------------------------- | ------------------------------------------------------------------------ | ------------------------------- | ------------------------------------------ | ----------------- | -------
|
|ASSETS                                  |                                                                          |                                 |                                            |                   |        
|Current Assets:                         |                                                                          |                                 |                                            |                   |        
|                                        | Cash and cash equivalents                                                |                                 | $                                          | 7,919             |        
|                                        | Accounts receivable, less allowance of $3,862 in 2007 and $4,462 in 2006 |                                 |                                            | 83,288            |        
|                                        | Receivable from suppliers                                                |                                 |                                            | 5,241             |        
|                                        | Inventories                                                              |                                 |                                            | 58,265            |        
|                                        | Prepaid expenses and other current assets                                |                                 |                                            | 10,407            |        
|                                        | Deferred income taxes                                                    |                                 |                                            | 5,434             |        
|                                        |                                                                          |                                 |                                            |                   |        
|                                        |                                                                          | Total current assets            |                                            |                   | 170,554
|                                        | Investment in AAG                                                        |                                 |                                            |                  |        
|                                        | Property, plant, and equipment, net                                      |                                 |                                            | 192,391           |        
|                                        | Goodwill                                                                 |                                 |                                            |                  |        
|                                        | Other intangibles, net                                                   |                                 |                                            | 64,306            |        
|                                        | Deferred financing costs                                                 |                                 |                                            | 9,563             |        
|                                        | Other assets                                                             |                                 |                                            | 2,604             |        
|                                        |                                                                          |                                 |                                            |                   |        
|                                        |                                                                          | Total assets                    |                                            | $                 | 439,418
|                                        |                                                                          |                                 |                                            |                   |        
|LIABILITIES AND STOCKHOLDERS' EQUITY    |                                                                          |                                 |                                            |                   |        
|Current Liabilities:                    |                                                                          |                                 |                                            |                   |        
|                                        | Accounts payable                                                         |                                 | $                                          | 69,125            |        
|                                        | Income taxes payable                                                     |                                 |                                            | 271               |        
|                                        | Deferred income taxes                                                    |                                 |                                            |                  |        
|                                        | Accrued expenses and other current liabilities                           |                                 |                                            | 35,206            |        
|                                        | Accrued interest                                                         |                                 |                                            | 10,160            |        
|                                        | Capital lease obligation                                                 |                                 |                                            | 1,563             |        
|                                        | Revolver borrowings                                                      |                                 |                                            | 67,500            |        
|                                        |                                                                          |                                 |                                            |                   |        
|                                        |                                                                          | Total current liabilities       |                                            |                   | 183,825
|Other liabilities                       |                                                                          |                                 | 40,767                                     |                   |        
|Capital lease obligation                |                                                                          |                                 | 3,662                                      |                   |        
|Long-term debt                          |                                                                          |                                 | 196,138                                    |                   |        
|Deferred income taxes                   |                                                                          |                                 | 6,191                                      |                   |        
|                                        |                                                                          |                                 |                                            |                   |        
|                                        | Total liabilities                                                        |                                 |                                            | 430,583           |        
|                                        |                                                                          |                                 |                                            |                   |        
|Commitments and contingencies (Note 20) |                                                                          |                                 |                                            |                   |        
|Stockholders' equity:                   |                                                                          |                                 |                                            |                   |        
|                                        | Common stock ($.001 par value per share). Authorized shares 2,900,000.   |                                 |                                            |                   |        
|                                        |                                                                          | Issued and oustanding 1,000,114 |                                            |                   | 1      
|                                        | Additional paid-in capital                                               |                                 |                                            | 35,124            |        
|                                        | Treasury stock, 90 shares at $111.11 per share                           |                                 |                                            | (10               | )      
|                                        | Accumulated deficit                                                      |                                 |                                            | (30,874           | )      
|                                        | Accumulated other comprehensive income                                   |                                 |                                            | 4,594             |        
|                                        |                                                                          |                                 |                                            |                   |        
|                                        |                                                                          | Total stockholders' equity      |                                            |                   | 8,835  
|                                        |                                                                          |                                 |                                            |                   |        
|                                        |                                                                          |                                 | Total liabilities and stockholders' equity |                   | $      
|                                        |                                                                          |                                 |                                            |                   |        

See accompanying notes to consolidated and combined financial statements.

F-4

---





INDALEX HOLDINGS FINANCE, INC.        CONSOLIDATED AND COMBINED STATEMENTS OF INCOME        Years ended December 31, 2007, December 31, 2006 and December 31, 2005    
  (Dollars in thousands)

|                                                                       |                                                 | Years ended              |          
|---------------------------------------------------------------------- | ----------------------------------------------- | ------------------------ | ---------
|
|
|
|Net sales                                                              |                                                 | $                        | 1,105,335
|Costs and expenses:                                                    |                                                 |                          |          
|                                                                       | Cost of sales                                   |                          |          
|                                                                       | Selling, general, and administrative            |                          |          
|                                                                       | Management fees to affiliates                   |                          |          
|                                                                       | Amortization of intangible assets               |                          |          
|                                                                       | Other (income) expense                          |                          |          
|                                                                       | Restructuring charges                           |                          |          
|                                                                       | Impairment of long-lived assets                 |                          |          
|                                                                       | (Gain) loss on disposal of assets               |                          |          
|                                                                       | Mark-to-market on derivatives                   |                          |          
|                                                                       |                                                 |                          |          
|                                                                       |                                                 | Total costs and expenses |          
|                                                                       |                                                 |                          |          
|Income (loss) from operations                                          |                                                 |                          | (29,183  
|Other income (expense):                                                |                                                 |                          |          
|                                                                       | Interest to affiliates                          |                          |          
|                                                                       | External interest expense                       |                          |          
|                                                                       | Deferred financing costs                        |                          |          
|                                                                       | Interest income                                 |                          |          
|                                                                       | Loss on redemption of notes                     |                          |          
|                                                                       | Income from equity method investment in AAG     |                          |          
|                                                                       | Gain on sale of equity method investment in AAG |                          |          
|                                                                       | Affiliated acquisition fees                     |                          |          
|                                                                       | Dividend income from affiliates                 |                          |          
|                                                                       |                                                 |                          |          
|Income (loss) before income taxes                                      |                                                 |                          | (13,183  
|Income tax provision (benefit)                                         |                                                 |                          | (6,207   
|                                                                       |                                                 |                          |          
|Income (loss) from continuing operations                               |                                                 |                          | (6,976   
|Discontinued operations, net of tax benefit of $, $, $, $27, and $ |                                                 |                          |         
|                                                                       |                                                 |                          |          
|Net income (loss)                                                      |                                                 | $                        | (6,976   
|                                                                       |                                                 |                          |          

See accompanying notes to consolidated and combined financial statements.

F-5

---





INDALEX HOLDINGS FINANCE, INC.        CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS        Years ended December 31, 2007, December 31, 2006 and December 31, 2005        (Dollars in thousands)

|                                                                                  |                                                                                    | Years ended                             |                                   
|--------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | --------------------------------------- | ----------------------------------
|
|
|
|Cash flows from operating activities                                              |                                                                                    |                                         |                                   
|Net income (loss)                                                                 |                                                                                    | $                                       | (6,976                            
|Adjustments to reconcile net income (loss) to net cash from operating activities: |                                                                                    |                                         |                                   
|                                                                                  | Depreciation                                                                       |                                         |                                   
|                                                                                  | Amortization of intangible assets                                                  |                                         |                                   
|                                                                                  | Amortization of deferred financing costs                                           |                                         |                                   
|                                                                                  | Amortization of bond discount                                                      |                                         |                                   
|                                                                                  | (Gain) loss on disposal of assets                                                  |                                         |                                   
|                                                                                  | Impairment of long-lived assets                                                    |                                         |                                   
|                                                                                  | Dividend from affiliate                                                            |                                         |                                   
|                                                                                  | Other                                                                              |                                         |                                   
|                                                                                  | Income from equity method investment in AAG                                        |                                         |                                   
|                                                                                  | Dividends from equity method investment in AAG                                     |                                         |                                   
|                                                                                  | Gain on sale of equity method investment in AAG                                    |                                         |                                   
|                                                                                  | Loss on redemption of notes                                                        |                                         |                                   
|                                                                                  | Stock-based compensation                                                           |                                         |                                   
|                                                                                  | Executive compensation                                                             |                                         |                                   
|                                                                                  | Management fees to affiliates                                                      |                                         |                                   
|                                                                                  | Deferred income taxes                                                              |                                         |                                   
|                                                                                  | Changes in operating assets and liabilities, net of the effect of the acquisition: |                                         |                                   
|                                                                                  |                                                                                    | Accounts receivable                     |                                   
|                                                                                  |                                                                                    | Receivable from affiliates              |                                   
|                                                                                  |                                                                                    | Inventories                             |                                   
|                                                                                  |                                                                                    | Prepaids and other assets               |                                   
|                                                                                  |                                                                                    | Income taxes payable/refundable         |                                   
|                                                                                  |                                                                                    | Checks issued in excess of bank balance |                                   
|                                                                                  |                                                                                    | Accounts payable                        |                                   
|                                                                                  |                                                                                    | Accrued expenses and other liabilities  |                                   
|                                                                                  |                                                                                    | Payable to affiliates                   |                                   
|                                                                                  |                                                                                    |                                         |                                   
|                                                                                  |                                                                                    |                                         | Net cash from operating activities
|                                                                                  |                                                                                    |                                         |                                   
|Cash flows from investing activities                                              |                                                                                    |                                         |                                   
|                                                                                  | Capital expenditures                                                               |                                         |                                   
|                                                                                  | Proceeds from sales of property, plant and equipment                               |                                         |                                   
|                                                                                  | Proceeds from sale of business                                                     |                                         |                                   
|                                                                                  | Proceeds from sale of equity method investment in AAG                              |                                         |                                   
|                                                                                  | Cash paid for acquisition                                                          |                                         |                                   
|                                                                                  | Payment of acquisition transaction cost                                            |                                         |                                   
|                                                                                  |                                                                                    |                                         |                                   
|                                                                                  |                                                                                    | Net cash from investing activities      |                                   
|                                                                                  |                                                                                    |                                         |                                   

F-6

---



INDALEX HOLDINGS FINANCE, INC.

CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

|Cash flows from financing activities                                    |                                                        |                                    |        |         |          |        |        |        |        |         |         |        |         |        |        |        
|----------------------------------------------------------------------- | ------------------------------------------------------ | ---------------------------------- | ------ | ------- | -------- | ------ | ------ | ------ | ------ | ------- | ------- | ------ | ------- | ------ | ------ | -------
|                                                                        | Dividends and distributions                            |                                    |        | (76,627 | )        |        | (6,809 | )      |        | (1,522  | )       |        |        |        |        | (25,759
|                                                                        | Payments on capital lease obligation                   |                                    |        | (1,114  | )        |        | (58    | )      |        | (1,033  | )       |        |        |        |        | (58    
|                                                                        | Revolver borrowings (repayments)                       |                                    |        | 10,469  |          |        |       |        |        | (13,122 | )       |        |        |        |        |       
|                                                                        | Debt payments                                          |                                    |        |        |          |        |       |        |        |        |         |        |        |        |        | (6,000 
|                                                                        | Repurchases of common stock                            |                                    |        |        |          |        |       |        |        | (10     | )       |        |        |        |        |       
|                                                                        | Net (payments to) collections from affiliates on notes |                                    |        |        |          |        | (1,620 | )      |        |        |         |        | 30,596  |        |        | (14,663
|                                                                        | Redemption of notes                                    |                                    |        | (75,542 | )        |        |       |        |        |        |         |        |        |        |        |       
|                                                                        | Revolver borrowings, acquisition                       |                                    |        |        |          |        |       |        |        | 68,839  |         |        |        |        |        |       
|                                                                        | Borrowings on long-term debt, acquisition              |                                    |        |        |          |        |       |        |        | 266,563 |         |        |        |        |        |       
|                                                                        | Capital contributions                                  |                                    |        |        |          |        |       |        |        | 111,250 |         |        |        |        |        |       
|                                                                        | Debt issuance costs                                    |                                    |        |        |          |        |       |        |        | (16,814 | )       |        |        |        |        |       
|                                                                        |                                                        |                                    |        |         |          |        |        |        |        |         |        
|                                                                        |                                                        | Net cash from financing activities |        |         | (142,814 | )      |        | (8,487 | )      |         | 414,151 |        |         | 30,596 |        |        
|                                                                        |                                                        |                                    |        |         |          |        |        |        |        |         |        
|Effect of changes in foreign exchange rates on cash                     |                                                        |                                    | 3,870  |         |          | (27    | )      |        | 194    |         |         | 2,887  |         |        | (1,772 | )      
|                                                                        |                                                        |                                    |        |         |          |        |        |        |        |         |        
|Net change in cash and cash equivalents                                 |                                                        |                                    | (3,238 | )       |          | (8,174 | )      |        | 11,157 |         |         | (5,747 | )       |        | (8,409 | )      
|Cash and cash equivalents                                               |                                                        |                                    |        |         |          |        |        |        |        |         |         |        |         |        |        |        
|                                                                        | Beginning of period                                    |                                    |        | 11,157  |          |        | 9,366  |        |        |        |         |        | 23,522  |        |        | 17,775 
|                                                                        |                                                        |                                    |        |         |          |        |        |        |        |         |        
|                                                                        | End of period                                          |                                    | $      | 7,919   |          | $      | 1,192  |        | $      | 11,157  |         | $      | 17,775  |        | $      | 9,366  
|                                                                        |                                                        |                                    |        |         |          |        |        |        |        |         |        
|Supplemental cash flow information:                                     |                                                        |                                    |        |         |          |        |        |        |        |         |         |        |         |        |        |        
|                                                                        | Cash paid for interest                                 |                                    | $      | 38,500  |          | $      | 18     |        | $      | 21,939  |         | $      | 1,191   |        | $      | 2,901  
|                                                                        | Cash paid for income taxes (refunds received)          |                                    |        | 4,400   |          |        |       |        |        | (62     | )       |        | 10,401  |        |        | 4,888  
|Supplemental disclosure of non cash investing and financing activities: |                                                        |                                    |        |         |          |        |        |        |        |         |         |        |         |        |        |        
|                                                                        | Property and equipment acquired under a capital lease  |                                    | $      |        |          | $      |       |        | $      | 3,198   |         | $      |        |        | $      | 3,724  
|                                                                        | Redemption of investment in preferred shares           |                                    |        |        |          |        |       |        |        |        |         |        | 161,214 |        |        |       
|                                                                        | Settlement of affiliate loan                           |                                    |        |        |          |        |       |        |        |        |         |        | 30,423  |        |        |       
|                                                                        | Settlement dividend to affiliate                       |                                    |        |        |          |        |       |        |        |        |         |        | 139,868 |        |        |       
|Supplemental disclosure of acquisition of a business:                   |                                                        |                                    |        |         |          |        |        |        |        |         |         |        |         |        |        |        
|                                                                        | Fair value of assets acquired                          |                                    | $      |        |          | $      |       |        | $      | 627,568 |         | $      |        |        | $      |       
|                                                                        | Fair value of liabilities assumed                      |                                    |        |        |          |        |       |        |        | 209,312 |         |        |        |        |        |       
|                                                                        |                                                        |                                    |        |         |          |        |        |        |        |         |        
|                                                                        | Cash paid for acquisition                              |                                    | $      |        |          | $      |       |        | $      | 418,256 |         | $      |        |        | $      |       
|                                                                        |                                                        |                                    |        |         |          |        |        |        |        |         |        

See accompanying notes to consolidated and combined financial statements.

F-7

---





INDALEX HOLDINGS FINANCE, INC.        CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY        Years ended December 31, 2007, December 31, 2006 and December 31, 2005    
  (Dollars in thousands)

|                                     |                                                                                                | Common
Stock |   | Additional
Paid-in
Capital |   | Treasury
Stock |         | Accumulated
Deficit |     | Accumulated
Other
Comprehensive
Income
(Loss) |   | Total   |       
|------------------------------------ | ---------------------------------------------------------------------------------------------- | ------------ | - | -------------------------- | - | -------------- | ------- | ------------------- | --- | --------------------------------------------- | - | ------- | ------
|Successor balance,
January 1, 2007   |                                                                                                | $            | 1 |                            | $ | 110,665        |         | $                   | (10 | )                                             | $ | (23,898 | )     
|                                     | Net loss                                                                                       |              |   |                           |   |                |        |                     |     |                                              |   |         | (6,976
|                                     | Dividends and distributions                                                                    |              |   |                           |   |                | (76,627 | )                   |     |                                              |   |         |      
|                                     | Stock-based compensation                                                                       |              |   |                           |   |                | 1,086   |                     |     |                                              |   |         |      
|                                     | Translation adjustment (net of tax of $3,444)                                                  |              |   |                           |   |                |        |                     |     |                                              |   |         |      
|                                     | Adjustment to accrued benefit liability related to defined benefit plan (net of tax of $2,665) |              |   |                           |   |                |        |                     |     |                                              |   |         |      
|                                     |                                                                                                |              |   |                            |   |                |         |                     |     |                                               |   |         |       
|Successor balance,
December 31, 2007 |                                                                                                | $            | 1 |                            | $ | 35,124         |         | $                   | (10 | )                                             | $ | (30,874 | )     
|                                     |                                                                                                |              |   |                            |   |                |         |                     |     |                                               |   |         |       

See accompanying notes to consolidated and combined financial statements.

F-8

---



INDALEX HOLDINGS FINANCE, INC.        CONSOLIDATED AND COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY        Years ended December 31, 2007, December 31, 2006 and December 31, 2005
    (Dollars in thousands)

|                                        |                                                                                                                                                           | Common
Stock |     | Additional
Paid-in
Capital |   | Retained
Earnings
(Accumulated
Deficit) |         | Treasury
Stock |         | Accumulated
Other
Comprehensive
Income
(Loss) |   | Total |    
|--------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | --- | -------------------------- | - | --------------------------------------- | ------- | -------------- | ------- | --------------------------------------------- | - | ----- | ---
|Predecessor 2 balance, January 1, 2006  |                                                                                                                                                           | $            | 391 |                            | $ | 411,515                                 |         | $              | 9,712   |                                               | $ |      |    
|                                        | Dividends and distributions                                                                                                                               |              |     |                           |   |                                         | (12,708 | )              |         |                                              |   |       |   
|                                        | Divestiture incentive payment                                                                                                                             |              |     |                           |   |                                         | 743     |                |         |                                              |   |       |    
|                                        | Net income                                                                                                                                                |              |     |                           |   |                                         |        |                |         | 1,639                                         |   |       |   
|                                        | Management fees to affiliates                                                                                                                             |              |     |                           |   |                                         | 125     |                |         |                                              |   |       |   
|                                        | Translation adjustment                                                                                                                                    |              |     |                           |   |                                         |        |                |         |                                              |   |       |   
|                                        |                                                                                                                                                           |              |     |                            |   |                                         |         |                |         |                                               |   |       |    
|                                        | Total comprehensive income                                                                                                                                |              |     |                            |   |                                         |         |                |         |                                               |   |       |    
|Predecessor 2 Balance, February 1, 2006 |                                                                                                                                                           | $            | 391 |                            | $ | 399,675                                 |         | $              | 11,351  |                                               | $ |      |    
|                                        |                                                                                                                                                           |              |     |                            |   |                                         |         |                |         |                                               |   |       |    
|Successor balance, February 2, 2006     |                                                                                                                                                           | $            |    |                            | $ |                                        |         | $              |        |                                               | $ |      |    
|                                        | Dividends and distributions                                                                                                                               |              |     |                           |   |                                         | (1,522  | )              |         |                                              |   |       |   
|                                        | Capital contributions                                                                                                                                     |              |     | 1                          |   |                                         | 111,249 |                |         |                                              |   |       |   
|                                        | Net loss                                                                                                                                                  |              |     |                           |   |                                         |        |                |         | (23,898                                       | ) |       |   
|                                        | Stock-based compensation                                                                                                                                  |              |     |                           |   |                                         | 938     |                |         |                                              |   |       |   
|                                        | Repurchase of common stock                                                                                                                                |              |     |                           |   |                                         |        |                |         |                                              |   |       | (10
|                                        | Translation adjustment                                                                                                                                    |              |     |                           |   |                                         |        |                |         |                                              |   |       |   
|                                        | Adjustment to accrued benefit liability and cumulative adjustment for the adoption of SFAS No. 158 related to defined benefit plan (net of tax of $1,831) |              |     |                           |   |                                         |        |                |         |                                              |   |       |   
|                                        |                                                                                                                                                           |              |     |                            |   |                                         |         |                |         |                                               |   |       |    
|                                        | Total comprehensive loss                                                                                                                                  |              |     |                            |   |                                         |         |                |         |                                               |   |       |    
|Successor balance, December 31, 2006    |                                                                                                                                                           | $            | 1   |                            | $ | 110,665                                 |         | $              | (23,898 | )                                             | $ | (10   | )  
|                                        |                                                                                                                                                           |              |     |                            |   |                                         |         |                |         |                                               |   |       |    

See accompanying notes to consolidated and combined financial statements.

F-9

---





INDALEX HOLDINGS FINANCE, INC.

CONSOLIDATED AND COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

|                                         |                                                                                           | Common
Stock |     | Additional
Paid-in
Capital |   | Retained
Earnings
(Accumulated
Deficit) |          | Unearned
Deferred
Compensation |        | Accumulated
Other
Comprehensive
Income
(Loss) |   | Total  |      
|---------------------------------------- | ----------------------------------------------------------------------------------------- | ------------ | --- | -------------------------- | - | --------------------------------------- | -------- | ------------------------------ | ------ | --------------------------------------------- | - | ------ | -----
|Predecessor 1 balance, January 1, 2005   |                                                                                           | $            | 391 |                            | $ | 534,446                                 |          | $                              | 12,050 |                                               | $ | (1,244 | )    
|                                         | Dividends and distributions                                                               |              |     |                           |   |                                         | (118,516 | )                              |        | (21,352                                       | ) |        |     
|                                         | Net income                                                                                |              |     |                           |   |                                         |         |                                |        | 9,302                                         |   |        |     
|                                         | Stock-based compensation                                                                  |              |     |                           |   |                                         |         |                                |        |                                              |   |        | 1,244
|                                         | Executive compensation                                                                    |              |     |                           |   |                                         | 311      |                                |        |                                              |   |        |     
|                                         | Management fees to affiliates                                                             |              |     |                           |   |                                         | 700      |                                |        |                                              |   |        |     
|                                         | Translation adjustment                                                                    |              |     |                           |   |                                         |         |                                |        |                                              |   |        |     
|                                         |                                                                                           |              |     |                            |   |                                         |          |                                |        |                                               |   |        |      
|Predecessor 1 Balance March 31, 2005     |                                                                                           | $            | 391 |                            | $ | 416,941                                 |          | $                              |       |                                               | $ |       |      
|                                         |                                                                                           |              |     |                            |   |                                         |          |                                |        |                                               |   |        |      
|Predecessor 2 balance, April 1, 2005     |                                                                                           | $            | 391 |                            | $ | 433,286                                 |          | $                              |       |                                               | $ |       |      
|                                         | Dividends and distributions                                                               |              |     |                           |   |                                         | (21,771  | )                              |        | (3,988                                        | ) |        |     
|                                         | Net income                                                                                |              |     |                           |   |                                         |         |                                |        | 13,700                                        |   |        |     
|                                         | Translation adjustment                                                                    |              |     |                           |   |                                         |         |                                |        |                                              |   |        |     
|                                         | Minimum liability adjustment related to defined benefit plan (net of tax benefit of $335) |              |     |                           |   |                                         |         |                                |        |                                              |   |        |     
|                                         |                                                                                           |              |     |                            |   |                                         |          |                                |        |                                               |   |        |      
|Predecessor 2 balance, December 31, 2005 |                                                                                           | $            | 391 |                            | $ | 411,515                                 |          | $                              | 9,712  |                                               | $ |       |      
|                                         |                                                                                           |              |     |                            |   |                                         |          |                                |        |                                               |   |        |      

See accompanying notes to consolidated and combined financial statements.

F-10

---



INDALEX HOLDINGS FINANCE, INC.        CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)        Years ended December 31, 2007, December 31, 2006 and
December 31, 2005        (Dollars in thousands)

|                                                                                                                       |  | Years ended |       
|---------------------------------------------------------------------------------------------------------------------- |  | ----------- | ------
|
|
|
|
|Net income (loss)                                                                                                      |  | $           | (6,976
|Translation adjustment (net of tax of $3,444, $, $, $, and $)                                                      |  |             | (1,487
|Adjustment to accrued benefit liability related to defined benefit plan (net of tax of $2,665, $, $1,831, $, and $) |  |             | 3,441 
|Minimum liability adjustment related to defined benefit plan (net of tax benefit of $, $, $, $, and $335)          |  |             |      
|                                                                                                                       |  |             |       
|Comprehensive income (loss)                                                                                            |  | $           | (5,022
|                                                                                                                       |  |             |       

See accompanying notes to consolidated and combined financial statements.

F-11

---





INDALEX HOLDINGS FINANCE, INC.        NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS        Years ended December 31, 2007, December 31, 2006 and December 31, 2005        (Dollars in thousands)

NOTE 1GENERAL

The Company is the second largest aluminum extruder, and the largest independent aluminum extruder, in the United States and Canada, based on shipment volume data
compiled by the Aluminum Association, the Aluminum Extruders Council, and management estimates. As an independent aluminum extruder, the Company is not involved in aluminum mining, refining or
smelting. In 2007, approximately 94% of the Company's products were customized, made-to-order aluminum extrusions for use in a wide array of end-user markets. In
addition to aluminum extrusion, the Company also offers a broad range of services, including fabrication, painting and anodizing. The Company serves over 3,700 customers, including a broad spectrum of
national, regional and local accounts.

On
February 2, 2006, Indalex Holding Corp. acquired (the "Indalex Holdings acquisition"), Indalex Inc. and Indalex Limited, wholly owned subsidiaries of Honeywell
International, Inc. ("Honeywell"). Indalex Holding Corp. is a holding company that is a wholly-owned direct subsidiary of Indalex Holdings Finance, Inc., (together with its predecessors,
the "Company") which is beneficially owned by affiliates of Sun Capital Partners, Inc., certain other investors and members of the Company's management team. Honeywell had previously acquired
(the "Honeywell acquisition") the former parent company, Novar plc ("Novar"), on March 31, 2005. Both the Indalex Holdings and the Honeywell acquisitions were accounted for under
purchase accounting. The financial statements presented prior to the Honeywell acquisition are referred to as "Predecessor 1", and the statements following the Honeywell acquisition and prior
to the Indalex Holdings acquisition are referred to as "Predecessor 2." The financial statements presented after the Indalex Holdings acquisition are referred to as the "Successor Company."
Results prepared for each of these periods are not comparable.

NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated and combined financial statements are prepared in accordance with accounting principles generally accepted in the United States of
America and reflect the policies set out below.

Use of Estimates:The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the combined financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates
include the allowance for doubtful accounts, accounts related to income taxes, liabilities related to environmental obligations and pension and other post-retirement benefits, and the
valuation of intangible assets.

Revenue Recognition:The Company recognizes net sales when the revenue is realized or realizable, and has been earned, in
accordance with the SEC's Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition in Financial Statements.

The
Company recognizes product revenue, net of trade discounts and allowances, in the reporting period in which the products are shipped and the title and risk of ownership pass to the
customer.

F-12

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The
Company records tolling revenue when the revenue is realized or realizable, and has been earned. Tolling refers to the process by which certain customers provide metal to the Company
for conversion to extrusions. The Company does not take title to the metal and, after the shipment of the extrusion to the customer, the Company charges them for the value-added conversion cost and
records these amounts in net sales.

Shipping
and handling amounts the Company bills to its customers are included in net sales and the related shipping and handling costs the Company incurs are included in cost of sales.

Cash Equivalents:For purposes of reporting cash flows, the Company considers all interest-bearing securities having
maturities of three months or less at the date of purchase to be cash equivalents.

Accounts Receivable:Receivables include trade receivables, notes receivable, and other miscellaneous receivables from
suppliers. The Company generally does not charge interest on its trade receivables.

Allowance for Doubtful Accounts:The allowance for doubtful accounts is determined by management based on the Company's
historical losses, specific customer circumstances, and general economic conditions. Periodically, management reviews accounts receivable and adjusts the allowance based on current circumstances and
charges off uncollectible receivables when all attempts to collect have failed.

Allowances
of $3,862 and $4,462 have been provided at December 31, 2007 and December 31, 2006, respectively.

Inventories:Inventories are valued at the lower of cost or market. Cost includes labor, materials, and production overhead.
The cost of domestic inventory is determined predominantly using the last-in, first-out ("LIFO") method. The cost of inventory in foreign operations is costed using the
first-in, first out method.

Investment in AAG:Investment in AAG consisted of Indalex Limited's investment in AAG, which was accounted for using the
equity method of accounting. On May 15, 2007 Indalex UK Limited sold its 25.01% interest in Asia Aluminum Group ("AAG") to OK Spring Roll Limited Partnership, an investment vehicle in
association with ORIX Corporation. See Note 6.

Property, Plant, and Equipment:Additions to property, plant, and equipment, including expenditures which improve or prolong
the useful lives of such assets, are valued at cost. Expenditures for improvements and betterments are capitalized, and repairs and maintenance are charged to expense as incurred. Property, plant, and
equipment obtained through acquisitions are stated at their fair values

F-13

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

at
the date of acquisition. Depreciation is computed principally on a straight-line basis for financial reporting purposes. The estimated useful lives for computing depreciation are as
follows:

Building

2040 yearsLeasehold improvements

115 yearsMachinery and equipment

215 yearsFurniture and fixtures

310 yearsVehicles

3 5 years


Leasehold improvements are amortized on a straight-line basis over the estimated useful life of the improvement or remaining life of the lease,
whichever is shorter.

Computer
software is capitalized and included in machinery and equipment for the Company projects that have a significant long-term benefit. In accordance with Statement of
Position 98-1,Accounting for the Costs of Computer Software Developed for Internal Use, the Company expenses costs incurred in the
preliminary project stage and thereafter capitalizes costs incurred in developing or obtaining internal use software. Certain costs, such as maintenance and training, are expensed as incurred.
Generally, a three-year life is used for depreciation.

The
Company capitalizes the costs for tools and dies and depreciates the costs over two years.

Accounting for the Impairment of Long-Lived Assets:The Company accounts for impairment of long-lived
assets in accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,Accounting for the Impairment or Disposal of Long-Lived
Assets. This Statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. At least annually, the Company evaluates
whether events and circumstances have occurred that indicate whether the remaining estimated useful lives of its long-lived assets may warrant revision or whether the remaining balance of
such assets may not be recoverable.

Goodwill:In accordance with SFAS No. 142,Goodwill and Other Intangible
Assets, goodwill is reviewed for impairment on an annual basis or more frequently if events or circumstances indicate that the carrying value may not be recoverable. During the
year ended December 31, 2007 the Company eliminated a deferred tax liability for book to tax differences related to certain inventory amounts. The liability existed at the time of acquisition
and was determined to no longer be necessary based on
information recently provided by the seller. The liability was reversed against goodwill and intangible assets, reducing goodwill to zero.

Financial Instruments:Derivative financial instruments are used to hedge existing inventory (metals) and anticipated
purchases of aluminum and gas and are, therefore, held for purposes other than trading. These instruments may involve elements of credit and market risk in excess of the amounts recognized in the
financial statements. The Company monitors its positions and the credit quality of counterparties, consisting primarily of major financial institutions, and does not anticipate nonperformance by any
counterparty.

F-14

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

To
manage foreign currency exposure, the Company enters into foreign currency forward contracts. The contracts are reported in the consolidated and combined financial statements at fair
value using a mark to market valuation.

