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

FORM 10-K

ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

OR

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

For the transition period
from                        to

Commission file number 1-9753

GEORGIA GULF CORPORATION(Exact name of registrant as specified in its charter)

DELAWARE(State or other jurisdiction of incorporation or organization)

58-1563799(I.R.S. Employer Identification No.)115 Perimeter Center Place, Suite 460, Atlanta, Georgia(Address of principal executive offices)

30346(Zip Code)Registrant's telephone number, including area code:(770) 395-4500Securities registered pursuant to Section 12(b) of the Act:


Title of each class

Name of each exchange on which registeredCommon Stock, $0.01 par value

New York Stock Exchange, Inc.


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 whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and
post such files). Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the 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. ý

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 definition 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    Smaller reporting
company o

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

Aggregate market value of the common stock held by non-affiliates of the registrant, computed using the closing price on the New York Stock Exchange
for the registrant's common stock on June 30, 2009 was $22,162,928.

Indicate
the number of shares outstanding of the registrant's common stock as of the latest practicable date.

Class

Outstanding at March 5, 2010Common Stock, $0.01 par value

33,722,121 shares


DOCUMENTS INCORPORATED BY REFERENCE(To the Extent Indicated Herein)

Proxy Statement for the Annual Meeting of Stockholders to be held on May 18, 2010, in Part III of this Form 10-K.



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Table of Contents

TABLE OF CONTENTS    PART I



Item



Page
Number1)

Business


11A)

Risk Factors


121B)

Unresolved Staff Comments


212)

Properties


213)

Legal Proceedings


234)

Reserved


23PART II5)

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities


246)

Selected Financial Data


267)

Management's Discussion and Analysis of Financial Condition and Results of Operations


287A)

Quantitative and Qualitative Disclosures About Market Risk


518)

Financial Statements and Supplementary Data


539)

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


1179A)

Controls and Procedures


1179B)

Other Information


119PART III10)

Directors, Executive Officers, and Corporate Governance


12011)

Executive Compensation


12112)

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


12113)

Certain Relationships and Related Transactions, and Director Independence


12114)

Principal Accountant Fees and Services


121PART IV15)

Exhibits and Financial Statement Schedule


122Signatures


125Certifications


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PART I

Item 1.    BUSINESS.

General

Georgia Gulf Corporation is a leading North American manufacturer and international marketer of two integrated chemical product lines,
chlorovinyls and aromatics. Our primary chlorovinyls products are chlorine, caustic soda, ethylene dichloride ("EDC"), vinyl chloride monomer ("VCM"), vinyl resins, vinyl compounds and compound
additives; and our aromatics products are cumene, phenol and acetone. On October 3, 2006, we completed the acquisition of Royal Group Technologies Limited, which was subsequently renamed Royal
Group, Inc. ("Royal Group"), a leading North American manufacturer and marketer of vinyl-based building and home improvement products. Royal Group's core businesses now consist of five product
lines: (i) window and door profiles; (ii) mouldings; (iii) siding; (iv) pipe and pipe fittings; and (v) deck, fence and rail products.

The
Royal Group acquisition furthered our chlorovinyls forward integration strategy by providing a growth platform that leverages Georgia Gulf's vinyl resins and vinyl compounds
formulation expertise, which we have refined over the last 20 years, with Royal Group's experience and innovative product development. We believe the acquisition will allow us to strengthen our
competitive position through further penetration of Royal Group's markets. The following chart illustrates our chlorovinyls and building and home improvement products integration.

GRAPHIC

Recapitalization

We completed the acquisition of all of the outstanding common stock of Royal Group in 2006 for a total purchase price, including
assumed debt and debt retired in conjunction with the closing, of approximately $1.5 billion. The acquisition was financed entirely with new debt, including $500.0 million in aggregate
principal amount of new senior notes, $200.0 million in aggregate principal amount of new senior subordinated notes and $800.0 million principal amount of floating interest rate term
debt under a new senior secured credit facility.

Demand
for our building and home improvement products declined during 2008 as compared to 2007 primarily as a result of U.S. housing starts decreasing by about 33 percent
according to a report furnished

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jointly
by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development in January 2009. Similarly, in 2008 our chlorovinyls segment experienced decreased demand compared to 2007,
primarily as a result of a continued weakness in the U.S. residential housing market.

As
a result of the significant impact of the recession on the residential construction industry, we were required to obtain numerous waivers and amendments of certain restrictive
covenants that required us to maintain certain financial ratios under our senior secured credit facility. In early 2009, we began to take actions to recapitalize our company.

On
March 31, 2009, we commenced private exchange offers for our outstanding 7.125 percent senior notes due 2013 (the "2013 notes"), 9.5 percent senior notes due 2014
(the "2014 notes"), and 10.75 percent senior subordinated notes due 2016 (the "2016 notes" and collectively with the 2013 notes and 2014 notes, the "notes") and, in conjunction with the private
exchange offers, withheld payment of $34.5 million of interest due April 15, 2009 for the 2014 and 2016 notes. After numerous extensions and amendments of the exchange offers and
additional waivers and amendments under our senior secured credit facility, on July 29, 2009, we consummated our private exchange of equity for approximately $736.0 million (principal
amount), or 92.0 percent, in aggregate principal amount of the notes. The $736.0 million was comprised of $91.0 million of the $100 million of 2013 notes,
$486.8 million of the $500 million of 2014 notes, and $158.1 million of the $200 million of 2016 notes. An aggregate of approximately 30.2 million shares of
convertible preferred stock and approximately 1.3 million shares of common stock were issued in exchange for the tendered notes after giving effect to a 1-for-25 reverse
stock split, which reduced the outstanding common shares, before the issuance of common shares in the debt exchange, to approximately 1.4 million shares. In preparation and prior to this debt
for equity exchange, we executed a 1-for-25 reverse stock split. In September 2009, following an amendment of our charter to increase our authorized shares of common stock to
100 million shares, approximately 30.2 million convertible preferred shares converted to an equal number of common shares. After giving effect to the debt exchange at December 31,
2009, we had outstanding $9.0 million of the 2013 notes, $13.2 million of the 2014 notes and $41.4 million of the 2016 notes. This debt for equity exchange was a troubled debt
restructuring and thus an extinguishment of the notes for which we recognized a net gain of $400.8 million, or approximately $16.61 per share.

On
December 22, 2009, we refinanced our senior secured credit facility and our $175.0 million asset securitization agreement. At the time of the refinancing, our senior
secured credit facility was comprised of a $300.0 million revolving credit facility and a $347.7 million Term Loan B. We replaced the senior secured credit facility and asset
securitization facility with a four-year term secured assetbased revolving credit facility that provides for a maximum of $300 million of revolving credit (including
credit in the form of letters of credit and swingline loans) through December 2013, subject to borrowing base availability and other terms and conditions (the "ABL Revolver") and the issuance of
$500.0 million in principal amount of our 9.0 percent senior secured
notes. The borrowing base under the ABL Revolver is equal to specified percentages of our eligible accounts receivable and inventories, less a fixed $15 million availability reserve and other
reserves reasonably determined by the co-collateral agents. The borrowings under the ABL Revolver are secured by substantially all of our assets.

The
$500.0 million of senior secured 9.0 percent notes are due in 2017. The 9.0 percent notes are secured by substantially all of our assets and contain certain
restrictive covenants including restrictions on debt incurrence, granting of liens, dividends, acquisitions and investments.

Our
new capital structure significantly reduces our interest expense to approximately $70 million to $80 million annually from approximately $130 million in recent
years and substantially eliminates quarterly maintenance covenants that were part of our debt agreements under our previous capital structure. However, we cannot be certain that our annual interest
expense will always fall within a range of $70 million to $80 million, as the borrowings under our ABL Revolver are subject to variable interest rates, and thus, could increase
substantially over time.

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Segment Information

We operate through four reportable segments: chlorovinyls; window and door profiles and mouldings products; outdoor building products;
and aromatics. These four reportable segments reflect the organization used by our management for purposes of allocating resources and assessing performance. The chlorovinyls segment is a highly
integrated chain of products, which includes chlorine, caustic soda, EDC, VCM and vinyl resins, vinyl compounds and compound additives. Through the Royal Group acquisition, we acquired manufacturing
facilities for vinyl-based building and home improvement products. Our vinyl-based building and home improvement products are primarily marketed under the Royal Group brand names, and are managed
within two reportable segments, window and door profiles and mouldings; and outdoor building products, which includes the manufacturing of siding, pipe and pipe fittings and deck, fence, and rail
products. The aromatics segment includes cumene and the co-products phenol, acetone and alpha methyl styrene ("AMS").

Reportable Segments

Key ProductsChlorovinyls

Chlorine/Caustic SodaEDCVCMVinyl ResinsVinyl CompoundsCompound AdditivesWindow and Door Profiles and Mouldings

Window and Door ProfilesMouldingsOutdoor Building Products

SidingPipe and Pipe FittingsDeck, Fence and RailAromatics

CumenePhenol/AcetoneAMS


For
selected financial information concerning our four reportable segments and our domestic and international sales, see Note 19 of the Notes to the Consolidated Financial
Statements included in Item 8.

Plant Closings and Temporary Plant Idlings

In May 2009, we announced plans to consolidate two plants in our window and door profiles and mouldings segment. As part of this plan,
our window and door profiles plant in McCarran, Nevada was closed in November 2009 and one of our window and door profiles manufacturing plants in Vaughan, Ontario was closed in December 2009.

The
phenol industry suffered from industry-wide supply and demand imbalance primarily as a result of capacity that was brought online in 1999 and 2000. Rather than continue
running both of our phenol/acetone plants of our aromatics segment at lower capacity utilization rates, management temporarily idled the Pasadena, Texas phenol/acetone plant in the second quarter of
2002. Subsequently, we have been able to continue to meet all of our customers' needs with phenol/acetone production from our Plaquemine, Louisiana plant. We intend to restart the Pasadena, Texas
phenol/acetone plant when market conditions warrant. The net book value of our idled Pasadena, Texas phenol/acetone plant was approximately $0.7 million as of December 31, 2009 and is
included in property, plant and equipment on our consolidated balance sheet.

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Products and Markets

Chlorovinyls

The chlorovinyls segment is a highly integrated chain of products, which includes chlorine, caustic soda, EDC, VCM, vinyl resins, vinyl
compounds and compound additives. We have leading market positions in our key chemical products. In North America, we are one of the largest producers of VCM, vinyl resins, and vinyl compounds. The
following table shows our total annual production capacities as of December 31, 2009, in our chlorovinyls product line:

Product Line

CapacityVinyl Compounds


1.3 billion poundsVinyl Resins


2.7 billion poundsVCM


3.0 billion poundsCaustic Soda


500,000 tonsChlorine


450,000 tonsCompound Additives


162 million poundsPlasticizers


22 million pounds


Vinyl Compounds and Compound Additives.Vinyl compounds are formulated to provide specific end-use properties that allow them to be
processed directly into finished products. We produce flexible and rigid compounds, which are used in many different applications, including wire and cable insulation and jacketing, electrical outlet
boxes and pipe fittings, window and furniture profiles and food-grade and general-purpose bottles. We also supply chlorinated vinyl compounds, or CPVC, to the extrusion and injection
molding markets, mainly for production of hot water pipe and pipe fittings.

We
have four vinyl compound facilities located in Aberdeen, Gallman, Madison and Prairie, Mississippi. As a result of the Royal Group acquisition, we acquired several vinyl compound
manufacturing facilities in Vaughan, Ontario and a compound additives manufacturing facility located in Bradford, Ontario. Additionally, certain Royal Group extrusion plants contain compounding
facilities. Substantially all of the vinyl compounds produced by Royal Group are used internally in Royal Group's extrusion operations. The additives plant produces lubricants, stabilizers, impact
modifiers and process aids used in the production of compounds, which are part of the typical compound formulations. The majority of our additives are consumed internally.

Vinyl Resins.Vinyl resins are among the most widely used plastics in the world today, and we supply numerous grades of vinyl resins to
a broad
number of end-use markets. During 2009, approximately 69 percent of Georgia Gulf's vinyl resins production was sold into the merchant market where our vinyl resins were used in a
wide variety of flexible and rigid vinyl end-use applications. In 2009, the largest end-uses of our products were for pipe and pipe fittings, siding and window profiles.
Approximately 31 percent of our vinyl resins are used internally in the manufacture of our vinyl compounds and vinyl building products.

VCM.During 2009, we used about 99 percent of our VCM production in the manufacture of vinyl resins in our PVC manufacturing
operations. VCM
production not used internally is sold to other vinyl resins producers in domestic and international markets.

Chlor-alkali Products.All of the chlorine we produce is used internally in the production of VCM. As a co-product of chlorine, caustic
soda further diversifies our revenue base. We sell substantially all of our caustic soda domestically and overseas to customers in numerous industries, with the pulp and paper, chemical and alumina
industries constituting our largest markets. Other markets for our caustic soda include soap and detergents and the water treatment industries.

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Window and Door Profiles and Mouldings

In our window and door profiles and mouldings segment, we currently operate 11 manufacturing facilities located in Canada and the U.S.
In addition we operate distribution centers, some of which are co-located with manufacturing plants. The window and door profiles and mouldings segment consists of extruded vinyl window
and door profiles as well as interior and exterior mouldings, in which we have leading market positions.

Window and Door Profiles.Our window and door profiles products represent the largest portion of revenues within our building and home
improvement
products lines. We manufacture and extrude vinyl window profiles including frames, sashes, trim and other components, as well as vinyl patio door components and fabricated patio doors, which are sold
primarily to window and door fabricators. Our sales are primarily to the custom segment of the vinyl window profile market with the profile design customized to a window fabricator's specific
requirements.

Mouldings.We manufacture and market extruded decorative mouldings and millwork. Our decorative trim products are used for interior
mouldings, such
as crown, base and chair rail. For exterior mouldings, our products are used in applications such as brick mouldings, and as components used in the fabrication of doors, windows and spas. This product
line includes a series of offerings, such as bendable trim and paintable/stainable trim.

Outdoor Building Products

In our outdoor building products segment, our continuing operations include 11 manufacturing facilities, which produce siding, pipe and
pipe fittings, deck, fence and rail, and fabricated aluminum products. In addition, we operate distribution centers, some of which are co-located with manufacturing plants and 21 of which
are free-standing facilities.

Siding.We manufacture vinyl siding, and we also offer a wide range of complementary accessories including vinyl soffit, aluminum soffit,
 fascia and
trim and molded vent mounts and exterior shutters. We have a broad product offering of vinyl siding styles, including a premium vinyl siding that includes rich, dark, color-fast shades as
well as a siding system, which enables siding panels to withstand harsh wind conditions.

Pipe and Pipe Fittings.We manufacture pipe and pipe fittings for the municipal and electrical markets, as well as pipe for plumbing
applications.
Our municipal pipe and pipe fittings product lines are used in potable water applications as well as for storm and sewer applications. Our plumbing lines are used in residential and industrial
applications to move storm and sanitary wastewater from the building to the municipal sewer at the property line. This product line is primarily targeted at drain, waste and vent applications.
Electrical, pipe, conduit and fittings are available in a wide variety of sizes and configurations, to meet the needs of both commercial and residential applications.

Deck, Fence and Rail.We manufacture vinyl deck, fence and rail products that are used for both the do-it-yourself
("D-I-Y") and professionally installed segments of the market. Products directed at the D-I-Y segment such as D-I-Y fencing are
made in pre-built sections designed for quick and easy installation, and are sold through big-box home improvement retail stores. We offer many different fence styles for the
professional installer. We also offer decorative columns and rail to complement our fence products. Royal Group's deck, fence and rail product lines are positioned as a lower-maintenance alternative
to conventional wood and metal products.

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Aromatics

The aromatics segment is also integrated and includes cumene and the co-products phenol and acetone. We operate the world's
largest cumene plant.

The
following table shows our total annual production capacities as of December 31, 2009 in our aromatics product line:

Product Line

CapacityPhenol*

660 million poundsAcetone*

408 million poundsCumene

2.0 billion pounds






Cumene.Cumene is used as an intermediate to make phenol and acetone. About 31 percent of our cumene was consumed internally during
2009 to
produce phenol and acetone. Cumene production not used internally is sold to other phenol and acetone manufacturers in domestic and international markets, and is sold as an additive in gasoline
blending.

Phenol.Our phenol is sold to a broad base of customers who are producers of a variety of phenolic resins, engineering plastics and
specialty
chemicals. Phenolic resins are used as adhesives for wood products such as plywood and Oriented Strand Board, or OSB. Engineering plastics are used in compact discs, digital video discs, automobiles,
household appliances, electronics and protective coating applications. We also sell phenol for use in insulation, electrical parts, oil additives and chemical
intermediates. In 2009, the largest sales segment of our phenol was the chemical/specialty chemical sector.

Acetone.As a co-product of phenol, acetone further diversifies our revenue base. Acetone is a chemical used primarily in the
production
of acrylic resins, engineering plastics and industrial solvents. We sell the majority of our acetone into the acrylic resins market, where it is used in the manufacture of various plastics and
coatings used for signage, automotive parts, household appliances, paints and industrial coatings. Other uses range from solvents for automotive and industrial applications to pharmaceuticals and
cosmetics.

Production, Raw Materials and Facilities

Our operations are highly vertically integrated as a result of our production of some of the key raw materials and intermediates used
in the manufacture of our products. Our operational integration enhances our control over production costs and capacity utilization rates, as compared to our non-integrated competitors.

Chemical Products.In our chlorovinyls segment, we produce chlorine and its co-product caustic soda by electrolysis of salt brine. We
produce VCM by reacting purchased ethylene with chlorine, which is both produced internally and purchased from third parties; our internal production of VCM slightly exceeds our internal demand
requirements. We produce vinyl resins by polymerization of VCM in a batch reactor process. We formulate our vinyl compounds by blending our vinyl resins with various additives such as plasticizers,
impact modifiers, stabilizers and pigments, most of which are purchased. We also have the capacity to produce EDC, an intermediate in the manufacture of VCM, for external sales. In our aromatics
segment, we produce cumene utilizing benzene and refinery grade propylene ("propylene") purchased from third parties. Cumene is then oxidized to produce cumene hydroperoxide, which is split into the
co-products phenol and acetone.

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The
significant raw materials we purchase from third parties include ethylene, benzene, natural gas, propylene, compound additives and chlorine. The majority of our purchases of ethylene
and chlorine are made under long-term supply agreements, and we purchase natural gas, benzene and
propylene in both the open market and under long-term contracts. We believe we have reliable sources of supply for our raw materials under normal market conditions. We cannot, however,
predict the likelihood or impact of any future raw material shortages. Any shortages could have a material adverse impact on our results of operations.

Plaquemine, Louisiana Facilities.Our operations at these facilities include the production of chlorine, caustic soda, VCM, vinyl
resins, phenol and
acetone. We have a long-term lease on a nearby salt dome with reserves in excess of twenty years from which we supply our salt brine requirements. We use all of our chlorine production in
the manufacture of VCM at this facility, and we sell substantially all of our caustic soda production externally. All of the ethylene requirements for our VCM production are supplied by pipeline. Most
of our Plaquemine VCM production is consumed on-site in our vinyl resins production or shipped to our other vinyl resins facilities with the remainder sold to third parties. We manufacture
a significant portion of our vinyl resins production at this facility. As part of a modernization project at this facility completed in 2007, we increased our vinyl resins production capacity by
approximately 450 million pounds annually. Our cumene requirements for the production of phenol and its co-product acetone are shipped from our Pasadena, Texas facility by dedicated
barges.

Our
250-megawatt cogeneration facility supplies all of the electricity and steam needs at our Plaquemine facilities. We also own an on-site air separation unit
operated by a third party that provides all of the Plaquemine facility's nitrogen and oxygen gas requirements.

Lake Charles, Louisiana Facilities.We produce VCM at our Lake Charles, Louisiana facility and through our manufacturing joint venture,
PHH
Monomers, LLC, which is located in close proximity to our Lake Charles VCM facility. PHH Monomers is a joint venture with PPG Industries, Inc. that entitles us to 50 percent of
the VCM production. Virtually all of the chlorine and ethylene needs of our Lake Charles VCM facility and PHH Monomers facility are supplied by pipeline. VCM from these facilities supplies our
Aberdeen, Mississippi facility. On occasion, a small portion of VCM produced at the Lake Charles facilities is sold on spot sales to third parties.

Aberdeen, Mississippi Facility.We produce vinyl resins at our Aberdeen, Mississippi facility from VCM supplied by railcar from our
various VCM
facilities. In addition, the Aberdeen facility produces plasticizers, which are consumed internally for flexible vinyl compound production.

Vinyl Compounds and Compound Additives Facilities.We operate compound facilities in Aberdeen, Gallman, Madison and Prairie,
Mississippi and Vaughan,
Ontario. We also produce vinyl compounds in
certain of our extrusion plants. All of these vinyl compound facilities are supplied from our vinyl resins facilities by railcar, truck or in the case of Aberdeen, pipeline. Additionally, we produce
some of our compound additives at our Bradford, Ontario facility and purchase the remainder from various sources at market prices.