To
manage the mix of fixed and floating rates in its revolving credit facility, the Company enters into interest rate swaps. The swaps are reported in the consolidated and combined
financial statements at fair value using a mark to market valuation.

The
Company accounts for financial instruments in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 138,
Accounting for Derivative Instruments and Hedging Activities. The derivatives are marked to market through the income statement.

Stock-Based Compensation:Effective January 1, 2006 the Company adopted SFAS No. 123(R) ("SFAS 123(R)").
SFAS 123(R) requires the Company to record compensation expense for all share-based awards. The Company did not have share-based awards at the time SFAS 123(R) was adopted. Accordingly,
the Company has recorded stock-based employee compensation cost using the calculated value method starting in 2006. The Company determined that it is not practicable for it to reasonably estimate its
expected volatility. The Company reviewed the Dow Jones Industrial Metals Small Cap Index as the appropriate industry sector index. The Company obtained the historical daily closing return values of
selected indices for the period equal to the expected term ending on the grant date and calculated the annualized historical volatility of those values. The indices were weighted evenly.

Under
the Predecessor 1 company (Novar), the Company had stock-based employee compensation plans. The Company accounted for stock-based compensation by applying APB Opinion
No. 25,Accounting for Stock Issued to Employees,as allowed under SFAS No. 123,Accounting for Stock-Based
Compensation,under which compensation expense is recorded to the extent that the market price of the underlying stock (Novar stock) exceeds the exercise price at the
measurement date using the intrinsic-value method.

The
fair value of options on their grant date was measured using the Black-Scholes option-pricing model. See Note 22 for more information on stock-based compensation.

All
options existing at March 31, 2005 were liquidated with the sale of Novar to Honeywell. Under the Predecessor 2 company, no stock-based compensation plans exist at
December 31, 2005.

Environmental Remediation Costs:The Company accrues for costs associated with environmental remediation obligations when
such costs are probable and reasonably estimable. Costs of future expenditures for environmental remediation obligations are not discounted to their present value.

Fair Value of Financial Instruments:The carrying values of cash, accounts receivable and payable, and accrued expenses
approximate fair value because of the short-term maturities of these assets and liabilities. The carrying value of revolver borrowings approximates fair value because of the variable rate
nature of the debt. The fair value of long-term debt is approximately $174,288 as of December 31, 2007 based on the market trading price of the Company's 111/2% Notes. See
Note 15 for further information.

F-15

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Concentration of Credit Risk:The Company maintains cash balances at several financial institutions in excess of the
insurance limits provided by the Federal Deposit Insurance Corporation.

Foreign Currency Translation:Assets and liabilities of foreign entities in the Company's combined financial statements are
translated to U.S. dollars at exchange rates in effect as of the balance sheet dates. Revenues and expenses are translated at the average exchange rates prevailing during the reporting period.
Adjustments from translating foreign currency assets and liabilities into U.S. dollars are included as a component of accumulated other comprehensive income. Transaction gains and losses that arise
from exchange rate fluctuations are included in the results of operations, as incurred.

Income Taxes:The Company (excluding Indalex Limited and subsidiaries) was included in the combined federal income tax return
of Novar USA Inc. through March 31, 2005. From April 1, 2005 to February 1, 2006, the Company is included in the federal income tax return of Honeywell. Subsequent to
February 1, 2006, the Company is included in the federal income tax return of Indalex Holdings Finance, Inc. The respective state corporate income tax returns of each subsidiary are
filed on a separate or combined entity basis as applicable. Current federal income taxes payable or recoverable is generally determined as if each subsidiary were filing a separate return and loss
companies are compensated for the benefit derived from the losses utilized. Indalex Limited and each of its subsidiaries file separate income tax returns. Indalex UK Limited files separate income tax
returns in the United Kingdom.

Deferred
income taxes are provided for temporary differences between the tax and book bases of assets and liabilities.

Significant
judgment is required in determining income tax provisions under Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes" (SFAS No. 109)
and in evaluating tax positions. The Company establishes additional provisions for income taxes when, despite the belief that tax positions are fully supportable, there remain certain positions that
do not meet the minimum probability threshold, as defined by FASB Interpretation ("FIN") No. 48, "Accounting for Uncertainty in Income TaxesAn Interpretation of FASB Statement 109"
("FIN 48"), which is a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority. As described in further detail in the Recent Accounting
Pronouncements section to the financial statements, FIN 48 was effective beginning January 1, 2007. FIN 48 establishes a single model to address accounting for uncertainty in tax
positions. FIN 48 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial
statements. FIN 48 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition.

In
the normal course of business, the Company and its subsidiaries are examined by various Federal, State and foreign tax authorities. The Company regularly assesses the potential
outcomes of these examinations and any future examinations for the current or prior years in determining the adequacy of the provision for income taxes. The Company continually assesses the likelihood
and amount of potential adjustments and adjusts the income tax provision, the current tax liability and deferred taxes in the period in which the facts that give rise to a revision become known.

F-16

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Comprehensive Income (Loss):Under SFAS No. 130,Reporting Comprehensive
Income,comprehensive income (loss) for the Company consists of net income (loss), minimum pension liability adjustments, and cumulative translation adjustments.

Recent Accounting Pronouncements:In June 2006, the Financial Accounting Standards Board ("FASB") issued FIN 48, which
establishes a single model to address accounting for uncertain tax positions. FIN
48 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides
guidance on derecognition, measurement classification, interest and penalties, accounting in interim periods, disclosure and transition. The adoption of FIN 48 which occurred on January 1, 2007
had no effect on the Company's consolidated financial position and results of operations. See Note 19 for additional information related to FIN 48.

In
May 2007, the FASB issued FASB Staff Position ("FSP") FIN 48-1 "Definition of Settlement in FASB Interpretation No. 48" (FSP FIN 48-1). FSP FIN
48-1 provides guidance on how to determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. FSP FIN 48-1 is
effective retroactively to January 1, 2007. The implementation of this standard had no effect on the Company's consolidated financial position or results of operations.

In
September 2006, the FASB issued FSP AUG AIR-1 "Accounting for Planned Major Maintenance Activities" (FSP AUG AIR-1). FSP AUG AIR-1 amends
the guidance on the accounting for planned major maintenance activities; specifically it precludes the use of the previously acceptable "accrue in advance" method. FSP AUG AIR-1 is
effective for fiscal years beginning after December 15, 2006. The implementation of this standard had no effect on the Company's consolidated financial position or results of operations.

In
September 2006, the FASB issued Statement of Financial Accounting Standard ("SFAS") No. 157, "Fair Value Measurements" (SFAS No. 157). SFAS No. 157
establishes a common definition for fair value to be applied to US GAAP requiring use of fair value, establishes a framework for measuring fair value, and expands disclosure about such fair value
measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007.

In
February 2008, the FASB issued FSP 157-2 "Partial Deferral of the Effective Date of Statement 157" (FSP 157-2). FSP 157-2 delays the
effective date of SFAS No. 157, for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually) to fiscal years beginning after November 15, 2008. The Company is currently assessing the impact of SFAS No. 157 for nonfinancial assets and nonfinancial
liabilities on its consolidated financial position and results of operations. The implementation of this standard, for financial assets and financial liabilities, will not have a material impact on
the Company's consolidated financial position and results of operations.

In
February 2007, the FASB issued SFAS No. 159 "The Fair Value Option for Financial Assets and Financial Liabilities" (SFAS No. 159). SFAS No. 159 permits
entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in
earnings. SFAS No. 159 is effective for fiscal years

F-17

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

beginning
after November 15, 2007. The implementation of this standard will not have a material impact on the Company's consolidated financial position and results of operations.

In
March 2007, the FASB ratified Emerging Issues Task Force ("EITF") Issue No. 06-10 "Accounting for Collateral Assignment Split-Dollar Life Insurance
Agreements" (EITF 06-10). EITF 06-10 provides guidance for determining a liability for postretirement benefit obligations as well as recognition and measurement of the
associated asset on the basis of the terms of the collateral assignment agreement. EITF 06-10 is effective for fiscal years beginning after December 15, 2007. The implementation of
this standard will not have a material impact on the Company's consolidated financial position and results of operations.

In
June 2007, the FASB ratified EITF 06-11 "Accounting for the Income Tax Benefits of Dividends on Share-Based Payment Awards" (EITF 06-11). EITF
06-11 provides that tax benefits associated with dividends on share-based payment awards be recorded as a component of additional paid-in capital. EITF 06-11 is
effective, on a prospective basis, for fiscal years beginning after December 15, 2007. The implementation of this standard will not have a material impact on the Company's consolidated
financial position and results of operations.

In
December 2007, the FASB issued SFAS No. 141(revised 2007), "Business Combinations" (SFAS No. 141R). SFAS No. 141R provides revised guidance on how
acquirers recognize and measure the consideration transferred, identifiable assets acquired, liabilities assumed, noncontrolling interests, and goodwill acquired in a business combination. SFAS
No. 141R also expands required disclosures surrounding the nature and financial effects of business combinations. SFAS No. 141R is effective, on a prospective basis, for fiscal years
beginning after December 15, 2008. The Company will apply the standard when required and applicable.

In
December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements" (SFAS No. 160). SFAS No. 160 establishes
requirements for ownership interests in subsidiaries held by parties other than the Company (sometimes called "minority interests") be clearly identified, presented, and disclosed in the consolidated
statement of financial position within equity, but separate from the parent's equity. All changes in the parent's ownership interests are required to be accounted for consistently as equity
transactions and any noncontrolling equity investments in deconsolidated subsidiaries must be measured initially at fair value. SFAS No. 160 is effective, on a prospective basis, for fiscal
years beginning after December 15, 2008. The Company will apply the standard when required and applicable.

NOTE 3THE INDALEX HOLDINGS ACQUISITION

On February 2, 2006, Indalex Inc. and Indalex Limited were acquired by Indalex Holdings Finance, Inc. through its wholly-owned subsidiary,
Indalex Holding Corp. for a purchase price of

F-18

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 3THE INDALEX HOLDINGS ACQUISITION (Continued)

$418,256,
net of acquired cash. The table below summarizes the allocation of purchase price based on estimates of the fair values of the assets acquired and liabilities assumed at the date of
acquisition.

ASSETSAccounts receivable, net

$
125,872Receivable from suppliers


8,986Inventories


71,860Prepaid expenses and other current assets


20,032Investment in AAG


90,000Property, plant, and equipment, net


217,806Goodwill


3,537Other intangibles


89,000Other assets


475Total assets


627,568LIABILITIESAccounts payable


59,064Accrued expenses and other current liabilities


67,461Pension and other post-retirement benefits


37,162Other liabilities


4,788Capital lease obligation


3,796Deferred income taxes


37,041Total liabilities


209,312NET ASSETS ACQUIRED

$
418,256


Of the $89,000 acquired intangibles, $17,000 was assigned to a trade name, which is being amortized using a declining balance method over a 15-year
life. The remaining $72,000 of acquired intangible assets relates to customer relationships that are being amortized using a declining balance method and a seven year life. The other intangibles have
a weighted average useful life of 10.7 years. Goodwill acquired of $3,537 was not being amortized and was not deductible for tax purposes.

During
the year ended December 31, 2007 the Company eliminated a deferred tax liability of $7,279 for book to tax differences related to certain inventory amounts. The liability
existed at the time of acquisition and was determined to no longer be necessary based on information recently provided by the seller. The liability was reversed against goodwill in the amount of
$3,537, reducing goodwill to zero. The remaining liability of $3,742 was reversed against intangible assets related to customer relationships.

In
connection with the Indalex Holdings acquisition certain executives of the Company received divestiture incentive payments totaling $743 that were paid by Honeywell. The payments were
accounted for as compensation expense in selling, general and administrative expense, and as an increase to additional paid-in capital.

F-19

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 4HONEYWELL ACQUISITION

On March 31, 2005 ("the closing date"), the Company was acquired by Honeywell International, Inc. as part of Honeywell's acquisition of Novar for a
purchase price of $433,677 net of acquired cash. The table below summarizes the allocation of purchase price based on the estimated fair values of the assets acquired and liabilities assumed at the
date of acquisition.

ASSETSCash and cash equivalents

$
17,775Accounts receivable, net


132,281Trade receivable from affiliates


569Inventories


86,988Prepaid expenses and other current assets


18,805Deferred income tax


2,627Note receivable from affiliate


6,528Investment in AAG


85,000Property, plant, and equipment, net


222,831Goodwill


14,626Other intangibles


83,000Other assets


652Total assets


671,682LIABILITIESAccounts payable


72,607Trade payable to affiliates


622Income taxes payable


4,791Accrued expenses and other current liabilities


50,699Short-term debt


6,000Pension and other post-retirement benefits


56,007Other liabilities


4,791Note payable to affiliates


13,028Deferred income taxes


29,460Total liabilities


238,005NET ASSETS ACQUIRED

$
433,677


Of the $83,000 acquired intangibles, $13,000 were assigned to a trade name, which was being amortized using a declining balance method over a 15-year
life. The remaining $70,000 of acquired intangible assets related to customer relationships that were being amortized using a declining balance method and a seven-year life. The other
intangibles had a weighted average useful life of 10.7 years.

Honeywell
International, Inc. purchased Novar with the intent of disposing of the Company as soon as practical.

F-20

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 4HONEYWELL ACQUISITION (Continued)

The following table summarizes the Company's financial results assuming the Honeywell Acquisition occurred at the beginning of the respective period.

Year Ended
December 31, 2005Amounts in millions(unaudited)Revenues

$
1,021.4Operating income


13.6Income before income taxes


19.4Net income


16.1


NOTE 5INVESTMENT IN PREFERRED SHARES OF AFFILIATES

On March 24, 2005 just prior to the sale of Novar plc to Honeywell International, Indalex Limited exercised its put option included in the
shareholders agreement to sell its investment in preferred shares of Novar affiliates. The redemption value of the preferred shares was set at the book value of $161,214, plus dividends earned through
the date of redemption of $9,077. The dividends were declared by Novar plc based on the rates in the shareholder agreement. The dividend was reflected in the statement of operations as dividend
income for the period January 1, 2005 through March 31, 2005.

Simultaneously
with this transaction, Indalex Limited settled an outstanding loan with Novar plc of $30,423. Also, simultaneously with this transaction, Novar plc caused
Indalex Limited to declare a non-cash dividend of $139,868 to Novar plc. The dividend to Novar plc represented the difference between (a) the redemption value of the
preferred shares and the related interim dividend payable by Novar plc to Indalex Limited and (b) the intercompany loan owed by Indalex Limited to Novar plc. The dividend owed to
Novar plc was accounted for as a reduction to retained earnings. All the transactions were net settled and not settled in cash so they are reported in the statement of cash flow as
non-cash activities for the period January 1, 2005 through March 31, 2005.

NOTE 6EQUITY METHOD INVESTMENT

On May 15, 2007 Indalex UK Limited sold its 25.01% interest in Asia Aluminum Group ("AAG") to OK Spring Roll Limited Partnership, an investment vehicle in
association with ORIX Corporation. The Company received $151,215 in cash (net of transaction costs) and recorded a book gain before tax of $51,246 related to the sale.

The
investment in AAG was accounted for using the equity method of accounting. The principal business transactions between AAG and the Company include the sale of finished aluminum
products where the Company uses AAG as a contract manufacturer. The Company purchases finished extruded aluminum products from AAG for resale to customers when it is more economical than manufacturing
the product directly or when there are capacity constraints. Approximately 4%, 4%, 6%, 2% and 3% of the Company's net sales were sourced from AAG for the periods January 1, 2007 to
May 15, 2007, January 1, 2006 to February 1, 2006, February 2, 2006 to December 31, 2006, January 1, 2005 to March 31, 2005, and April 1, 2005
to December 31, 2005, respectively.

F-21

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 6EQUITY METHOD INVESTMENT (Continued)

Summarized
financial data for AAG's operations as of May 15, 2007, February 1, 2006, December 31, 2006, March 31, 2005, and December 31, 2005 and for
the periods ended is as follows:

|                        |  | Period ended
|----------------------- |  | ------------
|
|
|
|
|Sales                   |  | $           
|Gross profit            |  |             
|Net income              |  |             
|Current assets          |  |             
|Current liabilities     |  |             
|Non-current liabilities |  |             
|Total assets            |  |             
|Stockholders' equity    |  |             
|Retained earnings       |  |             

NOTE 7INTANGIBLE ASSETS

As part of the Indalex Holding acquisition, identifiable intangible assets were recorded. The identifiable intangible assets are being amortized on a declining
balance method. The useful lives range from seven to fifteen years. The table below summarizes the identified intangible assets and annual amortization expense.

|                  |  | December 31, 2007 |        | December 31, 2006
|----------------- |  | ----------------- | ------ | -----------------
|
|Customer lists    |  | $                 | 68,258 |                  
|Indalex trademark |  |                   | 17,000 |                  
|                  |  |                   |        |                  
|Total             |  | $                 | 85,258 |                  
|                  |  |                   |        |                  

During the year ended December 31, 2007, the Company eliminated a deferred tax liability for book to tax differences related to certain inventory amounts.
$3,742 of the liability was reversed against intangible assets related to customer relationships. See Note 3 for further information.

Future
amortization expense is as follows:

Year Ended December 31,2008

$
8,0732009

$
7,3162010

$
6,8602011

$
6,4492012

$
6,449


F-22

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 8RESTRUCTURING CHARGES

On January 5, 2007, the Company announced the closure of its aluminum extrusion facility located in Watsonville, California. The facility ceased operations
in June 2007. As a result of the closure, the Company recorded an impairment on long-lived assets of $2,000 during the year ended December 31, 2007 and $3,446 during the period
February 2, 2006 to December 31, 2006 based on the appraised values of the assets expected to be disposed. During the year ended December 31, 2007, the Company recorded expense of
$2,160 comprised of $1,320 for severance and related costs resulting from the termination of 99 people, of which $208 remains unpaid, and $840 of lease obligations and other exit costs.

In
September 2006, the Company initiated an overhead restructuring program. During the year ended December 31, 2007, the Company recorded expense of $1,063 in severance and
related costs resulting from the termination of 33 people during the year ended December 31, 2007. The cumulative severance and related costs are $2,835 resulting from the termination of 65
people. As of December 31, 2007 and December 31, 2006, the Company had a remaining liability of $802 and $1,374, respectively.

On
March 14, 2005, the Company announced the closure of its aluminum extrusion facility located in Fostoria, Ohio. The Fostoria closure, which involved 53 employees, occurred on
July 31, 2005. For the period January 1, 2005 to March 31, 2005, the Company recorded restructuring expense of $694, comprised of $525 for severance costs for hourly and salaried
employees, including associated benefits and outplacement. Additional exit costs of $169 were recorded for lease obligations and other exit costs. All amounts were paid as of December 31, 2006.
As a result of the closure, the Company recorded asset impairments of $381 for the period January 1, 2005 to March 31, 2005 and $366 for the period February 2, 2006 to
December 31, 2006.

As
part of the acquisition by Honeywell and included in the related purchase accounting, the Company initiated an overhead reduction program that resulted in the termination of 75
employees at a cost of $2,054, of which $127 was recorded during the year ended December 31, 2007. The program was accounting for as a part of purchase accounting. These costs related to
severance costs and other eligible associated expenses. As of December 31, 2007 and December 31, 2006, the Company had a remaining liability of $0 and $8, respectively.

The
Company recorded income of $22 during the year ended December 31, 2007 related to restructuring programs initiated prior to 2005. The Company has a remaining liability of $127
as of December 31, 2007 related to restructuring programs initiated prior to 2005.

F-23

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 8RESTRUCTURING CHARGES (Continued)

The
following table summarizes the status of the Company's total restructuring costs.

|                             |                                      | Severance Costs |       | Asset Impairments |   | Exit Costs |        | Total |    
|---------------------------- | ------------------------------------ | --------------- | ----- | ----------------- | - | ---------- | ------ | ----- | ---
|Balance at December 31, 2004 |                                      | $               | 1,278 |                   | $ |           |        | $     | 25 
|                             | January 1-March 31, 2005 charges     |                 |       | 525               |   |            | 381    |       |    
|                             | January 1-March 31, 2005 usage       |                 |       | (741              | ) |            | (381   | )     |    
|                             |                                      |                 |       |                   |   |            |        |       |    
|Balance at March 31, 2005    |                                      |                 | 1,062 |                   |   |           |        |       | 193
|                             | April 1-December 31, 2005 charges    |                 |       | (250              | ) |            |       |       |    
|                             | April 1-December 31, 2005 usage      |                 |       | (1,424            | ) |            |        |       |    
|                             | Purchase Accounting reserve          |                 |       | 2,054             |   |            |       |       |    
|                             |                                      |                 |       |                   |   |            |        |       |    
|Balance at December 31, 2005 |                                      |                 | 1,442 |                   |   |           |        |       | 55 
|                             | January 1-February 1, 2006 charges   |                 |       |                  |   |            |       |       |    
|                             | January 1-February 1, 2006 usage     |                 |       | (156              | ) |            |       |       |    
|                             |                                      |                 |       |                   |   |            |        |       |    
|Balance at February 1, 2006  |                                      |                 | 1,286 |                   |   |           |        |       | 40 
|                             | February 2-December 31, 2006 charges |                 |       | 1,772             |   |            | 3,812  |       |    
|                             | February 2-December 31, 2006 usage   |                 |       | (1,529            | ) |            | (3,812 | )     |    
|                             |                                      |                 |       |                   |   |            |        |       |    
|Balance at December 31, 2006 |                                      |                 | 1,529 |                   |   |           |        |       |   
|                             | 2007 charges                         |                 |       | 2,824             |   |            | 5,928  |       |    
|                             | 2007 usage                           |                 |       | (3,178            | ) |            | (5,928 | )     |    
|                             |                                      |                 |       |                   |   |            |        |       |    
|Balance at December 31, 2007 |                                      | $               | 1,175 |                   | $ |           |        | $     | 16 
|                             |                                      |                 |       |                   |   |            |        |       |    

NOTE 9DERIVATIVE INSTRUMENTS

SFAS No. 133 requires that an entity recognize all derivatives as either assets or liabilities measured at fair value. In accordance with the Company's
risk management policy, derivatives are limited to futures, forwards, swaps, and options, which are used to mitigate commodity price, foreign currency, and interest rate risk. These hedging
relationships do not qualify for hedge accounting as defined by SFAS No. 133. Therefore, the derivatives are marked to market through the income statement.

As
of December 31, 2007, the Company had 297 contracts to purchase 62.3 million pounds of aluminum at prices per pound between $1.09 and $1.29 (actual). These purchase
contracts are scheduled to mature between January 2008 and June 2009, and the notional amount was $65,282. As of December 31, 2007, the Company had 39 contracts to sell 108.9 million
pounds of aluminum at prices between $1.07 and $1.20 (actual). These sales contracts are scheduled to mature between January 2008 and June 2008, and the notional amount was $117,854. As of
December 31, 2007, the unrealized losses related to these derivatives are recorded within other current liabilities in the amount of $175. The income statement reflects a loss of $3,624 for the
year ended December 31, 2007.

As
of December 31, 2006, the unrealized gains related to these derivatives are recorded within other current assets in the amount of $3,449. The income statement reflects a gain
of $3,619 for the

F-24

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 9DERIVATIVE INSTRUMENTS (Continued)

period
January 1, 2006 to February 1, 2006 and a loss of $7,560 for the period February 2, 2006 to December 31, 2006.

As
of December 31, 2005, the unrealized gains related to these derivatives are recorded within other current assets in the amount of $7,390. The income statement reflects a loss
of $285 for the period January 1, 2005 to March 31, 2005 and a gain of $1,200 for the period April 1, 2005 to December 31, 2005.

The
Company transacts business in foreign currencies, giving rise to foreign exchange rate risk. The purpose of the Company's foreign currency hedging activity is to protect the Company
from the risk that the eventual U.S. Dollar net cash outflows resulting from foreign purchases or net cash inflows denominated in foreign currency, will be adversely affected by the changes in
exchange rates. As of December 31, 2007, the Company had two contracts to buy 8.5 million Swedish Krona (SEK) at prices per US Dollar between SEK 6.72 and SEK 6.73 (actual). These
purchase contracts are scheduled to mature between January 2008 and March 2008, and the notional amount was $1,264. As of December 31, 2007, the Company had nine contracts to buy
10.5 million Canadian Dollars (CAD) at prices per US Dollar between CAD .98 and CAD 1.02 (actual). These purchase contracts are scheduled to mature between January 2008 and February 2008, and
the notional amount was $10,500. As of December 31, 2007, the unrealized gains related to these derivatives are recorded within other current assets in the amount of $155. The income statement
reflects a gain of $147 for the year ended December 31, 2007, of which $97 is included in other expense.

The
Company's short-term debt consists of a revolving credit facility providing for borrowings up to $200.0 million. (See Note 15.) In order to manage the mix
of fixed and floating rates in its revolving credit facility, the Company has entered into interest rate swaps to change the characteristics of interest rate payments from short-term
LIBOR-based variable rate payments to fixed-rate payments for a portion of its total revolver balance. As of December 31, 2007, the Company had three interest rate swap contracts
with a weighted average fixed rate of 5.1%. The contracts are scheduled to mature between July 2009 and September 2009, and the notional amount was $57,500. As of December 31, 2007, the
unrealized losses related to these derivatives are recorded within other current liabilities in the amount of $1,232. The income statement reflects a loss of $1,232 for the year ended
December 31, 2007.

NOTE 10AFFILIATE TRANSACTIONS

During the year ended December 31, 2007 and period February 2, 2006 to December 31, 2006, the Company incurred management fees of $1,071 and
$1,634, respectively, to Sun Capital Partners, Inc. for operational management, debt financing support and corporate governance. Sun Capital Partners charges its fees to affiliates
proportionately based on a percentage of EBITDA.

During
the year ended December 31, 2007 the Company paid Sun Capital Partners fees associated with the sale of its investment in AAG of $1,532. The fees are included as part of
the gain on the sale reported on the statement of income.

F-25

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 10AFFILIATE TRANSACTIONS (Continued)

During
the year ended December 31, 2007 the Company distributed $76,627 of the proceeds received from the sale of the AAG investment to its stockholders.

For
the period February 2, 2006 to December 31, 2006 the Company paid Sun Capital Partners fees associated with the Indalex Holdings acquisition of $5,475.

On
July 18, 2006, the Company paid a dividend to stockholders of $1,522.

For
the period January 1, 2006 through February 1, 2006, net cash generated under the Honeywell cash sweep arrangement in the United States of $5,899 was remitted as a
return of capital. Cash generated of $6,809 was remitted to Honeywell as a dividend. The Company was not charged management fees by Honeywell during this period. The Company recorded expense of $125
in the statement of income as an estimate for the services provided by Honeywell during this period. The management fees for this period are reflected as an increase to additional
paid-in-capital in the statement of stockholders' equity.

For
the period April 1, 2005 through December 31, 2005 net cash generated under the Honeywell cash sweep arrangement in the United States of $11,791 was remitted as a
return of capital. Cash generated in Canada of $13,968 was remitted to Honeywell as a dividend. The Company also paid management fees to Honeywell totaling $1,131 for services provided on its behalf
in the areas of tax and treasury which management believes were representative of the cost to provide those services. Honeywell proportionately allocates its support costs to its subsidiaries. The
Company incurred costs directly for all other functions.

For
the period January 1, 2005 through March 31, 2005 the Company was not charged management fees by Novar. The Company recorded expense of $700 in the statement of income
as an estimate for the services provided by Novar during this period. The management fees for this period are reflected as an increase to additional paid-in-capital in the
statement of stockholders' equity.

The
Company received dividend income from affiliated companies totaling $9,077 for the period January 1, 2005 to March 31, 2005.

F-26

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 11INVENTORIES

Inventories consisted of the following:

December 31, 2007

December 31, 2006Raw materials

$
33,206

$
37,883Work in process


2,172


4,251Finished goods


26,551


31,00161,929


73,135Less LIFO allowance


(3,664
)

(5,953
)Total inventories

$
58,265

$
67,182


Inventory stated on the LIFO basis amounted to $34,123 at December 31, 2007 and $35,922 at December 31, 2006. LIFO inventory liquidations resulted
in a reduction of $2,289 to cost of sales on the accompanying consolidated and combined statements of income for the year ended December 31, 2007.

NOTE 12PROPERTY, PLANT AND EQUIPMENT

Net property, plant, and equipment consists of the following:

December 31, 2007

December 31, 2006Land, buildings and improvements

$
89,736

$
93,129Machinery and equipment


128,622


121,774Office equipment, furniture and vehicles


5,644


5,336Construction in progress


15,117


3,788239,119


224,027Accumulated depreciation


(46,832
)

(24,539
)Net property, plant and equipment


192,287


199,488Assets held for sale


104


150Total property, plant and equipment

$
192,391

$
199,638


F-27

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 13ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consists of the following:

December 31, 2007

December 31, 2006Payroll and related benefits

$
11,865

$
18,052Accrued accounts payable


16,830


14,678Property and other taxes


1,685


1,040Environmental


116


105Restructuring


1,191


1,529Unrealized losses on derivatives


1,407


Other


2,112


3,074Total accrued expenses and other current liabilities

$
35,206

$
38,478


NOTE 14OTHER LIABILITIES

Other liabilities were comprised of the following:

December 31, 2007

December 31, 2006Pension

$
10,314

$
18,345FIN-48


19,289


Environmental


1,608


1,565Post-retirement benefits


3,868


4,362Other post-retirement benefits


639


547Other


5,049


5,848Total

$
40,767

$
30,667


NOTE 15DEBT

The Company has significant debt service obligations. A revolving credit facility consists of a first-priority secured five-year asset-based revolving
credit facility providing for borrowings up to $200.0 million. In addition, to fund the purchase from Honeywell, the Company issued $270.0 million of 111/2% notes on
February 2, 2006, which mature in 2014. The bonds were recorded net of a discount of $3,437 which is amortized over the term of the bonds. On June 21, 2007 the Company repurchased Notes
with a face value of $71,945 with proceeds from the sale of its investment in AAG. The Notes were redeemed at a 5% premium plus accrued interest. As a result of the tender offer for the Notes the
Company recorded a loss of $7,140 which includes the following: repurchase premium ($3,597), unamortized discount on Notes ($754), unamortized debt issue costs ($2,757) and transactions costs ($32).
The face value of the Notes is $198,055 and the discount is $1,917 at December 31, 2007.

F-28

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 15DEBT (Continued)



The revolving credit facility provides an aggregate principal amount of up to $200.0 million, all of which is available in the form of loans denominated in
U.S. dollars to Indalex Holding Corp. and up to $80.0 million of which is available as a revolving credit sub-facility in the form of loans denominated in Canadian dollars and loans
denominated in U.S. dollars to Indalex Limited or bankers' acceptances denominated in Canadian dollars, subject in each case to the borrowing base limitations described below. Up to an aggregate of
$30.0 million will be available to Indalex Holding Corp., Indalex Limited and subsidiaries of Indalex Holding Corp., to the extent that Indalex Holding Corp. or Indalex
Limited is a co-applicant, for the issuance of letters of credit. As of December 31, 2007, borrowings under the revolving credit facility bore interest at a weighted average rate of
7.25%.

The
aggregate amount of loans permitted to be made to Indalex Holding Corp. under the revolving credit facility may not exceed a borrowing base comprised of the eligible accounts
receivable, inventory, machinery and equipment and real property of Indalex Holding Corp. and its wholly owned domestic subsidiaries, subject to an aggregate total cap, when taken together with loans
made to Indalex Limited, of $200.0 million.

The
aggregate amount of loans permitted to be made to Indalex Limited under the Canadian revolving credit sub-facility may not exceed a borrowing base comprised of the
eligible accounts receivable, inventory, machinery and equipment and real property of Indalex Limited and its wholly owned Canadian subsidiaries, subject to an aggregate sub-cap of
$80.0 million and further subject to an aggregate total cap, when taken together with loans made to Indalex Holding Corp., of $200.0 million.