Pasadena, Texas Facilities.At our Pasadena, Texas facilities we have the capability to produce cumene, phenol and acetone. We produce
cumene
utilizing purchased benzene and propylene. Our cumene facility is integrated by pipeline with our phenol and acetone facility at Pasadena. Currently, due to the temporary idling of phenol and acetone
production at Pasadena (discussed above), all of the cumene production at this facility is either shipped to the Plaquemine phenol and acetone facility or sold to third parties. We purchase propylene
and benzene at market prices from various suppliers delivered by multiple transportation modes to our cumene facility. A portion of the benzene is supplied under contracts at market prices, and the
propylene is provided from numerous refineries at market prices. Based on current industry capacity, we believe we have adequate access to benzene and propylene under normal conditions.

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Building and Home Improvement Products.In our building and home improvement product lines, we produce vinyl window and door profiles,
mouldings,
siding, pipe and pipe fittings, and deck, fence and rail products. The principal raw material we use in production is vinyl resin, which is blended with other compound additives to form vinyl
compounds, which are then extruded or injection molded. We believe internal production of vinyl resins, compounds and most compound additives by our chlorovinyls segment assures quality and
facilitates efficient production of our vinyl-based products. Additives assist in processing vinyl resins efficiently and can be used to make the resulting product flexible or rigid, to add color or
texture or other desired properties. For example, UV inhibitors may be added to protect an exterior product from sun damage, which could cause fading.

Extrusion
is a process by which vinyl compounds are heated until they melt and then forced through a uniquely shaped opening, referred to as a die, to form various shapes and thickness.
For example, when producing decking, a slip resistant design may be embossed onto the planks. Variations in extrusion are used to give products other desired qualities. For example, in producing
mouldings and some deck products, we use cellular extrusion, which involves the process of encapsulating air bubbles in the vinyl extrusion, which reduces weight and cost. As the extruded product
leaves the die, it is immediately cooled resulting in resolidification of the vinyl into a product matching the die pattern. Cooling is accomplished by using water and/or air.

We
also produce some pipe fittings through injection molding. These products are produced by heating vinyl compounds until they melt and then injecting them under pressure into a hollow
mold to create three dimensional parts.

Facilities.We operate numerous manufacturing facilities in Canada and the U.S. to produce our building and home improvement products.
Vinyl resins
and vinyl compounds as well as compound additives from the plants operated by our chlorovinyls segment are supplied to our facilities by truck or rail. We also purchase additional additives from
various sources at market prices. The other principal cost to produce these products is electricity to power our facilities.

Operation
of numerous manufacturing facilities located strategically near customers, such as is the case in our window and door profiles division, facilitates marketing and customer
support and also minimizes transportation costs. Transportation costs limit sales of pipe from our facilities. Because our pipe plants are located in Ontario and British Columbia, sales of our pipe
are concentrated within the northeastern and northwestern portions of Canada and the U.S. Our building and home improvement products are delivered primarily by truck.

Seasonality

Operating income for all four of our reportable segments is affected by the seasonality of the construction industry, which experiences
its highest level of activity during the spring and summer months. Therefore, our second and third quarter operating results are typically the strongest. Our first and fourth quarter operating results
usually reflect a decrease in construction activity due to colder weather and holidays.

Inventory Practices and Product Returns

In our chlorovinyls business, by the nature of our products, we do not maintain significant inventories and product returns are
insignificant.

As
is typical for the industry, in our home improvement and building products business, we maintain stocks of inventories in most of our product lines. We generally build additional
inventory in advance of the peak construction season to assure product availability.

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Generally,
our home improvement and building products may be returned only if defective. However, in certain circumstances, we may allow the return of products as a customer
accommodation, such as in the case of a change in product lines.

Sales and Marketing

No single customer accounted for more than 6 percent of our consolidated revenues for the years ended December 31, 2009,
2008, and 2007. In addition to our domestic sales, we export some of our products.

Chemical Products.Our sales and marketing program is aimed at supporting our existing customers and expanding and diversifying our
customer base. In
our chemicals business, we have a dedicated sales force organized by product line and region. In addition, we use distributors to market products to smaller customers. We have a product development
and technical service staff that primarily supports our vinyl resins and vinyl compounds businesses. This staff works closely with customers to qualify existing Georgia Gulf products for use by our
customers.

Building and Home Improvement Products.In our building products business, sales and marketing activities vary by product line and
distribution
channel. Our window and door profiles are primarily sold by our dedicated sales force and supported by marketing support activities that may include brochure development for window fabricators,
technical advisory and design services for fabricators and advertising directed at installers suggesting that they look for windows fabricated with Royal Group profiles. Our mouldings products are
distributed primarily by our dedicated sales force to independent dealers, fabricators, distributors and home centers, who resell the products directly to builders, installers or homeowners. The
majority of our vinyl siding and accessories sales are in North America, where products are distributed through independent building product distributors, who are solicited primarily by Royal Group's
dedicated sales force. In Canada, vinyl siding and accessories are distributed through company-owned as well as independent building product distributors. These distributors generally sell to
professional building product installers in North America. Sales of pipe and pipe fittings are generally sold through municipal and electrical distributors. Our sales and technical staff work with end
use customers to provide technical information to promote the use of our PVC pipe and fitting products. The majority of pipe and pipe fitting sales occur in Canada, where
products are sold nationally through pipe distributors to contractors. In the United States, we sell our pipe fittings nationally, but sell our pipe only in the Northeast and Northwest due to close
proximity to Canadian manufacturing plants and higher costs associated with shipping to other regions. Deck, fence and rail products are sold through retail home improvement stores, and are also sold
to professionals through distributors. The sales force for these products is primarily company employees. Royal Group engages in advertising programs primarily directed at trade professionals that are
intended to develop awareness and interest in its products. In addition, Royal Group displays its products at a series of national and regional trade shows.

Competition

We experience competition from numerous manufacturers in our chlorovinyls, aromatics and building and home improvement products
businesses. We compete on a variety of factors including price, product quality, delivery and technical service.

In
our chemicals business, we face competition from numerous manufacturers of chemicals and vinyl resins and compounds. In our building and home improvement products business, we face
competition for each of our products from other manufacturers of vinyl products as well as numerous manufacturers of traditional building materials. We believe that our vinyl building and home
improvement products are preferred by builders and homeowners because of their durability and ease of installation and maintenance as compared to traditional building materials. In the window and door
profile market, we face competition from manufacturers of wood, aluminum and fiberglass products. In the siding market, we face competition

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from
manufacturers of cement, brick, wood, stucco, stone, concrete and aluminum products. We face competition from manufacturers of concrete and metal products in the pipe and pipe fittings market.
Similarly, we face competition from manufacturers of composite materials, wood and metal products in the deck, fence and rail markets. In addition, competition for certain price sensitive products
from countries such as China is increasing.

In
all businesses, we believe that we are well-positioned to compete as a result of integrated product lines and the operational efficiency of our plants and, in the case of
our chemical plants, the proximity of our facilities near major water and/or rail transportation terminals. We also believe that for many of our extruded products, our ability to produce our dies
internally is a competitive advantage over producers who must rely on third parties. For example, we believe our ability to produce our own dies generally results in our responding more quickly and
efficiently to the customer. Finally, we believe the breadth of our extruded building and home improvement product lines to be a source of competitive advantage.

Environmental Regulation

Our operations are subject to increasingly stringent federal, state and local laws and regulations relating to environmental quality.
These regulations, which are enforced principally by the United States Environmental Protection Agency ("USEPA") and comparable state agencies and Canadian federal and provincial agencies, govern the
management of solid hazardous waste, emissions into the air and discharges into surface and underground waters, and the manufacture of chemical substances. In addition to the matters involving
environmental regulation above and the matters discussed in Item 3 "Legal Proceedings," we have the following potential environmental issues.

In
the first quarter of 2007, the USEPA informed us of possible noncompliance at our Aberdeen, Mississippi facility with certain provisions of the Toxic Substances Control Act.
Subsequently, we discovered possible non-compliance involving our Plaquemine, Louisiana and Pasadena, Texas facilities, which were then disclosed. We expect that all of these disclosures
will be resolved in one settlement agreement with USEPA. While the penalties, if any, for such noncompliance may exceed $100,000, we do not expect that any penalties will have a material effect on our
financial position, results of operations, or cash flows.

There
are several serious environmental issues concerning the VCM facility at Lake Charles, Louisiana we acquired from CONDEA Vista Company ("CONDEA Vista" is now Sasol North
America, Inc.) on November 12, 1999. Substantial investigation of the groundwater at the site has been conducted, and groundwater contamination was first identified in 1981. Groundwater
remediation through the installation of groundwater recovery wells began in 1984. The site currently contains an extensive network of monitoring wells and recovery wells. Investigation to determine
the full extent of the contamination is ongoing. It is possible that offsite groundwater recovery will be required, in addition to groundwater monitoring. Soil remediation could also be required.

Investigations
are currently underway by federal environmental authorities concerning contamination of an estuary near the Lake Charles VCM facility we acquired known as the Calcasieu
Estuary. It is likely that this estuary will be listed as a Superfund site and will be the subject of a natural resource damage recovery claim. It is estimated that there are about 200 potentially
responsible parties ("PRPs") associated with the estuary contamination. CONDEA Vista is included among these parties with respect to its Lake Charles facilities, including the VCM facility we
acquired. The estimated cost for investigation and remediation of the estuary is unknown and could be quite costly. Also, Superfund statutes may impose joint and several liabilities for the cost of
investigations and remedial actions on any company that generated the waste, arranged for disposal of the waste, transported the waste to the disposal site, selected the disposal site, or presently or
formerly owned, leased or operated the disposal site or a site otherwise contaminated by hazardous substances. Any or all of the responsible parties may be required to bear all of the costs of cleanup
regardless of fault, legality of the original disposal or ownership of the disposal site.

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Currently,
we discharge our wastewater to CONDEA Vista, which has a permit to discharge treated wastewater into the estuary.

CONDEA
Vista has agreed to retain responsibility for substantially all environmental liabilities and remediation activity relating to the vinyls business we acquired from it, including
the Lake Charles, Louisiana VCM facility. For all matters of environmental contamination that were currently known at the time of acquisition (November 1999), we may make a claim for indemnification
at any time. For environmental matters that were then unknown, we must generally have made such claims for indemnification before November 12, 2009. No such material claims were made.

At
our Lake Charles VCM facility, CONDEA Vista continued to conduct the ongoing remediation at its expense until November 12, 2009. We are now responsible for remediation costs up
to about $150,000 of expense per year, as well as costs in any year in excess of this annual amount up to an aggregate one-time amount of about $2.3 million. As part of our ongoing
assessment of our environmental contingencies, we determined these remediation costs to be probable and estimable and therefore maintained a $2.2 million accrual in non-current
liabilities at December 31, 2009.

As
for employee and independent contractor exposure claims, CONDEA Vista is responsible for exposures before November 12, 2009, and we are responsible for exposures after
November 12, 2009, on a pro rata basis determined by years of employment or service before and after November 12, 1999, by any claimant.

In
May 2008, our corporate management was informed that further efforts to remediate a spill of styrene reducer at our Royal Mouldings facility in Atkins, Virginia would be necessary.
The spill was the result of a supply line rupture from an external holding tank. As a result of this spill, the facility entered into a voluntary remediation agreement with the Virginia Department of
Environmental Quality ("VDEQ") in August 2003 and began implementing the terms of the voluntary agreement
shortly thereafter. In August 2007, the facility submitted a report on the progress of the remediation to the VDEQ. Subsequently, the VDEQ responded by indicating that continued remediation of the
area impacted by the spill is required. While the additional remediation costs may exceed $100,000, we do not expect such costs will have a material effect on our financial position, results of
operations or cash flows.

We
believe that we are in material compliance with all current environmental laws and regulations. We estimate that any expenses incurred in maintaining compliance with these
requirements will not materially affect earnings or cause us to exceed our level of anticipated capital expenditures. However, there can be no assurance that regulatory requirements will not change,
and it is not possible to accurately predict the aggregate cost of compliance resulting from any such changes.

Although
we are not aware of any significant environmental liabilities associated with Royal Group, should any arise, we would have no third party indemnities for environmental
liabilities, including liabilities resulting from Royal Group's operations prior to our acquisition of the company.

Employees

As of December 31, 2009 and 2008, we had 3,489 and 4,463, respectively, full-time employees. The decrease in number
of employees represents part of management's continuing cost reduction strategy. We employ approximately 444 employees under collective bargaining agreements that expire at various times from 2010
through 2014. We believe our relationships with our employees are good.

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Available Information

We make available free of charge on our website at www.ggc.com our annual report on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934
as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the Securities and Exchange Commission ("SEC").

Item 1A.    RISK FACTORS.

Our business, financial condition and results of operations may be adversely affected by the risks described below as well as the other
risks described in this Annual Report on Form 10-K.

The chemical industry is cyclical and volatile, experiencing alternating periods of tight supply and overcapacity, and the building products industry is also cyclical. This
cyclicality adversely impacts our capacity utilization and causes fluctuations in our results of operations.

Our historical operating results for our chemical businesses have tended to reflect the cyclical and volatile nature of the chemical
industry. Historically, periods of tight supply have resulted in increased prices and profit margins and have been followed by periods of substantial capacity addition, resulting in oversupply and
declining prices and profit margins. A number of our chemical products are highly dependent on markets that are particularly cyclical, such as the building and construction, paper and pulp, and
automotive markets. As a result of changes in demand for our products, our operating rates and earnings fluctuate significantly, not only from year to year but also from quarter to quarter, depending
on factors such as feedstock costs, transportation costs, and supply and demand for the product produced at the facility during that period. As a result, individual facilities may operate below or
above rated capacities in any period. We may idle a facility for an extended period of time because an oversupply of a certain product or a lack of demand for that product makes production
uneconomical. Facility shutdown and subsequent restart expenses may adversely affect quarterly results when these events occur. In addition, a temporary shutdown may become permanent, resulting in a
write-down or write-off of the related assets. Capacity expansions or the announcement of these expansions have generally led to a decline in the pricing of our chemical
products in the affected product line. We cannot assure that future growth in product demand will be sufficient to utilize any additional capacity.

In
addition, the building products industry is cyclical and seasonal and is significantly affected by changes in national and local economic and other conditions such as employment
levels, demographic trends, availability of financing, interest rates and consumer confidence, which factors could negatively affect the demand for and pricing of our building products. For example,
if interest rates increase, the ability of prospective buyers to finance purchases of home improvement products and invest in new real estate could be adversely affected, which, in turn, could
adversely affect our financial performance. In response to the recent significant decline in the market for our building and home improvement products, we have closed facilities and sold certain
businesses and assets. We are continuing to take further actions and implement cost control initiatives; however, it is uncertain as to when demand will return, or whether demand for our products will
decline further, and when these businesses will return to profitability.

Our substantial level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under our senior secured notes and our
other indebtedness or force us to take other actions to satisfy these obligations.

We have substantial indebtedness which requires significant interest payments, including interest payments of approximately
$63 million in 2010, based on interest rates in effect at December 31, 2009. As of December 31, 2009, we had total indebtedness of $739.0 million, including
$500.0 million outstanding under our 9.0 percent notes, $56.5 million drawn under the new asset-based revolving credit facility that

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provides
for a maximum of $300 million of revolving credit, subject to borrowing base availability and other terms and conditions (the "ABL Revolver"), $106.4 million of lease financing
obligations, $22.1 million of senior unsecured notes, $41.4 million of senior subordinated notes and $15.9 million of other debt. As of December 31, 2009, we had
$134.5 million of undrawn availability under our new ABL Revolver, after giving effect to $45.2 million of outstanding letters of credit. Our high level of indebtedness could have
important consequences. For example, it could:



If
our cash flows are insufficient to fund our debt service obligations, we may be forced to sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative
measures may not be successful and may not permit us to meet our scheduled debt service obligations. In addition, the terms of existing or future debt agreements, including our new ABL Revolver and
the indenture relating to our 9.0 percent notes may restrict us from pursuing any of these alternatives. However, if we satisfy the various restrictive conditions in our debt agreements that
address our ability to incur additional indebtedness, and we incur additional new debt, the risks associated with our high level of indebtedness could intensify.

Our new ABL Revolver and the indenture governing the 9.0 percent notes impose significant operating and financial restrictions on us and our subsidiaries, which may
prevent us from capitalizing on business opportunities and taking some actions.

The agreements that govern the terms of our debt, including our new ABL Revolver and the indenture that governs the 9.0 percent
notes, impose significant operating and financial restrictions on us. These restrictions limit our ability to, among other things:



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As
a result of these covenants and restrictions, we will be limited in how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take
advantage of new business opportunities. The terms of any future indebtedness we may incur could include more restrictive covenants. A breach of any of these covenants could result in a default in
respect of the related indebtedness. If a default occurs, the relevant lenders could elect to declare the
indebtedness, together with accrued interest and other fees, to be due and payable immediately and proceed against any collateral securing that indebtedness.

Furthermore,
there are limitations on our ability to incur the full $300.0 million of commitments under our new ABL Revolver. Borrowings under our new ABL Revolver are limited by
a specified borrowing base consisting of a percentage of eligible accounts receivable and inventory, less customary reserves. In addition, if our availability under the ABL Revolver falls below a
certain amount, we will be subject to a minimum fixed charge maintenance covenant, which will require us to maintain a fixed charge coverage ratio of at least 1.1 to 1.0. Our ability to meet the
required fixed charge coverage ratio can be affected by events beyond our control, and we cannot assure you we will meet this ratio. A breach of any of these covenants could result in a default under
our new ABL Revolver.

A further deterioration in business conditions, or material interruption in our operations, could cause us to default on our indebtedness, which could result in loss of our
sources of liquidity, or an acceleration of our principal indebtedness.

We principally operate in the North American chemicals and building products markets, which have suffered a substantial decline as a
result of the severe downturn in the U.S. housing industry and the general worldwide recession resulting in a reduced demand for our products. In response principally to our resulting weakened
financial condition, in July 2009, we completed equity-for-debt exchanges, which substantially reduced our debt and relieved us of certain covenant obligations and we obtained
amendments to the financial covenants in our senior secured credit agreement. In December 2009 we entered into a new ABL Revolver because, among other things, it does not require compliance with
maximum leverage ratios. While we believe that we should be able to meet the covenants under the new ABL Revolver, we may be unable to do so, particularly if business conditions further deteriorate to
a material degree, or we suffer significant interruption of our operations. Further, deteriorating business conditions could result in declines in our accounts receivable and inventories thereby
lowering the availability of borrowings under the ABL Revolver. In any of these events, we would need to seek an amendment to, or a waiver or refinancing of, our new ABL Revolver, although there can
be no assurance that we could do so, and even if we do, it is likely that such relief would significantly increase our costs through additional fees or increased rates and may only last for a
specified period, potentially necessitating additional amendments, waivers or refinancing in the future. In the event we do not maintain compliance with the covenants under the new ABL Revolver, our
lenders under such facility could cease making loans to us and accelerate and declare due all outstanding loans under the facility.

Natural gas, electricity, fuel and raw materials costs, and other external factors beyond our control, as well as downturns in the home repair and remodeling and new home
construction sectors of the economy, can cause wide fluctuations in our margins.

The cost of our natural gas, electricity, fuel and raw materials, and other costs, may not correlate with changes in the prices we
receive for our products, either in the direction of the price change or in absolute magnitude. Natural gas and raw materials costs represent a substantial part of our manufacturing costs, and energy
costs, in particular electricity and fuel, represent a component of the costs to manufacture building products. Most of the raw materials we use are commodities and the price of each can fluctuate
widely for a variety of reasons, including changes in availability because of major capacity additions or significant facility operating problems. Other external factors beyond our control can cause
volatility in raw materials prices, demand for our products, product prices, sales volumes and margins. These factors

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include
general economic conditions, the level of business activity in the industries that use our products, competitors' actions, international events and circumstances, and governmental regulation
in the United States and abroad. These factors can also magnify the impact of economic cycles on our business. While we attempt to pass through price increases in energy costs and raw materials, we
have been unsuccessful in doing so in some circumstances in the past and there can be no assurance that we can do so in the future.

Additionally,
our business is impacted by changes in the North American home repair and remodeling sectors, as well as the new construction sector, which may be significantly affected by
changes in economic and other conditions such as gross domestic product levels, employment levels, demographic trends, consumer confidence, increases in interest rates and availability of consumer
financing for home repair and remodeling projects as well as availability of financing for new home purchases. These factors can lower the demand for and pricing of our products, which could cause our
net sales and net income to decrease and require us to recognize additional impairments of our assets.

The industries in which we compete are highly competitive, with some of our competitors having greater financial and other resources than we have; competition may adversely
affect our results of operations.

The commodity chemical industry is highly competitive. Many of our competitors are larger and have greater financial and other
resources and less debt than us. Moreover, barriers to entry, other than capital availability, are low in most product segments of our commodity chemical business. Capacity additions or technological
advances by existing or future competitors also create greater competition, particularly in pricing. We cannot provide assurance that we will have access to the financing necessary to upgrade our
facilities in response to technological advances or other competitive developments.