The
Company's obligations under the revolving credit facility are guaranteed on a first-priority secured basis by Holdings and each domestic subsidiary of Indalex Holding Corp. The
obligations of Indalex Limited under the Canadian revolving credit sub-facility will be guaranteed on a first-priority secured basis by Holdings, Indalex Holding Corp., each domestic
subsidiary of Indalex Holding Corp. and certain foreign subsidiaries of Indalex Holding Corp., other than Indalex Limited.

Indalex
Holding Corp.'s obligations under the U.S. portion of the revolving credit facility and the guarantees thereof are secured by a first-priority lien on all of the tangible and
intangible assets of Holdings, Indalex Holding Corp. and each domestic subsidiary of Indalex Holding Corp., as well as 100% of the capital stock of Indalex Holding Corp. and the Company's domestic
subsidiaries and 65% of the capital stock of the foreign subsidiaries directly owned by the Company or any of the Company's domestic subsidiaries. The obligations of Indalex Limited under the Canadian
revolving credit sub-facility and the guarantees thereof are secured by a first-priority lien on all of the tangible and intangible assets of Holdings, Indalex Holding Corp., Indalex
Limited, each domestic subsidiary of Indalex Holding Corp. and certain foreign subsidiaries of Indalex Holding Corp., as well as 100% of the capital stock of Indalex Holding Corp. and its domestic
subsidiaries and 100% of the capital stock of the Company's foreign subsidiaries, including Indalex Limited.

Indalex
Holding Corp. and Indalex Limited may, at their option, increase the aggregate commitments under the revolving credit facility by an additional $40.0 million, subject to
the satisfaction of certain conditions precedent.

F-29

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 15DEBT (Continued)

The
credit agreement contains a number of restrictive covenants that impose significant operating and financial restrictions. The credit agreement limits the Company's ability to:



Also,
the credit agreement requires the Company to maintain compliance with a fixed charge coverage ratio if either an average borrowing availability over a three-calendar-month period
(or twelve-calendar-week period, as the case may be) or actual borrowing availability for four consecutive business days falls below $25.0 million.

The
Company was in compliance with the covenants for the years ended December 31, 2007.



Indalex Holding Corp. issued the 111/2% Notes on February 2, 2006. The 111/2% Notes will mature in 2014 and are guaranteed on
a second-priority secured basis by each of the Company's domestic subsidiaries that incur indebtedness, and each of the Company's foreign subsidiaries that enter into a guarantee of any of the
Company's senior indebtedness (other than indebtedness incurred by another foreign subsidiary). On the closing date, the 111/2% Notes were guaranteed by each of the Company's domestic
subsidiaries and none of the Company's foreign subsidiaries. Interest on the 111/2% Notes is payable semi-annually in cash.

The
111/2% Notes are secured by a second-priority lien on substantially all of Indalex Holding Corp.'s and the guarantors' assets to the extent that such assets secure the
borrowings under the Company's revolving credit facility and a second-priority pledge of 100% of Indalex Holding Corp.'s and its domestic subsidiaries' capital stock and 65% of the capital stock of
the Company's foreign

F-30

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 15DEBT (Continued)

subsidiaries
directly owned by Indalex Holding Corp. or any domestic subsidiary (in each case, subject to certain limitations.)

The
indenture governing the 111/2% Notes, among other things, limits Indalex Holding Corp.'s ability and the ability of its restricted subsidiaries to: incur additional
indebtedness; pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments; enter into agreements that restrict distributions from
restricted subsidiaries; sell or otherwise dispose of assets, including capital stock of restricted subsidiaries; enter into transactions with affiliates; create or incur liens; enter into
sale/leaseback transactions; and merge, consolidate or sell substantially all of the Company's assets. These covenants are subject to important exceptions and qualifications. The Company was in
compliance with the covenants for the years ended December 31, 2007.

Optional Redemption

Except
as set forth below, the Company will not be entitled to redeem the Notes at its option prior to February 1, 2010.

On
and after February 1, 2010, the Company will be entitled at its option to redeem all or a portion of the Notes upon not less than 30 or more than 60 days' notice, at the
redemption prices (expressed as a percentage of principal amount on the redemption date), plus accrued and unpaid interest and additional interest thereon, if any, to the redemption date (subject to
the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on
February 1 of the years set forth below:

Period

Redemption Price2010

108.625
%2011

102.875
%2012 and thereafter

100.000
%


Prior to February 1, 2009, the Company will be entitled at its option on one or more occasions to redeem Notes (which includes Additional Notes, if any) in
an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Notes (which includes Additional Notes, if any) originally issued at a redemption price (expressed as a
percentage of principal amount) of 111/2%, plus accrued and unpaid interest and additional interest thereon, if any, to the redemption date, with the net cash proceeds from one or more
Equity Offerings;provided,however, that



F-31

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 15DEBT (Continued)



Prior
to February 1, 2010, the Company will be entitled on one or more occasions to redeem all or a portion of the Notes (which includes Additional Notes, if any) upon not less
than 30 nor more than 60 days' notice at a redemption price equal to the sum of:



The
term "Make-Whole Amount" shall mean, in connection with any optional redemption of any Note, the greater of (1) 1.0% of the principal amount of such Note and
(2) the excess, if any, of (A) the aggregate present value as of the date of such redemption of the redemption price of such Note on February 1, 2010 (as set forth in the table
above) and the amount of interest (exclusive of interest accrued to the redemption date) that would have been payable in respect of such Note through February 1, 2010 if such redemption had not
been made, determined by discounting, on a semiannual basis, such redemption price and interest at the Treasury Rate (determined on the business day preceding the date of such redemption) plus 0.5%,
from the respective dates on which such redemption price and interest would have been payable if such redemption had not been made, over (B) the principal amount of the Note being redeemed.

"Treasury
Rate" means, in connection with the calculation of any Make-Whole Amount with respect to any Note, the yield to maturity at the time of computation of United States
Treasury securities with a constant maturity, as compiled by and published in the most recent Statistical Release that has become publicly available at least two Business Days prior to the redemption
date, equal to the period from the redemption date to February 1, 2010. If no maturity exactly corresponds to such period, yields for the published maturities occurring prior to and after such
maturity most closely corresponding to such maturity shall be calculated pursuant to the immediately preceding sentence and the Treasury Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding in each of such relevant periods to the nearest month.

"Statistical
Release" means the statistical release "H.15(519)" or any successor publication which is published weekly by the Federal Reserve System and which establishes yields on
actively traded U.S. government securities adjusted to constant maturities or, if such statistical release is not published at the time of any determination, then such other reasonably comparable
index which shall be designated by the Trustee.

Selection and Notice of Redemption

If
the Company is redeeming less than all the Notes at any time, the Trustee will select the Notes to be redeemed on apro ratabasis to
the extent practicable.

The
Company will redeem Notes of $1,000 or less in whole and not in part. The Company will cause notices of redemption to be mailed by first-class mail at least 30 but not more than
60 days before the redemption date to each Holder of Notes to be redeemed at its registered address.

F-32

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 15DEBT (Continued)

If
any Note is to be redeemed in part only, the notice of redemption that relates to that Note will state the portion of the principal amount thereof to be redeemed. The Company will
issue a new Note in a principal amount equal to the unredeemed portion of the original Note in the name of the Holder upon cancellation of the original Note. Notes called for redemption become due on
the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption.

Mandatory Redemption; Offers to Purchase; Open Market Purchases

The
Company is not required to make any mandatory redemption or sinking fund payments with respect to the Notes. However, under certain circumstances, the Company may be required to
offer to purchase Notes as described under the captions "Change of Control", "Excess Cash Flow Offer" and "Certain CovenantsLimitation on Sales of
Assets and Subsidiary Stock". The Company may at any time and from time to time purchase Notes in the open market or otherwise.

As
noted previously, on June 21, 2007 the Company repurchased Notes with a face value of $71,945 at a 5% premium plus accrued interest. The offer to repurchase the Notes was
required per the indenture agreement due to the sale of the Company's investment in AAG.

NOTE 16DEBT ISSUE COSTS

As part of the transactions associated with the Indalex Holdings acquisition, the Company incurred $4.2 million and $12.6 million in debt issue
costs for the Revolving Credit Facility and the 111/2% Notes, respectively. These costs are being amortized using the straight-line method over the life of the debt
(5 years and 8 years, respectively).

As
indicated in Note 15, on June 21, 2007 the Company repurchased Notes with a face value of $71,945 with proceeds from the sale of its investment in AAG. As a result of
the tender offer for the Notes the Company expensed $2,757 of debt issue costs that were being amortized over 8 years. The expense is included in the statement of income as part of the loss on
redemption of notes.

NOTE 17DISPOSALS AND ASSETS HELD FOR SALE

On November 19, 2006, the Company sold its Drawn Tube and extrusion facilities located in Winton, North Carolina to Spectube USA. The aggregate purchase
price was $4,548, comprised of cash proceeds (net of transaction costs) of $3,373, and a promissory note of $1,175, payable over 3 years at an interest rate of 8% per annum. The Company also
entered into a raw material supply agreement with Spectube. As a result of the sale the Company recorded an impairment charge of $2,676.

In
March 2005, the Company announced the closure of its extrusion plant in Fostoria, Ohio. As a result of the closure the Company recorded an impairment of $381 on long-lived
assets during the period January 1, 2005 to March 31, 2005. During the period February 2, 2006 through December 31, 2006, the Company recorded an additional impairment on
long-lived assets of $366. The remaining assets of $150 are classified as assets held for sale as of December 31, 2006.

F-33

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

On December 14, 2004, the Company sold a cast house in Ahoskie, North Carolina, for a $740 mortgage note receivable. The mortgage note receivable bears
interest at 7%, was due December 31, 2007, and is collateralized by the Ahoskie land, building, and equipment. In connection with the sale, the Company entered into a five-year
supply agreement with the buyer to purchase
castings. Due to insufficient initial investment on the part of the buyer, this transaction was not recorded as a sale. Rather, an impairment loss of $1,356 was recorded on property, plant and
equipment during the year ended December 31, 2004, and the Company retained the property, plant and equipment in its combined financial statements. The buyer ceased operations, and the Company
recorded additional impairments on long-lived assets of $636 and $104 for the periods April 1, 2005 to December 31, 2005 and February 2, 2006 to December 31,
2006, respectively. The book value for the mortgage note receivable and property, plant and equipment is zero as of December 31, 2007.

In
June 2004, the Company announced the closure of its aluminum extrusion facility located in Berlin, Connecticut. The facility and equipment were disposed in 2005, generating proceeds
of $2,580 and a gain of $292.

NOTE 18EMPLOYEE BENEFIT PLANS

Pension and Post-Retirement Benefits:The Company maintains defined benefit pension plans which provide
retirement benefits for certain employees. The assets of the plans are invested primarily in equity and bond-based funds, debt and equity securities, and short-term cash
investments. Pension costs are calculated using the accrued benefit model of actuarial valuation with projected earnings where appropriate. The Company also maintains for select employees a defined
benefit plan that provides healthcare and life insurance benefits upon retirement. The plan is unfunded.

In
connection with the Indalex Holdings acquisition, the accrued pension was adjusted to exclude unamortized pension assets and liabilities at the acquisition date. In addition, part of
the pension liability was retained by Honeywell. Also related to the Indalex Holdings acquisition, the Company executed a wind-up of part of its Canadian pension plan. The net impact of
the Indalex Holdings acquisition was a $10.0 million reduction to the pension liability.

As
discussed in Note 2Summary of Significant Accounting Policies, the Company adopted SFAS No. 158 as of December 31, 2006. SFAS No. 158 requires
that employers recognize on a prospective basis the funded status of their defined benefit pension and other postretirement benefit
plans on their consolidated balance sheet and recognize as a component of other comprehensive income (loss), net of tax, the gains or losses and prior service costs or credits that arise during the
period but are not recognized as components of net periodic benefit cost. Additional minimum pension liabilities and related intangible assets are also derecognized upon adoption of the new standard.
The impact of adopting SFAS No. 158 resulted in an adjustment to the pension liability as shown in the table below:

As of December 31, 2006

Pension Liability Adjustment

SFAS No. 158 Adjustment

Pension Liability & SFAS No. 158 Adjustments(Increase) decrease to pension liabilities

$
(592
)
$
5,014

$
4,422Decrease to post-retirement liabilities





115


115Increase (decrease) in deferred income tax liabilities


239


(2,070
)

(1,831
)Accumulated other comprehensive income (loss)

$
(353
)
$
3,059

$
2,706


F-34

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 18EMPLOYEE BENEFIT PLANS (Continued)

The following tables summarize the balance sheet impact, including the benefit obligations, assets, and funded status associated with the Company's pension and
post-retirement plans. The Company uses a December 31 measurement date.

|                                                                      |                                               | December 31, 2007                           |         | December 31, 2006 |        
|--------------------------------------------------------------------- | --------------------------------------------- | ------------------------------------------- | ------- | ----------------- | -------
|
|Change in projected benefit obligation                                |                                               |                                             |         |                   |        
|                                                                      | Benefit obligation at February 1, 2006        |                                             |         |                   |        
|                                                                      | Benefit obligation at January 1, 2007         |                                             | $       | 129,768           |        
|                                                                      | Service cost (including expenses)             |                                             |         | 377               |        
|                                                                      | Interest cost                                 |                                             |         | 6,940             |        
|                                                                      | Plan participants' contributions              |                                             |         |                  |        
|                                                                      | Obligation being settled                      |                                             |         | (18,113           | )      
|                                                                      | Special termination benefits                  |                                             |         | 1,110             |        
|                                                                      | Actuarial gain                                |                                             |         | (7,987            | )      
|                                                                      | Benefits paid                                 |                                             |         | (6,555            | )      
|                                                                      | Impact of currency exchange                   |                                             |         | 6,844             |        
|                                                                      |                                               |                                             |         |                   |        
|                                                                      |                                               | Projected benefit obligation at end of year |         | $                 | 112,384
|                                                                      |                                               |                                             |         |                   |        
|Change in plan assets                                                 |                                               |                                             |         |                   |        
|                                                                      | Fair value of plan assets at February 1, 2006 |                                             |         |                   |        
|                                                                      | Fair value of plan assets at January 1, 2007  |                                             | $       | 111,424           |        
|                                                                      | Actual return on plan assets                  |                                             |         | 4,586             |        
|                                                                      | Employer contribution                         |                                             |         | 5,404             |        
|                                                                      | Plan participants' contributions              |                                             |         |                  |        
|                                                                      | Benefits paid                                 |                                             |         | (6,555            | )      
|                                                                      | Expenses paid                                 |                                             |         | (627              | )      
|                                                                      | Settlement payments                           |                                             |         | (16,703           | )      
|                                                                      | Impact of currency exchange                   |                                             |         | 4,540             |        
|                                                                      |                                               |                                             |         |                   |        
|                                                                      |                                               | Fair value of plan assets at end of year    |         | $                 | 102,069
|                                                                      |                                               |                                             |         |                   |        
|
|
|Funded status                                                         |                                               | $                                           | (10,314 | )                 | $      
|                                                                      |                                               |                                             |         |                   |        
|                                                                      | Net amount recognized                         |                                             | $       | (10,314           | )      
|                                                                      |                                               |                                             |         |                   |        
|Amounts recognized in the statement of financial position consist of: |                                               |                                             |         |                   |        
|Other long-term liabilities                                           |                                               | $                                           | (10,314 | )                 | $      
|Accrued expenses and other current liabilities                        |                                               |                                             |        |                   |        
|                                                                      |                                               |                                             |         |                   |        
|                                                                      | Net amount recognized                         |                                             | $       | (10,314           | )      
|                                                                      |                                               |                                             |         |                   |        

F-35

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 18EMPLOYEE BENEFIT PLANS (Continued)

|                                                                                |  | December 31, 2007 |       | December 31, 2006 |  
|------------------------------------------------------------------------------- |  | ----------------- | ----- | ----------------- | -
|
|Amounts recognized in accumulated other comprehensive income (loss) consist of: |  |                   |       |                   |  
|Actuarial gain                                                                  |  | $                 | 9,820 |                   | $
|                                                                                |  |                   |       |                   |  
|Net amount recognized, before tax effect                                        |  | $                 | 9,820 |                   | $
|                                                                                |  |                   |       |                   |  

The accumulated benefit obligation for the defined benefit pension plans was $84,012 and $129,481 at December 31, 2007 and December 31, 2006,
respectively.

Net
periodic pension costs for the plans include the following components:

|                                      |                           | Years ended |       
|------------------------------------- | ------------------------- | ----------- | ------
|
|
|
|Service cost                          |                           | $           | 493   
|Interest cost                         |                           |             | 6,940 
|Expected return on assets             |                           |             | (6,782
|Amortization of prior service cost    |                           |             |      
|Amortization of transition obligation |                           |             |      
|Recognized actuarial (gain) loss      |                           |             | (4    
|Settlement (gain) loss                |                           |             | 163   
|Curtailment income                    |                           |             |      
|Special termination benefits          |                           |             | 1,023 
|                                      |                           |             |       
|                                      | Net periodic benefit cost |             | $     
|                                      |                           |             |       

Net periodic post-retirement benefit cost (income) for the plans include the following components:

|                                   |                                    | Years ended |    
|---------------------------------- | ---------------------------------- | ----------- | ---
|
|
|
|Service cost                       |                                    | $           | 33 
|Interest cost                      |                                    |             | 242
|Recognized actuarial (gain) loss   |                                    |             | (3 
|Amortization of prior service cost |                                    |             |   
|Curtailment income                 |                                    |             |   
|                                   |                                    |             |    
|                                   | Net periodic benefit cost
(income) |             | $  
|                                   |                                    |             |    

F-36

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 18EMPLOYEE BENEFIT PLANS (Continued)

During the year ended December 31, 2007, the Company recognized a special termination benefits loss of $1,110 and a net settlement loss of $177 as a result
of executing a wind-up of part of its Canadian pension plan. The losses are included in other expense.

During
the period from February 2, 2006 to December 31, 2006, the Company recognized a net settlement gain of $11 as a result of executing a wind-up of part of
its Canadian pension plan.

During
the period from April 1, 2005 to December 31, 2005, the Company recognized a curtailment gain of $13 from reducing the number of participants in the Plan.

During
the period April 1, 2005 to December 31, 2005, the Company approved amendments to the post-retirement plan to reduce the benefits provided to current and
future retirees. The change resulted in a curtailment gain of $3,121. The gain is included in other income.

Actuarial
assumptions used in determining the benefit obligation and net periodic benefit cost for the benefit plans are presented in the following table:

|                                                             |                                               | Dec 31, 2007 |      | Jan 1-Feb 1, 2006 |      | Feb 2-Dec 31, 2006 |      | Jan 1-Mar 31, 2005 |      | Apr 1-Dec 31, 2005 |     
|------------------------------------------------------------ | --------------------------------------------- | ------------ | ---- | ----------------- | ---- | ------------------ | ---- | ------------------ | ---- | ------------------ | ----
|
|Actuarial assumptions used to determine benefit obligations: |                                               |              |      |                   |      |                    |      |                    |      |                    |     
|                                                             | Discount rate                                 |              | 6.41 | %                 | 5.62 | %                  | 5.84 | %                  | 5.75 | %                  | 5.50
|                                                             | Expected annual rate of compensation increase |              | 5.00 | %                 | 5.00 | %                  | 5.00 | %                  | 5.00 | %                  | 5.00
|Actuarial assumptions used to determine period benefit cost: |                                               |              |      |                   |      |                    |      |                    |      |                    |     
|                                                             | Discount rate                                 |              | 5.84 | %                 | 5.50 | %                  | 5.62 | %                  | 6.00 | %                  | 5.75
|                                                             | Expected rate of return on plan assets        |              | 7.00 | %                 | 8.00 | %                  | 8.00 | %                  | 8.00 | %                  | 8.00

The Company used an assumption of 7.00% for the year ended December 31, 2007 and 8.00% for the periods January 1, 2006 to February 1, 2006,
February 2, 2006 to December 31, 2006, January 1, 2005 to March 31, 2005, and April 1, 2005 to December 31, 2005 for long-term
rate-of-return on plan assets used to determine period benefit cost. In evaluating the reasonableness of this assumption, the Company used a combination of historical returns
and weighted-average expected returns for each asset class. The forward-looking approach is based on the most recent Investment Consulting Capital Markets Outlook of the Company's actuary. The
Investment Consulting Capital Markets Outlook defines the outlook for various market assumptions based on a 20-year timeframe. The Company's actuary reviews its forward-looking investment
returns assumptions every three months and repeatedly checks to see whether assumptions are consistent with market conditions.

F-37

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 18EMPLOYEE BENEFIT PLANS (Continued)

Actuarial
assumptions used in determining the benefit obligation and net periodic benefit cost for the post-retirement benefits are presented in the following table:

|                                                             |               | Dec 31, 2007 |      | Jan 1-Feb 1, 2006 |      | Feb 2-Dec 31, 2006 |      | Jan 1-Mar 31 2005 |      | Apr 1-Dec 31, 2005 |     
|------------------------------------------------------------ | ------------- | ------------ | ---- | ----------------- | ---- | ------------------ | ---- | ----------------- | ---- | ------------------ | ----
|
|Actuarial assumptions used to determine benefit obligations: |               |              |      |                   |      |                    |      |                   |      |                    |     
|                                                             | Discount rate |              | 6.10 | %                 | 5.50 | %                  | 5.70 | %                 | 5.75 | %                  | 5.50
|Actuarial assumptions used to determine period benefit cost: |               |              |      |                   |      |                    |      |                   |      |                    |     
|                                                             | Discount rate |              | 5.70 | %                 | 5.50 | %                  | 5.50 | %                 | 6.00 | %                  | 5.75

A 9% increase in the per capita cost of healthcare has been assumed for 2006, increasing to 9.5% for 2007, before declining to an ultimate rate of 5% in 2013. A
1% increase in the assumed healthcare trend rate increases service and interest cost by $13 and the accumulated benefit obligation by $178. A 1% decrease in the rate reduces service and interest costs
by $12 and the accumulated benefit obligation by $162.

F-38

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 18EMPLOYEE BENEFIT PLANS (Continued)

Pension plans with accumulated benefit obligations exceeding the fair value of plan assets were as follows:

Dec 31, 2007

Dec 31, 2006Projected benefit obligation

$
84,149

$
103,957Accumulated benefit obligation


84,012


103,670Fair value of plan assets


81,024


85,378


The Company expects to contribute $4,303 to the pension plans during 2008.

The
objective of the Company's investment policy is to maximize the return of invested assets while maintaining an appropriate level of diversification to minimize risk. The Company's
policy sets forth specific criteria used in the selection and ongoing evaluation of individual fund managers.

The
Company's investment committee generally meets quarterly with a registered investment advisor to review actual performance against relevant benchmarks. The weighted-average asset
allocations of invested assets held in the defined benefit plans were as follows:

|                         |  | Asset Allocation |  
|------------------------ |  | ---------------- | -
|
|
|
|Equity securities        |  | 56.6             | %
|Debt securities and cash |  | 43.4             | %
|                         |  |                  |  
|Total                    |  | 100.0            | %
|                         |  |                  |  

Benefit payments over the next ten years, including amounts to be paid from Company assets, and reflecting expected future service, as appropriate, are expected
to be paid as follows:

Year Ending
December 31

Pension

Other Post-Retirement Benefits2008

$
24,833

$
3712009


5,689


3982010


5,808


4442011


5,914


3762012


6,013


36620132017


32,142


1,773$
80,399

$
3,728


The Company also participates in defined contribution and multi-employer pension plans. The contributions were $4,141, $343, $3,473, $917 and $2,736 and the
expense was $4,164, $268, $3,622, $940 and $2,668 for the year ended December 31, 2007 and the periods from January 1, 2006 to February 1, 2006, February 2, 2006 to
December 31, 2006, January 1, 2005 to March 31, 2005, and from April 1, 2005 to December 31, 2005, respectively.

F-39

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 19INCOME TAXES

The income tax provision (benefit) consists of the following components:

Years endedDecember 31, 2006

December 31, 2005December 31, 2007Jan 1-Feb 1

Feb 2-Dec 31

Jan 1-Mar 31

Apr 1-Dec 31Successor

Predecessor 2

Successor

Predecessor 1

Predecessor 2Current:Federal

$
1,134

$
(200
)
$
1,648

$
(245
)
$
5,476State


284


(35
)

420


(135
)

310Foreign


470


(50
)

538


607


2,3271,888


(285
)

2,606


227


8,113Deferred:Federal


(6,973
)

986


(8,066
)

(434
)

(5,510
)State


(70
)

174


(73
)

57


170Foreign


(1,052
)

(172
)

(3,190
)

159


(861
)(8,095
)

988


(11,329
)

(218
)

(6,201
)Total

$
(6,207
)
$
703

$
(8,723
)
$
9

$
1,912


The amount of the provision (benefit) for taxes differs from the amount that would result from calculating the provision at the Company's basic U.S. tax rate of
35%. Reconciliation between the federal statutory rate and the Company's effective tax rate follows:

|                                            |  | Years ended |       
|------------------------------------------- |  | ----------- | ------
|
|
|
|
|
|Tax at statutory rate                       |  | $           | (4,614
|State income taxes, net of federal benefits |  |             | 215   
|Dividends not subject to tax                |  |             |      
|Equity earnings not subject to tax          |  |             | (670  
|Sale of equity method investment            |  |             | 367   
|Enacted foreign rate changes                |  |             | (1,489
|Foreign rate differences                    |  |             | 603   
|Transaction costs not deductible            |  |             | 57    
|Foreign tax (credits) allowance             |  |             | (589  
|Valuation allowance (reversal)              |  |             | (1,806
|NOL write-off                               |  |             | 1,275 
|Other, net                                  |  |             | 444   
|                                            |  |             |       
|Tax at effective tax rate                   |  | $           | (6,207
|                                            |  |             |       

F-40

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 19INCOME TAXES (Continued)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2007 and 2006
are presented below:

Dec 31, 2007

Dec 31, 2006Deferred tax assets:Accrued expenses

$
6,038

$
7,490Inventory


1,818


Equity investment





2,732Goodwill amortized for tax


13,014


14,750Pension and post-retirement


5,063


9,147Net operating losses


20,704


1,800Hedging


511


Other


2,801


2,101Valuation allowance


(1,536
)

(1,800
)Total deferred tax assets


48,413


36,220Deferred tax liabilities:Property, plant, and equipment


(23,226
)

(28,773
)Intangible assets


(22,500
)

(26,746
)Inventory





(6,636
)Hedging





(1,380
)Foreign currency translation gain


(3,444
)

Total deferred tax liabilities


(49,170
)

(63,535
)Net deferred tax liability

$
(757
)
$
(27,315
)Included in the balance sheet:Current deferred tax assets in excess of liabilities

$
5,434

$
Current deferred tax liabilities in excess of assets





(2,456
)Noncurrent deferred tax liabilities in excess of assets


(6,191
)

(24,859
)Net deferred tax liability

$
(757
)
$
(27,315
)


The Company recognized a deferred tax liability related to other comprehensive income of $2,665, $0 and $1,831 for the year ended December 31, 2007 and
periods January 1, 2006 to February 1, 2006, and February 2, 2006 to December 31, 2006, respectively. The Company recognized a deferred tax benefit related to other
comprehensive income of $0, and $335 for the periods January 1, 2005 to March 31, 2005 and April 1, 2005 to December 31, 2005, respectively. For financial statement
purposes, the provision/benefit was included in other comprehensive income.

For
the year ended December 31, 2007 the Company recorded a deferred tax liability of $3,444 to other comprehensive income related to the translation of an intercompany loan.

As
of January 1, 2007, the Company adopted the provisions of FIN 48 as described in Note 2. The adoption of FIN 48 had no effect on the Company's consolidated
financials position and results of operations.

F-41

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 19INCOME TAXES (Continued)

The
following table summarizes the activity related to the Company's unrecognized tax benefits:

|                                                 |  |  
|------------------------------------------------ |  | -
|Unrecognized tax benefits, January 1, 2007       |  | $
|Increases in positions taken in a prior period   |  |  
|Decreases in positions taken in a prior period   |  |  
|Increases in positions taken in a current period |  |  
|Decreases in positions taken in a current period |  |  
|Decreases due to settlements                     |  |  
|Decreases due to lapse of statute of limitations |  |  
|Foreign currency translation                     |  |  
|                                                 |  |  
|Unrecognized tax benefits, December 31, 2007     |  | $
|                                                 |  |  

The
net unrecognized tax benefits on uncertain tax positions, which would impact the effective tax rate if recognized as of December 31, 2007, are $16,787. Net operating losses
offset this tax expense.

Estimated
interest and penalties related to the underpayment of income taxes are classified as a component of income tax expense. Accrued interest and penalties were $0 and $204 as of
January 1, 2007 and December 31, 2007, respectively.

During
the period January 1, 2007 through December 31, 2007, the Company increased its uncertain tax benefits by $16,170 for uncertain tax positions related to the sale of
its investment in AAG. The uncertain tax positions relate to the basis and trading activities of the investment in AAG. The provision for uncertain tax benefits was recorded against income tax
expense, except for $409 recorded to cumulative translation adjustment. Net operating losses offset the provision recorded against income tax expense. Over the next twelve months if proposed
legislation is enacted a reduction to uncertain tax benefits of $4,841 may be recorded.

During
the period January 1, 2007 through December 31, 2007, the Company also increased its uncertain tax benefits by $3,119 related to the use of incorrect accounting
methods ($1,909), deducting financing transaction costs in the US and Canada ($922), and related party loans ($288). Over the next twelve months the filing of forms 3115 may reduce the uncertain tax
benefits by $1,909. This amount will be substantially offset by the release of deferred tax assets.

The
Company (excluding Indalex Limited and subsidiaries) was included in the combined federal income tax return of Novar USA Inc. through March 31, 2005. From
April 1, 2005 to February 1, 2006, the Company was included in the federal income tax return of Honeywell. Tax years prior to February 1, 2006 are subject to an indemnification
agreement with Honeywell so there are no open IRS audits for these years. There are no audits open for the period February 2, 2006 to December 31, 2007.

The
respective state corporate income tax returns of each subsidiary are filed on a separate or combined entity basis as applicable. The state statutes are generally open for 2003-2007.
Tax years prior to February 1, 2006 are subject to an indemnification agreement with Honeywell. There is one audit in process for the period 2003-2006.

Indalex
Limited and each of its subsidiaries file separate income tax returns. Tax years prior to February 1, 2006 are subject to an indemnification agreement with Honeywell.
There are no audits open.

F-42

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 20COMMITMENTS AND CONTINGENCIES

The Company has entered into several long-term contracts with metal suppliers to purchase aluminum billet. The price of billet is based primarily on
the average Midwest Transaction price plus a fixed billet premium. The Midwest Transaction average changes monthly. The minimum purchase commitments as of December 31, 2007 are as follows:

Year Ending
December 31

Amount2008

$
268,4242009


31,408Total commitments

$
299,832


The Company has also committed to purchasing natural gas. The commitments as of December 31, 2007 are as follows:

Year Ending
December 31

Amount2008

$
13,7582009


10,8422010


3,790Total commitments

$
28,390


As of December 31, 2007, the Company has committed approximately $9,248 for the purchase of property and equipment related to incomplete projects.

As
of December 31, 2007, the Company has outstanding letters of credit commitments of $9,175 related to its general insurance coverage. The letters of credit expire after one year
but renew automatically for another year unless the Company notifies the beneficiary at least ninety days prior to the expiration date.

The
Company is involved in various legal proceedings, claims, and litigations arising in the ordinary course of business. While any litigation contains an element of uncertainty,
management presently believes that the outcome of each such proceeding or claim which is pending or known to be threatened, or all of them combined, will not have a material adverse effect on the
consolidated financial position of the Company or on the consolidated results of operations or cash flows.

Environmental obligations

The Company established environmental reserves totaling $1,724 and $1,670 as of December 31, 2007 and December 31, 2006, respectively. $116 and $105
was included in current liabilities as of December 31, 2007 and December 31, 2006, respectively. Liabilities are recorded when environmental remedial efforts or damage claim payments are
probable and the range of possible costs can be reasonably estimated. In those cases where an amount within the range is judged most likely to be incurred, that amount is recorded. Where no specific
amount within the range of possible costs is considered more probable to be incurred than any other, the lower end of the range is typically used.

F-43

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 20COMMITMENTS AND CONTINGENCIES (Continued)

Such
liabilities are based on the Company's best estimate of the undiscounted future costs required to complete the remedial work. The recorded liabilities and ranges are adjusted periodically as
remediation efforts progress or as additional technical or legal information becomes available.

The
Company is subject to a wide variety of environmental laws including those governing air emissions, the generation, storage, handling, use and transportation of hazardous materials
and employee health and safety. Costs of achieving compliance with environmental regulations are not included in the reserves, but instead are treated as operating items and expensed or amortized, as
appropriate, based on the nature of the expenditure.

As
an owner of real property and a generator of waste, the Company is subject to laws imposing responsibility for the cleanup of contaminated property, including its currently and
formerly owned or operated properties. As part of its environmental management program, it is involved in investigatory and monitoring actions at some of these properties, but the Company has not
identified any conditions that warrant active remediation efforts.

The
Company is responsible for the cleanup of a formerly owned property that a release of hazardous substances occurred. There is the possibility of a claim for natural resources damages
at the site and it is likely that the Company will have an obligation to pay compensation for that damage if the claim is asserted. The amount of natural resource damages to be paid would be
determined by a formula. Based on the application of that formula, the Company estimates the total liability ranges from $500 to $1,850. The Company believes that the ultimate liability will be in the
lower limits of the range. Also, an additional $100 has been reserved to cover the costs of further groundwater monitoring at this site. The Company has recorded a reserve of $600 for this location.

The
Company has been identified as a potentially responsible party ("PRP") under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 or "CERCLA" with
respect to approximately 19 offsite locations to which the Company's corporate predecessors sent waste materials. Although the designation of an entity as a PRP is rarely withdrawn, the Company's
inquiries and
evaluations have led it to conclude that it has little or no liability at most of these sites. For those sites where the Company is judged likely to share responsibility for cleanup and other costs,
the Company has reserved a total of $480 of which $450 is attributable to one location. The full range of aggregate potential liability at these sites is estimated to be from $255 to $1,305.

The
Company has installed groundwater-monitoring wells in one of its California facilities, and the Company performs semi-annual monitoring of those wells. Results to date
indicate that a few constituents of materials used in the Company's processes are present in groundwater slightly above the selected screening criteria. However, this condition is very localized
(within the boundaries of the Company's property), and the source of those constituents has been eliminated. In conjunction with the Regional Water Quality Control Board, the Company has agreed to
continue to monitor the groundwater. Based on the results to date, no remediation is indicated. Management has established a reserve of $100 within a range of costs of $30 to $350 for this site.

The
Company is not currently a party to any judicial or administrative proceedings.

F-44

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 20COMMITMENTS AND CONTINGENCIES (Continued)

The Company believes its reserves for environmental matters are adequate, based on the information currently available.

NOTE 21LEASING ARRANGEMENTS

The Company leases property, plant, and equipment under operating leases which expire at various dates through 2015. At December 31, 2007, future minimum
lease payments under noncancelable operating leases with terms of one year or more are as follows:

Year Ending
December 31

Amount2008

$
2,8662009


1,9752010


1,4022011


7262012


264Thereafter


441Total commitments

$
7,674


Total lease expense for all operating leases was approximately $3,459, $415, $3,593, $1,834 and $5,659 for the year ended December 31, 2007 and the periods
January 1, 2006 to February 1, 2006, February 2, 2006 to December 31, 2006, January 1, 2005 to March 31, 2005, and April 1, 2005 to December 31,
2005, respectively.

In
December 2005, the Company renegotiated its lease of an extrusion press in Canada. In March 2006, the Company renegotiated its lease of an extrusion press in Elkhart, Indiana. Both
leases qualify as capital leases. As of December 31, 2007, future minimum lease payments, including the final buyout payment, are as follows:

Year Ending
December 31

Amount2008


2,0172009


1,9312010


1,7585,706Amount representing interest


(481
)Present value of net minimum lease payments


5,225Current portion


(1,563
)Long-term portion capital lease obligation

$
3,662


At December 31, 2007, the cost of the capital leases was $6,965 and accumulated depreciation was $3,036.

F-45

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 22STOCK-BASED COMPENSATION

In May 2006, certain employees of the Company were granted options to purchase shares of Indalex Holdings Finance, Inc. Stock options expire ten years from
the date of grant.

Under
the Plan, options are granted with an exercise price equal to or greater than the market value of the Company on the date of grant. A public market does not exist for the stock so
the market value of the Company was based on its recent purchase price. The fair value of options on their grant date was measured using the Black-Scholes option-pricing model. The weighted average
estimated value of employee stock options granted was $26.01 per share for the year ended December 31, 2007 and $42.54 per share for the period February 2, 2006 to December 31,
2006. Key assumptions used to apply this pricing model are as follows:

Years endedDecember 31, 2007

December 31, 2006Risk-free interest rate

4.41
%
4.98
%Expected life option grants (in years)

10.0

6.42Expected volatility of underlying stock

30.6
%
26.3
%Expected dividend yield

0.0
%
0.0
%


The expected to vest options are based on forfeiture assumptions derived from historical experience. Forfeiture assumptions are reviewed through the vesting
period, and adjustments are made if actual forfeitures differ materially from previous estimates. The cumulative effect of a change in estimated forfeitures is recognized in the period of change.

The
expected volatility of the underlying stock for options granted during the period February 2, 2006 to December 31, 2006 was based on the daily historical closing price
volatility of the Dow Jones Industrial Metals Small Cap Index over the period equal to the expected term ending on the grant date. The Dow Jones Industrial Metals Small Cap Index ceased to exist in
2007. The expected volatility of the underlying stock for options granted during the year ended December 31, 2007 was based on the daily historical closing price volatility of the Dow Jones
Industrial Metals Index over the period equal to the expected term ending on the grant date.

For
the year ended December 31, 2007, the Company recorded compensation expense of $1,086. The Company expects to record future stock compensation expense of $1,000 over a
weighted average period of 2.3 years.

F-46

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 22STOCK-BASED COMPENSATION (Continued)

A summary of stock option activity is provided below:

Year ended December 31, 2007Options

Weighted Average Exercise Price

Aggregate Intrinsic Value

Weighted Average Remaining TermOutstanding at beginning of period

70,000

$
111.25Granted

7,000


132.32Forfeited

(12,400
)

111.25Exercised

n/a


n/aExpired

n/a


n/aOutstanding at end of period

64,600

$
113.53

$


8.54Exercisable at end of period

14,400

$
113.30

$


8.43


As of December 31, 2007, 50,200 options with a weighted average exercise price of $113.60 are due to expire between 2016 and 2017.

As
of December 31, 2007, 14,400 options have vested, and 48,960 options are expected to vest between 2008 and 2012.

Options
vesting during the year ended December 31, 2007 were as follows:

Grant Date

Vesting Date

Numbers of Options Vesting During Period

Fair Value Per Option

Fair Value of Options Vesting5/19/2006

5/19/2007

2,800

$
39.70

$
1117/25/2007

12/1/2007

400

$
18.38

$
73,200




$
118


Certain employees of the Company were granted options to purchase shares of Novar plc under the Novar plc Executive Share Option Scheme and the
Novar plc 1996 Executive Share Option Scheme (the "Plans"). Under the Plans, options were granted with exercise prices equal to the quoted market price of Novar plc's stock on the date
of the grant. All options existing at March 31, 2005 were liquidated with the sale of Novar to Honeywell. For the period January 1, 2005 to March 31, 2005 the Company recognized
stock-based compensation expense of $1,244. Additional compensation expense of $311 was recognized during this period to reflect Honeywell's approval to compensate option holders for the dividend paid
to Novar plc shareholders. Under the Predecessor 2 company, no stock-based compensation plans existed at December 31, 2005.

F-47

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 22STOCK-BASED COMPENSATION (Continued)

A
summary of stock option activity for the Plans is set forth below (shares in thousands):

March 31, 2005Number
of options

Weighted Average
Exercise PriceOutstanding at beginning of year

3,592

$
2.68Granted




Exercised

(3,592
)

2.68Forfeited and expired




Outstanding at end of year




n/aOptions exercisable at year-end




NOTE 23GEOGRAPHIC DATA

|                    |  | Net Sales |           | Long-Lived Assets
|------------------- |  | --------- | --------- | -----------------
|
|
|
|
|United States       |  | $         | 903,388   |                  
|Canada              |  |           | 199,272   |                  
|Other International |  |           | 2,675     |                  
|                    |  |           |           |                  
|                    |  | $         | 1,105,335 |                  
|                    |  |           |           |                  

NOTE 24IMPAIRMENT ON LONG-LIVED ASSETS

In December 2007, the Company idled an anodizing line at its Modesto, CA facility due to a slowdown in sales volume. As a result, the Company recorded an
impairment on long-lived assets of $2,051.

In
December 2007, the Company razed one of its two Connersville, IN facilities, at which a six-inch press had been idled in June 2006. As a result, the Company recorded an
impairment on long-lived assets of $373.

In
December 2007, the Company idled the small powder paint line at its Gainesville, GA facility. As a result of idling the paint line, the Company recorded an impairment on
long-lived assets of $172.

In
December 2007, the Company idled the paint line at its Calgary, AB facility. As a result of idling the paint line, the Company recorded an impairment on long-lived assets
of $115.

F-48

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 24IMPAIRMENT ON LONG-LIVED ASSETS (Continued)

In
September 2007, the Company idled the paint line at its Modesto, CA facility due to a slowdown in sales volume. As a result, the Company recorded an impairment on
long-lived assets of $593.

In
June 2007, the Company made plans to scrap components of a surplus handling system at its Kokomo, IN facility. As a result, the Company recorded an impairment on
long-lived assets of $223.

In
November 2006, the Company sold its Drawn Tube and extrusion facilities located in Winton, NC to Spectube USA. As a result of the sale, the Company ceased depreciation on property,
plant, and equipment and recorded an impairment charge of $2,522.

In
June 2006, the Company idled a six-inch press at its Connersville, IN facility to consolidate operations in Niles, OH. As a result of idling the press, the Company
recorded an impairment on long-lived assets of $487.

Measurement
of impairment losses is based on the estimated fair value of the asset, generally determined on a discounted after-tax cash flow basis.

NOTE 25DISCONTINUED OPERATIONS

During February 2004, the Company sold substantially all of the assets and related operational obligations of Brampton to Breyer Industries Limited. The Company
incurred pre-tax expenses of $77 for the period January 1, 2005 to March 31, 2005 related to this discontinued operation.

NOTE 26CONSOLIDATED AND COMBINED GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION

Indalex Holding Corp. (the "Issuer") issued $270,000 aggregate principal amount of the 111/2% Notes on February 2, 2006. On June 21,
2007, the Company repurchased $71,945 aggregate principal amount of the 111/2% Notes, and as of July 1, 2007, $198,055 aggregate principal amount of 111/2% Notes
was outstanding. The notes are jointly and severally guaranteed on a full and unconditional basis by Indalex Holdings Finance, Inc., the parent company of Indalex Holding Corp., and each of the
domestic subsidiaries of Indalex Holding Corp. (the "Guarantor Companies"). Indalex Holding Corp. and the Guarantor Companies are 100% owned, directly or indirectly, by Indalex Holdings
Finance, Inc. Indalex Holding Corp.'s foreign subsidiaries (the "Non-Guarantor Companies") do not provide guarantees.

The
following consolidated and combined financial information presents the financial information of Indalex Holdings Finance, Inc., the Guarantor Companies and the
Non-Guarantor Companies in accordance with Rule 3-10 under the Securities and Exchange Commission's Regulation S-X. The financial information may not
necessarily be indicative of results of operations or financial position had the Guarantor Companies or Non-Guarantor Companies operated as independent entities. The Guarantor Companies
and Non-Guarantor Companies include the consolidated and combined financial results of their wholly owned subsidiaries accounted for under the equity method. All applicable corporate
expenses have been allocated among the Guarantor Companies and Non-Guarantor Companies.

F-49

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 26CONSOLIDATED AND COMBINED GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (Continued)

Indalex Consolidated Balance SheetGuarantor and Non-Guarantor
As of December 31, 2007 (Successor)

|                                        |                                                | Parent Company             |                                            | Guarantor Company |         | Non-Guarantor Company |         | Eliminations |         | Consolidated |        
|--------------------------------------- | ---------------------------------------------- | -------------------------- | ------------------------------------------ | ----------------- | ------- | --------------------- | ------- | ------------ | ------- | ------------ | -------
|ASSETS                                  |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|Current Assets:                         |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|                                        | Cash and cash equivalents                      |                            | $                                          |                  |         | $                     | 7,179   |              | $       | 740          |        
|                                        | Accounts receivable, net                       |                            |                                            |                  |         |                       | 48,920  |              |         | 34,368       |        
|                                        | Receivable from affiliates                     |                            |                                            |                  |         |                       | 3,190   |              |         | 17,229       |        
|                                        | Receivable from suppliers                      |                            |                                            |                  |         |                       | 5,241   |              |         |             |        
|                                        | Inventories                                    |                            |                                            |                  |         |                       | 40,465  |              |         | 17,800       |        
|                                        | Prepaid expenses and other current assets      |                            |                                            |                  |         |                       | 2,238   |              |         | 8,169        |        
|                                        | Deferred income taxes                          |                            |                                            |                  |         |                       | 5,188   |              |         | 246          |        
|                                        |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|                                        |                                                | Total current assets       |                                            |                   |        |                       |         | 112,421      |         |              | 78,552 
|                                        | Notes receivable from affiliates               |                            |                                            |                  |         |                       | 40,351  |              |         |             |        
|                                        | Investment in subsidiary                       |                            |                                            | 111,250           |         |                       |        |              |         |             |        
|                                        | Property, plant, and equipment, net            |                            |                                            |                  |         |                       | 128,655 |              |         | 63,736       |        
|                                        | Other intangibles, net                         |                            |                                            |                  |         |                       | 41,997  |              |         | 22,309       |        
|                                        | Deferred financing costs                       |                            |                                            |                  |         |                       | 4,404   |              |         | 5,159        |        
|                                        | Other assets                                   |                            |                                            |                  |         |                       | 1,979   |              |         | 625          |        
|                                        |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|                                        |                                                | Total assets               |                                            | $                 | 111,250 |                       | $       | 329,807      |         | $            | 170,381
|                                        |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|LIABILITIES AND STOCKHOLDERS' EQUITY    |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|Current Liabilities:                    |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|                                        | Accounts payable                               |                            | $                                          |                  |         | $                     | 33,480  |              | $       | 35,645       |        
|                                        | Payable to affiliates                          |                            |                                            |                  |         |                       | 17,229  |              |         | 3,190        |        
|                                        | Income taxes payable (refundable)              |                            |                                            |                  |         |                       | (853    | )            |         | 1,124        |        
|                                        | Accrued expenses and other current liabilities |                            |                                            |                  |         |                       | 28,400  |              |         | 6,806        |        
|                                        | Accrued interest                               |                            |                                            |                  |         |                       | 10,060  |              |         | 100          |        
|                                        | Capital lease obligation                       |                            |                                            |                  |         |                       | 605     |              |         | 958          |        
|                                        | Revolver borrowings                            |                            |                                            | 10                |         |                       | 67,490  |              |         |             |        
|                                        |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|                                        |                                                | Total current liabilities  |                                            |                   | 10      |                       |         | 156,411      |         |              | 47,823 
|Notes payable to affiliates             |                                                |                            |                                           |                   |         |                      |         |              | 40,351  |              |        
|Other liabilities                       |                                                |                            |                                           |                   |         | 28,328                |         |              | 12,439  |              |        
|Capital lease obligation                |                                                |                            |                                           |                   |         | 1,793                 |         |              | 1,869   |              |        
|Long-term debt                          |                                                |                            |                                           |                   |         | 196,138               |         |              |        |              |        
|Deferred income taxes                   |                                                |                            |                                           |                   |         | (1,306                | )       |              | 7,497   |              |        
|                                        |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|                                        | Total liabilities                              |                            |                                            | 10                |         |                       | 381,364 |              |         | 109,979      |        
|                                        |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|Commitments and contingencies (Note 20) |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|Stockholders' equity:                   |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|                                        | Common stock                                   |                            |                                            | 1                 |         |                       | 1       |              |         |             |        
|                                        | Additional paid-in capital                     |                            |                                            | 111,249           |         |                       | 4,864   |              |         | 30,260       |        
|                                        | Treasury stock                                 |                            |                                            | (10               | )       |                       |        |              |         |             |        
|                                        | Retained earnings (accumulated deficit)        |                            |                                            |                  |         |                       | (69,184 | )            |         | 38,310       |        
|                                        | Accumulated other comprehensive income (loss)  |                            |                                            |                  |         |                       | 12,762  |              |         | (8,168       | )      
|                                        |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|                                        |                                                | Total stockholders' equity |                                            |                   | 111,240 |                       |         | (51,557      | )       |              | 60,402 
|                                        |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|                                        |                                                |                            | Total liabilities and stockholders' equity |                   | $       | 111,250               |         | $            | 329,807 |              | $      
|                                        |                                                |                            |                                            |                   |         |                       |         |              |         |              |        

F-50

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 26CONSOLIDATED AND COMBINED GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (Continued)

Indalex Consolidated Balance SheetGuarantor and Non-Guarantor
Year Ended December 31, 2006 (Successor)

|                                        |                                                | Parent
Company             |                                            | Guarantor
Company |         | Non-Guarantor
Company |         | Eliminations |         | Consolidated |        
|--------------------------------------- | ---------------------------------------------- | -------------------------- | ------------------------------------------ | ----------------- | ------- | --------------------- | ------- | ------------ | ------- | ------------ | -------
|ASSETS                                  |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|Current Assets:                         |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|                                        | Cash and cash equivalents                      |                            | $                                          |                  |         | $                     | 6,777   |              | $       | 4,380        |        
|                                        | Accounts receivable, net                       |                            |                                            |                  |         |                       | 66,840  |              |         | 37,084       |        
|                                        | Receivable from affiliates                     |                            |                                            |                  |         |                       | 9,994   |              |         | 3,440        |        
|                                        | Receivable from suppliers                      |                            |                                            |                  |         |                       | 8,980   |              |         |             |        
|                                        | Inventories                                    |                            |                                            |                  |         |                       | 46,254  |              |         | 20,928       |        
|                                        | Prepaid expenses and other current assets      |                            |                                            |                  |         |                       | 8,641   |              |         | 2,124        |        
|                                        | Deferred income tax                            |                            |                                            |                  |         |                       |        |              |         | 567          |        
|                                        |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|                                        |                                                | Total current assets       |                                            |                   |        |                       |         | 147,486      |         |              | 68,523 
|                                        | Notes receivable from affiliates               |                            |                                            |                  |         |                       | 156,728 |              |         |             |        
|                                        | Investment in AAG                              |                            |                                            |                  |         |                       |        |              |         | 96,950       |        
|                                        | Investment in subsidiary                       |                            |                                            | 111,250           |         |                       |        |              |         |             |        
|                                        | Property, plant, and equipment, net            |                            |                                            |                  |         |                       | 130,925 |              |         | 68,713       |        
|                                        | Goodwill                                       |                            |                                            |                  |         |                       | 2,112   |              |         | 1,425        |        
|                                        | Other intangibles, net                         |                            |                                            |                  |         |                       | 50,913  |              |         | 27,351       |        
|                                        | Deferred financing costs                       |                            |                                            |                  |         |                       | 6,584   |              |         | 8,010        |        
|                                        | Other assets                                   |                            |                                            |                  |         |                       | 2,325   |              |         | 367          |        
|                                        |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|                                        |                                                | Total assets               |                                            | $                 | 111,250 |                       | $       | 497,073      |         | $            | 271,339
|                                        |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|LIABILITIES AND STOCKHOLDERS' EQUITY    |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|Current Liabilities:                    |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|                                        | Accounts payable                               |                            | $                                          |                  |         | $                     | 41,634  |              | $       | 25,146       |        
|                                        | Payable to affiliates                          |                            |                                            |                  |         |                       | 2,909   |              |         | 10,525       |        
|                                        | Income taxes payable                           |                            |                                            |                  |         |                       | 2,130   |              |         | 518          |        
|                                        | Deferred income taxes                          |                            |                                            |                  |         |                       | 3,023   |              |         |             |        
|                                        | Accrued expenses and other current liabilities |                            |                                            |                  |         |                       | 32,293  |              |         | 6,185        |        
|                                        | Accrued interest                               |                            |                                            |                  |         |                       | 13,617  |              |         | 189          |        
|                                        | Capital lease obligation                       |                            |                                            |                  |         |                       | 481     |              |         | 762          |        
|                                        | Checks in excess of bank balance               |                            |                                            |                  |         |                       |        |              |         |             |        
|                                        | Revolver borrowings                            |                            |                                            | 10                |         |                       | 40,090  |              |         | 15,617       |        
|                                        |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|                                        |                                                | Total current liabilities  |                                            |                   | 10      |                       |         | 136,177      |         |              | 58,942 
|Notes payable to affiliates             |                                                |                            |                                           |                   |         |                      |         |              | 156,728 |              |        
|Other liabilities                       |                                                |                            |                                           |                   |         | 25,673                |         |              | 4,994   |              |        
|Capital lease obligation                |                                                |                            |                                           |                   |         | 2,343                 |         |              | 2,331   |              |        
|Long-term debt                          |                                                |                            |                                           |                   |         | 266,957               |         |              |        |              |        
|Deferred income taxes                   |                                                |                            |                                           |                   |         | 12,413                |         |              | 12,446  |              |        
|                                        |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|                                        |                                                | Total liabilities          |                                            |                   | 10      |                       |         | 443,563      |         |              | 235,441
|                                        |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|Commitments and contingencies (Note 20) |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|Stockholders' equity:                   |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|                                        | Common stock                                   |                            |                                            | 1                 |         |                       | 1       |              |         |             |        
|                                        | Additional paid-in capital                     |                            |                                            | 111,249           |         |                       | 78,005  |              |         | 32,660       |        
|                                        | Treasury stock                                 |                            |                                            | (10               | )       |                       |        |              |         |             |        
|                                        | Accumulated deficit                            |                            |                                            |                  |         |                       | (23,821 | )            |         | (77          | )      
|                                        | Accumulated other comprehensive income (loss)  |                            |                                            |                  |         |                       | (675    | )            |         | 3,315        |        
|                                        |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|                                        |                                                | Total stockholders' equity |                                            |                   | 111,240 |                       |         | 53,510       |         |              | 35,898 
|                                        |                                                |                            |                                            |                   |         |                       |         |              |         |              |        
|                                        |                                                |                            | Total liabilities and stockholders' equity |                   | $       | 111,250               |         | $            | 497,073 |              | $      
|                                        |                                                |                            |                                            |                   |         |                       |         |              |         |              |        

F-51

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 26CONSOLIDATED AND COMBINED GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (Continued)

Indalex Consolidated Statement of IncomeGuarantor and Non-Guarantor
Year Ended December 31, 2007 (Successor)

|                                  |                                                 | Parent
Company           |   | Guarantor
Company |   | Non-Guarantor
Company |         | Eliminations |         | Consolidated |        
|--------------------------------- | ----------------------------------------------- | ------------------------ | - | ----------------- | - | --------------------- | ------- | ------------ | ------- | ------------ | -------
|Net sales                         |                                                 | $                        |  |                   | $ | 770,954               |         | $            | 449,721 |              | $      
|Costs and expenses:               |                                                 |                          |   |                   |   |                       |         |              |         |              |        
|                                  | Cost of sales                                   |                          |   |                  |   |                       | 733,143 |              |         | 431,057      |        
|                                  | Selling, general, and administrative            |                          |   |                  |   |                       | 37,922  |              |         | 14,007       |        
|                                  | Management fees to affiliates                   |                          |   |                  |   |                       | 780     |              |         | 291          |        
|                                  | Amortization of intangible assets               |                          |   |                  |   |                       | 6,471   |              |         | 3,745        |        
|                                  | Other (income) expense                          |                          |   |                  |   |                       | (99     | )            |         | 4,658        |        
|                                  | Restructuring charges                           |                          |   |                  |   |                       | 3,106   |              |         | 558          |        
|                                  | Impairment of long-lived assets                 |                          |   |                  |   |                       | 9,340   |              |         | 115          |        
|                                  | Gain on disposal of assets                      |                          |   |                  |   |                       | (42     | )            |         |             |        
|                                  | Mark-to-market on derivatives                   |                          |   |                  |   |                       | 4,806   |              |         |             |        
|                                  |                                                 |                          |   |                   |   |                       |         |              |         |              |        
|                                  |                                                 | Total costs and expenses |   |                   |  |                       |         | 795,427      |         |              | 454,431
|                                  |                                                 |                          |   |                   |   |                       |         |              |         |              |        
|Income (loss) from operations     |                                                 |                          |  |                   |   | (24,473               | )       |              | (4,710  | )            |        
|Other income (expense):           |                                                 |                          |   |                   |   |                       |         |              |         |              |        
|                                  | Interest to affiliates, net                     |                          |   |                  |   |                       | 10,501  |              |         | (10,501      | )      
|                                  | External interest expense                       |                          |   |                  |   |                       | (34,131 | )            |         | (1,097       | )      
|                                  | Deferred financing costs                        |                          |   |                  |   |                       | (1,057  | )            |         | (1,223       | )      
|                                  | Interest income                                 |                          |   |                  |   |                       | 422     |              |         | 43           |        
|                                  | Loss on redemption of notes                     |                          |   |                  |   |                       | (5,508  | )            |         | (1,632       | )      
|                                  | Income from equity method investment in AAG     |                          |   |                  |   |                       |        |              |         | 8,937        |        
|                                  | Gain on sale of equity method investment in AAG |                          |   |                  |   |                       |        |              |         | 51,246       |        
|                                  |                                                 |                          |   |                   |   |                       |         |              |         |              |        
|Income (loss) before income taxes |                                                 |                          |  |                   |   | (54,246               | )       |              | 41,063  |              |        
|Income tax benefit                |                                                 |                          |  |                   |   | (5,625                | )       |              | (582    | )            |        
|                                  |                                                 |                          |   |                   |   |                       |         |              |         |              |        
|Net income (loss)                 |                                                 | $                        |  |                   | $ | (48,621               | )       | $            | 41,645  |              | $      
|                                  |                                                 |                          |   |                   |   |                       |         |              |         |              |        

F-52

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 26CONSOLIDATED AND COMBINED GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (Continued)

Indalex Consolidated Statement of Cash FlowsGuarantor and Non-Guarantor
Year Ended December 31, 2007 (Successor)

|                                                                                  |                                                                                    | Parent
Company                     |                                        | Guarantor
Company                  |   | Non-Guarantor
Company |         | Eliminations |         | Consolidated |        
|--------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | ---------------------------------- | -------------------------------------- | ---------------------------------- | - | --------------------- | ------- | ------------ | ------- | ------------ | -------
|Cash flows from operating activities                                              |                                                                                    |                                    |                                        |                                    |   |                       |         |              |         |              |        
|Net income (loss)                                                                 |                                                                                    | $                                  |                                       |                                    | $ | (48,621               | )       | $            | 41,645  |              | $      
|Adjustments to reconcile net income (loss) to net cash from operating activities: |                                                                                    |                                    |                                        |                                    |   |                       |         |              |         |              |        
|                                                                                  | Depreciation                                                                       |                                    |                                        |                                   |   |                       | 23,479  |              |         | 10,720       |        
|                                                                                  | Amortization of intangible assets                                                  |                                    |                                        |                                   |   |                       | 6,471   |              |         | 3,745        |        
|                                                                                  | Amortization of deferred financing costs                                           |                                    |                                        |                                   |   |                       | 1,057   |              |         | 1,223        |        
|                                                                                  | Amortization of bond discount                                                      |                                    |                                        |                                   |   |                       | 373     |              |         |             |        
|                                                                                  | Gain on disposal of assets                                                         |                                    |                                        |                                   |   |                       | (42     | )            |         |             |        
|                                                                                  | Impairment of long-lived assets                                                    |                                    |                                        |                                   |   |                       | 9,340   |              |         | 115          |        
|                                                                                  | Other                                                                              |                                    |                                        |                                   |   |                       | 3,259   |              |         | (2,856       | )      
|                                                                                  | Income from equity method investment in AAG                                        |                                    |                                        |                                   |   |                       |        |              |         | (8,937       | )      
|                                                                                  | Dividends from equity method investment in AAG                                     |                                    |                                        |                                   |   |                       |        |              |         | 5,895        |        
|                                                                                  | Gain on sale of AAG investment                                                     |                                    |                                        |                                   |   |                       |        |              |         | (51,246      | )      
|                                                                                  | Loss on redemption of notes                                                        |                                    |                                        |                                    |   |                       | 5,508   |              |         | 1,632        |        
|                                                                                  | Stock-based compensation                                                           |                                    |                                        |                                   |   |                       | 1,086   |              |         |             |        
|                                                                                  | Deferred income taxes                                                              |                                    |                                        |                                   |   |                       | (7,042  | )            |         | (1,057       | )      
|                                                                                  | Changes in operating assets and liabilities, net of the effect of the acquisition: |                                    |                                        |                                    |   |                       |         |              |         |              |        
|                                                                                  |                                                                                    |                                    | Accounts receivable                    |                                    |   |                      |         |              | 17,920  |              |        
|                                                                                  |                                                                                    |                                    | Receivable from affiliates             |                                    |   |                      |         |              | 6,804   |              |        
|                                                                                  |                                                                                    |                                    | Inventories                            |                                    |   |                      |         |              | 5,789   |              |        
|                                                                                  |                                                                                    |                                    | Prepaids and other assets              |                                    |   |                      |         |              | 10,488  |              |        
|                                                                                  |                                                                                    |                                    | Income taxes payable/refundable        |                                    |   |                      |         |              | (2,983  | )            |        
|                                                                                  |                                                                                    |                                    | Accounts payable                       |                                    |   |                      |         |              | (8,182  | )            |        
|                                                                                  |                                                                                    |                                    | Accrued expenses and other liabilities |                                    |   |                      |         |              | (12,129 | )            |        
|                                                                                  |                                                                                    |                                    | Payable to affiliates                  |                                    |   |                      |         |              | 14,320  |              |        
|                                                                                  |                                                                                    |                                    |                                        |                                    |   |                       |         |              |         |              |        
|                                                                                  |                                                                                    |                                    |                                        | Net cash from operating activities |   |                       |        |              |         | 26,895       |        
|                                                                                  |                                                                                    |                                    |                                        |                                    |   |                       |         |              |         |              |        
|Cash flows from investing activities                                              |                                                                                    |                                    |                                        |                                    |   |                       |         |              |         |              |        
|                                                                                  | Capital expenditures                                                               |                                    |                                        |                                   |   |                       | (30,782 | )            |         | (6,033       | )      
|                                                                                  | Proceeds from sales of property, plant and equipment                               |                                    |                                        |                                   |   |                       | 224     |              |         |             |        
|                                                                                  | Proceeds from sale of equity method investment in AAG                              |                                    |                                        |                                   |   |                       |        |              |         | 151,238      |        
|                                                                                  |                                                                                    |                                    |                                        |                                    |   |                       |         |              |         |              |        
|                                                                                  |                                                                                    | Net cash from investing activities |                                        |                                    |  |                       |         | (30,558      | )       |              | 145,205
|                                                                                  |                                                                                    |                                    |                                        |                                    |   |                       |         |              |         |              |        
|Cash flows from financing activities                                              |                                                                                    |                                    |                                        |                                    |   |                       |         |              |         |              |        
|                                                                                  | Dividends and distributions                                                        |                                    |                                        |                                   |   |                       | (76,627 | )            |         |             |        
|                                                                                  | Payments on capital lease obligation                                               |                                    |                                        |                                   |   |                       | (426    | )            |         | (688         | )      
|                                                                                  | Borrowings (repayments)                                                            |                                    |                                        |                                   |   |                       | 27,399  |              |         | (16,930      | )      
|                                                                                  | Net (payments to) collections from affiliates on notes                             |                                    |                                        |                                   |   |                       | 129,261 |              |         | (129,261     | )      
|                                                                                  | Redemption of notes                                                                |                                    |                                        |                                   |   |                       | (75,542 | )            |         |             |        
|                                                                                  |                                                                                    |                                    |                                        |                                    |   |                       |         |              |         |              |        
|                                                                                  |                                                                                    |                                    | Net cash from financing activities     |                                    |   |                      |         |              | 4,065   |              |        
|                                                                                  |                                                                                    |                                    |                                        |                                    |   |                       |         |              |         |              |        
|Effect of changes in foreign exchange rates on cash                               |                                                                                    |                                    |                                       |                                    |   |                      |         |              | 1,773   |              |        
|                                                                                  |                                                                                    |                                    |                                        |                                    |   |                       |         |              |         |              |        
|Net change in cash and cash equivalents                                           |                                                                                    |                                    |                                       |                                    |   | 402                   |         |              | (3,640  | )            |        
|Cash and cash equivalents                                                         |                                                                                    |                                    |                                        |                                    |   |                       |         |              |         |              |        
|                                                                                  | Beginning of period                                                                |                                    |                                        |                                   |   |                       | 6,777   |              |         | 4,380        |        
|                                                                                  |                                                                                    |                                    |                                        |                                    |   |                       |         |              |         |              |        
|                                                                                  | End of period                                                                      |                                    | $                                      |                                   |   | $                     | 7,179   |              | $       | 740          |        
|                                                                                  |                                                                                    |                                    |                                        |                                    |   |                       |         |              |         |              |        