In
addition, we compete with other national and international manufacturers of vinyl-based building and home improvement products. Some of these companies are larger and have greater
financial resources and less debt than us. Accordingly, these competitors may be better able to withstand changes in conditions within the industries in which we operate and may have significantly
greater operating and financial flexibility than us. Some of these competitors, who compete with our building product lines, may also be able to compete more aggressively in pricing and could take a
greater share of sales and cause us to lose business from our customers. Many of our competitors have operated in the building products industry for a long time. Additionally, our building products
face competition from alternative materials: wood, metal, fiber cement and masonry in siding, wood and aluminum in windows and iron and cement in pipe and fittings. An increase in competition from
other vinyl exterior building products manufacturers and alternative building materials could cause us to lose customers and lead to decreases in net sales. To the extent we lose customers in the
renovation and remodeling markets, we must market to the new home construction market, which historically has experienced more fluctuations in demand.

Extensive environmental, health and safety laws and regulations impact our operations and assets; compliance with these regulations could adversely affect our results of
operations.

Our operations on and ownership of real property are subject to extensive environmental, health and safety regulation, including laws
and regulations related to air emissions, water discharges, waste disposal and remediation of contaminated sites, at both the national and local levels in the U.S. We are also subject to similar
regulations in Canada. The nature of the chemical and building products industries exposes us to risks of liability under these laws and regulations due to the production, storage, use, transportation
and sale of materials that can cause contamination or personal injury, including, in the case of commodity chemicals, potential releases into the environment. Environmental laws may have a significant
effect on the costs of use, transportation and storage of raw materials and finished products, as well as the costs of the storage and disposal of wastes. We have and must continue to incur operating
and capital costs to comply with environmental laws and regulations. In addition, we may incur substantial costs, including fines, damages, criminal or civil sanctions and remediation costs, or
experience interruptions in our operations for violations arising under these laws.

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Also,
some environmental laws, such as the federal Superfund statute, may impose joint and several liability for the cost of investigations and remedial actions on any company that
generated the waste, arranged for disposal of the waste, transported the waste to the disposal site, selected the disposal site, or presently or formerly owned, leased or operated the disposal site or
a site otherwise contaminated by hazardous substances. Any or all of the responsible parties may be required to bear all of the costs of cleanup, regardless of fault, legality of the original disposal
or ownership of the disposal site. A number of environmental liabilities have been associated with the facilities at Lake Charles, Louisiana
that we acquired as part of the acquisition of the vinyls business of CONDEA Vista Company ("CONDEA Vista," which is now known as Sasol North America, Inc.) and which may be designated as
Superfund sites. Although CONDEA Vista retained financial responsibility for certain environmental liabilities that relate to the facilities that we acquired from it and that arose before the closing
of our acquisition of the vinyls business of CONDEA Vista in November 1999, there can be no assurance that CONDEA Vista will be able to satisfy its obligations in this regard, particularly in light of
the long period of time in which environmental liabilities may arise under the environmental laws. If CONDEA Vista fails to fulfill its obligation regarding its environmental liabilities, then we
could be held responsible. Furthermore, any environmental liabilities relating to Royal Group will not have the benefit of any third party indemnification, including liabilities resulting from Royal
Group's operations prior to our acquisition of the company.

Our
policy is to accrue costs relating to environmental matters when it is probable that these costs will be required and can be reasonably estimated. However, estimated costs for future
environmental compliance and remediation may be too low or we may not be able to quantify the potential costs. We expect to be continually subjected to increasingly stringent environmental and health
and safety laws and regulations. It is difficult to predict the future interpretation and development of these laws and regulations or their impact on our future earnings and operations. We anticipate
continued compliance will require increased capital expenditures and increased operating costs. Any increase in these costs could adversely affect our financial performance.

Concerns
related to climate change are continuing to grow leading to efforts to limit greenhouse gas ("GHG") emissions. In the fourth quarter of 2009, the EPA issued rules requiring
reporting of GHG emissions in the U.S. beginning in 2010. In addition, the United States Congress is considering legislation which may require companies such as Georgia Gulf to restrict or control GHG
emissions. Also, the United States has recently engaged in discussions under the United Nations Framework Convention on Climate Change at Copenhagen. Such discussions may result in international
treaties requiring additional controls on GHG emissions. Our non-U.S. manufacturing facilities are all in Canada which has adopted the Kyoto Protocol which seeks the reduction of GHG
emissions. The cost impact of such legislation, regulation or international negotiations would depend on the specific requirements enacted and cannot be determined at this time. For example, the
impact of proposed legislation relating to GHG emissions would depend on factors such as the specific GHG limits imposed and the timing of the implementation of these requirements. The EPA regulatory
requirement to report GHG emissions may result in the need to install or modify monitoring equipment at certain of our U.S. manufacturing facilities to monitor GHG emissions.

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The potential impact of these and related future international, legislative or regulatory actions on our operations cannot be predicted at this time but could be
significant. Such impacts would include the potential for significant compliance costs, including capital expenditures, and could result in operating restrictions. Any increase in the costs related to
these initiatives could adversely affect our financial performance.

The
heightened interest in climate change issues could have the potential to affect business operations. There is a potential for indirect consequences of climate change regulation on
business trends. In addition, some have alleged an association with changes in weather patterns on climate change. The Company may, in the future, be required to expend money to defend claims based on
the alleged association of climate change with changes in weather patterns.

Hazards associated with manufacturing may occur, which could adversely affect our results of operations.

Hazards associated with chemical manufacturing as well as building products manufacturing, and the related use, storage and
transportation of raw materials, products and wastes may occur in our operations. These hazards could lead to an interruption or suspension of operations and have an adverse effect on the productivity
and profitability of a particular manufacturing facility or on our operations as a whole. These hazards include:



These
hazards may cause personal injury and loss of life, severe damage to or destruction of property and equipment, and environmental damage, any of which could lead to claims or liability under the
environmental laws. Additionally, individuals could seek damages for alleged personal injury or property damage due to exposure to chemicals at our facilities or to chemicals otherwise owned,
controlled or manufactured by us. We are also subject to present and future claims with respect to workplace exposure, workers' compensation and other matters. Although we maintain property, business
interruption and casualty insurance of the types and in the amounts that we believe are customary for the industry, we are not fully insured against all potential hazards incident to our business.

We face potential product liability claims relating to the production and manufacture of building products.

We are exposed to product liability risk and the risk of negative publicity if our building products do not meet customer expectations.
Although we maintain insurance for products liability claims, the amount and scope of such insurance may not be adequate to cover a products liability claim that is successfully asserted against us.
In addition, product liability insurance could become more expensive and difficult to maintain and, in the future, may not be available to us on commercially reasonable terms or at all. There can be
no assurance that we will be able to obtain or maintain adequate insurance coverage against possible products liability claims at commercially reasonable levels, or at all.

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We rely heavily on third party transportation, which subjects us to risks that we cannot control; these risks may adversely affect our operations.

We rely heavily on railroads, barges and other shipping companies to transport raw materials to our manufacturing facilities and to
ship finished product to customers. These transport operations are subject to various hazards, including extreme weather conditions, work stoppages and operating hazards, as well as interstate
transportation regulations. If we are delayed or unable to ship finished product or unable to obtain raw materials as a result of these transportation companies' failure to operate properly, or if
there were significant changes in the cost of these services, we may not be able to arrange efficient alternatives and timely means to obtain raw materials or ship our goods, which could result in an
adverse effect on our revenues and costs of operations.

We rely on a limited number of outside suppliers for specified feedstocks and services, and due to our overall financial condition, including our debt level, our key
suppliers may require more onerous terms for trade credit.

We obtain a significant portion of our raw materials from a few key suppliers. If any of these suppliers is unable to meet its
obligations under present supply agreements, we may be forced to pay higher prices to obtain the necessary raw materials. Any interruption of supply or any price increase of raw materials could have
an adverse effect on our business and results of operations. In connection with our acquisition of the vinyls business of CONDEA Vista in 1999, we entered into agreements with CONDEA Vista to provide
specified feedstocks for the Lake Charles facility. This facility is dependent upon CONDEA Vista's infrastructure for services such as wastewater and ground water treatment, site remediation, and fire
water supply. Any failure of CONDEA Vista to perform its obligations under those agreements could adversely affect the operation of the affected facilities and our results of operations. The
agreements relating to these feedstocks and services had initial terms of one to ten years. Most of these agreements have been automatically renewed, but may be terminated by CONDEA Vista after
specified notice periods. If we were required to obtain an alternate source for these feedstocks or services, we may not be able to obtain pricing on as favorable terms. Additionally, we may be forced
to pay additional transportation costs or to invest in capital projects for pipelines or alternate facilities to accommodate railcar or other delivery or to replace other services.

While
we believe that our relationships with our key suppliers are strong, any vendor may choose, subject to existing contracts, to modify our relationship due to general economic
concerns or concerns relating to the vendor or us, at any time. Any significant change in the terms that we have with our key suppliers could adversely affect our financial condition and liquidity, as
could significant additional requirements from our suppliers that we provide them additional security in the form of prepayments or with letters of credit.

Operation on multiple ERP information systems may negatively impact operations

We are highly dependent on our information systems infrastructure in order to process orders, track inventory, ship products in a
timely manner, prepare invoices to our customers, maintain regulatory compliance and otherwise carry on our business in the ordinary course. We currently operate on multiple Enterprise Resource
Planning, or ERP, information systems, which complicate our processing, reporting and analysis of business transactions and other information. Since we must process and reconcile our information from
multiple systems, the chance of errors is increased and we may incur additional costs. Inconsistencies in the information from multiple ERP systems could adversely impact our ability to manage our
business efficiently and may result in heightened risk to our ability to maintain our books and records and comply with regulatory requirements.

Further,
from time to time we may transition a portion of our operations from one of our ERP systems to another.

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The
transition to a different ERP system involves numerous risks, including:



We may pursue dispositions, asset acquisitions, and joint ventures, and other transactions that may impact our results of operations, including difficulties in integrating
any acquired business operations, which may result in our failure to realize expected cost savings and operational efficiencies.

We may enter into agreements to dispose of certain assets. However, we cannot assure you that we will be able to dispose of these
assets at any anticipated prices, or at all, or that any such sale will occur during any anticipated time frame. In addition, we may engage in additional business combinations, purchases or sales of
assets, or contractual arrangements or joint ventures. To the extent permitted under our debt agreements, some of these transactions may be financed by additional borrowings by us. The integration of
any business we acquire may be disruptive to our business and may result in a significant diversion of management attention and operational resources. Additionally, we may suffer a loss of key
employees, customers or suppliers, loss of revenues, increases in costs or other difficulties. If the expected efficiencies and synergies of the transactions are not fully realized, our results of
operations could be adversely affected, at least in the short term, because of the costs associated with such transactions. Other transactions may advance future cash flows from some of our
businesses, thereby yielding increased short-term liquidity, but consequently resulting in lower cash flows from these operations over the longer term.

Our participation in joint ventures exposes us to risks of shared control.

We own a 50 percent interest in a manufacturing joint venture, the remainder of which is controlled by PPG
Industries, Inc., which also supplies chlorine to the facility operated by the joint venture. We also have other joint ventures, such as Royal Group's strategic joint venture arrangements with
several customers. We may enter into additional joint ventures in the future. The nature of a joint venture requires us to share control with unaffiliated third parties. If our joint venture partners
do not fulfill their obligations, the affected joint venture may not be able to operate according to its business plan. In that case, our operations may be adversely affected or we may be required to
increase our level of commitment to the joint venture. Also, differences in views among joint venture participants may result in delayed decisions or failure to agree on major issues. Any differences
in our views or problems with respect to the operations of our joint ventures could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Fluctuations in foreign currency exchange and interest rates could affect our consolidated financial results.

We earn revenues, pay expenses, own assets and incur liabilities in countries using currencies other than the U.S. dollar, principally
the Canadian dollar. Because our consolidated financial statements are presented in U.S. dollars, we must translate revenues and expenses into U.S. dollars at the average exchange rate during each
reporting period, as well as assets and liabilities into U.S. dollars at exchange rates in effect at the end of each reporting period. Therefore, increases or decreases in the value of the U.S. dollar
against other major currencies will affect our net revenues, operating income and the value of balance sheet items denominated in foreign currencies. Because of the geographic diversity of our
operations, weaknesses in various currencies might occur in one or many of such currencies over time. From time to time, we may use derivative financial instruments to further reduce our net exposure
to currency exchange rate fluctuations. However, we cannot assure you that fluctuations in foreign currency

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exchange
rates, particularly the strengthening of the U.S. dollar against major currencies, would not materially affect our financial results.

In
addition, we are exposed to volatility in interest rates. When appropriate, we may use derivative financial instruments to reduce our exposure to interest rate risks. We cannot assure
you, however, that our financial risk management program will be successful in reducing the risks inherent in exposures to interest rate fluctuations.

Forward-Looking Statements

This Form 10-K and other communications to stockholders may contain "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, our outlook for future periods, supply and demand, pricing trends and market forces within the
chemical industry, cost reduction strategies and their results, planned capital expenditures, long-term objectives of management and other statements of expectations concerning matters
that are not historical facts.

Predictions
of future results contain a measure of uncertainty. Actual results could differ materially due to various factors. Factors that could change forward-looking statements are,
among others, those contained in the "Risk Factors" section above as well as continued compliance with covenants in our new ABL Revolver and our indenture for our 9.0 percent notes, our ability
to negotiate covenant relief and waivers from our lenders under our lending arrangements and availability of funds thereunder,
changes in the general economy, changes in demand for our products or increases in overall industry capacity that could affect production volumes and/or pricing, changes and/or cyclicality in the
industries to which our products are sold, availability and pricing of raw materials, technological changes affecting production, difficulty in plant operations and product transportation,
governmental and environmental regulations and other unforeseen circumstances. A number of these factors are discussed in this Form 10-K and in our other periodic filings with the
Securities and Exchange Commission.

20

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Table of Contents

Item 1B.    UNRESOLVED STAFF COMMENTS.

None.

Item 2.    PROPERTIES.

We believe current capacity will adequately meet anticipated demand requirements.

Chemical Production

Our chemical manufacturing sites are located in the U.S. and Canada. During 2009, our chlorovinyls and aromatics production facilities
operated at approximately 65 percent of capacity. The following table sets forth the location of each chemical manufacturing facility we own, products manufactured at each facility and the
approximate production capacity of each product, assuming normal plant operations, as of December 31, 2009.

Location

Products

Annual CapacityChlorovinyls

Plaquemine, LA

Chlorine

450,000 tonsPlaquemine, LA

Caustic Soda

500,000 tonsPlaquemine, LA

VCM

3.1 billion poundsLake Charles, LA (two locations) (1)

VCMPlaquemine, LA

Vinyl Resins

2.7 billion poundsAberdeen, MS

Vinyl ResinsAberdeen, MS

Vinyl Compounds

1.3 billion poundsGallman, MS

Vinyl CompoundsMadison, MS

Vinyl CompoundsPrairie, MS

Vinyl CompoundsVaughan, ON

Vinyl CompoundsBradford, ON

Vinyl CompoundsBradford, ON

Compound Additives

162 million poundsAberdeen, MS

Plasticizers

22 million poundsAromaticsPasadena, TX

Cumene

2.0 billion poundsPlaquemine, LA

Phenol

660 million poundsPasadena, TX (2)

PhenolPlaquemine, LA

Acetone

408 million poundsPasadena, TX (2)

Acetone


---

Our
chemical manufacturing facilities are located near major water and/or rail transportation terminals, facilitating efficient delivery of raw materials and prompt shipment of finished
products. In addition, our chemical operations have a fleet of about 3,625 railcars that are leased pursuant to operating leases with varying terms through the year 2018. The total lease expense for
these railcars and other transportation equipment was approximately $16.3 million for 2009, $16.4 million for 2008, and $20.1 million for 2007.

21

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Table of Contents

Home Improvement and Buildings Products

The following table sets forth the location of each home improvement and building products manufacturing facility we own or lease and
the principal products manufactured at each facility as of December 31, 2009.

Principal Products

LocationWindow and Door Profiles and Mouldings Products

Window and Door Profiles Products and Other Custom Extrusion

Vaughan, ON (3 plants) (1,2)
Laval, QC
Lachenaie, QC
St. Laurent, QC
St. Hubert, QC
McCarran, NV (3)
Delmont, PA
Everett, WAMouldings Products

Marion, VA (2 plants)
Bristol, TNOutdoor Building Products

Vinyl Siding

Vaughan, ON
Newbern, TNAluminum Siding Accessories

Concord, ON (1)
Ste. Lambert-de-Lauzon, PC (1)Pipe and Pipe Fittings

Shelby Township, MI
Surrey, BC (1)
Vaughan, ON (3 plants) (4)
Abbotsford, BCDeck, Fence and Rail

Newbern, TN
Milford, IN


(1)Leased.(2)Closed
in December 2009(3)Closed
in November 2009(4)One
of the three Vaughan facilities is leased


Certain
of the above facilities are also used as distribution centers. In addition, we operate a number of distribution locations, most of which are leased, to serve our home improvement
building products customers, primarily in Canada, which represented a total of about 410,000 square feet at December 31, 2009.

Other

We lease office space for our principal executive offices in Atlanta, Georgia, and for information services in Baton Rouge, Louisiana.
Additionally, space is leased for sales and marketing offices in Houston, Texas and for numerous storage terminals throughout the United States.

Substantially
all of our owned facilities are pledged as security for our senior secured 9.0 percent notes due 2017 and our ABL Revolver maturing in 2013.

22

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Table of Contents

Item 3.    LEGAL PROCEEDINGS.

In October 2004, the USEPA notified us that we have been identified as a potentially responsible party for a Superfund site in
Galveston, Texas. The site is a former industrial waste recycling, treatment and disposal facility. Over one thousand PRPs, have been identified by the USEPA. We contributed a relatively small
proportion of the total amount of waste shipped to the Superfund site. In the fourth quarter of 2007, we accepted a settlement offer from USEPA. Under the terms of this settlement, we were required to
pay $63,771 for cleanup costs incurred, or to be incurred, by USEPA, in exchange for a covenant not to sue and protection from contribution actions brought by other parties. The settlement agreement
was finally approved by USEPA and payment of the $63,771 settlement amount was made in June 2009.

In
August 2004 and January and February 2005, the USEPA conducted environmental investigations of our manufacturing facilities in Aberdeen, Mississippi and Plaquemine, Louisiana,
respectively. The USEPA informed us that it identified several "areas of concern," and indicated that such areas of concern may, in its view, constitute violations of applicable requirements, thus
warranting monetary penalties and possible injunctive relief. In lieu of pursuing such relief through its traditional enforcement process, the USEPA proposed that the parties enter into negotiations
in an effort to reach a global settlement of the areas of concern and that such a global settlement cover our manufacturing facilities at Lake Charles, Louisiana and Oklahoma City, Oklahoma as well.
During the second quarter of 2006, we were informed by the USEPA that its regional office responsible for Oklahoma and Louisiana desired to pursue resolution of these matters on a separate track from
the regional office responsible for Mississippi. During the second quarter of 2007, we reached agreement with the USEPA responsible for Mississippi on the terms and conditions of a consent decree that
would settle USEPA's pending enforcement action against our Aberdeen, Mississippi facility. All parties have executed a consent decree setting forth the terms and conditions of the settlement. The
consent decree has been approved by the federal district court in Atlanta, Georgia. Under the consent decree, we were required to, among other things, pay a $610,000 fine, which was paid in March
2008, and undertake certain other environmental improvement projects. While the cost of such additional projects will likely exceed $1.0 million, we do not believe that these projects will have
a material effect on our financial position, results of operations, or cash flows.

We
have not yet achieved a settlement with the USEPA regional office responsible for Oklahoma and Louisiana. However, on November 17, 2009, we received a unilateral administrative
order ("UAO") from this USEPA regional office. The UAO, issued pursuant to Section 3013(a) of the Resource Conservation and Recovery Act ("RCRA"), requires us to take certain monitoring and
assessment activities in and around several of our wastewater and storm water conveyance systems. In addition, on December 17, 2009, we received a Notice of Potential Penalty ("NOPP") from the
Louisiana Department of Environmental Quality. The NOPP contains allegations of violation that may potentially be similar in nature to allegations of violation by USEPA in respect to the above. The
NOPP does not identify a specific penalty amount. It is likely that any settlement, if achieved, will result in the imposition of monetary penalties, capital expenditures for installation of
environmental controls, and/or other relief. We do not know the total cost of monetary penalties, environmental projects, or other relief that would be imposed in any settlement or order. While we
expect that such costs will exceed $100,000, we do not expect that such costs will have a material effect on our financial position, results of operations, or cash flows.

In
addition, we are subject to other claims and legal actions that may arise in the ordinary course of business. We believe that the ultimate liability, if any, with respect to these
other claims and legal actions will not have a material effect on our financial position or on our results of operations.

Item 4.    RESERVED

23

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Table of Contents

PART II

Item 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Georgia Gulf Corporation's common stock is listed on the New York Stock Exchange under the symbol "GGC." At March 5, 2010, there
were 404 stockholders of record. The following table sets forth the New York Stock Exchange high, low and closing stock prices and dividend payments for Georgia Gulf's common stock for the periods
indicated.

High

Low

Close

Dividends2009First quarter

$
50.00

$
5.50

$
17.75

$
Second quarter


41.50


10.50


16.00


Third quarter


47.19


5.77


30.00


Fourth quarter


30.85


13.00


17.38


2008First quarter

$
225.00

$
78.00

$
173.25

$
2.00Second quarter


204.00


71.25


72.50


2.00Third quarter


121.00


49.00


62.50


2.00Fourth quarter


83.00


25.25


26.75





All
amounts reflect the 1-for-25 reverse stock split of our common stock effected on July 28, 2009. Since the fourth quarter of 2008, we have suspended the
quarterly cash dividends on our common stock. Dividends may be paid when, and if our board of directors deems appropriate, subject to covenants in our ABL Revolver and the indenture for our
9.0 percent senior secured notes which limit our ability to pay cash dividends. Under the ABL Revolver, cash dividend payments may be made if both our ability to borrow under the ABL Revolver
then exceeds $100 million and our fixed charge coverage ratio for the prior month exceeds 1.1 to 1.0, each on a pro forma basis after giving effect to the cash dividend payment (see
Note 10 of the Notes to the Consolidated Financial Statements included in Item 8).

24

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Table of Contents

PERFORMANCE GRAPH

This graph below is a comparison of the five-year cumulative total return for us, Standard & Poor's SmallCap 600
Index and Standard & Poor's Chemical SmallCap Index. Stock performances, including our stock performance, were calculated using the assumption that all dividends, including distributions of
cash, were reinvested in common stock. In March 2009, Standard & Poors announced that Georgia Gulf Corporation was being replaced on the Standard & Poor's SmallCap 600 index since its
market capitalization had fallen below the minimum requirement.

Pursuant
to SEC rules, the foregoing "Performance Graph" section of this Annual Report on Form 10-K is not deemed "filed" with the SEC and shall not be deemed
incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

Total Shareholder Returns (Indexed)  GGC vs S&P Smallcap 600 Index and S&P 600 Chemicals Index

GRAPHIC

25

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Table of Contents

Item 6.    SELECTED FINANCIAL DATA.



Five-Year Selected Financial Data

Year Ended December 31,(In thousands, except per share data,
percentages and employees)

2009*

2008*

2007*

2006*

2005Results of Operations:Net sales

$
1,990,091

$
2,916,477

$
3,157,270

$
2,427,843

$
2,273,719Cost of sales


1,778,998


2,717,409


2,851,426


2,152,571


2,049,510Selling, general and administrative expenses


182,937


168,572


225,607


119,151


61,444Long-lived asset impairment charges


21,804


175,958


158,960





Restructuring costs


6,858


21,973


3,659





Losses (gains) on sale of assets


62


(27,282
)

1,304





Operating (loss) income


(568
)

(140,153
)

(83,686
)

156,121


162,765Interest expense


(131,102
)

(134,513
)

(134,568
)

(51,648
)

(20,527
)Loss on debt modification and extinguishment, net


(42,797
)










Gain on debt exchange


400,835











Foreign exchange (loss) gain


(1,400
)

(4,264
)

6,286


(21,543
)

Interest income


583


1,308


805


369


120Income (loss) from continuing operations before taxes


225,551


(277,622
)

(211,163
)

83,299


142,358Provision (benefit) for income taxes (1)


79,762


(19,979
)

44,000


31,497


46,855Income (loss) from continuing operations


145,789


(257,643
)

(255,163
)

51,802


95,503Loss from discontinued operations, net of tax








(10,864
)

(3,263
)

Net income (loss)

$
145,789

$
(257,643
)
$
(266,027
)
$
48,539

$
95,503Basic earnings (loss) per share:(Loss) income from continuing operations

$
9.20

$
(193.00
)
$
(193.80
)
$
29.73

$
62.34Loss from discontinued operations








(7.91
)

(2.39
)

Net income (loss)

$
9.20

$
(193.00
)
$
(201.71
)
$
27.34

$
62.34Diluted earnings (loss) per share:Income (loss) from continuing operations

$
9.19

$
(193.00
)
$
(193.80
)
$
29.67

$
61.85Loss from discontinued operations








(7.91
)

(2.37
)

Net income (loss)

$
9.19

$
(193.00
)
$
(201.71
)
$
27.30

$
61.85Dividends per common share





6.00


8.00


8.00


8.00Financial Highlights:Net working capital

$
341,946

$
225,187

$
200,745

$
202,955

$
62,330Property, plant and equipment, net


687,570


760,760


967,188


1,023,004


401,412Total assets


1,605,865


1,610,401


2,201,664


2,458,227


1,000,953Total debt


739,005


1,394,150


1,382,008


1,498,134


278,639Asset securitization (2)





111,000


147,000


128,000


141,000Net cash provided by operating activities


723


41,392


128,557


250,577


71,145Depreciation and amortization


117,690


143,718


150,210


85,019


63,101Capital expenditures


30,085


62,545


83,670


90,770


32,044Maintenance expenditures


104,472


109,130


111,187


80,464


79,584Other Selected Data:Adjusted EBITDA

$
161,515

$
163,052

$
230,532

$
219,597

$
224,469Weighted average shares outstandingbasic


14,903


1,378


1,374


1,364


1,355Weighted average shares outstandingdiluted


14,908


1,378


1,374


1,375


1,368Common shares outstanding


33,718


1,379


1,376


1,376


1,370Return on sales


7.3
%

(8.8
)%

(8.4
)%

2.0
%

4.2
%Employees


3,489


4,463


5,249


6,654


1,123


*Includes
Royal Group financial data as of December 31, 2009, 2008 and 2007 and from October 3, 2006, the date of the acquisition. The years
ended December 31, 2007 and 2006 include additional cost of sales of $2.0 million


26

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Table of Contents

and
$18.0 million, respectively, as a result of valuing Royal Group's inventory at fair value as of the date of acquisition in accordance with accounting standards related to business
combinations. (1)Provision
for income taxes for 2007 includes the effect of a $52.1 million valuation allowance on deferred tax assets in Canada.(2)As
of December 31, 2008, $111.0 million of accounts receivable had been sold through the asset securitization facility. As of
December 31, 2009, the asset securitization facility was replaced with the ABL Revolver.(3)We
have included above the non-GAAP measure Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation, and
amortization, restructuring and goodwill, intangibles, and other long-lived asset impairment and (gains) losses on significant asset disposals, discontinued operations and other. We use
Adjusted EBITDA to measure the company's profitability excluding certain items. Adjusted EBITDA is commonly used by investors as a main component of valuation analysis of cyclical companies. Adjusted
EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to operating income as a measure of performance or to cash provided by operating
activities as a measure of liquidity. In addition, our calculation of Adjusted EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited. Below
we have provided a reconciliation of the non-GAAP financial measure to the most directly comparable financial measure calculated in accordance with GAAP.


Year Ended December 31,(In thousands)

2009

2008

2007

2006

2005Operating (Loss) Income

$
(568
)
$
(140,153
)
$
(83,686
)
$
156,121

$
162,765Depreciation and amortization expense


117,690


143,718


150,210


85,019


63,101Long lived asset impairment charges


21,804


175,958


158,960





Restructuring costs


6,858


21,973


3,659





Losses (gains) on sale of assets


62


(27,282
)

1,304





Foreign exchange loss on forward contracts











(20,800
)

Other (a)


15,669


(11,162
)

85


(743
)

(1,397
)Adjusted EBITDA

$
161,515

$
163,052

$
230,532

$
219,597

$
224,469


---



27

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Table of Contents

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

We are a leading North American manufacturer and an international marketer of chlorovinyl and aromatics chemicals and also manufacture
and market vinyl-based building and home improvement products. Our chlorovinyl and aromatic chemicals products are sold for further processing into a wide variety of end-use applications,
including plastic pipe and pipe fittings, siding and window frames, bonding agents for wood products, high-quality plastics, acrylic sheeting and coatings for wire and cable. Our
vinyl-based building and home improvement products, marketed under the Royal Group brands, primarily include window and door profiles, mouldings, siding, pipe and pipe fittings and deck, fence and
rail products.

Vinyl-Based Building and Home Improvement Products Business Overview

Our vinyl-based building and home improvement products are used primarily in new residential and industrial construction, municipality
infrastructure and residential remodeling. Our sales revenue by geographic area for our building and home improvement products for 2009 was about 44 percent in the U.S. and the remainder in
Canada. All of our building and home improvement products are ultimately sold to external customers.

Demand
for our building and home improvement products declined during 2009 as compared to 2008 primarily as a result of U.S. housing starts decreasing by about 37 percent
according to a report furnished jointly by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development in January 2010. Housing starts in Canada were down 30 percent from
2008 to 2009 with an average annualized rate in 2009 of about 0.1 million units. The weakness in the U.S. and Canadian residential housing industry was the primary cause of the industry sales
decrease for siding of 12 percent, mouldings of 10 percent and rigid pipe of 6 percent, according to American Chemistry Council Plastics Industry Producers Statistics Group
("PIPS").

Chemical Business Overview

Our chemical business consists of two integrated chemical product lines, chlorovinyls and aromatics. Our primary chlorovinyls products
include chlorine, caustic soda, VCM, vinyl resins and vinyl compounds. For the year ended December 31, 2009, we consumed all of our chlorine production in making VCM, we consumed
5 percent of our caustic soda production, we consumed 99 percent of our VCM production in manufacturing vinyl resins, we consumed 31 percent of our vinyl resins in the manufacture
of vinyl compounds and we consumed about 23 percent of our vinyl compounds in the manufacture of fabricated products. The remainder of our caustic soda, VCM, vinyl resins and vinyl compounds
were sold to third parties. Our primary aromatic products include cumene, phenol and acetone. For the year ended December 31, 2009, approximately 69 percent of our cumene was sold to
third parties with the remainder used internally to manufacture phenol and acetone. All of our phenol and acetone was sold to third parties. Our products are used primarily by customers as raw
materials to manufacture a diverse range of products, which serve numerous consumer markets for durable and non-durable goods and construction.

Our
chemical business and the chemical industry in general, are cyclical in nature and are affected by domestic and, to a lesser extent, worldwide economic conditions. Cyclical price
swings, driven by changes in supply and demand, can lead to significant changes in our overall profitability. The demand for our chemicals tends to reflect fluctuations in downstream markets that are
affected by consumer spending for durable and non-durable goods as well as construction.

Global
capacity also materially affects the prices of chemical products. Generally, in periods of high operating rates, prices rise, and margins increase and as a result new capacity is
announced. Since world-scale size plants are generally the most cost-competitive, new increases in capacity tend to be on a large scale and are often undertaken by existing industry
participants. Usually, as new capacity is added, prices

28

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Table of Contents

decline
until increases in demand improve operating rates and the new capacity is absorbed, or in some instances, until less efficient producers withdraw capacity from the market. As the additional
supply is absorbed, operating rates rise, prices increase and the cycle repeats.

Purchased
raw materials and natural gas costs account for the majority of our cost of sales and can also have a material effect on our profitability and margins. Some of our primary raw
materials, including ethylene, benzene and propylene, are crude oil and natural gas derivatives and therefore follow the oil and gas industry price trends. Chemical Market Associates, Incorporated
("CMAI") reported annual U.S. industry prices for crude oil and natural gas decreased 38 percent and 56 percent, respectively, from 2008 to 2009. From 2007 to 2008, CMAI reported U.S.
industry prices for crude oil and natural gas increased 38 percent and 32 percent, respectively.

Significant
volatility in raw material costs tends to put pressure on product margins as sales price increases can lag behind raw material cost increases. Conversely, product margins may
suffer from a sharp decline in raw material costs due to the time lag between the purchase of raw materials and the sale of the finished goods manufactured using those raw materials. As an example,
CMAI reported U.S. industry prices for crude oil and natural gas decreased 69 percent and 48 percent, respectively from July 2008 to December 2008.

In
2009 our chlorovinyls segment experienced decreased domestic demand compared to 2008, primarily as a result of a continued weakness in the U.S. residential housing market. When
comparing 2008 to 2009, North American industry vinyl resins sales volume decreased about 1 percent as a result of a domestic sales volume decline of 7 percent partially offset by a
33 percent increase in export sales volume. The domestic vinyl resins volume decrease resulted from declines in most end-use markets, according to PIPS. CMAI reported an industry
price decrease for our feedstocks ethylene of 43 percent and natural gas of 56 percent from 2008 to 2009, while chlorine increased about 7 percent for the same time period. Vinyl
resin industry sales prices decreased 10 percent from 2008 to 2009 due to decreased feedstock costs. Caustic soda industry sales prices decreased 43 percent from 2008 to 2009 due to a
decrease in demand caused by the significant economic downturn effectively removing large segments of the demand for caustic through shutdowns and rate reductions by end users and an increase in
global supply from new chlor-alkali capacity additions in Asia. Vinyl resin industry operating rates for 2009 and 2008 were approximately 77 percent, according to Chemical Data Inc.
("CDI").

Our
aromatics segment demand decreased in 2009 compared to 2008. According to CDI, North American operating rates for phenol and acetone decreased from about 75 percent in 2008 to
about 60 percent in 2009. North American cumene industry operating rates decreased from about 72 percent in 2008 to about 62 percent in 2009. CMAI reported industry prices trended
upwards during 2009 for our feedstocks benzene by 179 percent and propylene of 289 percent. As a result of the increase in feedstocks costs, industry sales prices also increased during
2009 by 62 percent for phenol, 133 percent for acetone and 177 percent for cumene, according to CMAI. Consequently, most producers were able to more than recover previously
purchased raw materials costs in an increasing sales price environment due to the time lag between the purchase of raw materials and the sale of the related finished goods. Conversely during the
fourth quarter of 2008, the aromatics industry experienced a sharp decline in feedstock and product prices. CDI reported U.S. industry prices for benzene and propylene decreased 76 percent and
78 percent, respectively, from September 2008 to December 2008, as a result of which most producers were unable to fully recover previously purchased raw materials costs.

29

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Table of Contents

Results of Operations

The following table sets forth our consolidated statement of operations data for each of the three years ended December 31,
2009, 2008 and 2007, and the percentage of net sales of each line item for the years presented.

Year Ended December 31,(Dollars in millions)

2009

2008

2007Net sales

$
1,990.1


100.0
%
$
2,916.5


100.0
%
$
3,157.3


100.0
%Cost of sales


1,779.0


89.4


2,717.4


93.2


2,851.5


90.3Gross margin


211.1


10.6


199.1


6.8


305.8


9.7Selling, general and administrative expenses


182.9


9.2


168.6


5.8


225.6


7.2Long-lived asset impairment charges


21.8


1.1


175.9


6.0


159.0


5.0Restructuring costs


6.9


0.3


22.0


0.7


3.6


0.1(Gains) losses on sale of assets


0.1


0.0


(27.3
)

(0.9
)

1.3


0.0Operating (loss) income


(0.6
)

(0.0
)

(140.1
)

(4.8
)

(83.7
)

(2.6
)Interest expense, net


130.4


6.6


133.2


4.6


133.8


4.2Loss on debt modification and extinguishment, net


42.8


2.2











Gain on debt exchange


(400.8
)

(20.1
)










Foreign exchange loss (gain)


1.4


0.1


4.3


0.1


(6.3
)

(0.2
)Provision for (benefit from) income taxes


79.8


4.0


(20.0
)

(0.7
)

44.0


1.4Income (loss) from continuing operations


145.8


7.3


(257.6
)

(8.8
)

(255.2
)

(8.1
)Loss from discontinued operations, net of tax














(10.8
)

(0.3
)Net income (loss)

$
145.8


7.3
%
$
(257.6
)

(8.8
)%
$
(266.0
)

(8.4
)%


We
have identified four reportable segments through which we conduct our operating activities: (i) chlorovinyls; (ii) window and door profiles and mouldings products;
(iii) outdoor building products, and (iv) aromatics. These four segments reflect the organization used by our management for internal reporting. The chlorovinyls segment is a highly
integrated chain of products, which includes chlorine, caustic soda, VCM, vinyl resins, vinyl compounds, and compound additives. Our vinyl-based building and home improvement products are marketed
under the Royal Group brand names, and are managed within two reportable segments, (i) window and door profiles and mouldings products and (ii) outdoor building products, which include
siding, pipe and pipe fittings and deck, fence and rail products. The aromatics segment is also integrated and includes the products cumene and the co-products phenol and acetone.

30

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Table of Contents

The
following table sets forth certain financial data by reportable segment for each of the three years ended December 31, 2009, 2008 and 2007, and the percentage of total net
sales or gross margin by segment for each line item.

Year Ended December 31,(Dollars in millions)

2009

2008

2007Net salesChlorovinyls

$
940.6


47.3
%
$
1,380.0


47.3
%
$
1,409.1


44.6
%Window and door profiles and mouldings products


323.7


16.3


408.9


14.0


508.0


16.1Outdoor building products


404.5


20.3


508.8


17.5


573.3


18.2Aromatics


321.3


16.1


618.8


21.2


666.9


21.1Total net sales

$
1,990.1


100.0
%
$
2,916.5


100.0
%
$
3,157.3


100.0
%Gross marginChlorovinyls

$
108.2


11.5
%
$
165.5


12.0
%
$
150.3


10.7
%Window and door profiles and mouldings products


28.0


8.7


23.7


5.8


68.7


13.5Outdoor building products


53.6


13.3


41.0


8.1


72.0


12.6Aromatics


21.3


6.6


(31.1
)

(5.0
)

14.8


2.2Total gross margin

$
211.1


10.6
%
$
199.1


6.8
%
$
305.8


9.7
%


Year Ended December 31, 2009, Compared With Year Ended December 31, 2008

Net Sales.For the year ended December 31, 2009, net sales totaled $1,990.1 million, a decrease of 32 percent compared
to
$2,916.5 million for the prior year. This decrease was primarily a result of decreases in our overall sales prices and volumes of 27 percent and 6 percent, respectively. Our
overall average sales price decrease is largely a result of decreases in the prices of vinyl resins and all of our aromatics products and an unfavorable currency impact. The sales price decreases
reflect lower costs for our raw materials and natural gas. Our overall sales volume decrease is mainly attributable to a decrease in demand in North America for vinyl-based building materials, which,
in turn, is attributable
to the seasonally adjusted annual U.S housing starts rate decreasing 37 percent from 2008 to 2009. Our North American sales volume decrease was partially offset by an increase in export sales.

Chlorovinyls
segment net sales totaled $940.6 million for the year ended December 31, 2009, a decrease of 32 percent compared with net sales of
$1,380.0 million for the prior year. Our overall average sales price decreased 32 percent primarily as a result of decreases in the prices of vinyl resins of 34 percent and
caustic soda of 50 percent. The vinyl resins sales price decrease reflects lower prices for the feedstock ethylene and natural gas. The caustic soda sales price decrease reflects a decrease in
demand caused by the significant economic downturn effectively removing large segments of the demand for caustic through shutdowns and rate reductions by end users and an increase in global supply
from new chlor-alkali capacity additions in Asia. Our North America chlorovinyls sales volume decreased primarily as a result of the decrease in our sales volume for vinyl resins of 15 percent,
vinyl compounds of 10 percent and caustic soda of 21 percent. Our North American sales volume decrease was offset by an increase in exports for vinyl resins of 80 percent and
caustic soda of 59 percent. North American vinyl resin industry sales volume declined 1 percent as a result of the domestic sales volume decrease of 7 percent, primarily due to
the decline in U.S. housing and construction offset by an increase in export sales volume of 33 percent.

Window
and door profiles and mouldings products segment net sales totaled $323.7 million for the year ended December 31, 2009, a decrease of 21 percent
(16 percent decrease on a constant currency basis) compared to $408.9 million for the prior year. Our overall sales volumes decreased 19 percent. North American industry wide
vinyl resin extruded window and doors and mouldings sales volumes

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declined
4 percent in the same period, reflecting the decline in U.S. housing construction and remodeling. We experienced an unfavorable currency impact on our sales in Canada resulting from
the weakening of the Canadian dollar against the U.S. dollar. During 2009, our window and door profiles and mouldings segment generated about 55 percent of its revenue in the U.S. and the
remainder in Canada.

Outdoor
building products segment net sales totaled $404.5 million for the year ended December 31, 2009, a decrease of 21 percent (14 percent decrease on a
constant currency basis) compared to $508.8 million for the prior year. Our overall sales volumes decreased 10 percent. North American vinyl resin pipe, siding, fence and decking
industry sales volumes declined about 7 percent, reflecting the decline in U.S. housing construction and remodeling. In addition, sales during 2008 included about $26.4 million related
to the outdoor storage business, a business we divested in 2008. We experienced an unfavorable currency impact on our sales in Canada resulting from the weakening of the Canadian dollar against the
U.S. dollar. During 2009, our outdoor building products segment generated about 35 percent of its revenue in the U.S. and the remainder in Canada.