F-53

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 26CONSOLIDATED AND COMBINED GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (Continued)

Indalex Combined Statement of IncomeGuarantor and Non-Guarantor
For the Period January 1, 2006 through February 1, 2006 (Predecessor 2)

|                               |                                             | Parent Company           |   | Guarantor Company |   | Non-Guarantor Company |        | Eliminations |        | Combined |       
|------------------------------ | ------------------------------------------- | ------------------------ | - | ----------------- | - | --------------------- | ------ | ------------ | ------ | -------- | ------
|Net sales                      |                                             | $                        |  |                   | $ | 71,591                |        | $            | 30,035 |          | $     
|Costs and expenses:            |                                             |                          |   |                   |   |                       |        |              |        |          |       
|                               | Cost of sales                               |                          |   |                  |   |                       | 68,152 |              |        | 28,582   |       
|                               | Selling, general, and administrative        |                          |   |                  |   |                       | 4,157  |              |        | 1,391    |       
|                               | Management fees to affiliates               |                          |   |                  |   |                       | 125    |              |        |         |       
|                               | Amortization of intangible assets           |                          |   |                  |   |                       | 598    |              |        | 322      |       
|                               | Other (income) expense                      |                          |   |                  |   |                       | (14    | )            |        | 209      |       
|                               | Mark-to-market on derivatives               |                          |   |                  |   |                       | (3,619 | )            |        |         |       
|                               |                                             |                          |   |                   |   |                       |        |              |        |          |       
|                               |                                             | Total costs and expenses |   |                   |  |                       |        | 69,399       |        |          | 30,504
|                               |                                             |                          |   |                   |   |                       |        |              |        |          |       
|Income (loss) from operations  |                                             |                          |  |                   |   | 2,192                 |        |              | (469   | )        |       
|Other income (expense):        |                                             |                          |   |                   |   |                       |        |              |        |          |       
|                               | External interest expense                   |                          |   |                  |   |                       | 1      |              |        | (25      | )     
|                               | Income from equity method investment in AAG |                          |   |                  |   |                       |       |              |        | 643      |       
|                               |                                             |                          |   |                   |   |                       |        |              |        |          |       
|Income before income taxes     |                                             |                          |  |                   |   | 2,193                 |        |              | 149    |          |       
|Income tax provision (benefit) |                                             |                          |  |                   |   | 925                   |        |              | (222   | )        |       
|                               |                                             |                          |   |                   |   |                       |        |              |        |          |       
|Net income                     |                                             | $                        |  |                   | $ | 1,268                 |        | $            | 371    |          | $     
|                               |                                             |                          |   |                   |   |                       |        |              |        |          |       

F-54

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 26CONSOLIDATED AND COMBINED GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (Continued)

Indalex Consolidated Statement of IncomeGuarantor and Non-Guarantor
For the Period February 2, 2006 through December 31, 2006 (Successor)

|                              |                                             | Parent Company           |   | Guarantor Company |   | Non-Guarantor Company |         | Eliminations |         | Consolidated |        
|----------------------------- | ------------------------------------------- | ------------------------ | - | ----------------- | - | --------------------- | ------- | ------------ | ------- | ------------ | -------
|Net sales                     |                                             | $                        |  |                   | $ | 812,839               |         | $            | 420,602 |              | $      
|Costs and expenses:           |                                             |                          |   |                   |   |                       |         |              |         |              |        
|                              | Cost of sales                               |                          |   |                  |   |                       | 755,916 |              |         | 393,360      |        
|                              | Selling, general, and administrative        |                          |   |                  |   |                       | 39,448  |              |         | 15,518       |        
|                              | Management fees to affiliates               |                          |   |                  |   |                       | 1,128   |              |         | 506          |        
|                              | Amortization of intangible assets           |                          |   |                  |   |                       | 6,937   |              |         | 3,799        |        
|                              | Other (income) expense                      |                          |   |                  |   |                       | 1,250   |              |         | (234         | )      
|                              | Restructuring charges                       |                          |   |                  |   |                       | 261     |              |         | 1,511        |        
|                              | Impairment of long-lived assets             |                          |   |                  |   |                       | 7,083   |              |         | 165          |        
|                              | (Gain) loss on disposal of assets           |                          |   |                  |   |                       | (213    | )            |         | 468          |        
|                              | Mark-to-market on derivatives               |                          |   |                  |   |                       | 7,560   |              |         |             |        
|                              |                                             |                          |   |                   |   |                       |         |              |         |              |        
|                              |                                             | Total costs and expenses |   |                   |  |                       |         | 819,370      |         |              | 415,093
|                              |                                             |                          |   |                   |   |                       |         |              |         |              |        
|Income (loss) from operations |                                             |                          |  |                   |   | (6,531                | )       |              | 5,509   |              |        
|Other income (expense):       |                                             |                          |   |                   |   |                       |         |              |         |              |        
|                              | Interest to affiliates, net                 |                          |   |                  |   |                       | 16,955  |              |         | (16,955      | )      
|                              | External interest expense                   |                          |   |                  |   |                       | (33,794 | )            |         | (1,951       | )      
|                              | Deferred financing costs                    |                          |   |                  |   |                       | (1,047  | )            |         | (1,173       | )      
|                              | Income from equity method investment in AAG |                          |   |                  |   |                       |        |              |         | 11,841       |        
|                              | Affiliated acquisition fees                 |                          |   |                  |   |                       | (5,475  | )            |         |             |        
|                              |                                             |                          |   |                   |   |                       |         |              |         |              |        
|Loss before income taxes      |                                             |                          |  |                   |   | (29,892               | )       |              | (2,729  | )            |        
|Income tax benefit            |                                             |                          |  |                   |   | (6,071                | )       |              | (2,652  | )            |        
|                              |                                             |                          |   |                   |   |                       |         |              |         |              |        
|Net income (loss)             |                                             | $                        |  |                   | $ | (23,821               | )       | $            | (77     | )            | $      
|                              |                                             |                          |   |                   |   |                       |         |              |         |              |        

F-55

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 26CONSOLIDATED AND COMBINED GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (Continued)

Indalex Combined Statement of Cash FlowsGuarantor and Non-Guarantor
For the Period January 1, 2006 through February 1, 2006 (Predecessor 2)

|                                                                          |                                               | Parent Company                          |                                    | Guarantor Company |   | Non-Guarantor Company |        | Elimination |        | Combined |       
|------------------------------------------------------------------------- | --------------------------------------------- | --------------------------------------- | ---------------------------------- | ----------------- | - | --------------------- | ------ | ----------- | ------ | -------- | ------
|Cash flows from operating activities                                      |                                               |                                         |                                    |                   |   |                       |        |             |        |          |       
|Net income                                                                |                                               | $                                       |                                   |                   | $ | 1,268                 |        | $           | 371    |          | $     
|Adjustments to reconcile net income to net cash from operating activities |                                               |                                         |                                    |                   |   |                       |        |             |        |          |       
|                                                                          | Depreciation                                  |                                         |                                    |                  |   |                       | 1,966  |             |        | 855      |       
|                                                                          | Amortization of intangibles                   |                                         |                                    |                  |   |                       | 598    |             |        | 322      |       
|                                                                          | Other                                         |                                         |                                    |                  |   |                       | 743    |             |        |         |       
|                                                                          | Income from equity method investment in AAG   |                                         |                                    |                  |   |                       |       |             |        | (643     | )     
|                                                                          | Management fees to affiliates                 |                                         |                                    |                  |   |                       | 125    |             |        |         |       
|                                                                          | Deferred income taxes                         |                                         |                                    |                  |   |                       | 1,160  |             |        | (172     | )     
|                                                                          | Changes in operating assets and liabilities   |                                         |                                    |                   |   |                       |        |             |        |          |       
|                                                                          |                                               | Accounts receivable                     |                                    |                   |  |                       |        | (9,285      | )      |          | (2,970
|                                                                          |                                               | Receivable from affiliates              |                                    |                   |  |                       |        | 3,212       |        |          | (1,358
|                                                                          |                                               | Inventories                             |                                    |                   |  |                       |        | (774        | )      |          | (1,878
|                                                                          |                                               | Prepaids and other assets               |                                    |                   |  |                       |        | (4,621      | )      |          | 937   
|                                                                          |                                               | Income taxes payable/refundable         |                                    |                   |  |                       |        | (238        | )      |          | (54   
|                                                                          |                                               | Checks issued in excess of bank balance |                                    |                   |  |                       |        | (242        | )      |          |      
|                                                                          |                                               | Accounts payable                        |                                    |                   |  |                       |        | (4,674      | )      |          | (1,912
|                                                                          |                                               | Accrued expenses and other liabilities  |                                    |                   |  |                       |        | 18,108      |        |          | 1,690 
|                                                                          |                                               | Payable to affiliates                   |                                    |                   |  |                       |        | 770         |        |          | 42    
|                                                                          |                                               |                                         |                                    |                   |   |                       |        |             |        |          |       
|                                                                          |                                               |                                         | Net cash from operating activities |                   |   |                      |        |             | 8,116  |          |       
|                                                                          |                                               |                                         |                                    |                   |   |                       |        |             |        |          |       
|Cash flows from investing activities                                      |                                               |                                         |                                    |                   |   |                       |        |             |        |          |       
|                                                                          | Capital expenditures                          |                                         |                                    |                  |   |                       | (2,036 | )           |        | (970     | )     
|                                                                          |                                               |                                         |                                    |                   |   |                       |        |             |        |          |       
|                                                                          |                                               | Net cash from investing activities      |                                    |                   |  |                       |        | (2,036      | )      |          | (970  
|                                                                          |                                               |                                         |                                    |                   |   |                       |        |             |        |          |       
|Cash flows from financing activities                                      |                                               |                                         |                                    |                   |   |                       |        |             |        |          |       
|                                                                          | Dividends and distributions                   |                                         |                                    |                  |   |                       |       |             |        | (6,809   | )     
|                                                                          | Payments on capital lease obligation          |                                         |                                    |                  |   |                       |       |             |        | (58      | )     
|                                                                          | Net (payments to) collections from affiliates |                                         |                                    |                  |   |                       | (5,899 | )           |        | 4,279    |       
|                                                                          | on notes                                      |                                         |                                    |                  |   |                       |       |             |        |         |       
|                                                                          | Debt issuance and other transaction costs     |                                         |                                    |                  |   |                       |       |             |        |         |       
|                                                                          |                                               |                                         |                                    |                   |   |                       |        |             |        |          |       
|                                                                          |                                               | Net cash from financing activities      |                                    |                   |  |                       |        | (5,899      | )      |          | (2,588
|                                                                          |                                               |                                         |                                    |                   |   |                       |        |             |        |          |       
|Effect of changes in foreign exchange rates on cash                       |                                               |                                         |                                   |                   |   |                      |        |             | (27    | )        |       
|                                                                          |                                               |                                         |                                    |                   |   |                       |        |             |        |          |       
|Net change in cash and cash equivalents                                   |                                               |                                         |                                   |                   |   | 181                   |        |             | (8,355 | )        |       
|Cash and cash equivalents                                                 |                                               |                                         |                                    |                   |   |                       |        |             |        |          |       
|                                                                          | Beginning of period                           |                                         |                                    |                  |   |                       |       |             |        | 9,366    |       
|                                                                          |                                               |                                         |                                    |                   |   |                       |        |             |        |          |       
|                                                                          | End of period                                 |                                         | $                                  |                  |   | $                     | 181    |             | $      | 1,011    |       
|                                                                          |                                               |                                         |                                    |                   |   |                       |        |             |        |          |       

F-56

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 26CONSOLIDATED AND COMBINED GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (Continued)

Indalex Consolidated Statement of Cash FlowsGuarantor and Non-Guarantor
For the Period February 2, 2006 through December 31, 2006 (Successor)

|                                                                           |                                                                                    | Parent Company                          |                                     | Guarantor Company |          | Non-Guarantor Company |          | Eliminations |        | Consolidated |         
|-------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | --------------------------------------- | ----------------------------------- | ----------------- | -------- | --------------------- | -------- | ------------ | ------ | ------------ | --------
|Cash flows from operating activities                                       |                                                                                    |                                         |                                     |                   |          |                       |          |              |        |              |         
|Net income (loss)                                                          |                                                                                    | $                                       |                                    |                   | $        | (23,821               | )        | $            | (77    | )            | $       
|Adjustments to reconcile net income to net cash from operating activities: |                                                                                    |                                         |                                     |                   |          |                       |          |              |        |              |         
|                                                                           | Depreciation                                                                       |                                         |                                     |                  |          |                       | 22,775   |              |        | 9,552        |         
|                                                                           | Amortization of intangible assets                                                  |                                         |                                     |                  |          |                       | 6,937    |              |        | 3,799        |         
|                                                                           | Amortization of deferred financing costs                                           |                                         |                                     |                  |          |                       | 1,047    |              |        | 1,173        |         
|                                                                           | Amortization of bond discount                                                      |                                         |                                     |                  |          |                       | 394      |              |        |             |         
|                                                                           | (Gain) loss on disposal of assets                                                  |                                         |                                     |                  |          |                       | (213     | )            |        | 468          |         
|                                                                           | Impairment of long-lived assets                                                    |                                         |                                     |                  |          |                       | 7,083    |              |        | 165          |         
|                                                                           | Other                                                                              |                                         |                                     |                  |          |                       | 22       |              |        | (1           | )       
|                                                                           | Income from equity method investment in AAG                                        |                                         |                                     |                  |          |                       |         |              |        | (11,841      | )       
|                                                                           | Dividends from equity method investment in AAG                                     |                                         |                                     |                  |          |                       |         |              |        | 4,891        |         
|                                                                           | Stock-based compensation                                                           |                                         |                                     |                  |          |                       | 938      |              |        |             |         
|                                                                           | Deferred income taxes.                                                             |                                         |                                     |                  |          |                       | (8,139   | )            |        | (3,190       | )       
|                                                                           | Changes in operating assets and liabilities, net of the effect of the acquisition: |                                         |                                     |                   |          |                       |          |              |        |              |         
|                                                                           |                                                                                    | Accounts receivable                     |                                     |                   |         |                       |          | 11,850       |        |              | 6,642   
|                                                                           |                                                                                    | Receivable from affiliates              |                                     |                   |         |                       |          | (9,124       | )      |              | 4,851   
|                                                                           |                                                                                    | Inventories                             |                                     |                   |         |                       |          | 4,699        |        |              | (1,698  
|                                                                           |                                                                                    | Prepaids and other assets               |                                     |                   |         |                       |          | 6,949        |        |              | 51      
|                                                                           |                                                                                    | Income taxes payable/refundable         |                                     |                   |         |                       |          | 2,129        |        |              | 254     
|                                                                           |                                                                                    | Checks issued in excess of bank balance |                                     |                   |         |                       |          | (1,260       | )      |              |        
|                                                                           |                                                                                    | Accounts payable                        |                                     |                   |         |                       |          | 10,827       |        |              | (2,768  
|                                                                           |                                                                                    | Accrued expenses and other liabilities  |                                     |                   |         |                       |          | (15,851      | )      |              | (2,498  
|                                                                           |                                                                                    | Payable to affiliates                   |                                     |                   |         |                       |          | (5,214       | )      |              | 9,477   
|                                                                           |                                                                                    |                                         |                                     |                   |          |                       |          |              |        |              |         
|                                                                           |                                                                                    |                                         | Net cash from operating activities. |                   |          |                      |          |              | 12,028 |              |         
|                                                                           |                                                                                    |                                         |                                     |                   |          |                       |          |              |        |              |         
|Cash flows from investing activities                                       |                                                                                    |                                         |                                     |                   |          |                       |          |              |        |              |         
|                                                                           | Capital expenditures.                                                              |                                         |                                     |                  |          |                       | (16,227  | )            |        | (5,050       | )       
|                                                                           | Proceeds from sales of property, plant and equipment.                              |                                         |                                     |                  |          |                       | 237      |              |        | 2,007        |         
|                                                                           | Proceeds from sale of business                                                     |                                         |                                     |                  |          |                       | 4,548    |              |        |             |         
|                                                                           | Cash paid for acquisition                                                          |                                         |                                     | (111,250          | )        |                       | (361,665 | )            |        | (216,741     | )       
|                                                                           | Payment of acquisition transaction costs                                           |                                         |                                     |                  |          |                       | (1,735   | )            |        |             |         
|                                                                           |                                                                                    |                                         |                                     |                   |          |                       |          |              |        |              |         
|                                                                           |                                                                                    | Net cash from investing activities      |                                     |                   | (111,250 | )                     |          | (374,842     | )      |              | (219,784
|                                                                           |                                                                                    |                                         |                                     |                   |          |                       |          |              |        |              |         
|Cash flows from financing activities                                       |                                                                                    |                                         |                                     |                   |          |                       |          |              |        |              |         
|                                                                           | Dividends and distributions                                                        |                                         |                                     |                  |          |                       | (1,522   | )            |        |             |         
|                                                                           | Payments on capital lease obligation                                               |                                         |                                     |                  |          |                       | (374     | )            |        | (659         | )       
|                                                                           | Revolver payments, net                                                             |                                         |                                     | 10                |          |                       | (749     | )            |        | (12,383      | )       
|                                                                           | Repurchases of common stock                                                        |                                         |                                     | (10               | )        |                       |         |              |        |             |         
|                                                                           | Revolver borrowings, acquisition                                                   |                                         |                                     |                  |          |                       | 40,839   |              |        | 28,000       |         
|                                                                           | Borrowings on long-term debt, acquisition                                          |                                         |                                     |                  |          |                       | 266,563  |              |        | 160,150      |         
|                                                                           | Capital contributions                                                              |                                         |                                     | 111,250           |          |                       | 81,648   |              |        | 29,602       |         
|                                                                           | Debt issuance costs                                                                |                                         |                                     |                  |          |                       | (16,814  | )            |        |             |         
|                                                                           |                                                                                    |                                         |                                     |                   |          |                       |          |              |        |              |         
|                                                                           |                                                                                    | Net cash from financing activities      |                                     |                   | 111,250  |                       |          | 369,591      |        |              | 204,710 
|                                                                           |                                                                                    |                                         |                                     |                   |          |                       |          |              |        |              |         
|Effect of changes in foreign exchange rates on cash                        |                                                                                    |                                         |                                    |                   |          |                      |          |              | 204    |              |         
|                                                                           |                                                                                    |                                         |                                     |                   |          |                       |          |              |        |              |         
|Net change in cash and cash equivalents                                    |                                                                                    |                                         |                                    |                   |          | 6,777                 |          |              | 4,380  |              |         
|Cash and cash equivalents                                                  |                                                                                    |                                         |                                     |                   |          |                       |          |              |        |              |         
|                                                                           | Beginning of period                                                                |                                         |                                     |                  |          |                       |         |              |        |             |         
|                                                                           |                                                                                    |                                         |                                     |                   |          |                       |          |              |        |              |         
|                                                                           | End of period                                                                      |                                         | $                                   |                  |          | $                     | 6,777    |              | $      | 4,380        |         
|                                                                           |                                                                                    |                                         |                                     |                   |          |                       |          |              |        |              |         

F-57

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 26CONSOLIDATED AND COMBINED GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (Continued)

Indalex Combined Statement of IncomeGuarantor and Non-Guarantor
Period January 1, 2005 to March 31, 2005 (Predecessor 1)

|                                                   |                                             | Parent Company           |   | Guarantor Company |   | Non-Guarantor Company |         | Elimination |        | Combined |       
|-------------------------------------------------- | ------------------------------------------- | ------------------------ | - | ----------------- | - | --------------------- | ------- | ----------- | ------ | -------- | ------
|Net sales                                          |                                             | $                        |  |                   | $ | 169,924               |         | $           | 87,872 |          | $     
|Costs and expenses:                                |                                             |                          |   |                   |   |                       |         |             |        |          |       
|                                                   | Cost of sales                               |                          |   |                  |   |                       | 157,843 |             |        | 81,646   |       
|                                                   | Selling, general, and administrative        |                          |   |                  |   |                       | 11,522  |             |        | 4,071    |       
|                                                   | Management fees to affiliates               |                          |   |                  |   |                       | 550     |             |        | 150      |       
|                                                   | Other expense                               |                          |   |                   |   |                       | 800     |             |        | 193      |       
|                                                   | Restructuring charges                       |                          |   |                  |   |                       | 694     |             |        |         |       
|                                                   |                                             |                          |   |                   |   |                       |         |             |        |          |       
|                                                   | Impairment of long-lived assets             |                          |   |                  |   |                       | 381     |             |        |         |       
|                                                   | (Gain) loss on disposal of assets           |                          |   |                  |   |                       | (311    | )           |        | 37       |       
|                                                   | Mark-to-market on derivatives               |                          |   |                  |   |                       | 285     |             |        |         |       
|                                                   |                                             |                          |   |                   |   |                       |         |             |        |          |       
|                                                   |                                             | Total costs and expenses |   |                   |  |                       |         | 171,764     |        |          | 86,097
|                                                   |                                             |                          |   |                   |   |                       |         |             |        |          |       
|Income (loss) from operations                      |                                             |                          |  |                   |   | (1,840                | )       |             | 1,775  |          |       
|Other income (expense):                            |                                             |                          |   |                   |   |                       |         |             |        |          |       
|                                                   | Interest to affiliates, net                 |                          |   |                  |   |                       | (1,038  | )           |        | (170     | )     
|                                                   | External interest (expense) income, net     |                          |   |                  |   |                       | (45     | )           |        | 45       |       
|                                                   | Income from equity method investment in AAG |                          |   |                  |   |                       |        |             |        | 1,557    |       
|                                                   | Dividend income from affiliates             |                          |   |                  |   |                       |        |             |        | 9,077    |       
|                                                   |                                             |                          |   |                   |   |                       |         |             |        |          |       
|Income (loss) before income taxes                  |                                             |                          |  |                   |   | (2,923                | )       |             | 12,284 |          |       
|Income tax provision (benefit)                     |                                             |                          |   |                   |   | (757                  | )       |             | 766    |          |       
|                                                   |                                             |                          |   |                   |   |                       |         |             |        |          |       
|Income (loss) from continuing operations           |                                             |                          |  |                   |   | (2,166                | )       |             | 11,518 |          |       
|Discontinued operations, net of tax benefit of $27 |                                             |                          |  |                   |   |                      |         |             | (50    | )        |       
|                                                   |                                             |                          |   |                   |   |                       |         |             |        |          |       
|Net income (loss)                                  |                                             | $                        |  |                   | $ | (2,166                | )       | $           | 11,468 |          | $     
|                                                   |                                             |                          |   |                   |   |                       |         |             |        |          |       

F-58

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 26CONSOLIDATED AND COMBINED GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (Continued)

Indalex Combined Statement of IncomeGuarantor and Non-Guarantor
Period April 1, 2005 to December 31, 2005 (Predecessor 2)

|                           |                                             | Parent Company           |   | Guarantor Company |   | Non-Guarantor Company |         | Elimination |         | Combined |        
|-------------------------- | ------------------------------------------- | ------------------------ | - | ----------------- | - | --------------------- | ------- | ----------- | ------- | -------- | -------
|Net sales                  |                                             | $                        |  |                   | $ | 549,602               |         | $           | 288,167 |          | $      
|Costs and expenses:        |                                             |                          |   |                   |   |                       |         |             |         |          |        
|                           | Cost of sales                               |                          |   |                  |   |                       | 514,800 |             |         | 269,247  |        
|                           | Selling, general, and administrative        |                          |   |                  |   |                       | 24,791  |             |         | 11,142   |        
|                           | Management fees to affiliates               |                          |   |                  |   |                       | 1,131   |             |         |         |        
|                           | Amortization of intangible assets           |                          |   |                  |   |                       | 5,383   |             |         | 2,899    |        
|                           | Other (income) expense                      |                          |   |                  |   |                       | (2,219  | )           |         | 1,394    |        
|                           | Restructuring charges                       |                          |   |                  |   |                       | (222    | )           |         |         |        
|                           | Impairment of long-lived assets             |                          |   |                  |   |                       | 636     |             |         |         |        
|                           | Gain on disposal of assets                  |                          |   |                  |   |                       | (126    | )           |         | (20      | )      
|                           | Mark-to-market on derivatives               |                          |   |                  |   |                       | (1,200  | )           |         |         |        
|                           |                                             |                          |   |                   |   |                       |         |             |         |          |        
|                           |                                             | Total costs and expenses |   |                   |  |                       |         | 542,974     |         |          | 284,662
|                           |                                             |                          |   |                   |   |                       |         |             |         |          |        
|Income from operations     |                                             |                          |  |                   |   | 6,628                 |         |             | 3,505   |          |        
|Other income (expense):    |                                             |                          |   |                   |   |                       |         |             |         |          |        
|                           | Interest to affiliates, net                 |                          |   |                  |   |                       | (3,712  | )           |         |         |        
|                           | External interest expense                   |                          |   |                  |   |                       | (333    | )           |         |         |        
|                           | Interest income                             |                          |   |                  |   |                       | 46      |             |         | 98       |        
|                           | Income from equity method investment in AAG |                          |   |                  |   |                       |        |             |         | 9,380    |        
|                           |                                             |                          |   |                   |   |                       |         |             |         |          |        
|Income before income taxes |                                             |                          |  |                   |   | 2,629                 |         |             | 12,983  |          |        
|Income tax provision       |                                             |                          |  |                   |   | 446                   |         |             | 1,466   |          |        
|                           |                                             |                          |   |                   |   |                       |         |             |         |          |        
|Net income                 |                                             | $                        |  |                   | $ | 2,183                 |         | $           | 11,517  |          | $      
|                           |                                             |                          |   |                   |   |                       |         |             |         |          |        

F-59

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 26CONSOLIDATED AND COMBINED GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (Continued)

Indalex Combined Statement of Cash FlowsGuarantor and Non-Guarantor
Period January 1, 2005 to March 31, 2005 (Predecessor 1)

|                                                                                 |                                                      | Parent Company                         |                                    | Guarantor Company |   | Non-Guarantor Company |        | Elimination |         | Combined |       
|-------------------------------------------------------------------------------- | ---------------------------------------------------- | -------------------------------------- | ---------------------------------- | ----------------- | - | --------------------- | ------ | ----------- | ------- | -------- | ------
|Cash flows from operating activities                                             |                                                      |                                        |                                    |                   |   |                       |        |             |         |          |       
|Net income (loss)                                                                |                                                      | $                                      |                                   |                   | $ | (2,166                | )      | $           | 11,468  |          |       
|Adjustments to reconcile net income (loss) to net cash from operating activities |                                                      |                                        |                                    |                   |   |                       |        |             |         |          |       
|                                                                                 | Depreciation                                         |                                        |                                    |                  |   |                       | 6,241  |             |         | 1,712    |       
|                                                                                 | (Gain) loss on disposal of assets                    |                                        |                                    |                  |   |                       | (311   | )           |         | 37       |       
|                                                                                 | Impairment of long-lived assets                      |                                        |                                    |                  |   |                       |       |             |         | 381      |       
|                                                                                 | Dividend from affiliate                              |                                        |                                    |                  |   |                       |       |             |         | (9,077   | )     
|                                                                                 | Other                                                |                                        |                                    |                  |   |                       | 245    |             |         |         |       
|                                                                                 | Income from equity investment in AAG                 |                                        |                                    |                  |   |                       |       |             |         | (1,557   | )     
|                                                                                 | Dividends from investment in AAG                     |                                        |                                    |                  |   |                       |       |             |         | 4,602    |       
|                                                                                 | Stock-based compensation                             |                                        |                                    |                  |   |                       | 998    |             |         | 246      |       
|                                                                                 | Executive compensation                               |                                        |                                    |                  |   |                       | 235    |             |         | 76       |       
|                                                                                 | Management fees to affiliates                        |                                        |                                    |                  |   |                       | 550    |             |         | 150      |       
|                                                                                 | Deferred income taxes                                |                                        |                                    |                  |   |                       | (377   | )           |         | 159      |       
|                                                                                 | Changes in operating assets and liabilities          |                                        |                                    |                   |   |                       |        |             |         |          |       
|                                                                                 |                                                      | Accounts receivable                    |                                    |                   |  |                       |        | (16,379     | )       |          | (8,918
|                                                                                 |                                                      | Receivable from affiliates             |                                    |                   |  |                       |        | (737        | )       |          | 1,550 
|                                                                                 |                                                      | Inventories                            |                                    |                   |  |                       |        | (17,223     | )       |          | 2,519 
|                                                                                 |                                                      | Prepaids and other assets              |                                    |                   |  |                       |        | 1,257       |         |          | 881   
|                                                                                 |                                                      | Income taxes payable/refundable        |                                    |                   |  |                       |        | (556        | )       |          | (9,598
|                                                                                 |                                                      | Accounts payable                       |                                    |                   |  |                       |        | 1,526       |         |          | 896   
|                                                                                 |                                                      | Accrued expenses and other liabilities |                                    |                   |  |                       |        | 2,849       |         |          | (1,416
|                                                                                 |                                                      | Payable to affiliates                  |                                    |                   |  |                       |        | (1,946      | )       |          | 485   
|                                                                                 |                                                      |                                        |                                    |                   |   |                       |        |             |         |          |       
|                                                                                 |                                                      |                                        | Net cash from operating activities |                   |   |                      |        |             | (25,794 | )        |       
|                                                                                 |                                                      |                                        |                                    |                   |   |                       |        |             |         |          |       
|Cash flows from investing activities                                             |                                                      |                                        |                                    |                   |   |                       |        |             |         |          |       
|                                                                                 | Capital expenditures                                 |                                        |                                    |                  |   |                       | (6,084 | )           |         | (2,686   | )     
|                                                                                 | Proceeds from sales of property, plant and equipment |                                        |                                    |                  |   |                       | 742    |             |         | (4       | )     
|                                                                                 |                                                      |                                        |                                    |                   |   |                       |        |             |         |          |       
|                                                                                 |                                                      | Net cash from investing activities     |                                    |                   |  |                       |        | (5,342      | )       |          | (2,690
|                                                                                 |                                                      |                                        |                                    |                   |   |                       |        |             |         |          |       
|Cash flows from financing activities                                             |                                                      |                                        |                                    |                   |   |                       |        |             |         |          |       
|                                                                                 | Net collections from affiliates on notes             |                                        |                                    |                  |   |                       | 30,332 |             |         | 264      |       
|                                                                                 | Debt issuance and other transaction costs            |                                        |                                    |                  |   |                       |       |             |         |         |       
|                                                                                 |                                                      |                                        |                                    |                   |   |                       |        |             |         |          |       
|                                                                                 |                                                      | Net cash from financing activities     |                                    |                   |  |                       |        | 30,332      |         |          | 264   
|                                                                                 |                                                      |                                        |                                    |                   |   |                       |        |             |         |          |       
|Effect of changes in foreign exchange rates on cash                              |                                                      |                                        |                                   |                   |   |                      |        |             | 2,887   |          |       
|                                                                                 |                                                      |                                        |                                    |                   |   |                       |        |             |         |          |       
|Net change in cash and cash equivalents                                          |                                                      |                                        |                                   |                   |   | (804                  | )      |             | (4,943  | )        |       
|Cash and cash equivalents                                                        |                                                      |                                        |                                    |                   |   |                       |        |             |         |          |       
|                                                                                 | Beginning of period                                  |                                        |                                    |                  |   |                       | 6,012  |             |         | 17,510   |       
|                                                                                 |                                                      |                                        |                                    |                   |   |                       |        |             |         |          |       
|                                                                                 | End of period                                        |                                        | $                                  |                  |   | $                     | 5,208  |             | $       | 12,567   |       
|                                                                                 |                                                      |                                        |                                    |                   |   |                       |        |             |         |          |       

F-60

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 26CONSOLIDATED AND COMBINED GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (Continued)

Indalex Combined Statement of Cash FlowsGuarantor and Non-Guarantor
Period April 1, 2005 to December 31, 2005 (Predecessor 2)

|                                                                          |                                                        | Parent Company                          |                                    | Guarantor Company |   | Non-Guarantor Company |         | Eliminations |        | Combined |        
|------------------------------------------------------------------------- | ------------------------------------------------------ | --------------------------------------- | ---------------------------------- | ----------------- | - | --------------------- | ------- | ------------ | ------ | -------- | -------
|Cash flows from operating activities                                      |                                                        |                                         |                                    |                   |   |                       |         |              |        |          |        
|Net income                                                                |                                                        | $                                       |                                   |                   | $ | 2,183                 |         | $            | 11,517 |          | $      
|Adjustments to reconcile net income to net cash from operating activities |                                                        |                                         |                                    |                   |   |                       |         |              |        |          |        
|                                                                          | Depreciation                                           |                                         |                                    |                  |   |                       | 17,752  |              |        | 7,191    |        
|                                                                          | Amortization of intangibles                            |                                         |                                    |                  |   |                       | 5,383   |              |        | 2,899    |        
|                                                                          | Gain on disposal of assets                             |                                         |                                    |                  |   |                       | (126    | )            |        | (20      | )      
|                                                                          | Impairment of long-lived assets                        |                                         |                                    |                  |   |                       | 636     |              |        |         |        
|                                                                          | Income from equity method investment in AAG            |                                         |                                    |                  |   |                       |        |              |        | (9,380   | )      
|                                                                          | Deferred income taxes                                  |                                         |                                    |                  |   |                       | (5,340  | )            |        | (861     | )      
|                                                                          | Changes in operating assets and liabilities            |                                         |                                    |                   |   |                       |         |              |        |          |        
|                                                                          |                                                        | Accounts receivable                     |                                    |                   |  |                       |         | 16,190       |        |          | 4,886  
|                                                                          |                                                        | Receivable from affiliates              |                                    |                   |  |                       |         | (2,679       | )      |          | (3,350 
|                                                                          |                                                        | Inventories                             |                                    |                   |  |                       |         | 31,677       |        |          | (2,280 
|                                                                          |                                                        | Prepaids and other assets               |                                    |                   |  |                       |         | (7,682       | )      |          | 1,596  
|                                                                          |                                                        | Income taxes payable/refundable         |                                    |                   |  |                       |         | 3,855        |        |          | 21     
|                                                                          |                                                        | Checks issued in excess of bank balance |                                    |                   |  |                       |         | 1,716        |        |          |       
|                                                                          |                                                        | Accounts payable                        |                                    |                   |  |                       |         | (13,001      | )      |          | 4,733  
|                                                                          |                                                        | Accrued expenses and other liabilities  |                                    |                   |  |                       |         | (14,349      | )      |          | 1,435  
|                                                                          |                                                        | Payable to affiliates                   |                                    |                   |  |                       |         | 3,609        |        |          | (179   
|                                                                          |                                                        |                                         |                                    |                   |   |                       |         |              |        |          |        
|                                                                          |                                                        |                                         | Net cash from operating activities |                   |   |                      |         |              | 39,824 |          |        
|                                                                          |                                                        |                                         |                                    |                   |   |                       |         |              |        |          |        
|Cash flows from investing activities                                      |                                                        |                                         |                                    |                   |   |                       |         |              |        |          |        
|                                                                          | Capital expenditures                                   |                                         |                                    |                  |   |                       | (13,951 | )            |        | (6,277   | )      
|                                                                          | Proceeds from sales of property, plant and equipment   |                                         |                                    |                  |   |                       | 2,020   |              |        | 19       |        
|                                                                          |                                                        |                                         |                                    |                   |   |                       |         |              |        |          |        
|                                                                          |                                                        | Net cash from investing activities      |                                    |                   |  |                       |         | (11,931      | )      |          | (6,258 
|                                                                          |                                                        |                                         |                                    |                   |   |                       |         |              |        |          |        
|Cash flows from financing activities                                      |                                                        |                                         |                                    |                   |   |                       |         |              |        |          |        
|                                                                          | Dividends and distributions                            |                                         |                                    |                  |   |                       | (11,791 | )            |        | (13,968  | )      
|                                                                          | Payments on capital lease obligation                   |                                         |                                    |                  |   |                       |        |              |        | (58      | )      
|                                                                          | Debt payments                                          |                                         |                                    |                  |   |                       | (6,000  | )            |        |         |        
|                                                                          | Net (payments to) collections from affiliates on notes |                                         |                                    |                  |   |                       | (15,308 | )            |        | 645      |        
|                                                                          |                                                        |                                         |                                    |                   |   |                       |         |              |        |          |        
|                                                                          |                                                        | Net cash from financing activities      |                                    |                   |  |                       |         | (33,099      | )      |          | (13,381
|                                                                          |                                                        |                                         |                                    |                   |   |                       |         |              |        |          |        
|Effect of changes in foreign exchange rates on cash                       |                                                        |                                         |                                   |                   |   |                      |         |              | (1,772 | )        |        
|                                                                          |                                                        |                                         |                                    |                   |   |                       |         |              |        |          |        
|Net change in cash and cash equivalents                                   |                                                        |                                         |                                   |                   |   | (5,206                | )       |              | (3,203 | )        |        
|Cash and cash equivalents                                                 |                                                        |                                         |                                    |                   |   |                       |         |              |        |          |        
|                                                                          |                                                        | Beginning of period                     |                                    |                   |  |                       | $       | 5,206        |        | $        | 12,569 
|                                                                          |                                                        |                                         |                                    |                   |   |                       |         |              |        |          |        
|                                                                          |                                                        | End of period                           |                                    | $                 |  |                       | $       |             |        | $        | 9,366  
|                                                                          |                                                        |                                         |                                    |                   |   |                       |         |              |        |          |        

F-61

---



INDALEX HOLDINGS FINANCE, INC.

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)

Years ended December 31, 2007, December 31, 2006 and December 31, 2005

(Dollars in thousands)

NOTE 27SUBSEQUENT EVENT

On January 9, 2008, the Company announced the closure of its aluminum extrusion facility located in Girard, Ohio. The facility ceased operations in March
2008. As a result of the Company's decision to close the facility in 2007, the Company recorded an impairment on long-lived assets of $3,928 during the year ended December 31, 2007
based on the appraised values of the assets expected to be disposed.

F-62

---





Audited Financial Statements

ASIA ALUMINUM GROUP LIMITED
(Incorporated in the British Virgin Islands with limited liability)

Years ended June 30, 2007, 2006 and 2005

F-63

---



ASIA ALUMINUM GROUP LIMITED
CONTENTS

|                                                        |  | Pages
|------------------------------------------------------- |  | -----
|REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |  | F-65 
|AUDITED FINANCIAL STATEMENTS                            |  |      
|Consolidated:                                           |  |      
|Income statements                                       |  | F-66 
|Balance sheets                                          |  | F-67 
|Statements of changes in equity                         |  | F-68 
|Cash flow statements                                    |  | F-69 
|Notes to financial statements                           |  | F-70 

F-64

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and Shareholders
Asia Aluminum Group Limited
(Incorporated in the British Virgin Islands with limited liability)

We
have audited the accompanying consolidated balance sheets of Asia Aluminum Group Limited (the "Company") as of June 30, 2007 and 2006 and the related consolidated income
statements, consolidated statements of changes in equity and consolidated cash flow statements for each of the years ended June 30, 2007, 2006 and 2005. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of June 30,
2007 and 2006, and the consolidated results of their operations and their cash flows for each of the three years in the period ended June 30, 2007, in conformity with accounting principles
generally accepted in Hong Kong.

Accounting
principles generally accepted in Hong Kong vary in certain significant respects from United States generally accepted accounting principles. Information relating to the nature
and effect of such differences is presented in note 35 to the financial statements.

/s/ERNST & YOUNGErnst & Young
Certified Public Accountants

Hong
Kong
September 29, 2007, except for note 35 to the financial statements, for which the date is November 9, 2007

F-65

---





ASIA ALUMINUM GROUP LIMITED        CONSOLIDATED INCOME STATEMENTS        Years ended June 30, 2007, 2006 and 2005

|                                    |                               | Notes |   | 2007       |         | 2006       |         | 2005       |        
|----------------------------------- | ----------------------------- | ----- | - | ---------- | ------- | ---------- | ------- | ---------- | -------
|
|REVENUE                             |                               | 5     |   | 6,756,645  |         | 3,907,340  |         | 3,408,800  |        
|Cost of sales and services provided |                               |       |   | (5,523,762 | )       | (3,091,507 | )       | (2,621,875 | )      
|                                    |                               |       |   |            |         |            |         |            |        
|Gross profit                        |                               |       |   | 1,232,883  |         | 815,833    |         | 786,925    |        
|Other income and gains, net         |                               | 5     |   | 59,033     |         | 30,508     |         | 56,800     |        
|Selling and distribution costs      |                               |       |   | (119,541   | )       | (102,305   | )       | (91,478    | )      
|Administrative expenses             |                               |       |   | (247,851   | )       | (153,481   | )       | (138,400   | )      
|Other operating expenses, net       |                               |       |   | (156,448   | )       | (5,210     | )       | (1,883     | )      
|Finance costs                       |                               | 7     |   | (223,472   | )       | (145,865   | )       | (96,407    | )      
|Share of losses of associates       |                               |       |   | (7,773     | )       | (2,324     | )       |           |        
|                                    |                               |       |   |            |         |            |         |            |        
|PROFIT BEFORE TAX                   |                               | 6     |   | 536,831    |         | 437,156    |         | 515,557    |        
|Tax                                 |                               | 8     |   | (152,353   | )       | (161,775   | )       | (151,716   | )      
|                                    |                               |       |   |            |         |            |         |            |        
|PROFIT FOR THE YEAR                 |                               |       |   | 384,478    |         | 275,381    |         | 363,841    |        
|                                    |                               |       |   |            |         |            |         |            |        
|Attributable to:                    |                               |       |   |            |         |            |         |            |        
|                                    | Equity holders of the Company |       | 9 |            | 392,355 |            | 303,665 |            | 378,369
|                                    | Minority interests            |       |   |            | (7,877  | )          | (28,284 | )          | (14,528
|                                    |                               |       |   |            |         |            |         |            |        
|                                    |                               |       |   | 384,478    |         | 275,381    |         | 363,841    |        
|                                    |                               |       |   |            |         |            |         |            |        
|DIVIDEND                            |                               | 10    |   | 184,009    |         | 151,748    |         |           |        
|                                    |                               |       |   |            |         |            |         |            |        

F-66

---





ASIA ALUMINUM GROUP LIMITED        CONSOLIDATED BALANCE SHEETS        June 30, 2007 and 2006

|                                                      |  | Notes  |  | 2007      |   | 2006     
|----------------------------------------------------- |  | ------ |  | --------- | - | ---------
|
|NON-CURRENT ASSETS                                    |  |        |  |           |   |          
|Property, plant and equipment                         |  | 11     |  | 3,324,107 |   | 2,093,183
|Prepaid land lease payment                            |  | 12     |  | 2,524     |   | 2,511    
|Interests in associates                               |  | 15     |  | (9,982    | ) | 2,811    
|Deposits paid                                         |  | 16     |  | 10,443    |   | 21,143   
|Deferred tax assets                                   |  | 8      |  | 2,436     |   | 2,436    
|                                                      |  |        |  |           |   |          
|Total non-current assets                              |  |        |  | 3,329,528 |   | 2,122,084
|                                                      |  |        |  |           |   |          
|CURRENT ASSETS                                        |  |        |  |           |   |          
|Trade receivables                                     |  |        |  | 1,104,780 |   | 564,770  
|Inventories                                           |  | 17     |  | 562,513   |   | 389,390  
|Prepayments, deposits and other receivables           |  |        |  | 106,528   |   | 121,201  
|Due from related companies                            |  | 18     |  | 8,676     |   | 126,138  
|Due from minority equity holders of subsidiaries      |  | 19     |  | 69        |   | 69       
|Due from fellow subsidiaries                          |  | 1      |  | 754,925   |   | 99,871   
|Due from the immediate holding company                |  | 1      |  | 24,147    |   | 22,525   
|Deposits with non-bank financial institutions         |  |        |  | 49,261    |   | 3,451    
|Cash and bank balances                                |  | 20     |  | 2,211,004 |   | 2,735,705
|Pledged deposit with a non-bank financial institution |  | 25     |  | 10,308    |   |         
|Pledged bank deposits                                 |  | 20, 25 |  | 131,133   |   | 28,846   
|                                                      |  |        |  |           |   |          
|Total current assets                                  |  |        |  | 4,963,344 |   | 4,091,966
|                                                      |  |        |  |           |   |          
|CURRENT LIABILITIES                                   |  |        |  |           |   |          
|Trade payables                                        |  |        |  | 272,717   |   | 229,482  
|Accrued liabilities and other payables                |  |        |  | 1,130,128 |   | 562,233  
|Derivative financial instruments                      |  | 21     |  |          |   | 28,019   
|Due to fellow subsidiaries                            |  | 1      |  | 3,561     |   | 375,769  
|Due to the immediate holding company                  |  | 1, 22  |  | 1,724,899 |   | 1,309,669
|Due to minority equity holders/shareholders           |  | 23     |  | 44,072    |   | 50,942   
|Trust receipt loans                                   |  |        |  | 304,402   |   | 465,140  
|Interest-bearing bank and other loans                 |  | 24, 25 |  | 1,636,486 |   | 476,123  
|Finance lease payables                                |  | 24, 26 |  | 346,142   |   | 528      
|Tax payable                                           |  |        |  | 85,259    |   | 117,174  
|                                                      |  |        |  |           |   |          
|Total current liabilities                             |  |        |  | 5,547,666 |   | 3,615,079
|                                                      |  |        |  |           |   |          
|NET CURRENT ASSETS/(LIABILITIES)                      |  |        |  | (584,322  | ) | 476,887  
|                                                      |  |        |  |           |   |          
|TOTAL ASSETS LESS CURRENT LIABILITIES                 |  |        |  | 2,745,206 |   | 2,598,971
|NON-CURRENT LIABILITIES                               |  |        |  |           |   |          
|Finance lease payables                                |  | 24, 26 |  | 225       |   | 342,990  
|                                                      |  |        |  |           |   |          
|Net assets                                            |  |        |  | 2,744,981 |   | 2,255,981
|                                                      |  |        |  |           |   |          
|EQUITY                                                |  |        |  |           |   |          
|Equity attributable to equity holders of the Company  |  |        |  |           |   |          
|Issued capital                                        |  | 27     |  | 184       |   | 184      
|Share premium account                                 |  |        |  | 625,847   |   | 625,847  
|Reserves                                              |  | 28     |  | 2,118,950 |   | 1,623,807
|                                                      |  |        |  |           |   |          
|                                                      |  |        |  | 2,744,981 |   | 2,249,838
|Minority interests                                    |  |        |  |          |   | 6,143    
|                                                      |  |        |  |           |   |          
|Total equity                                          |  |        |  | 2,744,981 |   | 2,255,981
|                                                      |  |        |  |           |   |          

F-67

---





ASIA ALUMINUM GROUP LIMITED    CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY    Years ended June 30, 2007, 2006 and 2005

|                                                                                              |  | Attributable to equity holders of the Company |  |         |  |        |  
|--------------------------------------------------------------------------------------------- |  | --------------------------------------------- |  | ------- |  | ------ | -
|
|
|At July 1, 2004                                                                               |  | 184                                           |  | 625,847 |  | 74,467 |  
|Profit for the year                                                                           |  |                                              |  |        |  |       |  
|2004 dividends declared                                                                       |  |                                              |  |        |  |       |  
|Transfer to statutory surplus reserve                                                         |  |                                              |  |        |  |       |  
|                                                                                              |  |                                               |  |         |  |        |  
|At June 30, 2005 and July 1, 2005                                                             |  | 184                                           |  | 625,847 |  | 74,467 |  
|Exchange realignment and total income and expenses for the year recognised directly in equity |  |                                              |  |        |  |       |  
|Profit for the year                                                                           |  |                                              |  |        |  |       |  
|                                                                                              |  |                                               |  |         |  |        |  
|Total income and expense for the year                                                         |  |                                              |  |        |  |       |  
|2005 dividend paid                                                                            |  |                                              |  |        |  |       |  
|Transfer to statutory surplus reserve                                                         |  |                                              |  |        |  |       |  
|                                                                                              |  |                                               |  |         |  |        |  
|At June 30, 2006 and July 1, 2006                                                             |  | 184                                           |  | 625,847 |  | 74,467 |  
|Exchange realignment and total income and expenses for the year recognised directly in equity |  |                                              |  |        |  |       |  
|Profit for the year                                                                           |  |                                              |  |        |  |       |  
|                                                                                              |  |                                               |  |         |  |        |  
|Total income and expense for the year                                                         |  |                                              |  |        |  |       |  
|2006 dividend paid                                                                            |  |                                              |  |        |  |       |  
|Transfer to statutory surplus reserve                                                         |  |                                              |  |        |  |       |  
|                                                                                              |  |                                               |  |         |  |        |  
|At June 30, 2007                                                                              |  | 184                                           |  | 625,847 |  | 74,467 | *
|                                                                                              |  |                                               |  |         |  |        |  

---

F-68

---





ASIA ALUMINUM GROUP LIMITED        CONSOLIDATED CASH FLOW STATEMENTS        Years ended June 30, 2007, 2006 and 2005

|                                                                           |                                                                           | Notes |   | 2007       |         | 2006      |         | 2005      |        
|-------------------------------------------------------------------------- | ------------------------------------------------------------------------- | ----- | - | ---------- | ------- | --------- | ------- | --------- | -------
|
|CASH FLOWS FROM OPERATING ACTIVITIES                                       |                                                                           |       |   |            |         |           |         |           |        
|Profit before tax                                                          |                                                                           |       |   | 536,831    |         | 437,156   |         | 515,557   |        
|Adjustments for:                                                           |                                                                           |       |   |            |         |           |         |           |        
|                                                                           | Finance costs                                                             |       | 7 |            | 223,472 |           | 145,865 |           | 96,407 
|                                                                           | Interest income                                                           |       | 5 |            | (22,318 | )         | (16,847 | )         | (17,214
|                                                                           | Share of losses of associates                                             |       |   |            | 7,773   |           | 2,324   |           |       
|                                                                           | Impairment/(write-back of impairment) of bad and doubtful debts, net      |       | 6 |            | 19,448  |           | (9,097  | )         | (1,600 
|                                                                           | Loss on disposal/write-off of items of property, plant and equipment, net |       | 6 |            | 150,885 |           | 28,641  |           | 16,040 
|                                                                           | Fair value losses/(gains) on trading of forward contracts, net            |       | 5 |            | (8,168  | )         | 31,152  |           |       
|                                                                           | Depreciation of property, plant and equipment                             |       | 6 |            | 196,901 |           | 130,423 |           | 127,787
|                                                                           | Amortisation of a prepaid land lease payment                              |       | 6 |            | 163     |           | 157     |           | 154    
|                                                                           |                                                                           |       |   |            |         |           |         |           |        
|                                                                           |                                                                           |       |   | 1,104,987  |         | 749,774   |         | 737,131   |        
|Increase in trade receivables                                              |                                                                           |       |   | (559,458   | )       | (7        | )       | (12,040   | )      
|Increase in inventories                                                    |                                                                           |       |   | (173,123   | )       | (39,697   | )       | (6,639    | )      
|Decrease in prepayments, deposits and other receivables                    |                                                                           |       |   | 14,684     |         | 57,363    |         | 72,663    |        
|Decrease/(increase) in amounts due from related companies                  |                                                                           |       |   | 117,462    |         | (90,979   | )       | 1,023     |        
|Decrease in amounts due from minority equity holders of subsidiaries       |                                                                           |       |   |           |         |          |         | 67,841    |        
|Increase/(decrease) in trade payables                                      |                                                                           |       |   | 43,235     |         | 54,642    |         | (88,662   | )      
|Increase in accrued liabilities and other payables                         |                                                                           |       |   | 567,895    |         | 193,666   |         | 116,504   |        
|Increase/(decrease) in trust receipt loans                                 |                                                                           |       |   | (160,738   | )       | 186,484   |         | (138,839  | )      
|Increase/(decrease) in amounts due to minority equity holders/shareholders |                                                                           |       |   | (6,870     | )       | (35,607   | )       | 27,457    |        
|                                                                           |                                                                           |       |   |            |         |           |         |           |        
|Cash generated from operations                                             |                                                                           |       |   | 948,074    |         | 1,075,639 |         | 776,439   |        
|Interest paid                                                              |                                                                           |       |   | (200,534   | )       | (127,375  | )       | (92,582   | )      
|Interest element on finance lease rental payments                          |                                                                           |       |   | (22,938    | )       | (18,490   | )       | (3,825    | )      
|Mainland China corporate income tax paid                                   |                                                                           |       |   | (184,268   | )       | (142,678  | )       | (161,490  | )      
|                                                                           |                                                                           |       |   |            |         |           |         |           |        
|Net cash inflow from operating activities                                  |                                                                           |       |   | 540,334    |         | 787,096   |         | 518,542   |        
|                                                                           |                                                                           |       |   |            |         |           |         |           |        
|CASH FLOWS FROM INVESTING ACTIVITIES                                       |                                                                           |       |   |            |         |           |         |           |        
|Purchases of items of property, plant and equipment                        |                                                                           |       |   | (1,457,642 | )       | (547,850  | )       | (440,730  | )      
|Proceeds from disposal of items of property, plant and equipment           |                                                                           |       |   | 17,385     |         | 2,413     |         | 9         |        
|Deposits refunded/(paid)                                                   |                                                                           |       |   | (9,042     | )       | 3,442     |         | (35,040   | )      
|Capital injection to an associate                                          |                                                                           |       |   |           |         |          |         | (4        | )      
|Repayment from/(advances to) an associate                                  |                                                                           |       |   | 5,020      |         | (5,044    | )       | (87       | )      
|Interest received                                                          |                                                                           |       |   | 22,318     |         | 16,847    |         | 17,214    |        
|Increase in pledged deposit with a non-bank financial institution          |                                                                           |       |   | (10,308    | )       |          |         |          |        
|Decrease/(increase) in pledged bank deposits                               |                                                                           |       |   | (102,287   | )       | 9,760     |         | 36,723    |        
|                                                                           |                                                                           |       |   |            |         |           |         |           |        
|Net cash outflow from investing activities                                 |                                                                           |       |   | (1,534,556 | )       | (520,432  | )       | (421,915  | )      
|                                                                           |                                                                           |       |   |            |         |           |         |           |        
|CASH FLOWS FROM FINANCING ACTIVITIES                                       |                                                                           |       |   |            |         |           |         |           |        
|New bank and other loans                                                   |                                                                           |       |   | 1,528,153  |         | 473,263   |         | 320,386   |        
|Repayment of bank loans                                                    |                                                                           |       |   | (367,790   | )       | (370,257  | )       | (420,715  | )      
|Repayment of other loans                                                   |                                                                           |       |   |           |         |          |         | (3,767    | )      
|Capital element of finance lease rental payments                           |                                                                           |       |   | (528       | )       | (773      | )       | (473      | )      
|Settlement for forward contracts                                           |                                                                           |       |   | (19,851    | )       | (3,133    | )       |          |        
|Repayment to related companies                                             |                                                                           |       |   |           |         |          |         | (25,452   | )      
|Advances from/(repayment to) the immediate holding company, net            |                                                                           | 29(b) |   | 286,558    |         | 82,275    |         | (141,681  | )      
|Advances from/(repayment to) fellow subsidiaries                           |                                                                           |       |   | (1,027,262 | )       | 266,589   |         | 86,012    |        
|Dividends paid                                                             |                                                                           |       |   | (56,959    | )       | (37,952   | )       | (44,431   | )      
|                                                                           |                                                                           |       |   |            |         |           |         |           |        
|Net cash inflow/(outflow) from financing activities                        |                                                                           |       |   | 342,321    |         | 410,012   |         | (230,121  | )      
|                                                                           |                                                                           |       |   |            |         |           |         |           |        
|NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                       |                                                                           |       |   | (651,901   | )       | 676,676   |         | (133,494  | )      
|Cash and cash equivalents at beginning of year                             |                                                                           |       |   | 2,739,156  |         | 2,036,170 |         | 2,169,664 |        
|Effect of foreign exchange rate changes, net                               |                                                                           |       |   | 173,010    |         | 26,310    |         |          |        
|                                                                           |                                                                           |       |   |            |         |           |         |           |        
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                   |                                                                           |       |   | 2,260,265  |         | 2,739,156 |         | 2,036,170 |        
|                                                                           |                                                                           |       |   |            |         |           |         |           |        
|ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS                          |                                                                           |       |   |            |         |           |         |           |        
|Cash on hand and at banks                                                  |                                                                           |       |   | 2,211,004  |         | 2,735,705 |         | 2,022,528 |        
|Deposits with non-bank financial institutions                              |                                                                           |       |   | 49,261     |         | 3,451     |         | 13,642    |        
|                                                                           |                                                                           |       |   |            |         |           |         |           |        
|                                                                           |                                                                           |       |   | 2,260,265  |         | 2,739,156 |         | 2,036,170 |        
|                                                                           |                                                                           |       |   |            |         |           |         |           |        

F-69

---





ASIA ALUMINUM GROUP LIMITED        NOTES TO FINANCIAL STATEMENTS        June 30, 2007, 2006 and 2005

1. CORPORATE INFORMATION

The
Company was incorporated in the British Virgin Islands with limited liability. The registered office of the Company is located at 3rd Floor, Omar Hodge Building, Wickhams Cay
I, P.O. Box 362, Road Town, Tortola, the British Virgin Islands.

The
principal activity of the Company is investment holding. During the year, the Group was principally involved in the manufacture and sale of aluminum and stainless steel products and
the provision of design and testing services for aluminum products.

The
Company is a subsidiary of Asia Aluminum Holdings Limited ("AAHL"), a company incorporated in Bermuda. The directors consider AA Investments Company Limited
("AAIL"), a company incorporated in Bermuda, as the Company's ultimate holding company as at the balance sheet date.

During
each of the three years ended June 30, 2007, the Company and its subsidiaries had transactions with other members of the AAIL group and these financial statements reflect
the effect of these transactions.

Except
for an amount due to the immediate holding company (note 22), the balances with group companies are unsecured, interest-free and have no fixed terms of
repayment. The carrying amounts of the balances approximate to their fair values.

2.1 BASIS OF PRESENTATION AND PREPARATION

Basis of presentation

The consolidated financial statements have been prepared on a going concern basis notwithstanding that the Group had net current liabilities at June 30,
2007 because the Group's immediate holding company has confirmed its intention to provide continuous financial support to the Group to enable it to meet its liabilities as and when they fall due.

Basis of preparation

These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") (which also include Hong Kong Accounting
Standards ("HKASs") and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants, accounting principles generally accepted in Hong Kong and the disclosure requirements of the
Hong Kong Companies Ordinance. They have been prepared under the historical cost convention, except for derivative financial instruments, which have been measured at fair value. These financial
statements are presented in Hong Kong dollars and all values are rounded to the nearest thousand (HK$'000) except when otherwise indicated.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries for each of the three years ended June 30, 2007.
The results of subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.
All significant intercompany transactions and balances within the Group are eliminated on consolidation.

F-70

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

2.1 BASIS OF PRESENTATION AND PREPARATION (Continued)

The
acquisition of subsidiaries is accounted for using the purchase method of accounting. This method involves allocating the cost of the business combinations to the fair value of the
identifiable assets acquired, and liabilities and contingent liabilities assumed at the date of acquisition. The cost of the acquisition is measured at the aggregate of the fair value of the assets
given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.

Minority
interests represent the interests of outside shareholders not held by the Group in the results and net assets of the Company's subsidiaries. Acquisitions of minority interests
are accounted for using the parent entity extension method whereby the difference between the consideration and the book value of the share of the net assets acquired is recognised as goodwill.

2.2 IMPACT OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

The HKICPA has issued a number of new and revised HKFRSs that are effective for the Group's accounting period commencing on July 1, 2006. The Group has
adopted the following new and revised HKFRSs for the first time for the current year's financial statements:

HKAS 21 Amendment

Net Investment in a Foreign OperationHKAS 27 Amendment

Consolidated and Separate Financial Statements:Amendments as a consequence of the Companies (Amendment) Ordinance 2005HKAS 39 Amendment

Cash Flow Hedge Accounting of Forecast Intragroup TransactionsHKAS 39 Amendment

The Fair Value OptionHKAS 39 & HKFRS 4 Amendments

Financial Guarantee ContractsHK(IFRIC)-Int 4

Determining whether an Arrangement contains a LeaseHK(IFRIC)-Int 7

Applying the Restatement Approach under HKAS 29Financial Reporting in Hyperinflationary EconomiesHK(IFRIC)-Int 8

Scope of HKFRS 2HK(IFRIC)-Int 9

Reassessment of Embedded Derivatives


The
principal changes in accounting policies are as follows:





F-71

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

2.2 IMPACT OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (Continued)









The
adoption of HKAS 27 Amendment, HK(IFRIC)-Int 4, HK(IFRIC)-Int 7, HK(IFRIC)-Int 8 and HK(IFRIC)-Int 9 has had no material impact on the
accounting policies of the Group and the Company and the methods of computation in the Group's and the Company's financial statements.

F-72

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

2.3 IMPACT OF ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

The Group has not applied the following new and revised HKFRSs, that have been issued but are not yet effective, in these financial statements.

HKAS 1 Amendment

Capital Disclosures(1)HKAS 23 (Revised)

Borrowing Costs(2)HKFRS 7

Financial Instruments: Disclosures(1)HKFRS 8

Operating Segments(2)HK(IFRIC)-Int 10

Interim Financial Reporting and Impairment(1)HK(IFRIC)-Int 11

HKFRS 2Group and Treasury Share Transactions(1)HK(IFRIC)-Int 12

Service Concession Arrangements(3)


---

HKAS
1 Amendment will affect the disclosures about qualitative information about the Group's objective, policies and processes for managing capital; quantitative data about what the
Company regards as capital; and compliance with any capital requirements and the consequences of any non-compliance.