Aromatics
segment net sales were $321.3 million for the year ended December 31, 2009, a decrease of 48 percent compared to $618.8 million for the prior year.
Our overall average sales prices decreased 34 percent as a result of decreases in the prices of cumene of 36 percent, phenol of 30 percent and
acetone of 19 percent. The sales price decreases reflect lower costs for the feedstocks benzene and propylene. The North American phenol and acetone industry operating rate was approximately
61 percent for 2009, or down about 15 percent compared with the prior year. The North American cumene industry operating rate was approximately 62 percent during 2009, or about
10 percent lower than the prior year. During the first quarter of 2009, a competitor announced the idling of a 1 billion pound cumene plant reducing North American cumene industry
capacity by about 9 percent. Our overall aromatics sales volumes decreased 21 percent as a result of a decline in phenol of 48 percent and acetone of 50 percent. The phenol
and acetone sales volume decrease is due to weak demand in North America caused primarily by the decline in the U.S. housing construction and automotive markets and reduced export sales. Our cumene
sales volume increase of 10 percent reflects additional spot sales opportunities realized during the year ended December 31, 2009.

Gross Margin.Total gross margin increased from 6.8 percent of sales for the year ended December 31, 2008 to 10.6 percent
of
sales for the year ended December 31, 2009. This $12.0 million gross margin increase and related increase in gross margin percentage is due to lower feedstock costs and natural gas costs
and several cost savings initiatives partially offset by lower sales volumes and sales prices. Also during 2009, we were able to fully recover previously purchased raw materials costs in an increasing
feedstock and sales price environment. Conversely during 2008, the chemical industry experienced a sharp decline in feedstock and product prices and we were not able to recover previously purchased
feedstock costs due to the time lag between the purchase of raw materials and the sale of the related finished goods. Some of our primary raw materials and natural gas costs in our chemical segments
normally track crude oil and natural gas industry prices. Crude oil and natural gas industry prices experienced decreases of 38 percent and 56 percent, respectively, from 2008 to 2009.
We implemented several cost savings initiatives during 2008 and 2009 including the permanent closure of our 450 million pound vinyl resin manufacturing plant in Sarnia, Ontario and our
500 million pound vinyl resin manufacturing plant in Oklahoma City, Oklahoma, resulting in a number of cost reductions including a decrease in labor cost related to cost of sales of about
$50.5 million during 2009 as compared to 2008.

Chlorovinyls
segment gross margin decreased from 12.0 percent of sales for the year ended December 31, 2008 to 11.5 percent of sales for the year ended
December 31, 2009. This $57.3 million gross margin decrease and related decrease in gross margin percentage primarily reflects a decrease in sales prices and domestic sales volume for
most of our chlorovinyls products partially offset by a decrease in our raw materials and natural gas costs, an increase in export sales and cost savings initiatives implemented during 2008 and 2009.
The sales price decrease reflects lower prices for our feedstock costs. In addition, the caustic soda sales price decrease reflects a decrease in demand due to the significant economic

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downturn
and an increase in global supply from chlor-alkali capacity additions in Asia. The domestic sales volume decrease is due to weak demand in North America caused primarily by the decline in
U.S. housing construction. Our overall raw materials and natural gas costs during 2009 decreased 47 percent compared to 2008. Our chlorovinyls operating rate increased from 70 percent
for 2008 to 75 percent for 2009. In addition, in the first quarter of 2009 we had scheduled turnaround maintenance for our caustic chlorine plant. During 2008, we reduced our cost structure
with the permanent closure of the Sarnia, Ontario and Oklahoma City, Oklahoma vinyl resin manufacturing plants, which had a combined
950 million pound annualized capacity, and moved the production requirements of our customers to our other manufacturing locations.

Window
and door profiles and mouldings segment gross margin increased from 5.8 percent of sales for the year ended December 31, 2008 to 8.7 percent of sales for the
year ended December 31, 2009. This $4.3 million gross margin increase and related increase in gross margin percentage primarily reflects decreases in our raw materials costs and cost
savings initiatives implemented during 2008 and 2009 partially offset by decreases in sales volumes. The industry price of vinyl resins, this segment's primary raw material, decreased from 2008 to
2009. The window and door profiles and mouldings sales volume decrease is due to weak demand in North America reflecting the decline in the North American housing and construction markets. We
implemented numerous cost savings initiatives during 2008 and 2009 to improve profitability, reduce indirect spending and freight costs and adjust our capacity to more closely match market demand.
During 2008, we reduced our cost structure with the permanent closure of two window and door profile fabrication plants and moved the production requirements of our customers to our other
manufacturing locations. In May 2009, we announced the permanent closure of two additional window and door profile fabrication plants and moved the production requirements of our customers to our
other manufacturing locations.

Outdoor
building products segment gross margin increased from 8.1 percent of sales for the year ended December 31, 2008 to 13.3 percent of sales for the year ended
December 31, 2009. This $12.6 million gross margin increase and related increase in gross margin percentage primarily reflects decreases in our raw materials costs and cost savings
initiatives implemented during 2008 and 2009 partially offset by decreases in sales volumes. The industry price of vinyl resins, this segment's primary raw material, decreased from 2008 to 2009. We
implemented numerous cost savings initiatives during 2008 and 2009 to improve profitability, reduce indirect spending and freight costs and adjust our capacity to more closely match market demand.
During 2008, we reduced our cost structure with the permanent closure of one fabrication plant and moved the production requirements of our customers to our other manufacturing locations. In addition,
we sold our outdoor storage buildings business during the first quarter of 2008, which also reduced our cost structure. The outdoor building products sales volume decrease is due to weak demand in
North America reflecting the decline in the North American housing and construction markets.

Aromatics
segment gross margin increased from negative 5.0 percent of sales for the year ended December 31, 2008 to 6.6 percent of sales for the year ended
December 31, 2009. This $52.4 million gross margin increase and related increase in gross margin percentage from the last year is due primarily to decreases in our raw materials costs
which more than offset decreases in our sales prices and volumes for most of our aromatics products. Also during 2009, we were able to fully recover previously purchased raw materials costs in an
increasing feedstock and sales price environment. Conversely during the fourth quarter of 2008, we experienced a $24.8 million operating loss due to a sharp decline in feedstock and product
prices and we were not able to recover previously purchased feedstock costs due to the time lag between the purchase of raw materials and their sale as finished goods. Our aromatics segment is
allocated costs for certain maintenance, utilities, environmental and service costs, as well as other selling, general and administrative costs. For the years ended December 31, 2009 and 2008,
there was $10.5 million and $12.9 million, respectively, of these costs allocated to our aromatics segment.

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Selling, General and Administrative Expenses.Selling, general and administrative expenses totaled $182.9 million for the year
ended
December 31, 2009, an 8 percent increase from the $168.6 million for the year ended December 31, 2008. We have increased selling, general and administrative expenses about
$14.4 million for stock compensation expense. This increase in stock compensation expense is primarily related to a July 27, 2009 stock grant in connection with the completion of our
private exchange offers described in Note 10 of the Notes to the Consolidated Financial Statements. On the date of acceptance of notes in the exchange offers, restricted share units for
2,274,745 shares in the aggregate were granted. We have also increased our selling, general and administrative expenses primarily from a $12.6 million increase for services of restructuring
advisors to assist us in reducing overall indebtedness and related interest expense, performance improvement, and transportation management and indirect sourcing cost reduction initiatives among other
areas of the business, with the ultimate goal to improve and sustain profitability for the long-term. In addition, we increased selling, general and administrative expenses by
$4.4 million for the amortization of financing fees related to our asset securitization agreement entered into on March 17, 2009, lower cost last year of $5.2 million relating to
a change in our vacation policy and accrued incentive compensation of $1.8 million. Our chlorovinyls and aromatics segments collectively increased selling, general, and administrative costs by
$1.4 million, primarily as a result of a $4.0 million increase in the bad debt reserve offset partially by a gain in litigation settlements of $3.8 million. We have reduced
selling, general and administrative costs in our window and door profiles and mouldings and outdoor building product segments, collectively, by $26.6 million, including a decrease in payroll
related costs of $7.1million, bad debt expense of $5.5 million, advertising, commission and promotional expense of $4.3 million and depreciation and amortization of $5.1 million.
Our Canadian operations selling, general, and administrative expenses reflect a favorable currency effect of $4.3 million as the Canadian dollar weakened against the U.S. dollar during the year
ended December 31, 2009 compared to the same period in the prior year

Long-Lived Asset Impairment Charges.In May 2009, we initiated plans to further consolidate plants in our window and door profiles and
mouldings products segment (the "2009 Window and Door Consolidation Plan"). In accordance with general accepted accounting principles, we wrote down the plant's property, plant and equipment,
resulting in a $21.6 million charge in the year ended December 31, 2009. During the fourth quarter of 2008, we recorded non-cash impairment charges of $176.0 million
for the year ended December 31, 2008 to write down goodwill, other intangible assets and long-lived assets. The additional impairment during 2008 is due to the continued
deteriorating U.S. housing and construction markets. An impairment loss may be recognized when the carrying amount of the reporting unit's net assets exceeds the estimated fair value of the reporting
unit. The 2008 non-cash impairment charges by reportable segment are as follows: Window and Door Profiles and Mouldings reportable segment are $63.4 million of goodwill and
$47.2 million of other intangible assets and $2.3 million of other long-lived assets. Outdoor Building Products reportable segment are $0.1 million of other intangible
assets and $0.6 million of other long-lived assets and Chlorovinyls reportable segment is $1.4 million
of other intangible assets and $61.1 million of other long-lived assets. The Chlorovinyls reportable segment other long-lived assets write down of $61.1 million
is primarily due to ceasing all operations and permanent shut down of the Oklahoma City, Oklahoma and Sarnia, Ontario vinyl resin manufacturing plants during 2008.

Restructuring Costs.The expenses associated with the Fourth Quarter 2008 Restructuring Plan, the Outdoor Storage Plan (each as
described in
Note 4 of the Notes to the Consolidated Financial Statements included in Item 8) and the 2009 Window and Door Consolidation Plan for the year ended December 31, 2009 for severance
and exit costs totaled $4.4 million. Also related to these restructuring plans we expensed about $2.5 million for the services of several consultants to assist us in performance
improvement, transportation management and indirect sourcing cost reduction initiatives among other areas of the business with the ultimate goal of improving and sustaining profitability for the
long-term. For 2008, restructuring costs were $22.0 million primarily due to the closure and disposition costs of our outdoor storage buildings business of $5.8 million and
cost related to the permanent shut down of the Oklahoma City, Oklahoma and Sarnia, Ontario vinyl resin manufacturing plants, severance and other exit

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costs
of $6.3 million. See Note 4 of the Notes to the Consolidated Financial Statements for the year ended December 31, 2009 for further information on restructuring costs.

Losses (gains) on sale of assets.There were no significant asset sales during the year ended December 31, 2009. In June 2008, we
sold land
for net proceeds of $36.5 million, which resulted in a gain of $28.8 million. Additionally, in June 2008, we sold and leased back equipment for $10.6 million resulting in a
$2.2 million currently recognized gain, a short-term deferred gain of $0.8 million and a non-current deferred gain of $7.2 million. The remainder of
$3.7 million was due to a loss on the sale of other real estate.

Interest Expense, net.Interest expense, net decreased to $130.4 million for the year ended December 31, 2009, from
$133.2 million for the year ended December 31, 2008. This decrease of $2.7 million was primarily attributable to lower overall debt balances and interest rates offset partially by
the accretion of the fair value of the Term Loan B during 2009 as compared to the same period last year. The lower overall debt balance was due primarily to our exchanging approximately
$736.0 million of our debt for equity on July 27, 2009. This reduction in debt effectively decreased our annual interest expense by $69.7 million. This decrease in interest
expense was offset by the Term Loan B debt discount accretion as interest expense of $12.9 million during 2009, prior to the extinguishment of the Term Loan B on December 22, 2009 when
this debt was refinanced. There was no Term Loan B debt discount accretion expense during 2008.

Loss on debt modification and extinguishment, net.On March 16, 2009, we executed the fifth amendment to our senior secured credit
facility
and accounted for this amendment as an extinguishment of the Term Loan B in accordance with ASC subtopic 470-50 section 40,Modifications and
Extinguishments.Accordingly, we recorded the amended Term Loan B at its estimated fair value of $207.1 million at the date of extinguishment. The difference between the
fair value of the amended Term Loan B and the carrying value of the original Term Loan B less the related financing cost at the date of debt extinguishment of $121.0 million was recorded as a
gain. On December 22, 2009, we refinanced our senior secured credit facility and asset securitization agreement with a four-year term $300.0 million senior secured
asset-based revolving credit facility and $500.0 million of senior secured 9.0 percent notes. The full extinguishment of our old senior secured credit facility and asset securitization
agreement resulted in the write off of the Term Loan B debt discount and related financing costs of $163.8 million. Both the gain from the fifth amendment to our senior secured credit facility
and loss from the refinancing of our senior secured credit facility and asset securitization were netted in the loss on debt modification and extinguishment, net in the consolidated statement of
operations for the year ended December 31, 2009.

Gain on debt exchange.On July 29, 2009, we consummated our private exchange of equity for approximately $736.0 million of
our
outstanding notes. In accordance with ASC subtopic 470-60,Troubled Debt Restructuring by Debtors,this debt for equity exchange was a
troubled debt restructuring and thus an extinguishment of the notes for which we recognized a net gain of $400.8 million. This gain included $731.5 million of principal debt, net of
original issuance discounts, $53.7 million accrued interest, $14.1 million in deferred financing fees written off and $12.4 million of third party fees which was exchanged for the
$357.9 million fair value of our common and preferred stock.

Provision for (benefit from) income taxes.The provision for income taxes from continuing operations was $79.8 million for the
year ended
December 31, 2009 compared with an income tax benefit from continuing operations of $20.0 million for the year ended December 31, 2008. Income from continuing operations before
income taxes increased $503.2 million from 2008 to 2009. Our effective tax rate for continuing operations for 2009 and 2008 was 35.4 percent and 7.2 percent, respectively. The
difference in the effective tax rate as compared to the U.S. statutory federal income tax rate in 2009 was primarily due to federal and state income tax credits, including credits earned from timely
repayment of the Mississippi Industrial Development Bond, and the benefit related to the Cancellation of Debt Income ("CODI") offset by the reduction of tax attributes as a result of the debt for
equity exchange and concurrent change

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in
control of the company for tax purposes and the valuation allowance in Canada. The difference in the effective tax rate as compared to the U.S. statutory federal income tax rate in 2008 was
primarily due to federal and state income tax credits, the reversal of the interest accrued on the Quebec Trust
matter discussed below and the valuation allowance in Canada. We are not recognizing a tax benefit for the net operating losses in Canada, as we have determined that we have not met the ASC topic 740, Income
Taxes, criteria to allow us to realize such benefits. See Note 16 of the Notes to the Consolidated Financial Statements for further
information on income taxes.

In
March 2008, we reached a settlement with the provinces of Quebec and Ontario and the Canada Customs and Revenue Agency with respect to their assessments resulting from the retroactive
application of tax law changes promulgated by Bill 15, which amended the Quebec Taxation Act and other legislative provisions. Royal Group, in connection with its tax advisors, had established tax
structures that used a Quebec Trust to minimize its overall tax liabilities in Canada. Bill 15 eliminated the ability to use the Quebec Trust structure on a retroactive basis. As of
December 31, 2007, we had recorded a liability for the unrecognized tax benefit of $46.1 million related to the Quebec Trust matter. We settled this matter with all relevant
jurisdictions by making cash payments totaling $20.1 million. We recognized an income tax benefit of $9.2 million related to the reversal of $5.8 million in interest accrued on
this liability and the reversal of $3.4 million in a previously established valuation allowance for net operating loss carryforwards, the value of which was realized via this settlement. In
addition, we reduced goodwill by $16.5 million as a result of the settlement of this preacquisition tax contingency.

Year Ended December 31, 2008, Compared With Year Ended December 31, 2007

Net Sales.For the year ended December 31, 2008, net sales totaled $2.9 billion, a decrease of about 8 percent compared
to
$3.2 billion in 2007. This decrease in our overall sales was primarily a result of a decrease in volumes of 17 percent offset by an increase in our overall net sales prices of
11 percent. Our overall sales volumes decrease is mainly attributable to a significant decrease in demand in North America for most of our products as North American housing starts decreased
33 percent from 2007 to 2008. In addition, our sales volumes were impacted by hurricanes Gustav and Ike in the U.S. gulf coast region during the third quarter of 2008. Our overall average sales
price increase is due to higher costs for our raw materials and natural gas.

Chlorovinyls
segment net sales totaled $1.38 billion for the year ended December 31, 2008, a slight decrease compared with net sales of $1.41 billion in 2007. Our
overall chlorovinyls sales volumes decreased 18 percent and were mostly offset by our overall average sales prices increase of 19 percent. The sales volume decrease was primarily due to
a decrease in demand for vinyl resins of 28 percent and vinyl compounds of 17 percent. Our vinyl resins sales volume decrease reflects a reduction in domestic sales as a result of a
decrease in demand, a rationalization of lower margin customers, and disruptions caused by hurricanes Gustav and Ike during the third quarter of 2008, offset partially by an increase in exports. North
American vinyl resin industry sales volume declined 12 percent as a result of the domestic sales volume decrease of 16 percent, reflecting the decline in U.S. housing starts, offset
partially by an increase in exports of 27 percent. Our overall average sales prices increased by 19 percent, primarily as a result of increases in the prices of caustic soda of
79 percent and vinyl resins of 15 percent. The caustic soda price increase reflects the tightness of supply resulting from the weak demand for its co-product chlorine. The
vinyl resins sales price increase reflects higher costs for the feedstock ethylene and natural gas.

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Window and door profiles and mouldings products segment net sales totaled $408.9 million for the year ended December 31, 2008, a decrease of
20 percent (20 percent decrease on a constant currency basis) compared to $508.0 million in 2007. Our overall sales volumes decreased 20 percent. North American vinyl resin
extruded window and door industry sales volumes declined about 19 percent reflecting the decline in the U.S. housing and construction markets. We experienced a minimal currency impact on our
sales in Canada resulting from the change of the Canadian dollar against the U.S. dollar from 2007 to 2008. During 2008, our window and door profiles and mouldings segment generated about
57 percent of its revenue in the U. S. and the remainder in Canada.

Outdoor
building products segment net sales totaled $508.8 million for the year ended December 31, 2008, a decrease of 11 percent (12 percent change on a
constant currency basis) compared to $573.3 million in 2007. Our overall sales volumes decreased 19 percent. North American vinyl resin pipe, siding, fence and decking industry sales
volumes declined about 20 percent reflecting the decline in U.S. housing and construction market. We experienced a minimal currency impact on our sales in Canada resulting from the change of
the Canadian dollar against the U.S. dollar from 2007 to 2008. During 2008, our outdoor building products segment generated about 32 percent of its revenue in the U.S. and the remainder
primarily in Canada.

Aromatics
segment net sales were $618.8 million for the year ended December 31, 2008, a decrease of 7 percent compared to $666.9 million in 2007. Our overall
aromatics sales volumes decreased 12 percent primarily as a result of decreases in phenol and acetone sales of 23 and 20 percent, respectively. The phenol and acetone sales volume
decrease is due to weak demand in North America reflecting the decline in the U.S. housing and construction markets. In addition, our sales volumes were impacted by hurricanes Gustav and Ike in the
U.S. gulf coast region during the third quarter of 2008. Our overall average sales prices increased 6 percent as a result of increases in the prices of acetone of 16 percent, phenol of
4 percent and cumene of 1 percent. The sales price increases reflect higher costs for the feedstock propylene and natural gas. The North American phenol and acetone industries' operating
rates were approximately 76 percent for the year ended of 2008, or about 11 percent lower than in 2007.

Gross Margin.Total gross margin decreased from 9.7 percent of sales for the year ended December 31, 2007 to 6.8 percent
of
sales for the year ended December 31, 2008. This $106.7 million decrease is due to lower overall sales volumes and higher feedstock costs and was partially offset by an increase in
overall sales prices and cost reduction initiatives. Some of our primary raw materials and natural gas costs in our chemical segments normally track crude oil and natural gas industry prices. Crude
oil and natural gas industry prices experienced increases of 38 percent and 32 percent, respectively, from 2007 to 2008. We have implemented several cost savings initiatives during 2008
including reducing our cost structure by the permanent closure and consolidation of six manufacturing plants into other facilities. We also reduced total headcount by about 15 percent resulting
in a decrease in labor cost related to cost of sales of about $37.1 million in 2008 compared to 2007. In addition, we sold our outdoor storage buildings business, which also reduced our cost
structure.

Chlorovinyls
segment gross margin increased from 10.7 percent of sales for the year ended December 31, 2007 to 12.0 percent of sales for the year ended
December 31, 2008. This $15.2 million increase primarily reflects increases in sales prices for all of our chlorovinyls products offset partially by a decrease in overall sales volumes
and increases in our raw materials and natural gas costs. Our overall raw materials and natural gas costs during 2008 increased 28 percent compared to 2007. Our chlorovinyls operating rate
decreased from about 81 percent for 2007 to about 69 percent for 2008. During 2008, we reduced our cost structure with the permanent closure of the Sarnia, Ontario and Oklahoma City,
Oklahoma vinyl resin manufacturing plants, which had a combined 950 million pound annualized capacity, and moved the production requirements of our customers to our other manufacturing
locations.