HKAS
23 (Revised) shall be applied to borrowing costs relating to qualifying assets for which the commencement date for capitalisation is on or after July 1, 2009. The main change
is the removal of the option to immediately recognise as an expense borrowing costs that relate to assets that take a substantial period of time to get ready for use or sale.

HKFRS
7 requires disclosures that enable users of the financial statements to evaluate the significance of the Group's financial instruments and the nature and extent of risk arising
from those financial instruments and also incorporates many of the disclosure requirements of HKAS 32.

The
Group is in the process of making an assessment of the impact of these new and revised HKFRSs upon initial application. So far, it has concluded that while the adoption of the HKAS 1
Amendment and HKFRS 7 may result in new or amended disclosures, these new and revised HKFRSs are unlikely to have a significant impact on the Group's results of operations and financial position.

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Subsidiaries

A subsidiary is an entity whose financial and operating policies the Company controls, directly or indirectly, so as to obtain benefits from its activities.

The
results of subsidiaries are included in the Company's income statement to the extent of dividends received and receivable. The Company's interests in subsidiaries are stated at cost
less any impairment losses.

F-73

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Joint ventures

A joint venture is an entity set up by contractual arrangement, whereby the Group and other parties undertake an economic activity. The joint venture operates as
a separate entity in which the Group and the other parties have an interest.

The
joint venture agreement between the venturers stipulates the capital contributions of the joint venture parties, the duration of the joint venture entity and the basis on which the
assets are to be realised upon its dissolution. The profits and losses from the joint venture's operations and any
distributions of surplus assets are shared by the venturers, either in proportion to their respective capital contributions, or in accordance with the terms of the joint venture agreement.

A
joint venture is treated as:



Associates

An associate is an entity, not being a subsidiary, in which the Group has a long term interest of generally not less than 20% of the equity voting rights and over
which it is in a position to exercise significant influence.

The
Group's share of the post-acquisition results and reserves of associates is included in the consolidated income statement and consolidated reserves, respectively. The
Group's interests in associates are stated in the consolidated balance sheet at the Group's share of net assets under the equity method of accounting, less any impairment losses.

Goodwill

Goodwill arising on the acquisition of subsidiaries represents the excess of the cost of the business combination over the Group's interest in the net fair value
of the acquirees' identifiable assets acquired, and liabilities and contingent liabilities assumed as at the date of acquisition.

Goodwill
arising on acquisition is recognised in the consolidated balance sheet as an asset, initially measured at cost and subsequently at cost less any accumulated impairment losses.

The
carrying amount of goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

F-74

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

For
the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units, or
groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those
units or groups of units. Each unit or group of units to which the goodwill is so allocated:



Impairment
is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units) to which the goodwill relates. Where the
recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised.

Where
goodwill forms part of a cash-generating unit (group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill
associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance
is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

An
impairment loss recognised for goodwill is not reversed in a subsequent period.



Prior to the adoption of the HKICPA's Statement of Standard Accounting Practice 30 "Business Combinations" ("SSAP 30") in 2001, goodwill arising on acquisition
was eliminated against the consolidated capital reserve in the year of acquisition. On the adoption of HKFRS 3, such goodwill remains eliminated against the consolidated capital reserve and is not
recognised in the income statement when all or part of the business to which the goodwill relates is disposed of or when a cash-generating unit to which the goodwill relates becomes
impaired.

Impairment of non-financial assets other than goodwill

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than financial assets, inventories, deferred tax
assets and goodwill), the asset's recoverable amount is estimated. An asset's recoverable amount is calculated as the higher of the asset's or cash-generating unit's value in use and its
fair value less costs to sell, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets,
in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An
impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to
the income statement in the period in which it arises.

F-75

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

An
assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such
indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to
determine the recoverable amount of that asset, however not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation), had no impairment loss
been recognised for the asset in prior years. A reversal of such impairment loss is credited to the income statement in the period in which it arises.

Related parties

A party is considered to be related to the Group if the party:



Property, plant and equipment and depreciation

Property, plant and equipment, other than construction in progress, are stated at cost less accumulated depreciation and any impairment losses. The cost of an
item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure
incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the income statement in the period in which it is incurred.
In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property, plant
and equipment, and where the cost of the item can be measured reliably, the expenditure is capitalised as an additional cost of that asset or as a replacement.

F-76

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Depreciation
is calculated on the straight-line basis to write off the cost of each item of property, plant and equipment to its residual value over its estimated useful
life. The principal annual rates used for this purpose are as follows:

Buildings

-5% or over lease terms, whichever is shorterPlant and machinery

-6.25%Moulds

-12.5% to 20%Furniture and fixtures

-10%Office equipment

-16.67%Motor vehicles

-16.67%


Where
parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated
separately.

Residual
values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at each balance sheet date.

An
item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or
retirement recognised in the income statement in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Construction
in progress represents the costs incurred in connection with the construction of property, plant and equipment less any impairment losses and is not depreciated. Cost
comprises the direct costs incurred during the period of construction and installation and capitalised borrowing costs on related borrowed funds during the period of construction. Construction in
progress is reclassified to the appropriate category of property, plant and equipment when completed and ready for use.

Leases

Leases that transfer substantially all the rewards and risks of ownership of assets to the Group, other than legal title, are accounted for as finance leases. At
the inception of a finance lease, the cost of the leased asset is capitalised at the present value of the minimum lease payments and recorded together
with the obligation, excluding the interest element, to reflect the purchase and financing. Assets held under capitalised finance leases are included in property, plant and equipment, and depreciated
over the shorter of the lease terms and the estimated useful lives of the assets. The finance costs of such leases are charged to the income statement so as to provide a constant periodic rate of
charge over the lease terms.

Assets
acquired through hire purchase contracts of a financing nature are accounted for as finance leases, but are depreciated over their estimated useful lives.

Leases
where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Where the Group is the lessor, assets leased by
the Group under operating leases are included in non-current assets, and rentals receivable under the operating leases are credited to the income statement on the straight-line
basis over the lease terms. Where the Group is the lessee, rentals payable under the operating leases are charged to the income statement on the straight-line basis over the lease terms.

F-77

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Prepaid
land lease payments under operating leases are initially stated at cost and subsequently recognised on the straight-line basis over the lease terms.

Investments and other financial assets

Financial assets in the scope of HKAS 39 are classified as financial assets at fair value through profit or loss and loans and receivables, as appropriate. When
financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The
Group considers whether a contract contains an embedded derivative when the Group first becomes a party to it. The embedded derivatives are separated from the host contract which is not measured at
fair value through profit or loss when the analysis shows that the economic characteristics and risks of embedded derivatives are not closely related to those of the host contract.

The
Group determines the classification of its financial assets after initial recognition and, where allowed and appropriate, re-evaluates this designation at the balance
sheet date.

All
regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular way purchases or
sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.



Financial assets at fair value through profit or loss include financial assets held for trading. Financial assets are classified as held for trading if they are
acquired for the purpose of sale in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging
instruments. Gains or losses on investments held for trading are recognised in the income statement.



Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are
subsequently carried at amortised cost using the effective interest method. Amortised cost is calculated taking into account any discount or premium on acquisition and includes fees that are an
integral part of the effective interest rate and transaction costs. Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, as well as
through the amortisation process.



The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of
business at the balance sheet date. For investments where there is no active market, fair value is determined using valuation techniques. Such techniques include using recent arm's length market
transactions; reference to the current market value of another instrument which is substantially the same; a discounted cash flow analysis; and option pricing models.

F-78

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Impairment of financial assets

The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset or a group of financial assets is impaired.



If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as
the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's
original effective interest rate (i.e., the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either directly or through the use of an
allowance account. The amount of the impairment loss is recognised in the income statement.

The
Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for
financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not,
the asset is included in a group of financial assets with similar credit risk characteristics and that group is collectively assessed for impairment. Assets that are individually assessed for
impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.

If,
in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the
previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in the income statement, to the extent that the carrying value of the asset does not
exceed its amortised cost at the reversal date.

In
relation to trade receivables, a provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the
debtor) that the Group will not be able to collect all of the amounts due under the original terms of an invoice. The carrying amount of the receivables is reduced through the use of an allowance
account. Impaired debts are derecognised when they are assessed as uncollectible.

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised where:



F-79

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



Where
the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor
transferred control of
the asset, the asset is recognised to the extent of the Group's continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at
the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Where
continuing involvement takes the form of a written and/or purchased option (including a cash-settled option or similar provision) on the transferred asset, the extent
of the Group's continuing involvement is the amount of the transferred asset that the Group may repurchase, except in the case of a written put option (including a cash-settled option or
similar provision) on an asset measured at fair value, where the extent of the Group's continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise
price.

Financial liabilities at amortised cost (including interest-bearing loans and borrowings)

Financial
liabilities including trade and other payables, an amount due to the ultimate holding company, amounts due to minority equity holders/shareholders and interest-bearing loans
and borrowings are initially stated at fair value less directly attributable transaction costs and are subsequently measured at amortised cost, using the effective interest method unless the effect of
discounting would be immaterial, in which case they are stated at cost.

Gains
and losses are recognised in the income statement when the liabilities are derecognised as well as through the amortisation process.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.

When
an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such
an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in
the income statement.

Derivative financial instruments and hedging

The Group uses derivative financial instruments e.g. forward currency contracts to hedge its risks associated with foreign currency fluctuations.
Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are
carried as assets when the fair value is positive and as liabilities when the fair value is negative.

F-80

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Any
gains or losses arising from changes in fair value on derivatives that do not qualify for hedge accounting are taken directly to the income statement for the year.

The
fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average basis and, in the case of work in progress and
finished goods, comprises direct materials, direct labour and an appropriate proportion of overheads. Net realisable value is based on estimated selling prices less any estimated costs to be incurred
to completion and disposal.

Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be
complied with. When the grant relates to an expense item, it is recognised as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate.
Where the grant relates to an asset, the fair value is deducted from the carrying amount of the asset and released to the income statement by way of a reduced depreciation charge.

Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to the Group and when the revenue can be measured reliably, on the following bases:



F-81

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



Dividends

Final dividends proposed by the directors are classified as a separate allocation of retained profits within the equity section of the balance sheet, until they
have been approved by the shareholders in a general meeting. When these dividends have been approved by the shareholders and declared, they are recognised as a liability.

Interim
dividends are simultaneously proposed and declared, because the Company's Bye-Laws grant the directors the authority to declare interim dividends. Consequently,
interim dividends are recognised immediately as a liability when they are proposed and declared.

Employee benefits



The Group provides paid annual leave to its employees under their employment contracts on a calendar year basis. Under certain circumstances, such leave which
remains untaken as at the balance sheet date is permitted to be carried forward and utilised by the respective employees in the following year. An accrual is made at the balance sheet date for the
expected future cost of such paid leave earned during the year by the employees and carried forward.



The Group operates a defined contribution Mandatory Provident Fund retirement benefits scheme (the "MPF Scheme") under the Mandatory Provident Fund Schemes
Ordinance for those employees who are eligible to participate in the MPF Scheme. Contributions are made based on a percentage of the employees' basic salaries and are charged to the income statement
as they become payable in accordance with the rules of the MPF Scheme. The assets of the MPF Scheme are held separately from those of the Group in an independently administered fund. The Group's
employer contributions vest fully with the employees when contributed into the MPF Scheme, except for the Group's employer
voluntary contributions, which are refunded to the Group when an employee leaves employment prior to the contributions vesting fully, in accordance with the rules of the MPF Scheme.

The
employees of the Group's subsidiaries which operate in Mainland China are required to participate in a central pension scheme operated by the local municipal government, the assets
of which are held separately from those of the Group. These Mainland China subsidiaries are required to contribute certain percentage of their respective payroll costs to the central pension scheme,
which are charged to the income statement as they become payable, in accordance with the rules of the scheme. The employer contributions vest fully once they are made.

Income tax

Income tax comprises current and deferred tax. Income tax is recognised in the income statement, or in equity if it relates to items that are recognised in the
same or a different period directly in equity.

Current
tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities.

F-82

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Deferred
tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts
for financial reporting purposes.

Deferred
tax liabilities are recognised for all taxable temporary differences, except:



Deferred
tax assets are recognised for all deductible temporary differences, carryforward of unused tax credits and unused tax losses, to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilised except:



The
carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available
to allow all or part of the deferred tax asset to be utilised. Conversely, previously unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that
it is probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Deferred
tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and
tax laws) that have been enacted or substantively enacted at the balance sheet date.

Deferred
tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes
relate to the same taxable entity and the same taxation authority.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e., assets that necessarily take a substantial
period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. The capitalisation of such borrowing costs ceases when the assets are substantially
ready for their intended use or sale. Investment income earned

F-83

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

on
the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs capitalised.

Foreign currencies

These financial statements are presented in Hong Kong dollars, which is the Company's functional and presentation currency. Each entity in the Group determines
its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions are initially recorded using the
functional currency rates ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rates of exchange ruling
at the balance sheet date. All differences are taken to the income statement. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using
the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the
fair value was determined.

The
functional currencies of certain overseas subsidiaries and associates are currencies other than the Hong Kong dollar. As at the balance sheet date, the assets and liabilities of
these entities are translated into the presentation currency of the Company at the exchange rates ruling at the balance sheet date and, their income statements are translated into Hong Kong dollars at
the weighted average exchange rates for the year. The resulting exchange differences are included in the exchange fluctuation reserve account. On disposal of a foreign entity, the deferred cumulative
amount recognised in the exchange fluctuation reserve account relating to that particular foreign operation is recognised in the income statement.

For
the purpose of the consolidated cash flow statement, the cash flows of overseas subsidiaries are translated into Hong Kong dollars at the exchange rates ruling at the dates of the
cash flows. Frequently recurring cash flows of overseas subsidiaries which arise throughout the year are translated into Hong Kong dollars at the weighted average exchange rates for the year.

Provisions

A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of
resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.

When
the effect of discounting is material, the amount recognised for a provision is the present value at the balance sheet date of the future expenditures expected to be required to
settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in the income statement.

Cash and cash equivalents

For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise cash on hand and demand deposits, and short term highly liquid
investments which are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, and have

F-84

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

a
short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group's cash management.

For
the purpose of the consolidated balance sheet, cash and bank balances comprise cash on hand and at banks, including term deposits, which are not restricted as to use.

3. SIGNIFICANT ACCOUNTING ESTIMATES

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.



The management of the Group reviews the aged analysis of the Group's inventories at each balance sheet date, and makes allowance for obsolete and
slow-moving inventory items identified that are no longer suitable for use in production and sales. Management estimates the net realisable value for such finished goods and work in
progress based primarily on the latest invoice prices and current market conditions.



Impairment allowances for bad and doubtful debts are made based on an assessment of the recoverability of trade receivables and other receivables. The
identification of doubtful debts requires management judgement and estimates. Where the actual outcome or expectation in future is different from the original estimate, such differences will impact
the carrying value of the receivables and doubtful debt expenses/write-back in the period in which such estimate has been changed.

F-85

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

4. RELATED PARTY TRANSACTIONS



Notes

2007
HK$'000

2006
HK$'000

2005
HK$'000Sales of finished goods to a former minority shareholder, Indalex Aluminum Solutions Group ("IASG")

(i
)
296,715

302,539

139,234Sales of finished goods to a company of which a director of a non wholly-owned subsidiary is also a director of the Company

(ii
)
7,975

8,054

10,805Sales of raw materials to a fellow subsidiary

(iii
)


20,258

Sales of finished goods to fellow subsidiaries

(iii
)


12,367

Sales of items of property, plant and equipment to fellow subsidiaries

(iii
)


22,908

Purchases of items of property, plant and equipment from a fellow subsidiary

(iii
)


49,350

Interest expense for finance leases paid to a related company

(iv
)
1,893



Commission paid to a related company, of which a director is also a director of the Company

(v
)
6,671



Interest income received from minority equity holders of two non wholly-owned subsidiaries

(vi
)




6,748


In
addition to the foregoing, management fees in the amount of HK$16,330,000 (2006: HK$16,330,000; 2005: HK$16,330,000) and HK$63,983,000 (2006: Nil; 2005: Nil) were paid during the year
by the Company and certain of its subsidiaries, which are wholly-owned by the Company, to Asia Aluminum Management Limited and Asia Aluminum (China) Limited, fellow subsidiaries of the Company,
respectively. These management fees were paid on a cost-recovery basis.

Notes:



F-86

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

4. RELATED PARTY TRANSACTIONS (Continued)



Each
of Guangdong Nanhua Aluminium Factory Co., Ltd ("Guangdong Nanhua") and Foshan Nanhai Hongjia Aluminium Materials and Stainless Steel Co., Ltd ("Hongjia
Aluminum"), the minority equity holders of two subsidiaries of the Group, has granted the Group the right to use certain underlying parcels of land and buildings on a rent-free basis.
Based on the legal advice, the directors of the Company consider that the above arrangement is valid and legally binding under the prevailing Mainland China applicable law and regulations.



2007
HK$'000

2006
HK$'000

2005
HK$'000Short term employee benefits

11,596

9,919

8,533Post-employment benefits





Total compensation paid to key management personnel

11,596

9,919

8,533


Further
details of directors' remuneration are included in note 6 to the financial statements.

F-87

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

5. REVENUE, OTHER INCOME AND GAINS, NET

Revenue,
which is also the Group's turnover, represents the aggregate of net invoiced amounts, after allowances for returns and trade discounts, from the sale of goods and other
businesses.

An
analysis of the Group's revenue, other income and gains, net is as follows:

|                                                                         |                  | 2007      |   | 2006      |   | 2005     
|------------------------------------------------------------------------ | ---------------- | --------- | - | --------- | - | ---------
|
|Revenue                                                                  |                  |           |   |           |   |          
|Manufacture and sale of aluminium extrusion products                     |                  | 6,625,730 |   | 3,775,414 |   | 3,225,784
|Manufacture and sale of stainless steel products                         |                  | 130,915   |   | 123,153   |   | 116,978  
|Manufacture and sale of aluminium panels                                 |                  |          |   | 7,066     |   | 59,345   
|Provision of design and testing services for aluminium products          |                  |          |   | 1,707     |   | 6,693    
|                                                                         |                  |           |   |           |   |          
|                                                                         |                  | 6,756,645 |   | 3,907,340 |   | 3,408,800
|                                                                         |                  |           |   |           |   |          
|Other income and gains, net                                              |                  |           |   |           |   |          
|Interest income                                                          |                  | 22,318    |   | 16,847    |   | 17,214   
|Net gains on trading of forward contracts:                               |                  |           |   |           |   |          
|                                                                         | Realised gains   |           |  |           |  |          
|                                                                         | Unrealised gains |           |  |           |  |          
|Fair value gains/(losses) on trading of forward contracts,
net (note 21) |                  | 8,168     |   | (31,152   | ) |         
|Management fee income from other AAIL group companies                    |                  | 10,800    |   | 10,800    |   | 10,800   
|Sale of scrap materials                                                  |                  | 4,808     |   | 10,621    |   | 5,748    
|Exchange gains/(losses), net                                             |                  | (4,718    | ) | 14,378    |   |         
|Sundry income                                                            |                  | 17,657    |   | 9,014     |   | 14,373   
|                                                                         |                  |           |   |           |   |          
|                                                                         |                  | 59,033    |   | 30,508    |   | 56,800   
|                                                                         |                  |           |   |           |   |          
|                                                                         |                  | 6,815,678 |   | 3,937,848 |   | 3,465,600
|                                                                         |                  |           |   |           |   |          

F-88

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

6. PROFIT BEFORE TAX

The
Group's profit before tax is arrived at after charging/(crediting) the following:

|                                                                           |                  | 2007                         |       | 2006      |       | 2005      |      
|-------------------------------------------------------------------------- | ---------------- | ---------------------------- | ----- | --------- | ----- | --------- | -----
|
|Cost of inventories sold*                                                  |                  | 5,523,762                    |       | 3,090,306 |       | 2,620,737 |      
|Cost of services provided                                                  |                  |                             |       | 1,201     |       | 1,138     |      
|Depreciation of property, plant and equipment*                             |                  | 196,901                      |       | 130,423   |       | 127,787   |      
|Amortisation of a prepaid land lease payment                               |                  | 163                          |       | 157       |       | 154       |      
|Directors' remuneration:                                                   |                  |                              |       |           |       |           |      
|                                                                           | Fee              |                              |      |           |      |           |     
|                                                                           | Other emoluments |                              | 5,758 |           | 4,875 |           | 3,799
|Employee benefits expense
(excluding directors' remuneration):             |                  |                              |       |           |       |           |      
|                                                                           |                  | Salaries and wages           |       | 140,507   |       | 115,908   |      
|                                                                           |                  | Pension scheme contributions |       | 403       |       | 344       |      
|                                                                           |                  |                              |       |           |       |           |      
|                                                                           |                  | 140,910                      |       | 116,252   |       | 101,415   |      
|                                                                           |                  |                              |       |           |       |           |      
|Auditors' remuneration                                                     |                  | 3,790                        |       | 3,567     |       | 2,249     |      
|Impairment/(write-back of impairment) of bad and
doubtful debts, net       |                  | 19,448                       |       | (9,097    | )     | (1,600    | )    
|Minimum lease payments under operating leases
on land and buildings        |                  | 9,003                        |       | 9,794     |       | 9,062     |      
|Loss on disposal/write-off of items of property,
plant and equipment, net* |                  | 150,885                      |       | 28,641    |       | 16,040    |      
|Exchange losses/(gains), net                                               |                  | 4,718                        |       | (14,378   | )     | (806      | )    
|                                                                           |                  |                              |       |           |       |           |      

F-89

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

7. FINANCE COSTS

|                                                                                      |  | 2007    |  | 2006    |  | 2005  
|------------------------------------------------------------------------------------- |  | ------- |  | ------- |  | ------
|
|Interest on bank loans, overdrafts and other loans
wholly repayable within five years |  | 74,621  |  | 45,273  |  | 38,447
|Interest on finance leases                                                            |  | 22,938  |  | 18,490  |  | 3,825 
|Interest on loans from the immediate holding company                                  |  | 125,913 |  | 82,102  |  | 54,135
|                                                                                      |  |         |  |         |  |       
|                                                                                      |  | 223,472 |  | 145,865 |  | 96,407
|                                                                                      |  |         |  |         |  |       

8. TAX

|                              |                        | 2007    |         | 2006    |         | 2005    |        
|----------------------------- | ---------------------- | ------- | ------- | ------- | ------- | ------- | -------
|
|Group:                        |                        |         |         |         |         |         |        
|                              | CurrentHong Kong      |         | 5,000   |         |        |         |       
|                              | CurrentMainland China |         | 147,353 |         | 161,775 |         | 152,486
|                              | Deferred tax           |         |        |         |        |         | (770   
|                              |                        |         |         |         |         |         |        
|Total tax charge for the year |                        | 152,353 |         | 161,775 |         | 151,716 |        
|                              |                        |         |         |         |         |         |        

Hong
Kong profits tax has been provided at the rate of 17.5% (2006: 17.5%; 2005: 17.5%) on the estimated assessable profits arising in Hong Kong during the year. In the prior years, no
Hong Kong profits tax had been provided as there were no estimated assessable profits arising from the Group's operations in Hong Kong. Taxes on profits assessable elsewhere have been calculated at
the applicable rates of tax in the jurisdictions in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.

The
statutory tax rate for Mainland China corporate income tax is 33% (2006: 33%; 2005: 33%). Under the relevant laws and regulations in Mainland China, certain subsidiaries (the
"Mainland China Subsidiaries") of the Company operating in Mainland China are exempted from income tax for two years from their respective first profit-making year and are eligible for a 50% reduction
in income tax for the following three years. During the each of the three years ended June 30, 2007, provisions for income tax for these subsidiaries have been made at the applicable reduced
rate for the Mainland China Subsidiaries.

F-90

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

8. TAX (Continued)

A
reconciliation of the tax expense applicable to profit before tax using the statutory rates for the countries in which the Company, its subsidiaries and associates are domiciled to the
tax expense at the effective tax rates is as follows:

|                                                                      |  | 2007     |   | 2006    |   | 2005    |  
|--------------------------------------------------------------------- |  | -------- | - | ------- | - | ------- | -
|
|Profit before tax                                                     |  | 536,831  |   | 437,156 |   | 515,557 |  
|                                                                      |  |          |   |         |   |         |  
|Tax at statutory rate of 33% in Mainland China                        |  | 177,154  |   | 144,261 |   | 170,134 |  
|Lower tax rate for Hong Kong and specific provinces
in Mainland China |  | (129,397 | ) | (31,514 | ) | (40,667 | )
|Income not subject to tax                                             |  | (909     | ) | (99     | ) | (1,843  | )
|Expenses not deductible for tax                                       |  | 103,922  |   | 48,331  |   | 23,391  |  
|Increase in unutilised tax losses carried forward                     |  | 1,583    |   | 796     |   | 701     |  
|                                                                      |  |          |   |         |   |         |  
|Tax charge at the effective rate                                      |  | 152,353  |   | 161,775 |   | 151,716 |  
|                                                                      |  |          |   |         |   |         |  

The
movements of the principal components of the Group's net deferred tax assets are as follows:

|                                                                        |  | Accelerated
depreciation
allowances |   | Impairment
allowance
for bad
and doubtful
debts |  | Fair value
changes of
forward
contracts |   | Total
|----------------------------------------------------------------------- |  | ----------------------------------- | - | ----------------------------------------------- |  | --------------------------------------- | - | -----
|
|At July 1, 2004                                                         |  | (240                                | ) | 1,379                                           |  | 527                                     |   | 1,666
|Deferred tax credited/(charged) to the income statement during the year |  | 101                                 |   | 1,787                                           |  | (1,118                                  | ) | 770  
|                                                                        |  |                                     |   |                                                 |  |                                         |   |      
|At June 30, 2005 and July 1, 2005                                       |  | (139                                | ) | 3,166                                           |  | (591                                    | ) | 2,436
|Deferred tax credited/(charged) to the income statement during the year |  |                                    |   |                                                |  |                                        |   |     
|                                                                        |  |                                     |   |                                                 |  |                                         |   |      
|At June 30, 2006 and July 1, 2006                                       |  | (139                                | ) | 3,166                                           |  | (591                                    | ) | 2,436
|Deferred tax credited/(charged) to the income statement during the year |  |                                    |   |                                                |  |                                        |   |     
|                                                                        |  |                                     |   |                                                 |  |                                         |   |      
|At June 30, 2007                                                        |  | (139                                | ) | 3,166                                           |  | (591                                    | ) | 2,436
|                                                                        |  |                                     |   |                                                 |  |                                         |   |      

F-91

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

8. TAX (Continued)

The
Group has unrecognised tax losses arising in Hong Kong of HK$26,985,000 (2006: HK$18,012,000; 2005: HK$18,517,000) that are available indefinitely for offsetting against future
taxable profits of
companies in which the losses arose. Deferred tax assets have not been recognised in respect of these losses as they have arisen in subsidiaries that have been loss-making for some time.

On
March 16, 2007, the National People's Congress approved the Mainland China Corporate Income Tax Law (the "New CIT Law"), which is effective from January 1, 2008 onwards
and unifies the corporate income tax rates for both domestic-invested and foreign-invested enterprises at 25%.

Since
the detailed implementation and administrative rules and regulations have not yet been announced, the financial impact of the New CIT Law to the Group cannot be reasonably
estimated at this stage. In addition, the Group does not have any deferred tax assets and liabilities balances for the temporary differences of assets or liabilities related to the Mainland China
operations as at the balance sheet date. Accordingly, no impact was noted on the deferred tax assets and liabilities.

9. PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY

The
consolidated profit attributable to equity holders of the Company for the year ended June 30, 2007 includes a profit of HK$190,036,000 (2006: profit of HK$230,076,000; 2005:
loss of HK$76,605,000) which has been dealt with in the financial statements of the Company.