Window
and door profiles and mouldings segment gross margin decreased from 13.5 percent of sales for the year ended December 31, 2007 to 5.8 percent of sales for the
year ended December 31, 2008. This

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$45.0 million
decrease primarily reflects decreases in sales volumes and increases in our raw materials costs. The industry price of vinyl resins, this segment's primary raw material, increased
about 24 percent from 2007 to 2008. During 2008, we reduced our cost structure with the permanent closure of two
window and door profile fabrication plants and moved the production requirements of our customers to our other manufacturing locations.

Outdoor
building products segment gross margin decreased from 12.6 percent of sales for the year ended December 31, 2007 to 8.1 percent of sales for the year ended
December 31, 2008. This $31.0 million decrease primarily reflects decreases in sales volumes and increases in our raw materials costs. The industry price of vinyl resins, this segment's
primary raw material, increased about 24 percent from 2007 to 2008. During 2008, we reduced our cost structure with the permanent closure of one fabrication plant and moved the production
requirements of our customers to our other manufacturing locations. In addition, we sold our outdoor storage buildings business, which also reduced our cost structure.

Aromatics
segment gross margin decreased from 2.2 percent of sales for year ended December 31, 2007 to a negative 5.0 percent of sales for the year ended
December 31, 2008. This $45.9 million decrease is due primarily to decreases in sales volumes as well as an increase in our benzene and propylene raw material costs, which were not fully
offset by increases in sales prices for all of our aromatics products. Overall raw material costs increased 4 percent primarily as a result of increases in propylene and natural gas costs from
2007 to 2008. During the fourth quarter of 2008, we experienced a $24.8 million operating loss due to a sharp decline in feedstock and product prices and the time lag between the purchase of
raw materials and their sale as finished goods.

Impact from Hurricanes Ike and Gustav on the year ended December 31, 2008.Hurricanes Ike and Gustav impacted the U.S. Gulf Coast
region
during the first two weeks of September of 2008 resulting in a significant disruption of our operations and minor property damage at our Louisiana and Texas facilities. Certain manufacturing plants
were shut down in an orderly manner just prior to the hurricanes and subsequently were down or running at reduced rates as a result of the disruption to feedstock and energy supplies, and
transportation networks in the region. As of September 30, 2008, all of our impacted plants returned to near normal operations. We estimate that these events negatively impacted our operating
income by approximately $27.0 million during the year ended December 31, 2008 as a result of repairs and maintenance costs, unabsorbed fixed costs and lost sales resulting from the
hurricanes. In addition, based on current projections of costs related to the hurricanes, we believe it is unlikely that we will be able to recover any material amount under our commercial insurance
policies.

Selling, General and Administrative Expenses.Selling, general and administrative expenses totaled $168.6 million for the year
ended
December 31, 2008, a 25 percent decrease from the $225.6 million for the year ended December 31, 2007. This $57.0 million decrease reflects our continued focus on
targeted cost saving initiatives. We reduced selling, general and administrative costs in our window and door profiles and mouldings and outdoor building product segments, collectively, by
$38.7 million, including a decrease in payroll related costs of $12.1 million, legal and professional fees of $7.8 million, advertising, commission and promotional expense of
$6.1 million, information systems related costs of $1.8 million and Canadian capital tax expense of $2.2 million. We also reduced selling, general, and administrative costs in our
chlorovinyls and aromatics segments collectively by $7.1 million, primarily as a result of a
decrease in our information systems related costs of $2.3 million and a reduction of $5.2 million relating to a change in our vacation policy that resulted in a reduction to our vacation
accrual. In 2008, we changed our vacation policy from one where vacation earned in a given year was to be taken in the following year, to a policy where vacation earned in a given year must be used by
that year end. Additionally, our share-based compensation expense decreased by $7.5 million. The decreases in selling, general and administrative expenses were offset by an increase in legal
and professional fees of $3.7 million primarily related to the favorable resolution of an alleged notice of default issue during the second quarter of 2008. We experienced a minimal currency
impact on our selling, general and administrative costs in Canada resulting from the change of the Canadian dollar against the U.S. dollar from 2007 to 2008.

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Long-Lived Asset Impairment Charges.As a result of our annual impairment testing performed during the fourth quarter of 2008 and the
property plant and equipment impairments, resulting from our restructuring activity, we recorded non-cash impairment charges of $176.0 million for the year ended December 31,
2008 as compared to $159.0 million for the year ended December 31, 2007 to write down goodwill, other intangible assets and long-lived assets. The additional impairment
during 2008 is due to the continued deterioration of the U.S. housing and construction markets. The 2008 non-cash impairment charges by reportable segment are as follows: Window and Door
Profiles and Mouldings reportable segment are $63.4 million of goodwill and $47.2 million of other intangible assets and $2.3 million of other long-lived assets.
Outdoor Building Products reportable segment are $0.1 million of other intangible assets and $0.6 million of other long-lived assets and Chlorovinyls reportable segment is
$1.4 million of other intangible assets and $61.1 million of other long-lived assets. The Chlorovinyls reportable segment other long-lived assets write down of
$61.1 million is primarily due to ceasing all operations and permanent shut down of the Oklahoma City, Oklahoma and Sarnia, Ontario vinyl resin manufacturing plants during 2008.

Restructuring costs.Restructuring costs were $22.0 million for the year ended December 31, 2008, as compared to
$3.7 million
for 2007. This $18.3 million increase is primarily due to closure and disposition costs of our outdoor storage buildings business of $5.8 million, cost related to the permanent shut down
of the Oklahoma City, Oklahoma and Sarnia Ontario vinyl resin manufacturing plants of about $9.9 million and severance and other exit costs of $6.3 million. For the year ended
December 31, 2007, restructuring costs were costs of $3.7 million consisting primarily of severance and other exit costs.

(Gains) losses on sale of assets.Gains on sale of assets totaled $27.3 million for the year ended
December 31, 2008, as compared to a loss on sale of assets of $1.3 million for the year ended December 31, 2007. In June 2008, we sold excess land in Pasadena, Texas for
$36.5 million, which resulted in a gain of $28.8 million. Additionally, in June 2008, we sold and leased back equipment for $10.6 million resulting in a $2.2 million
currently recognized gain, a short-term deferred gain of $0.8 million and a non-current deferred gain of $7.2 million. The remainder of $3.7 million was
due to a loss on the sale of other real estate.

Interest Expense, net.Interest expense, net decreased to $133.2 million for the year ended December 31, 2008, from
$133.8 million for the year ended December 31, 2007. This minimal change was primarily attributable to lower capitalized interest on construction in progress offset by lower average debt
balances and interest rates during 2008 compared to 2007.

Provision for (Benefit from) Income Taxes.The benefit from income taxes from continuing operations was $20.0 million for the year
ended
December 31, 2008, compared with an income tax provision for continuing operations of $44.0 million for the year ended December 31, 2007. Loss from continuing operations before
income taxes increased $66.5 million from 2007 to 2008. Our effective tax rate for continuing operations for 2008 and 2007 was 7.2 percent and negative 20.8 percent, respectively.
The difference in the rates was due to the routine accrual of interest on ASC topic 740,Income Taxes, formerly Financial Accounting Standards Board
Interpretation ("FIN") 48,Accounting for Uncertainty in Income Taxesan Interpretation of FASB Statement No. 109("FIN 48")
liabilities, the reversal of interest accrued on the Quebec tax trust settlement, (described below), and a portion of our valuation allowance for deferred tax assets in Canada, which was realized as a
result of the Quebec Trust Settlement, the impact of non-deductible goodwill, intangibles and other long-lived assets and the impact of the valuation allowance resulting from
not recognizing a tax benefit for the deferred tax assets in Canada as we determined that we did not meet the ASC topic 740,Income Taxes, criteria to
realize such benefits.

In
March 2008, we reached a settlement with the provinces of Quebec and Ontario and the Canada Customs and Revenue Agency with respect to their assessments resulting from the retroactive
application of tax law changes promulgated by Bill 15, which amended the Quebec Taxation Act and other legislative provisions. Royal Group, in connection with its tax advisors, established tax
structures that used a Quebec Trust to minimize its overall tax liabilities in Canada. Bill 15 eliminated the ability to use the Quebec Trust

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structure
on a retroactive basis. As of December 31, 2007, we had recorded a liability for the unrecognized tax benefit of $46.1 million related to the Quebec Trust matter. We settled
this matter with all relevant jurisdictions by making cash payments totaling $20.1 million. We recognized an income tax benefit of $9.2 million related to the reversal of
$5.8 million in interest accrued on this liability and the reversal of $3.4 million in a previously established valuation allowance for net operating loss
carryforwards, the value of which was realized via this settlement. In addition, we reduced goodwill by $16.5 million as a result of the settlement of this preacquisition tax contingency.

Loss from Discontinued Operations.Subsequent to the Royal Group acquisition on October 3, 2006, we began to exit several non-core
businesses. Certain businesses qualified as discontinued operations under generally accepted accounting principles. There was no activity in our discontinued operations for the year ended
December 31, 2008, compared with a net loss of $10.8 million for the year ended December 31, 2007.

Liquidity and Capital Resources

Operating Activities.For the year ended December 31, 2009, cash flows provided by operating activities from continuing operations
were
$0.7 million compared with $41.4 million for the year ended December 31, 2008. The major use of cash flow for fiscal year 2009 was a $111.0 million repurchase of previously
sold accounts receivable as a result of the termination and replacement of our asset securitization agreement as part of our December 2009 refinancing that included a new ABL Revolver and issuance of
$500.0 million aggregate principal amount of 9.0 percent senior secured notes ("9.0 percent Notes"). Additionally we incurred approximately $21.8 million on restructuring
and process improvement initiatives. Total working capital at December 31, 2009 was $341.9 million versus $225.2 million at December 31, 2008. The significant increase in
working capital for fiscal year 2009 includes the $111.0 million increase in accounts receivable due to the above described termination of our asset securitization agreement and a decrease of
$28.6 million in current debt. Further, since completing our debt for equity exchange, described below in "Financing Activities," we have steadily improved our vendor terms, as a result of
which our accounts payable are returning to levels more in line with our historical averages for accounts payable.

For
the year ended December 31, 2008, cash flows provided by operating activities from continuing operations were $41.4 million compared with $128.2 million for the
year ended December 31, 2007. The major use of cash flow for fiscal year 2008 was a $20.1 million payment in connection with the settlement of our Quebec tax trust tax contingency. The
major source of cash flow for fiscal year 2008 was a $13.7 million increase in cash provided by other current operating assets and liabilities. Total working capital at December 31, 2008
was $225.2 million versus $200.7 million at December 31, 2007, an increase of $24.5 million. The significant increase in working capital for fiscal year 2008 includes an
$80.7 million increase in cash partially offset by a $32.6 million increase in our current portion of long-term debt, primarily due to the issues regarding the availability
on our revolver discussed below in "Financing Activities"; and decreases in accounts payable, accrued compensation, and liability for unrecognized tax benefits of $127.4 million,
$23.0 million and $52.1 million, respectively.
The decrease in payables was primarily attributable to production volume decreases and shorter credit terms from certain vendors, some of whom required prepayments, as a result of certain vendors'
concern over the alleged notice of default on our 7.125 percent notes that was resolved on July 15, 2008. These significant increases in working capital for fiscal year 2008 were
partially offset by a decrease in inventories of $126.3 million. The majority of our inventory decrease was mainly due to lower prices in our raw materials and adjusting our levels to the
decrease in current demand.

For
the year ended December 31, 2007, we generated $128.2 million of cash flow from operating activities from continuing operations. The major use of cash flow for fiscal
year 2007 was approximately $19.0 million paid towards involuntary employee termination benefits. The major source of cash flow in 2007 was a $40.2 million increase in cash provided by
other current operating assets and liabilities. Total

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working
capital at December 31, 2007 was $200.7 million compared to the $203.0 million at December 31, 2006.

Investing Activities.Net cash used in investing activities was $26.0 million for the year ended December 31, 2009. Cash
provided by
investing activities for the years ended December 31, 2008 and 2007 was $24.6 million and $21.6 million, respectively. We incurred maintenance expense for our production
facilities of $104.5 million, $109.1 million and $111.2 million during the years ended December 31, 2009, 2008, and 2007, respectively. During 2009, we used cash of
$30.1 million primarily for capital expenditures at our Plaquemine, Louisiana co-generation and Lake Charles, Louisiana VCM manufacturing plants. During 2008, we received cash
proceeds from sales of property, plant and equipment and assets held for sale of $79.8 million. These proceeds relate primarily to the sale of the outdoor storage business for
$13.0 million, a sale of real estate in Ontario, Canada for $12.6 million, a sale of real estate in Manitoba, Canada for $4.5 million, the sale of a vacant tract of land along the
Houston ship channel in Pasadena, Texas for net proceeds of $36.5 million, and the sale and lease back of equipment for $10.6 million. During 2007, we received cash proceeds from sales
of property, plant and equipment; assets held for sale and discontinued operations of $105.3 million. These proceeds primarily relate to the sale of Royal Group's corporate headquarters and
three manufacturing facilities located in Vaughan, Ontario. We estimate total capital expenditures for 2010 will be in the range of $45.0 million to $50.0 million.

Financing Activities.Cash used in financing activities was $29.1 million for the year ended December 31, 2009. In 2006, we
completed
the acquisition of all of the outstanding common stock of Royal Group for a total purchase price, including assumed debt and debt retired in conjunction with the closing, of approximately
$1.5 billion. The acquisition was financed entirely with new debt, including $500.0 million in aggregate principal amount of new senior notes, $200.0 million in aggregate
principal amount of new senior subordinated notes and $800.0 million principal amount of floating interest rate term debt under a new senior secured credit facility. Demand for our building and
home improvement products declined
during 2008 as compared to 2007 primarily as a result of U.S. housing starts decreasing by about 33 percent according to a report furnished jointly by the U.S. Census Bureau and the U.S.
Department of Housing and Urban Development in January 2009. Similarly, in 2008 our chlorovinyls segment experienced decreased demand compared to 2007, primarily as a result of a continued weakness in
the U.S. residential housing market. As a result of the significant impact of the recession on the residential construction industry, we were required to obtain numerous waivers and amendments of
certain restrictive covenants that required us to maintain certain financial ratios under our senior secured credit facility. In early 2009, we began to take actions to recapitalize our company.

On
March 31, 2009, we commenced private exchange offers for our outstanding 7.125 percent senior notes due 2013 (the "2013 notes"), 9.5 percent senior notes due 2014
(the "2014 notes"), and 10.75 percent senior subordinated notes due 2016 (the "2016 notes" and collectively with the 2013 notes and 2014 notes, the "notes") and, in conjunction with the private
exchange offers, withheld payment of $34.5 million of interest due April 15, 2009 for the 2014 and 2016 notes. After numerous extensions and amendments of the exchange offers and
additional waivers and amendments under our senior secured credit facility, on July 29, 2009, we consummated our private exchange of equity for approximately $736.0 million (principal
amount), or 92.0 percent, in aggregate principal amount of the notes. The $736.0 million was comprised of $91.0 million of the $100 million of 2013 notes,
$486.8 million of the $500 million of 2014 notes, and $158.1 million of the $200 million of 2016 notes. An aggregate of approximately 30.2 million shares of
convertible preferred stock and approximately 1.3 million shares of common stock were issued in exchange for the tendered notes after giving effect to a 1-for-25 reverse
stock split, which reduced the outstanding common shares, before the issuance of common shares in the debt exchange, to approximately 1.4 million shares. In preparation for and prior to this
debt for equity exchange, we executed a 1-for-25 reverse stock split. In September 2009, following an amendment of our charter to increase the shares of our authorized common
stock to 100 million shares, approximately 30.2 million convertible preferred shares converted to an equal number of common shares. After giving effect to the debt exchange at
December 31, 2009, we had

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outstanding
$9.0 million of the 2013 notes, $13.2 million of the 2014 notes and $41.4 million of the 2016 notes. This debt for equity exchange was a troubled debt restructuring
and thus an extinguishment of the notes for which we recognized a net gain of $400.8 million, or approximately $16.61 per share. Cash tax payments in 2009 were $10 million. As a result
of the enactment of the American Recovery and Reinvestment Act passed in 2009, we have the option to defer the federal taxes payable as a result of the debt exchange to 2014 and then pay those taxes
ratably over five years. We expect to make this election when we file our 2009 federal tax return and therefore do not have a large current tax liability.

On
December 22, 2009, we refinanced our senior secured credit facility and our $175.0 million asset securitization agreement. At the time of the refinancing our senior
secured credit facility was comprised of a $300.0 million revolving credit facility and a $347.7 million Term Loan B. We replaced the senior secured credit facility and asset
securitization facility with a four-year term senior secured asset-based revolving credit facility that provides for a maximum of $300 million of revolving credit subject to
borrowing base availability and other terms and conditions (the "ABL Revolver") and the issuance of $500.0 million in principal amount of 9.0 percent senior secured notes.

This
recapitalization and a $17.0 million payoff of other debt per the stated terms of that debt are the primary contributors to reducing our total debt by $655.1 million
from December 31, 2008 to December 31, 2009. These debt reductions are net of a $15.0 million increase in our lease financing obligation that is due exclusively to the change in
the Canadian dollar foreign exchange rate. These debt pay offs were also partly offset by refinancing our trade receivable asset securitization program with debt. The recapitalization also
significantly extended the timing of our debt maturities. The ABL Revolver terminates in December 2013 and our next significant debt maturity is in 2017 when the 9.0 percent Notes are due.
Further, the recapitalization reduced our cash interest costs and removed the quarterly maintenance covenants that required waivers and amendments from our lenders in the past.

Cash
provided by financing activities was $15.4 million for the year ended December 31, 2008. Cash provided by financing activities in 2008 was impacted by our adjustment
of our cash management activities to maximize our financial flexibility. Specifically, Lehman Commercial Paper, Inc., a subsidiary of Lehman Brothers Inc. (collectively "Lehman
Brothers"), was a participant in our revolving line of credit facility, representing about 12 percent of our $375.0 million revolving line of credit facility. Due to their failure to
fund revolver draws, we had about $6.6 million of our revolving line of credit that was not available to us. As a result we maintained a higher cash balance partially due to
$105.8 million of net additional borrowings on our revolving line of credit that was partially offset by the repayment of $74.0 million of long-term debt.
Long-term debt repayments were primarily funded by proceeds from the sale of under utilized assets. During fiscal year 2008, we increased our total debt by $33.3 million due
primarily to the above noted issues with Lehman Brothers and the impact on the availability of our revolving line of credit. Had the revolving line of credit been fully available we could have
decreased total debt during fiscal 2008 by $46.7 million by applying approximately $80.0 million of the $90.0 million of cash and cash equivalents on hand at December 31,
2008 towards our outstanding revolving line of credit balance.

Cash
used in financing activities was $150.9 million for the year ended December 31, 2007. During fiscal year 2007, we reduced our total debt by $135.9 million, of
which $11.6 million was generated from cash provided by operations, $105.3 million was provided by asset sales and $19.0 million was provided from the sale of additional interests
in our trade receivables. Additionally, we entered into a lease financing obligation whereby we transferred ownership in certain real estate in exchange for proceeds of $95.9 million. We used
those proceeds to reduce our term B debt. In connection with the lease financing transaction, a $17 million collateralized letter of credit was issued in favor of the buyer-lessor, with an
effective term of eight years. As a result of the collateralized letter of credit, the transaction has been recorded as a financing transaction rather than as a sale, and the land and buildings and
related accounts continue to be recognized in property, plant, and equipment in accordance with generally accepted accounting principles. These lease financing transactions primarily related to the
lease of four Royal Group manufacturing and warehousing facilities located in Vaughan, Ontario.

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On
December 31, 2009, our balance sheet debt consisted of $56.5 million of borrowings under our ABL Revolver, $9.0 million of unsecured 7.125 percent senior
notes due 2013, $13.2 million of unsecured 9.5 percent senior notes due 2014, $41.4 million of unsecured 10.75 percent senior subordinated notes due 2016,
$496.7 million of senior secured 9.0 percent Notes due 2017, $106.4 million of lease financing obligations and $15.9 million in other debt. At December 31, 2009,
under our ABL Revolver, we had a maximum borrowing capacity of $300.0 million, and net of qualifying accounts receivable and inventory, outstanding letters of credit of $45.2 million,
current borrowings of $56.5 million, and less a fixed $15.0 million availability reserve we had remaining availability of $134.5 million. Over the next twelve months, we expect to
pay off $28.2 million on our ABL Revolver. Therefore, we have classified this debt as current in our consolidated balance sheet as of December 31, 2009.

The
ABL Revolver provides for a maximum of $300 million of revolving credit including letters of credit through December 2013, subject to borrowing base availability. The
borrowing base is determined on a monthly basis and is equal to specified percentages of our eligible accounts receivable and inventories, less a fixed $15 million availability reserve and
other reserves reasonably determined by the co-collateral agents. Interest on this facility is variable at a rate per annum, at our option, based on the prime rate plus the applicable
pricing margin or the London Interbank Offered Rate, ("LIBOR") plus the applicable pricing margin. For the years ended December 31, 2009, 2008, and 2007, the average interest rates for the
former senior credit facility were 9.09, 6.51, and 7.94 percent, respectively. As of December 31, 2009 the rate was 6.0%. The ABL Revolver is secured by substantially all of our assets
and contains certain restrictive covenants including restrictions on debt incurrence, granting of liens, dividends, acquisitions and investments.

On
December 22, 2009, we also issued the $500.0 million aggregate principal amount of senior secured 9.0 percent Notes due 2017. These notes were issued at a
$3.3 million discount to effectively provide a 9.125 percent interest rate. Interest on these notes is payable January 15 and July 15 of each year. On or after
January 15, 2014, we may redeem the notes in whole or in part, initially at 104.5 percent of their principal amount, and thereafter at prices declining annually to 100 percent on
or after December 15, 2016. During any twelve-month period prior to January 15, 2014 we may make optional redemptions of the notes up to 10 percent of the aggregate principal
amount thereof at a redemption price of 103.0 percent. In addition, prior to January 15, 2013, we may make optional redemptions of up to 35 percent of the aggregate principal
amount thereof at a redemption price equal to 109.0 percent of the aggregate principal amount thereof, plus accrued and unpaid interest. In addition, we may redeem some or all of the notes at
anytime prior to January 15, 2014 at a price equal to the principal amount thereof plus a make-whole premium and any accrued and unpaid interest. The 9.0 percent Notes are
secured by substantially all of our assets and contain certain restrictive covenants including restrictions on debt incurrence, granting of liens, dividends, acquisitions and investments.

Management
believes based on current and projected levels of operations and conditions in our markets and cash flow from operations, together with our cash and cash equivalents on hand
of $38.8 million and the availability to borrow an additional $134.5 million under our ABL Revolver as of December 31, 2009, the Company has adequate funding for the foreseeable
future to make required payments of principal and interest on our debt and fund our working capital and capital expenditure requirements and comply with the financial ratios of the senior secured ABL
Revolver and covenants under our indenture for the 9.0 percent notes. To the extent our cash flow and liquidity exceeds the levels necessary for us to make our required debt payments, fund our
working capital and capital expenditure requirements and comply with our ABL Revolver and the indenture for the 9.0 percent notes, we may use that excess liquidity to further grow our business
through investments or acquisitions
and/or to further reduce our debt through optional prepayments or redemptions of our outstanding debt securities.

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However, if our expectations regarding our business prove incorrect, we may not be able to pursue any such business growth or debt reduction opportunities, and
may not be able to meet certain restrictive covenants and maintain compliance with certain financial ratios or, possibly, not be able to make required payments under our notes or ABL Revolver. In that
event, we would attempt to obtain waivers or covenant relief from our lenders. Although we have successfully negotiated covenant relief in the past, there can be no assurance we can do so in the
future. As of December 31, 2009, we are in compliance with all required debt covenants.

Off-Balance Sheet Arrangement.We had agreements pursuant to which we sold an undivided percentage ownership interest in a defined pool
of our U.S. trade receivables on a revolving basis through a wholly owned subsidiary to a third party (the "Securitization"). The funded balance has the effect of reducing accounts receivable and
short-term liabilities by the same amount. As collections reduce accounts receivable included in the pool, we sold interests in new receivables to bring the ownership interests sold up to
a maximum of $165.0 million, as permitted by the Securitization in effect through March 17, 2009, and up to a maximum of $175.0 million thereafter. The balance in the interest of
receivables sold at December 31, 2008 was $111.0 million.

As
of December 22, 2009, the Securitization was terminated and replaced with a $300.0 million ABL Revolver (see Note 10 of the Notes to the Consolidated Financial
Statements).

Contractual Obligations.Our aggregate future payments under contractual obligations by category as of December 31, 2009, were as
follows:

(In millions)

Total

2010

2011

2012

2013

2014

2015 and
thereafterContractual obligations:Long-term debtprincipal

$
638

$


$


$
18

$
65

$
13

$
542Long-term debtinterest


416


56


56


55


55


51


143Lease financing obligations


52


7


7


7


7


7


17Operating lease obligations


77


20


13


12


9


10


13Purchase obligations


3,186


884


763


536


508


479


16Uncertain income tax positions


1


1














Other


10

















10Total

$
4,380

$
968

$
839

$
628

$
644

$
560

$
741


Long-Term Debt.Long-term debt includes principal and interest payments based upon our interest rates as of
December 31, 2009. Long-term debt obligations are listed based on when they are contractually due.

Lease Financing Obligations.We lease land and buildings for certain of our Canadian manufacturing facilities under leases with varying
maturities
through the year 2017.

Operating Lease Obligations.We lease railcars, storage terminals, computer equipment, automobiles and warehouse and office space under
non-cancelable operating leases with varying maturities through the year 2017. We did not have significant capital lease obligations as of December 31, 2009.

Purchase Obligations.Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding
and that specify
all significant terms. We have certain long-term raw material supply contracts and energy purchase agreements with various terms extending through 2014. These commitments are designed to
assure sources of supply for our normal requirements. Amounts are based upon contractual raw material volumes and market rates as of December 31, 2009.

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Uncertain Income Tax Positions.We have recognized a liability for our unrecognized income tax benefits
of approximately $65.2 million as December 31, 2009. We have included in the table above any liability for our unrecognized income tax benefits related to audits and other tax matters
that we are likely to pay within a twelve month period. The ultimate resolution and timing of payment for remaining matters remains uncertain and are therefore excluded from the above table.

Outlook

We based our 2010 operating plans on conservative macro economic assumptions regarding the main drivers of our businesses. We assume a
slight recovery in U.S. and Canadian housing starts, gross domestic product ("GDP") growth in both the U.S. and Canada greater than 2 percent over 2009, a continuation of favorable conditions
for PVC exports, natural gas costs that average approximately $6 per MMBTU, and stabilization in the ECU value in 2010 compared to 2009.

In
addition to the macroeconomic assumptions, our operating plans give effect to the expected impact of a number of factors specifically related to GGC. Among other things, our
performance will be impacted by two scheduled maintenance outages compared to just one in 2009, as well as the benefit of cost reduction efforts initiated in 2009, which should be fully realized in
2010.

See
Item 1A. "Risk FactorsForward-Looking Statements"

Inflation

The most significant component of our cost of sales is raw materials, which include basic oil-based commodities and natural
gas or derivatives thereof. The costs of raw materials and natural gas are based primarily on market forces and have not been significantly affected by inflation. Inflation has not had a material
impact on our sales or income from operations.

New Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("Codification" or "ASC")
subtopic 105-10,Generally
Accepted Accounting Principles. The Codification is now the single source of authoritative nongovernmental U.S. generally accepted accounting principles ("GAAP"). Rules and
interpretive releases of the Securities and Exchange Commission ("SEC") under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. This statement was
effective for interim and annual reporting periods ending after September 15, 2009. All existing accounting standards are superseded as described in this statement. All other accounting
literature not included in the Codification is nonauthoritative. The adoption of the Codification on September 30, 2009 did not have an impact on our consolidated financial statements.

In
June 2009, the FASB issued ASC topic 810,Amendments to FASB Interpretation No. 46(R), which amends the consolidation guidance
applicable to variable interest entities and the definition of a variable interest entity ("VIE") and requires enhanced disclosures to provide more information about an enterprise's involvement in a
VIE. In addition, it requires an enterprise to perform an analysis to determine whether the enterprise's variable interest gives it a controlling interest in a VIE. The analysis identifies the primary
beneficiary of the VIE as the enterprise that has both (a) the power to direct the activities of the VIE and (b) the obligation to absorb losses of the VIE. This statement will be
effective for us beginning in the first quarter of 2010. We are currently evaluating the impact of this statement on our consolidated financial statements.

In
June 2009, the FASB issued ASC topic 860,Accounting for Transfers of Financial Assetsan amendment of FASB Statement
No. 140, which improves the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial statements
about a transfer of financial assets; the effects of a transfer on its financial position, financial performance and cash flows;

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and
a transferor's continuing involvement, if any, in the transferred assets. This statement is effective for financial asset transfers occurring after the beginning of an entity's first fiscal year
that begins after November 15, 2009. Early adoption is prohibited. We are currently evaluating the impact of this statement on our consolidated financial statements.

In
April 2009, the FASB issued ASC subtopic 820-10,Fair Value Measurements and Disclosures,section 65-4, Transition Related to FASB Staff Position ("FSP") SFAS 157-4,
Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly.This ASC subtopic emphasizes that even if there has been a significant decrease in the volume and
level of activity for the asset or liability and regardless of the valuation technique(s) used, the objective of a fair value measurement remains the same. Fair value is the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under
current market conditions. This ASC subtopic was effective for the second quarter of 2009 and did not have a material impact on our consolidated financial statements. On August 28, 2009 the
FASB issued Accounting Standards Update ("ASU") 2009-05,Measuring Liabilities at Fair Value,(previously exposed for comments as proposed
FSP 157-f) to provide guidance on measuring the fair value of liabilities under ASC 820. This ASU clarifies that the quoted price for the identical liability, when traded as an
asset in an active market, is also a Level 1 measurement for that liability when no adjustment to the quoted price is required. The ASU also provides guidance in the absence of a Level 1
measurement. The ASU was effective for the first interim or annual reporting period beginning after the ASU's issuance. The adoption of this ASU did not have a material impact on our consolidated
financial statements. In January 2010, the FASB issued ASU 2010-6,Improving Disclosures about Fair Value Measurements.This ASU discusses
the level of disaggregation required for each class of assets and liabilities and for fair value measurements that fall within Level 2 or 3 of the fair value hierarchy. This ASU is effective
for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures concerning purchases, sales, issuances and settlements in the roll forward of activity in
Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. See
Note 18, "Fair Value of Financial Instruments" of the Notes to the Consolidated Financial Statements in Item 8, for disclosures related to this statement.

In
April 2009, the FASB issued ASC subtopic 825-10,Financial Instruments,section 65-1, Transition Related to FSP SFAS 107-1 and Accounting Principles Bulletin ("APB")
No. 28-1, Interim Disclosures About Fair Value of
Financial Instruments.This ASC subtopic states that an entity shall disclose in the body or in the accompanying notes of its summarized financial information for interim
reporting periods and in its financial statements for annual reporting periods the fair value of all financial instruments for which it is practicable to estimate that value, whether recognized or not
recognized in the statement of financial position, as required by Statement 107. Fair value information disclosed in the notes must be presented together with the related carrying amount in a form
that makes it clear whether the fair value and carrying amount represent assets or liabilities and how the carrying amount relates to what is reported in the statement of financial position. An entity
also must disclose the method(s) and significant assumptions used to estimate the fair value of financial instruments and describe changes in method(s) and significant assumptions, if any, during the
period. These new disclosures became effective for interim and annual periods ending after June 15, 2009. See Note 18, "Fair Value of Financial Instruments" of the Notes to the
Consolidated Financial Statements in Item 8 for disclosures related to this statement.

In
December 2008, the FASB issued ASC subtopic 715-20,CompensationRetirement Benefits,section 65-2,Transition Related to FSP SFAS 132(R)-1, Employer's Disclosure about Postretirement Benefit Plan
Assets, which amends ASC subtopic 715-20 to require more detailed disclosures about employers' pension plan assets. New disclosures will include more information on
investment strategies, major categories of assets, concentrations of risk within plan assets and valuation techniques used to measure the fair value of plan assets. This new ASC subtopic requires new
disclosures for us for the year ending

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December 31,
2009. The new disclosures are reflected in Note 15, "Employee Retirement Plans" of the Notes to the Consolidated Financial Statements in Item 8.

Critical Accounting Policies and Estimates

Critical accounting policies are those that are important to our financial condition and require management's most difficult,
subjective, or complex judgments. Different amounts would be reported under different operating conditions or under alternative assumptions. We have evaluated the accounting policies used in the
preparation of the accompanying consolidated financial statements and related notes and believe those policies to be reasonable and appropriate. See Note 1 of the Notes to Consolidated
Financial Statements in Item 8 for a complete listing of our accounting policies. We believe the following to be our most critical accounting policies applied in the preparation of our
financial statements.

Allowance for Doubtful Accounts.In our determination of the allowance for doubtful accounts and consistent with our accounting policy,
we estimate
the amount of accounts receivable that we believe are unlikely to be collected and we record an expense for that amount. Estimating this amount requires us to analyze the financial strength of our
customers by analyzing leverage and coverage ratios, as well as Dun and Bradstreet ratings. In our analysis, we combine the use of historical collection experience, our accounts receivable aged trial
balance and specific collectibility analysis. By its nature, such an estimate is highly subjective, and it is possible that the amount of accounts receivable that we are unable to collect may be
different than the amount initially estimated. Our allowance for doubtful accounts on December 31, 2009 and 2008 was $16.5 million and $12.3 million, respectively. No individual
customer accounted for greater than 10 percent of our trade accounts receivable as of December 31, 2009 and 2008. To the extent the actual collectibility of our accounts receivable
differs from our estimated allowance by 10 percent, our net income would be higher or lower by approximately $1.2 million, on an after-tax basis, depending on whether the
actual collectibility was better or worse than the estimated allowance.

Environmental and Legal Accruals.In our determination of the estimates relating to ongoing environmental costs and legal proceedings
(see
Note 11 of the Notes to Consolidated Financial Statements), we consult with our advisors (consultants, engineers and attorneys). Such consultation provides us with the information on which we
base our judgments on these matters and under which we accrue an expense when it has been determined that it is probable that a liability has been incurred and the amount is reasonably estimable.
While we believe that the amounts recorded in the accompanying consolidated financial statements related to these contingencies are based on the best estimates and judgments available to us, the
actual outcomes could differ from our estimates. To the extent that actual outcomes differ from our estimates by 10 percent, our net income would be higher or lower by approximately
$0.5 million, on an after-tax basis, depending on whether the actual outcomes were better or worse than the estimates.

Valuation of Goodwill and Other Intangible Assets.Goodwill is the excess of cost of an acquired entity over the amounts specifically
assigned to
assets acquired and liabilities assumed in purchase accounting for business combinations. Other identifiable intangible assets are intangible assets such as customer lists, trade names and technology
that are identified during acquisitions. Our carrying value of our goodwill and indefinite lived intangible assets are tested for impairment annually on October 1 and are tested for impairment
between annual impairment tests if an event occurs or circumstances change that would indicate the carrying amounts may be impaired. Indicators include, but are not limited to significant declines in
the markets and industries which buy our products, changes in the estimated future cash flows of our reporting units, changes in capital markets and changes in our market capitalization. Impairment
testing for goodwill and indefinite lived intangible assets is a two-step test performed at a reporting unit level. Our reporting units subject to such testing are window and door
profiles; mouldings; deck, fence and rail products and compounds (vinyl and additives). The initial step requires the carrying value of each reporting unit to be compared with its estimated fair
value. The second step to evaluate a reporting unit for

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impairment
is only required if the carrying value of the reporting unit exceeds the estimated fair value in the initial step. We use a discounted cash flow analysis and market approaches to determine
the estimated fair value of a reporting unit, which requires judgment and assumptions including estimated future cash flows and discount rates. Our weighting of the discounted cash flow and market
approaches vary by reporting unit based on factors specific to those reporting units. Our weighting of the two approaches was equal in 2009. An impairment loss may be recognized when the carrying
amount of the reporting unit's net assets exceeds the estimated fair value of the reporting unit. Actual impairment charges incurred could vary significantly from amounts that we estimate if different
assumptions or methods are used in the estimate for fair value of the reporting units.

Inherent
in our fair value determinations are certain judgments and estimates relating to future cash flows, including interpretation of current economic indicators and market
conditions, overall economic conditions and our strategic operational plans with regard to our operations. A change in such assumptions may cause a change in the results of the analyses performed. In
addition, to the extent significant changes occur in market conditions, overall economic conditions or our strategic operational plan; it is possible that goodwill not currently impaired may become
impaired in the future. Based on the results of our evaluation in connection with our goodwill impairment test as of October 1, 2009, we did not record an impairment charge to goodwill in 2009.
We experienced a significant decline in our market capitalization from October 1, 2009 to December 31, 2009, which we determined was not primarily due to company-specific factors, but
rather, due to macroeconomic conditions, including rising unemployment levels, turmoil in the credit markets, and deteriorating consumer confidence. However, given the decrease in market
capitalization at December 31, 2009, we reconsidered our cash flow projections utilized in our impairment test as of October 1, 2009, including an assessment of our actual results for
the fourth quarter of 2009 as compared to our projections for such period, and also assessed whether the discount rates used in our October 1, 2009 impairment test remained appropriate as of
December 31, 2009. We further evaluated our reporting units with significant goodwill using a 100 basis point increase in our discount rates above those that were supported by our valuation
work on the basis that a change in such assumptions may cause a change in the results of the analyses performed; however, it did not. See Note 9 of the Notes to Consolidated Financial
Statements for further details of the 2009 goodwill and other intangible asset impairment test. We recorded a non-cash impairment charge to write down goodwill and other intangible assets
by $112.1 million and
$149.4 million in 2008 and 2007, respectively, primarily as a result of the deteriorating North America housing and construction markets.

Valuation of Long-Lived Assets.Our long-lived assets, such as property, plant, and equipment, are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, in accordance with ASC topic 360Property, Plant, and
Equipment.Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected
to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized for the amount by which the carrying amount of
the asset exceeds the fair value of the asset. Our judgments regarding the existence of impairment indicators are based on legal factors, market conditions and assumptions for operational performance
of our businesses. The assumptions used to estimate our future undiscounted cash flows are predominately identified from our financial forecasts. The actual impairment charge incurred could vary
significantly from amounts that we estimate. Additionally, future events could cause us to conclude that impairment indicators exist and that associated long-lived assets of our businesses
are impaired.

During
2009 we continued the consolidation of our Window and Door profiles plants resulting in impairments of $21.6 million. During 2008 we assessed our Oklahoma City, Oklahoma
and Sarnia, Ontario resin plants for impairment, and recorded impairment charges of $15.5 million and $42.3 million, respectively. The Oklahoma City, Oklahoma plant ceased operations in
March 2008 and the Sarnia plant closed in December 2008. We noted no significant further impairment of these assets in 2009 or 2007.

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Pension Liabilities.Accounting for employee retirement plans involves estimating the cost of benefits that are to be provided in the
future and
attempting to match, for each employee, that estimated cost to the period worked. To accomplish this, we make assumptions about discount rates, expected long-term rates of return on plan
assets, salary increases, employee turnover and mortality rates, among others. We reevaluate all assumptions annually with our independent actuaries taking into consideration existing as well as
forecasted economic conditions, and our policy and strategy with regard to the plans. We believe our estimates, the most significant of which are stated below, to be reasonable.

The
discount rate reflects the rate at which pension benefit obligations could be effectively settled. We determined our discount rate by matching the expected cash flows of our pension
obligations to a yield curve generated from a broad portfolio of high-quality fixed rate debt instruments. The discount rate assumption used for determining annual pension expense for our
U.S. pension plans in 2009 was 6.7 percent. At December 31, 2009, this rate was 6.0 percent for determining 2010 annual pension expense for our U.S. pension plans. A 25 basis
point increase or decrease in this discount rate would decrease or increase our annual pre-tax pension expense by $0.1 million for our U.S. pension plans. In addition to the
expense, a 25 basis point increase in our discount rate would decrease our year-end benefit obligations by $3.8 million, whereas a 25 basis point decrease would increase our
year-end benefit obligations by $4.0 million for our U.S. pension plans.

The
expected long-term rate of return on plan assets assumption is based on historical and projected rates of return for current and planned asset classes in the plan's
investment portfolio. Our weighted average asset allocation as of December 31, 2009, is 58.5 percent equity securities, 21.7 percent debt securities, 1.6 percent real
estate and 18.2 percent other. Assumed projected rates of return for each of the plan's projected asset classes were selected by us after analyzing historical experience and future expectations
of the returns and volatility of the various asset classes. The expected long-term rate of return assumption used for determining annual pension expense for 2009 was 8.75 percent
for our U.S. pension plans. At December 31, 2009, this rate was 8.75 percent for determining 2010 annual pension expense for our U.S. pension plans. A 25 basis point increase or decrease
in the long-term rate of return on plan assets assumption would decrease or increase our annual pre-tax pension expense by $0.2 million for our U.S. pension plans. A 25
basis point increase or decrease in the expected long-term rate of return assumption for our foreign pension plans is not material.

Income Taxes.Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized
for the future
tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. At December 31, 2009 and 2008, we had a net deferred tax liability balance of
$160.3 million and $47.6 million, respectively.