10. DIVIDEND

|                                                                         |  | 2007    |  | 2006    |  | 2005
|------------------------------------------------------------------------ |  | ------- |  | ------- |  | ----
|
|Interim dividend HK$77.94 (2006: HK$64.28; 2005: Nil) per ordinary share |  | 184,009 |  | 151,748 |  |    
|                                                                         |  |         |  |         |  |     

F-92

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

11. PROPERTY, PLANT AND EQUIPMENT

|                          |                                        | Buildings
in Mainland
China |           | Construction
in progress |            | Plant,
machinery
and moulds |           | Furniture
and
fixtures |         | Office
equipment |         | Motor
vehicles |        | Total |          
|------------------------- | -------------------------------------- | --------------------------- | --------- | ------------------------ | ---------- | --------------------------- | --------- | ---------------------- | ------- | ---------------- | ------- | -------------- | ------ | ----- | ---------
|
|June 30, 2007             |                                        |                             |           |                          |            |                             |           |                        |         |                  |         |                |        |       |          
|Cost:                     |                                        |                             |           |                          |            |                             |           |                        |         |                  |         |                |        |       |          
|                          | At July 1, 2006                        |                             | 205,655   |                          | 1,243,338  |                             | 1,286,125 |                        | 35,736  |                  | 26,674  |                | 50,145 |       | 2,847,673
|                          | Additions                              |                             | 743       |                          | 1,370,890  |                             | 97,034    |                        | 1,380   |                  | 1,138   |                | 6,199  |       | 1,477,384
|                          | Disposals                              |                             | (28,327   | )                        |           |                             | (2,180    | )                      |        |                  |        |                | (751   | )     | (31,258  
|                          | Write-off                              |                             |          |                          |           |                             | (455,177  | )                      | (24,763 | )                | (23,272 | )              |       |       | (503,212 
|                          | Transfer from construction in progress |                             | 1,019,258 |                          | (2,672,806 | )                           | 1,648,738 |                        | 2,560   |                  | 2,250   |                |       |       |         
|                          | Exchange realignment                   |                             | 15,444    |                          | 64,212     |                             | 91,169    |                        | 2,640   |                  | 1,801   |                | 2,357  |       | 177,623  
|                          |                                        |                             |           |                          |            |                             |           |                        |         |                  |         |                |        |       |          
|                          | At June 30, 2007                       |                             | 1,212,773 |                          | 5,634      |                             | 2,665,709 |                        | 17,553  |                  | 8,591   |                | 57,950 |       | 3,968,210
|                          |                                        |                             |           |                          |            |                             |           |                        |         |                  |         |                |        |       |          
|Accumulated depreciation: |                                        |                             |           |                          |            |                             |           |                        |         |                  |         |                |        |       |          
|                          | At July 1, 2006                        |                             | 90,882    |                          |           |                             | 583,982   |                        | 14,836  |                  | 24,116  |                | 40,674 |       | 754,490  
|                          | Provided during the year               |                             | 40,519    |                          |           |                             | 149,590   |                        | 2,660   |                  | 776     |                | 3,356  |       | 196,901  
|                          | Write-back on disposal                 |                             | (9,983    | )                        |           |                             | (104      | )                      |        |                  |        |                | (389   | )     | (10,476  
|                          | Write-off                              |                             |          |                          |           |                             | (317,189  | )                      | (15,513 | )                | (23,022 | )              |       |       | (355,724 
|                          | Exchange realignment                   |                             | 8,471     |                          |           |                             | 45,647    |                        | 1,226   |                  | 1,644   |                | 1,924  |       | 58,912   
|                          |                                        |                             |           |                          |            |                             |           |                        |         |                  |         |                |        |       |          
|                          | At June 30, 2007                       |                             | 129,889   |                          |           |                             | 461,926   |                        | 3,209   |                  | 3,514   |                | 45,565 |       | 644,103  
|                          |                                        |                             |           |                          |            |                             |           |                        |         |                  |         |                |        |       |          
|Net book value:           |                                        |                             |           |                          |            |                             |           |                        |         |                  |         |                |        |       |          
|                          | At June 30, 2007                       |                             | 1,082,884 |                          | 5,634      |                             | 2,203,783 |                        | 14,344  |                  | 5,077   |                | 12,385 |       | 3,324,107
|                          |                                        |                             |           |                          |            |                             |           |                        |         |                  |         |                |        |       |          
|                          | At June 30, 2006                       |                             | 114,773   |                          | 1,243,338  |                             | 702,143   |                        | 20,900  |                  | 2,558   |                | 9,471  |       | 2,093,183
|                          |                                        |                             |           |                          |            |                             |           |                        |         |                  |         |                |        |       |          

F-93

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

11. PROPERTY, PLANT AND EQUIPMENT (Continued)

|                          |                                        | Buildings
in Mainland
China |         | Construction
in progress |           | Plant,
machinery
and moulds |           | Furniture
and
fixtures |        | Office
equipment |        | Motor
vehicles |        | Total |          
|------------------------- | -------------------------------------- | --------------------------- | ------- | ------------------------ | --------- | --------------------------- | --------- | ---------------------- | ------ | ---------------- | ------ | -------------- | ------ | ----- | ---------
|
|June 30, 2006             |                                        |                             |         |                          |           |                             |           |                        |        |                  |        |                |        |       |          
|Cost:                     |                                        |                             |         |                          |           |                             |           |                        |        |                  |        |                |        |       |          
|                          | At July 1, 2005                        |                             | 200,204 |                          | 498,354   |                             | 1,251,726 |                        | 36,174 |                  | 25,077 |                | 47,320 |       | 2,058,855
|                          | Additions                              |                             | 3,774   |                          | 745,264   |                             | 80,120    |                        | 373    |                  | 1,174  |                | 5,828  |       | 836,533  
|                          | Disposals                              |                             | (972    | )                        |          |                             | (44,675   | )                      | (271   | )                | (73    | )              | (3,924 | )     | (49,915  
|                          | Write-off                              |                             | (5,931  | )                        |          |                             | (28,964   | )                      | (1,485 | )                |       |                |       |       | (36,380  
|                          | Transfer from construction in progress |                             | 4,285   |                          | (7,081    | )                           | 2,618     |                        | 178    |                  |       |                |       |       |         
|                          | Exchange realignment                   |                             | 4,295   |                          | 6,801     |                             | 25,300    |                        | 767    |                  | 496    |                | 921    |       | 38,580   
|                          |                                        |                             |         |                          |           |                             |           |                        |        |                  |        |                |        |       |          
|                          | At June 30, 2006                       |                             | 205,655 |                          | 1,243,338 |                             | 1,286,125 |                        | 35,736 |                  | 26,674 |                | 50,145 |       | 2,847,673
|                          |                                        |                             |         |                          |           |                             |           |                        |        |                  |        |                |        |       |          
|Accumulated depreciation: |                                        |                             |         |                          |           |                             |           |                        |        |                  |        |                |        |       |          
|                          | At July 1, 2005                        |                             | 78,663  |                          |          |                             | 491,290   |                        | 12,716 |                  | 21,670 |                | 38,942 |       | 643,281  
|                          | Provided during the year               |                             | 14,525  |                          |          |                             | 107,402   |                        | 2,280  |                  | 2,018  |                | 4,198  |       | 130,423  
|                          | Write-back on disposal                 |                             |        |                          |          |                             | (19,621   | )                      | (265   | )                |       |                | (3,235 | )     | (23,121  
|                          | Write-off                              |                             | (3,985  | )                        |          |                             | (5,058    | )                      | (169   | )                |       |                |       |       | (9,212   
|                          | Exchange realignment                   |                             | 1,679   |                          |          |                             | 9,969     |                        | 274    |                  | 428    |                | 769    |       | 13,119   
|                          |                                        |                             |         |                          |           |                             |           |                        |        |                  |        |                |        |       |          
|                          | At June 30, 2006                       |                             | 90,882  |                          |          |                             | 583,982   |                        | 14,836 |                  | 24,116 |                | 40,674 |       | 754,490  
|                          |                                        |                             |         |                          |           |                             |           |                        |        |                  |        |                |        |       |          
|Net book value:           |                                        |                             |         |                          |           |                             |           |                        |        |                  |        |                |        |       |          
|                          | At June 30, 2006                       |                             | 114,773 |                          | 1,243,338 |                             | 702,143   |                        | 20,900 |                  | 2,558  |                | 9,471  |       | 2,093,183
|                          |                                        |                             |         |                          |           |                             |           |                        |        |                  |        |                |        |       |          
|                          | At June 30, 2005                       |                             | 121,541 |                          | 498,354   |                             | 760,436   |                        | 23,458 |                  | 3,407  |                | 8,378  |       | 1,415,574
|                          |                                        |                             |         |                          |           |                             |           |                        |        |                  |        |                |        |       |          

F-94

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

11. PROPERTY, PLANT AND EQUIPMENT (Continued)

The buildings are erected on land situated in the Mainland China under operating leases which expire between the years 2011 and 2016.

At
June 30, 2007, certain items of property, plant and equipment, mainly buildings in Mainland China and plant and machinery, with total net book value of nil (2006: HK$4,549,000)
and HK$27,802,000 (2006: HK$19,064,000), respectively, were pledged as security for certain banking facilities granted to the Group as set out in notes 24 and 25 to the financial statements.

The
net book value of assets held under finance leases included in the total amount of property, plant and equipment at June 30, 2007 amounted to HK$345,506,000 (2006:
HK$353,715,000).

During
the year, certain plant and machinery, buildings in Mainland China, furniture and fixtures and office equipment, amounting to HK$127,500,000 (2006: HK$12,361,000; 2005: Nil), nil
(2006: HK$1,946,000; 2005: Nil), HK$9,250,000 (2006: Nil; 2005: Nil) and HK$250,000 (2006: Nil; 2005: Nil), respectively were written off because of the relocation of certain factories in Mainland
China.

At
June 30, 2007, buildings in Mainland China included certain buildings with a net book value of approximately HK$384,000,000 (2006: Nil) for which the Group is still in the
process of obtaining the building ownership certificates. These buildings are erected on land for which the relevant land use rights certificates have been obtained by the Group. As confirmed by the
Group's legal advisors, the Group has obtained the right to use these buildings.

12. PREPAID LAND LEASE PAYMENT

|                                                                        |                            | 2007  |       | 2006  |      
|----------------------------------------------------------------------- | -------------------------- | ----- | ----- | ----- | -----
|
|Cost:                                                                   |                            |       |       |       |      
|                                                                        | At beginning of year       |       | 3,114 |       | 3,049
|                                                                        | Exchange realignment       |       | 224   |       | 65   
|                                                                        |                            |       |       |       |      
|                                                                        | At June 30                 |       | 3,338 |       | 3,114
|                                                                        |                            |       |       |       |      
|Amortisation:                                                           |                            |       |       |       |      
|                                                                        | At beginning of year       |       | 446   |       | 283  
|                                                                        | Recognised during the year |       | 163   |       | 157  
|                                                                        | Exchange realignment       |       | 37    |       | 6    
|                                                                        |                            |       |       |       |      
|                                                                        | At June 30                 |       | 646   |       | 446  
|                                                                        |                            |       |       |       |      
|Carrying amount at June 30                                              |                            | 2,692 |       | 2,668 |      
|Current portion included in prepayments, deposits and other receivables |                            | (168  | )     | (157  | )    
|                                                                        |                            |       |       |       |      
|Non-current portion                                                     |                            | 2,524 |       | 2,511 |      
|                                                                        |                            |       |       |       |      

F-95

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

12. PREPAID LAND LEASE PAYMENT (Continued)

The
prepaid land lease payment is held under a medium term lease and is situated in Mainland China.

At
June 30, 2007, the prepaid land lease payment with a net book value of approximately HK$2,692,000 (2006: HK$2,668,000) was pledged as security for the Group's bank loan
amounting to HK$24,739,000 (2006: HK$23,558,000), as further detailed in note 25 to financial statements.

Pursuant
to an agreement and a supplementary agreement entered into between AAHL and the local bureau of the High-Tech Development Zone of Zhaoqing City, Guangdong Province,
Mainland China ("Zhaoqing City") in prior years, AAHL has agreed to acquire 50 years' land use rights to 10,300 mu GRAPHIC(approximately
6,867,000 square metres) of land located in the High-Tech Development Zone at an aggregate consideration of RMB288,400,000. In turn, the local
bureau of Zhaoqing City has agreed to refund the whole consideration of RMB288,400,000 to AAHL as compensation for the construction cost of basic infrastructure incurred by the Group. In prior years,
the Group paid consideration of RMB31,220,000, for obtaining the land use rights of 1,115 mu and the related certificate. The local bureau of Zhaoqing City refunded the same amount to the Group.

13. GOODWILL

|                                         |  | 2007    |  | 2006   
|---------------------------------------- |  | ------- |  | -------
|
|Cost at beginning of year and at June 30 |  | 105,373 |  | 105,373
|                                         |  |         |  |        

The
Group applied the transitional provisions of HKFRS 3Business Combinationsthat permitted goodwill in respect of business combinations
which occurred prior to 2001, to remain eliminated against the consolidated capital reserve. The amount of goodwill remaining in the consolidated capital reserve arising from the acquisition of
subsidiaries prior to the adoption of SSAP 30 in 2001, was HK$105,373,000 (2006: HK$105,373,000) as at June 30, 2007. The amount of goodwill is stated at its cost.

F-96

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

14. INVESTMENTS IN SUBSIDIARIES

Details
of the principal subsidiaries are as follows:

|                                            |  | Place of
incorporation/
registration
and operations |  | Nominal value
of issued
ordinary share/
paid-up capital |  | Percentage
of equity
attributable to
the Company |   |    
|------------------------------------------- |  | --------------------------------------------------- |  | ------------------------------------------------------- |  | ------------------------------------------------ | - | ---
|
|
|
|Directly held                               |  |                                                     |  |                                                         |  |                                                  |   |    
|Asia Aluminum Manufacturing Company Limited |  | Hong Kong                                           |  | HK$2                                                    |  | 100                                              |   | 100
|Long Hing Profits
Limited                   |  | British Virgin
Islands/Hong Kong                    |  | US$1                                                    |  | 100                                              |   | 100
|Pavillion Services
Limited                  |  | British Virgin
Islands/Hong Kong                    |  | US$200                                                  |  | 100                                              |   | 100
|Huge Spot Holdings
Limited                  |  | British Virgin
Islands/Mainland
China               |  | US$1                                                    |  | 100                                              |   | 100
|Kar Yip Holdings
Limited                    |  | British Virgin
Islands/Mainland
China               |  | US$1                                                    |  | 100                                              |   | 100
|Indirectly held                             |  |                                                     |  |                                                         |  |                                                  |   |    
|Majestic Holdings
Limited                   |  | Hong Kong                                           |  | HK$60,000,000                                           |  | 100                                              |   | 100
|Guangdong Asia
Aluminium Factory
Co., Ltd.  |  | Mainland
China                                      |  | US$44,790,000                                           |  | 100
(note b                                      | ) | 100

F-97

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

14. INVESTMENTS IN SUBSIDIARIES (Continued)

|Foshan Nanhai Panasia
Metal Spraying
Co., Ltd.            |  | Mainland
China |  | US$2,900,000  |  | 100
(note b | ) | 100 |  | Dormant                                                           
|--------------------------------------------------------- |  | -------------- |  | ------------- |  | ----------- | - | --- |  | ------------------------------------------------------------------
|Foshan Nanhai Xinya
Aluminium & Stainless
Steel Co., Ltd. |  | Mainland
China |  | US$13,390,000 |  | 100
(note b | ) | 100 |  | Subcontracting
of aluminum
and stainless
steel products
processing
|Foshan Nanhai Hongjia
Aluminum Company
Limited            |  | Mainland
China |  | US$13,330,000 |  | 60
(note c  | ) | 60  |  | Manufacture
and trading of
aluminum
products                      
|Foshan Nanhua Aluminum
Company Limited                    |  | Mainland
China |  | US$17,000,000 |  | 60
(note c  | ) | 60  |  | Manufacture
and trading of
aluminum
products                      
|Zhaoqing Asia Aluminum
Factory Co., Ltd.                  |  | Mainland
China |  | US$39,941,200 |  | 100
(note b | ) | 100 |  | Manufacture
and trading of
aluminum
products                      

F-98

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

14. INVESTMENTS IN SUBSIDIARIES (Continued)

The
above table lists the subsidiaries of the Company which, in the opinion of the directors, principally affected the results of the year or formed a substantial portion of the net
assets of the Group. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.







F-99

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005



15. INTERESTS IN ASSOCIATES

|                                             |  | 2007    |   | 2006   |  
|-------------------------------------------- |  | ------- | - | ------ | -
|
|Share of net liabilities other than goodwill |  | (10,093 | ) | (2,320 | )
|Due from an associate                        |  | 111     |   | 5,131  |  
|                                             |  |         |   |        |  
|                                             |  | (9,982  | ) | 2,811  |  
|                                             |  |         |   |        |  

The
amount due from an associate is unsecured, interest-free and has no fixed terms of repayment. The carrying amount of the amount due from the associate approximates to its
fair value.

Particulars
of the associates are as follows:

|Name                                            |  | Place of
incorporation/
registration
and operations |  | Nominal value
of issued
ordinary share/
paid-up capital |  | Percentage of
equity indirectly
attributable to
the Company |  | Principal
activities
|----------------------------------------------- |  | --------------------------------------------------- |  | ------------------------------------------------------- |  | ----------------------------------------------------------- |  | --------------------
|Phoenix Asia Dies
Company Limited *             |  | Hong Kong                                           |  | US$1,000                                                |  | 40                                                          |  | Investment
holding  
|Phoenix (Zhaoqing) Dies
Manufacturing Co., Ltd. |  | Mainland China                                      |  | US$7,732,676                                            |  | 40                                                          |  | Production
of dies  

The
following table illustrates the summarised financial information of the Group's associates extracted from their management accounts:

|                     |  | 2007    |  | 2006  
|-------------------- |  | ------- |  | ------
|
|Assets               |  | 92,107  |  | 36,126
|Liabilities          |  | 117,340 |  | 41,926
|Revenue for the year |  | 38      |  |      
|Loss for the year    |  | 19,433  |  | 5,781 
|                     |  |         |  |       

16. DEPOSITS PAID

The
balance mainly represented deposits paid for the purchase of aluminum rolling mills and the associated auxiliary equipment and for construction works of plants.

F-100

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

17.    INVENTORIES

2007

2006HK$'000

HK$'000Raw materials

148,149

93,789Work in progress

226,664

167,680Finished goods

187,700

127,921562,513

389,390


As
at June 30, 2007, the carrying amount of the Group's inventories in the amount of HK$198,443,000 (2006: HK$32,298,000) was pledged as security for the Group's bank loans, as
further detailed in note 25 to the financial statements.

18.    DUE FROM RELATED COMPANIES

Particulars of the amounts due from related companies, disclosed pursuant to Section 161B of the Hong Kong Companies Ordinance, are as follows:

Notes

At June 30,
2007

Maximum
amount
outstanding
during
the year

At June 30,
and July 1,
2006

Maximum
amount
outstanding
during
the year

At July 1,
2005HK$'000

HK$'000

HK$'000

HK$'000

HK$'000IASG

(i)



140,738

125,362

134,312

35,159Asia Aluminum (USA) Corp.

(ii)

8,676

15,387

776

776

8,676



126,138



35,159


Notes:



The
carrying amounts of amounts due from related companies approximate to their fair values.

19.    DUE FROM MINORITY EQUITY HOLDERS OF SUBSIDIARIES

The amounts due from minority equity holders of subsidiaries amounted to approximately HK$69,000 (2006: HK$69,000) represent the accounts receivable arising from
the sale of raw materials to the minority equity holders. The balances are unsecured, interest-free and repayable on demand.

F-101

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

19.    DUE FROM MINORITY EQUITY HOLDERS OF SUBSIDIARIES (Continued)

The
carrying amounts of amounts due from minority equity holders approximate to their fair values.

20.    CASH AND BANK BALANCES AND PLEDGED DEPOSITS

2007

2006HK$'000

HK$'000Cash on hand and at banks

2,211,004

2,735,705Time deposits with banks

131,133

28,8462,342,137

2,764,551Less: Pledged time deposits (note 25)

(131,133
)
(28,846
)2,211,004

2,735,705


At
June 30, 2007, the cash and bank balances and time deposits with banks of the Group denominated in Renminbi ("RMB") amounted to approximately HK$2,269,603,000 (2006:
HK$2,682,000,000). The RMB is not freely convertible into foreign currencies. Subject to Mainland China Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of
Foreign Exchange Regulations, the Group is permitted to exchange RMB for foreign currencies through banks authorised to conduct the foreign exchange business.

Cash
at banks earns interest at floating rates based on daily bank deposit rates. Short term time deposits are made for varying periods of between one day and three months depending on
the immediate cash requirements of the Group, and earn interest at the respective short term time deposit rates. The carrying amounts of the cash and bank balances and the pledged deposits approximate
to their fair values.

21.    DERIVATIVE FINANCIAL INSTRUMENTS

Liabilities2007

2006HK$'000

HK$'000Aluminum forward contracts



28,019


The
carrying amounts of aluminum forward contracts are the same as their fair values.

The
Group has entered into various aluminum forward contracts to manage the fluctuation of aluminum price which did not meet the criteria for hedge accounting. Changes in the fair value
of non-hedging aluminum forward contracts amounting to HK$8,168,000 were credited to the income statement during the year ended June 30, 2007 (2006: HK$31,152,000 charged to income
statement).

F-102

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

21.    DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

As
at June 30, 2007, the aggregate notional amount of the aluminum forward contracts undertaken by the Group with a fair value liability of nil (2006: HK$28,019,000) amounted to
HK$47,252,000 (2006: HK$423,826,000).

22.    DUE TO THE IMMEDIATE HOLDING COMPANY

The amounts due to the immediate holding company are unsecured, bear interest at the LIBOR plus 3.80% or 8% (2006: 8%9%) per annum and repayable on
demand except for an amount of HK$16,889,000 (2006: Nil) which is interest-free and has no fixed terms of repayment. The carrying amounts of the amounts due to the immediate holding
company approximate to their fair values.

23.    DUE TO MINORITY EQUITY HOLDERS/SHAREHOLDERS

The amounts due to minority equity holders of approximately HK$14,548,000 (2006: HK$14,548,000) represented the amounts due to minority equity
holders/shareholders for the transfer of business database and purchases of items of property, plant and equipment on behalf of the two non wholly-owned subsidiaries. The remaining balance of
approximately HK$29,524,000 (2006: HK$36,394,000) represented dividend payables to minority shareholders and cash advance from minority equity holders.

The
carrying amounts of amounts due to minority equity holders/shareholders approximate to their fair values.

24.    INTEREST-BEARING BANK AND OTHER LOANS

2007

2006Effective
interest
rate (%)

Maturity

HK$'000

Effective
interest
rate (%)

Maturity

HK$'000CurrentFinance lease payables (note 26)

10-11.8

February 2008-
June 2008

346,142

10.4

June 2007

528Bank loanssecured

4.55

June 2008

1,435,738

5.88

June 2007

476,123Loans from non-bank financial institutions secured

5.85-6.51

June 2008

200,748





1,982,628





476,651Non-currentFinance lease payables (note 26)

11.8

March 2009

225

10-11.8

February 2008-
March 2009

342,9901,982,853





819,641


F-103

---



ASIA ALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

24.    INTEREST-BEARING BANK AND OTHER LOANS (Continued)

The carrying amount of the Group's borrowings are denominated in the following currencies.

As at June 30, 2007HK Dollar

US Dollar

Renminbi

TotalHK$'000

HK$'000

HK$'000

HK$'000Bank loanssecured



41,412

1,394,326

1,435,738Loans from non-bank financial institutionssecured





200,748

200,748

41,412

1,595,074

1,636,486


|
|

As at June 30, 2006HK Dollar

US Dollar

Renminbi

TotalHK$'000

HK$'000

HK$'000

HK$'000Bank loanssecured

48,431



427,692

476,123


Other
interest rate information:

2007

2006Fixed rate

Floating rate

Fixed rate

Floating rateHK$'000

HK$'000

HK$'000

HK$'000Finance lease payables

346,367



343,518

Bank loanssecured

1,394,326

41,412

427,692

48,431Loans from non-bank financial institutionssecured

200,748








The
carrying amounts of the Group's interest-bearing bank and other loans approximate to their fair values.

The
fair value of interest-bearing bank and other borrowings is estimated as the present value of future cash flows, discounted at current market interest rates for similar financial
instruments.

25.    BORROWING FACILITIES

The Group's borrowings at June 30, 2007 were secured by buildings in Mainland China and plant and machinery of nil (2006: HK$4,549,000) and HK$27,802,000
(2006: HK$19,064,000), respectively, a prepaid land lease payment of HK$2,692,000 (2006: HK$2,668,000), trade receivables of nil (2006: HK$25,042,000), inventories of HK$198,443,000 (2006:
HK$32,298,000) and bank deposits of HK$131,133,000 (2006: HK$28,846,000) and deposit with a non-bank financial institution of HK$10,308,000 (2006: Nil).

In
addition, the Company's ultimate holding company has guaranteed certain of the Group's bank facilities up to HK$76,000,000 (2006: Nil) as at the balance sheet date.

F-104

---



ASIA AALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

25.    BORROWING FACILITIES (Continued)

AAHL
has guaranteed certain of the Group's bank loans up to HK$1,246,756,000 (2006: HK$713,080,000). In addition, certain of the Group's bank loans are secured by certain machinery of
minority shareholders of a non wholly-owned subsidiary, corporate guarantees granted by two (2006: one) non wholly-owned subsidiaries, a fellow subsidiary and minority shareholders of a non wholly-
owned subsidiary and joint and several personal guarantees provided by certain directors of two non wholly-owned subsidiaries.

As
at June 30, 2007, the Group was technically in breach of a covenant under the trade finance facilities with two banks, as the ratio of the consolidated current assets to the
consolidated current liabilities of AAHL was less than the required ratio by the banks. As at June 30, 2007, the related trust receipt loans in aggregate, amounted to HK$131,159,000. Subsequent
to the year end, the Group has successfully removed the covenant with the bank which provided the trust receipt loans of HK$92,991,000 as at June 30, 2007 and the Group was in the process of
negotiation with the other bank which provided the remaining trust receipt loans of HK$38,168,000 as at June 30, 2007. There was no impact on the classification of the trust receipt loans.

26.    FINANCE LEASE PAYABLES

The Group leases certain plant and machinery and motor vehicles for its business use. These leases are classified as finance leases and have remaining lease terms
ranging from one to two years. The total
future minimum lease payments under finance leases and their present values at the balance sheet date were as follows:

Minimum
lease
payments
2007

Present value
of minimum
lease
payments
2007

Minimum
lease
payments
2006

Present value
of minimum
lease
payments
2006HK$'000

HK$'000

HK$'000

HK$'000Amounts payable:Within one year

360,059

346,142

23,026

528In the second year

252

225

356,326

342,765In the third to fifth years, inclusive





252

225Total minimum finance lease payments

360,311

346,367

379,604

343,518Future finance charges

(13,944
)


(36,086
)Total net finance lease payables

346,367



343,518Portion classified as current liabilities

(346,142
)


(528
)Non-current portion

225



342,990


Certain
of the finance leases are secured by corporate guarantees granted by AAHL and two wholly-owned subsidiaries.

Included
in finance leases is an amount of HK$345,842,000 due to a partner of a minority shareholder of the Company.

F-105

---



ASIA AALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

27.    SHARE CAPITAL

Shares

2007

2006HK$'000

HK$'000Authorised:5,000,000 ordinary shares of US$0.01 each

390

390Issued and fully paid:2,360,872 ordinary shares of US$0.01 each

184

184


28.    RESERVES

The amounts of the Group's reserves and the movements therein for the current and prior years are presented in the consolidated statement of changes in equity of
the financial statements.

The
statutory surplus reserve and statutory public welfare fund represent appropriation of profits retained by the Mainland China subsidiaries of the Company. In accordance with the
Mainland China regulations and the respective articles of association of the Mainland China subsidiaries, these companies are required to appropriate an amount equal to a minimum of 10% of their
profits after tax each year to the statutory surplus reserve. In addition, a portion of the profit after tax as determined at
the discretion of the directors of each of the Mainland China subsidiaries, is transferred to the statutory public welfare fund.

Subject
to certain restrictions set out in the Mainland China Company Law and the respective articles of association of the Mainland China subsidiaries, the statutory surplus reserve may
be distributed to shareholders in the form of a share bonus issue and/or cash dividends.

29.    NOTES TO THE CONSOLIDATED CASH FLOW STATEMENTS

Major non-cash transactions

During
each of the three years ended June 30, 2007, the following major non-cash transactions took place:



F-106

---



ASIA AALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

29.    NOTES TO THE CONSOLIDATED CASH FLOW STATEMENTS (Continued)



30.    OPERATING LEASE ARRANGEMENTS

The Group leases its manufacturing premises in the Mainland China under operating lease arrangements. Leases for properties are negotiated for terms which expire
between the years 2010 and 2022.

At
June 30, 2007 and 2006, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:

2007

2006HK$'000

HK$'000Within one year

7,264

6,727In the second to fifth years, inclusive

28,101

27,409After five years

32,361

35,81867,726

69,954


31.    CONTINGENT LIABILITIES

At June 30, 2006, the Group granted a guarantee to and utilised by a minority equity holder in respect of banking facilities of HK$11,058,000.

32.    COMMITMENTS

In addition to the operating lease arrangements detailed in note 30 above, the Group had the following commitments at June 30, 2007 and 2006.

F-107

---



ASIA AALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

32.    COMMITMENTS (Continued)



2007

2006HK$'000

HK$'000Contracted but not provided for:capital contribution

468,939

455,295acquisition of property, plant and equipment

7,755

171,385shareholder's loan to an associate



18,622476,694

645,302




33.    FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group's principal financial instruments, other than derivatives, comprise trust receipt loans, bank loans, finance lease payables, intercompany balances, cash
on hand and at banks, and short term deposits. The main purpose of these financial instruments is to raise finance for the Group's operations. The Group has various other financial assets and
liabilities such as trade receivables and trade payables, which arise directly from its operations.

The
Group also enters into derivative transactions, including principally aluminum forward contracts. The purpose is to manage price risk arising from the Group's operations.

It
is, and has been, throughout the year under review, the Group's policy that no trading in financial instruments shall be undertaken.

The
main risks arising from the Group's financial instruments are price risk, interest rate risk, foreign currency risk, credit risk and liquidity risk. The board reviews and agrees
policies for managing each of these risks and they are summarised below. The Group's accounting policies in relation to derivatives are set out in note 2.4 to the financial statements.



The Group is exposed to price movements of the inventories it holds and for the products it trades. The Group manages this exposure by entering into aluminum
forward contracts transacted through over-the-counter markets. The Group only enters into over-the-counter transactions with high credit quality
counterparties.



The Group's current banking facilities maintained with commercial banks are mainly at fixed rates. The Group currently does not have an interest rate hedging
policy. However, management monitors

F-108

---



ASIA AALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

33.    FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

the
Group's interest exposure and will consider hedging significant interest rate exposure should the need arise.



The Group has transactional currency exposures. Such exposures arise from revenue or expenses of operating units in currencies other than the units' functional
currency. The Group's monetary assets, financing and transactions are principally denominated in Hong Kong dollars, United States dollars and Renminbi. The Group currently does not have a foreign
currency hedging policy in respect of foreign currency assets and liabilities. The Group will monitor its foreign currency exposures closely and will consider hedging significant foreign currency
exposures should the need arise.



The Group trades only with recognised and creditworthy third parties. It is the Group's policy that all customers who wish to trade on credit terms are subject to
credit verification procedures. In addition, receivable balances are monitored on an ongoing basis and on an individual basis.

There
is no credit risk of the Group under other financial assets such as cash and cash equivalents.



The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of interest-bearing bank loans, trust receipt loans
and finance leases.

34.    POST BALANCE SHEET EVENTS

On August 14, 2007, Asia Aluminum Manufacturing Company Limited ("AAMCL"), a wholly-owned subsidiary of the Company, has entered into a sale
and purchase agreement ("Sale and Purchase Agreement") with Cometal Phoenix China Dies s.r.l. ("CPC") for the acquisition of 60% interest of the share capital of Phoenix Asia Dies Company
Limited ("Phoenix Asia") by AAMCL from CPC and the related shareholder's loan of Euro3,582,194 owed by Phoenix Asia to CPC for a total cash consideration of HK$12,416,000. Upon completion of the Sale
and Purchase Agreement, AAMCL increased its share holding in Phoenix Asia from 40% to 100%. Since the financial information of Phoenix Asia as at the date of completion of the Sales and Purchase
Agreement was not yet completed up to the date of approval of these financial statements, no further financial information was disclosed in these financial statements.

35.    SUMMARY OF DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The Group's consolidated financial statements are prepared in accordance with accounting principles generally accepted in Hong Kong ("HK GAAP"), which differs in
certain material respects from United States generally accepted accounting principles ("US GAAP"). The following tables summarise the adjustments considered necessary to reflect profit for the
year and equity of the Group on the basis of US GAAP giving effect to material differences between HK GAAP and US GAAP.

F-109

---



ASIA AALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

35.    SUMMARY OF DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)

The
following table summarises the effect on profit for the year of the differences between HK GAAP and US GAAP.

Year ended June 30Notes

2007

2006HK$'000

HK$'000Profit for the year as reported under HK GAAP



384,478

275,381US GAAP adjustments:Impairment of goodwill

(a)



(50,312
)Rental for rent-free land and buildings

(b)

(11,456
)
(9,627
)Capitalisation of finance costs

(c)

63,501

59,041Depreciation for capitalisation of finance costs

(c)

(3,621
)
(650
)Deferred tax arising from US GAAP differences

(d)

(10,229
)
(14,014
)Attributable to minority interests

(e)

7,877

28,284Profit for the year as reported under US GAAP



430,550

288,103


The
following table summarises the effect on equity of the differences between HK GAAP and US GAAP.

Year ended June 30Notes

2007

2006HK$'000

HK$'000Equity as reported under HK GAAP



2,744,981

2,255,981US GAAP adjustments:Reclassification of goodwill from reserves to assets

(a)

105,373

105,373Goodwillaccumulated amortisation, under US GAAP

(a)

(17,323
)
(17,323
)Goodwillimpairment, under US GAAP

(a)

(50,312
)
(50,312
)Rent expense for rent-free land and buildings

(b)

(48,374
)
(36,918
)Capitalisation of finance costs

(c)

147,568

84,067Depreciation for capitalisation of finance costs

(c)

(7,693
)
(4,072
)Deferred tax arising from US GAAP differences

(d)

(29,428
)
(19,199
)Equity attributable to minority interests

(e)



(6,143
)Equity as reported under US GAAP



2,844,792

2,311,454






F-110

---



ASIA AALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

35.    SUMMARY OF DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)



2007

2006HK$'000

HK$'000Goodwill carried as consolidated reserves under HK GAAP reclassified as asset under US GAAP

105,373

105,373Goodwill amortisation recognised under US GAAP

(17,323
)
(17,323
)Goodwill impairment recognised under US GAAP

(50,312
)
(50,312
)Carrying value as reported under US GAAP

37,738

37,738






F-111

---



ASIA AALUMINUM GROUP LIMITED

NOTES TO FINANCIAL STATEMENTS (Continued)

June 30, 2007, 2006 and 2005

35.    SUMMARY OF DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)







36.    APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements were approved and authorised for issue by the board of directors on September 29, 2007, except for note 35 to the financial
statements, which was approved and authorised for issue by the board of directors on November 9, 2007.

F-112

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