In
evaluating the ability to realize our deferred tax assets we rely principally on forecasted taxable income using historical and projected future operating results and the reversal of
existing temporary differences. At December 31, 2009 and 2008, we had deferred tax assets for state tax credit carryforwards of $16.1 million and $4.6 million, respectively, which
carryforward indefinitely. We believe we will achieve taxable income in the related jurisdictions in order to realize the deferred tax assets for state tax credit carryforwards. In addition, at
December 31, 2009 we had deferred tax assets for net operating loss carryforwards in the U.S. and Canada of $3.0 million and $31.1 million, respectively, of which we have a
$32.6 million valuation allowance to record these deferred tax assets related to net operating losses at their estimated realizable values.

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In 2009 and 2008, we recorded a $7.3 million and $55.5 million valuation allowance, respectively, on certain deferred tax assets in Canada that, in
the judgment of management, are not more likely than not to be realized. In assessing the reliability of deferred tax assets, management considers whether it is more likely than not that some or all
of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary
differences are deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected taxable income and
tax-planning strategies available to the company in making this assessment. In order to fully realize the deferred tax assets, we will need to generate future taxable income before the
expiration of the deferred tax assets governed by the tax code. Based on the level of historical cumulative losses, management believes that it is more likely than not that the company will realize
the benefits of these deductible differences, net of the existing valuation allowances at December 31, 2009. As a result of the debt exchange completed in July 2009, we experienced a change in
control as defined by the Internal Revenue Code. Because of this change in control, we will be unable to realize a benefit from the U.S. federal net operating loss arising before the acquisition of
the Royal Group. Therefore, we no longer carry those net operating losses as a deferred tax asset. The change in control also limits our ability to realize certain expenses in the future and we have
recorded deferred tax liabilities to reflect this.

Effective
January 1, 2007, we adopted ASC topic 740,Income Taxes, formerly Financial Accounting Standards Board Interpretation
("FIN") 48 ,Accounting for Uncertainty in Income Taxesan Interpretation of FASB Statement No. 109,which clarifies the accounting
for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement 109,Accounting for Income Taxes.The ASC standard prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
Under the ASC standard, we recognize the financial statement effects of a tax position when it is more likely than not, based upon the technical merits, that the position will be sustained upon
examination. Conversely, we derecognize a previously recognized tax position in the first period in which it is no longer more likely than not that the tax position would be sustained upon
examination. A tax position that meets the more likely than not recognition threshold will initially and subsequently be measured as the largest amount of tax benefit that is greater than fifty
percent likely of being realized upon ultimate settlement with a taxing authority. We also recognize interest expense by applying a rate of interest to the difference between the tax position
recognized in accordance with the ASC standard and the amount previously taken or expected to be taken in a tax return. We classify interest expense and related penalties, if any, with respect to our
uncertain tax positions in the provision for income taxes.

In
addition, we have accrued a reserve for non-income tax contingencies of $8.7 million and $7.4 million, at December 31, 2009 and 2008, respectively.
The increase in the reserve is related primarily to the changes in the Canadian dollar exchange rates and the accrued interest related to these matters. We accrue for non-income tax
contingencies when it is probable that a liability to a taxing authority has been incurred and the amount of the contingency can be reasonably estimated. The non-income tax contingency
reserves are adjusted for, among other things, changes in facts and circumstances, receipt of tax assessments, expiration of statutes of limitations, interest and settlements and additional
uncertainties.

Stock-Based Compensation.We account for share-based payments in accordance with ASC topic 718, CompensationStock Compensation("ASC 718"). All share-based payments to employees and non-employee directors, including grants
of stock options, restricted and deferred stock units, restricted stock and employee stock purchase rights are required to be recognized in our financial statements based on their respective grant
date fair values. Under ASC 718, the fair value of each share-based payment award is estimated on the date of grant using an option-pricing model that meets certain requirements. We currently use the
Black-Scholes option-pricing model to estimate the fair value of our share-based payment awards. The Black-Scholes model meets the requirements of ASC 718; however, the fair values generated by the
model may not be indicative of the actual fair values of our awards as it does not consider certain

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factors
important to our awards, such as continued employment, periodic vesting requirements and limited transferability. Future stock-based compensation expense and unearned stock-based compensation
will increase to the extent that we grant additional equity awards to employees or we assume unvested equity awards in connection with acquisitions. The determination of the fair value of share-based
payment awards utilizing the Black-Scholes model is affected by our stock price and a
number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. We use the historical volatility for our stock, as we believe that
historical volatility is more representative than implied volatility. The expected life of the awards is based on historical and other economic data trended into the future. The risk-free
interest rate assumption is based on observed interest rates appropriate for the terms of our awards. The dividend yield assumption is based on our historical dividend yield and expectation of future
dividend payouts. The fair value of our restricted and deferred stock units and restricted stock are based on the fair market value of our stock on the date of grant. Forfeitures are estimated at the
time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Stock-based compensation expense recognized in our financial statements is based on
awards that are ultimately expected to vest. We evaluate the assumptions used to value our awards on a quarterly basis. If factors change and we employ different assumptions, stock-based compensation
expense may differ significantly from what we have recorded in the past. If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate,
increase or cancel any remaining unearned stock-based compensation expense.

Environmental

Our operations are subject to increasingly stringent federal, state, and local laws and regulations relating to environmental quality.
These regulations, which are enforced principally by USEPA and comparable state agencies, govern the management of solid hazardous waste, emissions into the air and discharges into surface and
underground waters, and the manufacture of chemical substances. Our Canadian operations are subject to similar laws and regulations.

We
believe that we are in material compliance with all the current environmental laws and regulations. We estimate that any expenses incurred in maintaining compliance with these
requirements will not materially affect earnings or cause us to exceed our level of anticipated capital expenditures. However, there can be no assurance that regulatory requirements will not change,
and therefore, it is not possible to accurately predict the aggregate cost of compliance resulting from any such changes.

See
Item 1. Business, Item 3. Legal Proceedings, Note 11 of the Notes to the Consolidated Financial Statements in Item 8 for additional information related to
environmental matters.

Item 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are subject to certain market risks related to long-term financing and related derivative financial instruments, foreign
currency exchange rates and raw material commodity prices. These financial exposures are managed as an integral part of our risk management program, which seeks to reduce the potentially adverse
effect that the volatility of the interest rate, exchange rate, raw material commodity and natural gas markets may have on our operating results. We do not engage in speculative transactions, nor do
we hold or issue financial instruments for trading purposes.

Interest Rate Risk Management.The following table is "forward-looking" information that provides information about our debt
obligations and other
significant financial instruments that are sensitive to changes in interest rates. Our policy is to manage interest rates through the use of a combination of fixed and floating rate debt instruments.
At times, we may utilize interest rate swap agreements to help manage our interest rate risk. As of December 31, 2008, we had interest rate swaps with notional amounts totaling
$75.0 million to fix the interest rate on $75.0 million of our variable LIBOR based term debt. As of December 31, 2009 we had no outstanding interest rate swaps. We currently
estimate that a 100 basis point

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change
in prevailing market interest rates on our variable rate debt would impact our related annual pre-tax income by $0.6 million. The table presents principal cash flows and
related weighted average interest rates by expected maturity dates for the financial instruments.

Principal (Notional) Amounts by Expected Maturity Date(In thousands)

2010

2011

2012

2013

2014

Thereafter

Total

Fair value
at 12/31/09Financial instruments:Fixed rate principal

$


$


$
18,038

$
8,965

$
13,214

$
541,856

$
582,073

$
565,291Average interest rate



%


%

6.53
%

7.13
%

9.5
%

9.14
%

9.03
%Variable rate principal

$


$


$


$
56,462

$


$


$
56,462

$
56,462Average interest rate



%


%


%

6.00
%


%


%

6.00
%


Foreign Currency Exchange Risk Management.Our international operations require active participation in foreign exchange markets. We
may or may not
enter into foreign exchange forward contracts and options, and cross-currency swaps to hedge various currency exposures or create desired exposures.

Raw Materials and Natural Gas Price Risk Management.The availability and price of our raw materials and natural gas are subject to
fluctuations due
to unpredictable factors in global supply and demand. To reduce price risk caused by market fluctuations, from time to time, we may enter into forward swap contracts, which are generally less than one
year in duration. We designate forward swap contracts with financial counter-parties as cash flow hedges. Any outstanding contracts are valued at market with the offset going to other comprehensive
income, net of applicable income taxes, and any material hedge ineffectiveness is recognized in cost of goods sold. Any gain or loss is recognized in cost of goods sold in the same period or periods
during which the hedged transaction affects earnings. The fair value of our natural gas swap contract was a $0.3 million and $0.2 million asset at December 31, 2009 and
December 31, 2008, respectively.

We
also have other long-term supply contracts for raw materials, which are at prices not in excess of market, designed to assure a source of supply and not expected to be in
excess of our normal manufacturing operations requirements. Historically, we have taken physical delivery under these contracts and we intend to take physical delivery in the future. Therefore, at
inception we designate these contracts as normal purchase agreements and account for them under the normal purchase provision of ASC topic 815,Derivatives and
Hedging,and related amendments.

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Item 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and Stockholders of
Georgia Gulf Corporation
Atlanta, Georgia

We
have audited the accompanying consolidated balance sheets of Georgia Gulf Corporation and subsidiaries (the "Company") as of December 31, 2009 and 2008, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2009. Our audits also included the financial statement schedule listed in
the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the
financial statements and financial statement schedule 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. 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.

In
our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Georgia Gulf Corporation and subsidiaries as of December 31, 2009 and
2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in
the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of
December 31, 2009, based on the criteria established inInternal ControlIntegrated Frameworkissued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated March 11, 2010 expressed an unqualified opinion on the Company's internal control over financial reporting.

DELOITTE & TOUCHE LLP

Atlanta,
Georgia
March 11, 2010

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Georgia Gulf Corporation and Subsidiaries        Consolidated Balance Sheets

(In thousands, except share data)

December 31,
2009

December 31,
2008ASSETSCash and cash equivalents

$
38,797

$
89,975Receivables, net of allowance for doubtful accounts of $16,453 in 2009 and $12,307 in 2008


208,941


117,287Inventories


251,397


240,199Prepaid expenses


24,296


21,360Income tax receivables


30,306


2,264Deferred income taxes


14,108


22,505Total current assets


567,845


493,590Property, plant and equipment, net


687,570


760,760Goodwill


203,809


189,003Intangible assets, net of accumulated amortization of $10,996 in 2009 and $9,988 in 2008


15,223


15,905Other assets, net


116,494


150,643Non-current assets held for sale


14,924


500Total assets

$
1,605,865

$
1,610,401LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)Current portion of long-term debt

$
28,231

$
56,843Accounts payable


124,829


105,052Interest payable


2,844


16,115Income taxes payable


1,161


3,476Accrued compensation


16,069


9,890Liability for unrecognized income tax benefits and other tax reserves


9,529


27,334Other accrued liabilities


43,236


49,693Total current liabilities


225,899


268,403Long-term debt


710,774


1,337,307Liability for unrecognized income tax benefits


64,371


34,592Deferred income taxes


174,457


70,141Other non-current liabilities


37,036


39,886Total liabilities


1,212,537


1,750,329Stockholders' equity:Preferred stock$0.01 par value; 75,000,000 shares authorized; no shares issued





Common stock$0.01 par value; 100,000,000 shares authorized; shares issued and outstanding: 33,718,367 in 2009 and 1,379,273 in 2008


337


14Additional paid-in capital


472,018


105,815Accumulated deficit


(72,713
)

(218,502
)Accumulated other comprehensive loss, net of tax


(6,314
)

(27,255
)Total stockholders' equity (deficit)


393,328


(139,928
)Total liabilities and stockholders' equity (deficit)

$
1,605,865

$
1,610,401


See
accompanying notes to consolidated financial statements.

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GEORGIA GULF CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31,(In thousands, except share data)

2009

2008

2007Net sales

$
1,990,091

$
2,916,477

$
3,157,270Operating costs and expenses:Cost of sales


1,778,998


2,717,409


2,851,426Selling, general and administrative expenses


182,937


168,572


225,607Long-lived asset impairment charges


21,804


175,958


158,960Restructuring costs


6,858


21,973


3,659Losses (gains) on sale of assets


62


(27,282
)

1,304Total operating costs and expenses


1,990,659


3,056,630


3,240,956Operating loss


(568
)

(140,153
)

(83,686
)Other (expense) income:Interest expense


(131,102
)

(134,513
)

(134,568
)Loss on debt modification and extinguishment, net


(42,797
)




Gain on debt exchange


400,835





Foreign exchange (loss) gain


(1,400
)

(4,264
)

6,286Interest income


583


1,308


805Income (loss) from continuing operations before income taxes


225,551


(277,622
)

(211,163
)Provision (benefit) for income taxes


79,762


(19,979
)

44,000Income (loss) from continuing operations


145,789


(257,643
)

(255,163
)Loss from discontinued operations, net of tax of $1,524 in 2007








(10,864
)Net income (loss)

$
145,789

$
(257,643
)
$
(266,027
)Earning (loss) per share:Basic:Income (loss) from continuing operations

$
9.20

$
(193.00
)
$
(193.80
)(Loss) from discontinued operations








(7.91
)Net income (loss)

$
9.20

$
(193.00
)
$
(201.71
)Diluted:Income (loss) from continuing operations

$
9.19

$
(193.00
)
$
(193.80
)(Loss) from discontinued operations








(7.91
)Net income (loss)

$
9.19

$
(193.00
)
$
(201.71
)Weighted average common sharesbasic


14,903


1,378


1,374Weighted average common sharesdiluted


14,908


1,378


1,374


See
accompanying notes to consolidated financial statements.

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Georgia Gulf Corporation and Subsidiaries        Consolidated Statements of Stockholders' Equity (Deficit)

Common Stock



Retained
Earnings
Accumulated
(deficit)

Accumulated
Other
Comprehensive
Income (loss)

Total
Stockholders'
Equity
(deficit)Additional
Paid-In
Capital(In thousands, except share data)

Shares

AmountBalance, January 1, 2007


1,376

$
14

$
94,376

$
324,007

$
(24,874
)
$
393,523Comprehensive loss:Net loss











(266,027
)




(266,027
)Adjustment to initially apply FIN No. 48











(2,151
)




(2,151
)Pension liability adjustment including effect of SFAS No. 158, net of taxes of $4,288














6,964


6,964Foreign currency translation adjustments, net of taxes of $39,477














68,344


68,344Unrealized loss on derivatives, net of tax of $1,201














(1,945
)

(1,945
)Total comprehensive loss

















(194,815
)Employee stock purchase and stock compensation plans, net of forfeitures


2





10,856








10,856Retirement of common stock associated with stock compensation plans


(2
)




(685
)







(685
)Tax benefit (deficiency) from stock purchase and stock compensation plans








(979
)







(979
)Dividends











(11,099
)




(11,099
)Balance, December 31, 2007


1,376

$
14


103,568


44,730


48,489


196,801Comprehensive loss:Net loss











(257,643
)




(257,643
)Pension liability adjustment including effect of SFAS No. 158, net of taxes of $16,519














(23,113
)

(23,113
)Foreign currency translation adjustments, net of taxes of $32,025














(53,640
)

(53,640
)Unrealized gain on derivatives, net of tax of $609














1,009


1,009Total comprehensive loss

















(333,387
)Employee stock purchase and stock compensation plans, net of forfeitures


4


1


3,301








3,302Retirement of common stock associated with stock compensation plans


(1
)




(110
)







(110
)Tax benefit (deficiency) from stock purchase and stock compensation plans








(945
)







(945
)Dividends











(5,589
)




(5,589
)Balance, December 31, 2008


1,379

$
14


105,815


(218,502
)

(27,255
)

(139,928
)Comprehensive income:Net income











145,789





145,789Pension liability adjustment including effect of SFAS No. 158, net of taxes of $419














(4,469
)

(4,469
)Foreign currency translation adjustments, net of taxes of $14,596














23,589


23,589Unrealized gain on derivatives, net of tax of $1,105














1,821


1,821Total comprehensive income

















166,730Preferred stock issued and converted to common stock


31,582


316


357,237








357,553Employee stock purchase and stock compensation plans, net of forfeitures


1,154


12


17,650








17,662Retirement of common stock associated with stock compensation plans


(397
)

(4
)

(7,153
)







(7,157
)Tax benefit (deficiency) from stock purchase and stock compensation plans








(1,532
)







(1,532
)Balance, December 31, 2009


33,718

$
337

$
472,018

$
(72,713
)
$
(6,314
)
$
393,328


See accompanying notes to consolidated financial statements.

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Table of Contents



GEORGIA GULF CORPORATION AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,(In thousands)

2009

2008

2007Operating activities:Net income (loss)

$
145,789

$
(257,643
)
$
(266,027
)Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization


117,690


143,718


150,210Loss on debt modification and extinguishment, net


42,797





Gain on debt exchange


(400,835
)




Loan fair value gain amortization


12,944





Foreign exchange (gain) loss


(938
)

7,108


(10,357
)Deferred income taxes


97,190


(23,435
)

29,695Tax deficiency related to stock plans


(1,630
)

(945
)

(1,142
)Goodwill, intangibles and other long-lived asset impairment charges


21,866


175,958


158,960Stock based compensation


17,663


3,302


10,856Losses (gains) on sale of assets


218


(27,282
)

1,304Other non-cash items


7,479


12,433


23,456Change in operating assets and liabilities:Receivables


2,362


117,591


43,038Securitization of trade receivables


(111,000
)

(36,000
)

19,000Inventories


1,112


97,704


541Prepaid expenses and other current assets


(5,665
)

(2,472
)

11,381Accounts payable


5,462


(117,437
)

8,628Interest payable


40,397


(1,637
)

(3,494
)Accrued income taxes


(2,493
)

8,603


6,728Accrued compensation


5,261


(20,996
)

(7,238
)Other accrued liabilities


(7,930
)

(31,627
)

(38,358
)Other


12,984


(5,551
)

(9,022
)Net cash provided by operating activities from continuing operations


723


41,392


128,159Net cash provided by operating activities from discontinued operations








398Net cash provided by operating activities


723


41,392


128,557Investing activities:Proceeds from insurance recoveries related to property, plant and equipment


1,980


7,308


Capital expenditures


(30,085
)

(62,545
)

(83,670
)Proceeds from sale of assets


2,080


79,806


105,259Net cash (used in) provided by investing activities


(26,025
)

24,569


21,589Financing activities:Borrowings on revolving line of credit


254,301


1,005,904


1,042,708Repayments on revolving line of credit


(389,523
)

(898,186
)

(1,049,949
)Borrowings on ABL revolver


56,462





Long-term debt payments


(367,402
)

(74,004
)

(224,505
)Long-term debt proceeds


496,739





95,865Fees paid to amend or issue debt facilities


(79,749
)

(9,823
)

(3,241
)Tax benefits from employee share-based exercises


98





Stock compensation plan activity


(25
)

(110
)

(685
)Dividends





(8,379
)

(11,099
)Net cash (used in) provided by financing activities


(29,099
)

15,402


(150,906
)Effect of exchange rate changes on cash and cash equivalents


3,223


(615
)

346Net change in cash and cash equivalents


(51,178
)

80,748


(414
)Cash and cash equivalents at beginning of year


89,975


9,227


9,641Cash and cash equivalents at end of year

$
38,797

$
89,975

$
9,227


See accompanying notes to consolidated financial statements.

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Table of Contents



Georgia Gulf Corporation and Subsidiaries        Notes to Consolidated Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF BUSINESS

Principles of Consolidation.The consolidated financial statements include the accounts of Georgia Gulf Corporation and its wholly
owned
subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Nature of Operations.We are a leading North American manufacturer and an international marketer of chlorovinyl and aromatics chemicals
and also
manufacture and market vinyl-based building and home improvement products. Our chlorovinyl and aromatic chemicals products are sold for further processing into a wide variety of end-use
applications, including plastic pipe and pipe fittings, siding and window frames, bonding agents for wood products, high-quality plastics, acrylic sheeting and coatings for wire and cable.
Our vinyl-based building and home improvement products, marketed under the Royal Group brands, primarily include window and door profiles, mouldings, siding, pipe and pipe fittings and deck, fence and
rail products.

Use of Estimates.Management is required to make estimates and assumptions that affect amounts reported in the financial statements and
accompanying
notes prepared in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates.

Foreign Currency Translation and Transactions.Our subsidiaries that operate outside the United States use their local currency as the
functional
currency. The functional currency is translated into U.S. dollars for balance sheet accounts using the month end exchange rates in effect as of the balance sheet date and average exchange rate for
revenues and expenses for each respective period. The translation adjustments are deferred as a separate component of stockholders' equity, within accumulated other comprehensive income (loss), net of
tax where applicable. Gains or losses resulting from transactions denominated in foreign currencies are reported in the same financial statement captions as the underlying transactions in the
consolidated statements of operations. We recorded a loss of $1.1 million, $2.3 million and $5.4 million, in fiscal years 2009, 2008 and 2007, respectively, within operating
(loss) income in the consolidated statement of operations. The year over year fluctuation in transaction related gains or (losses) is due to both the volume of foreign currency denominated
transactions and the volatility in the underlying exchange rates.

Cash and Cash Equivalents.Marketable securities that are highly liquid with an original maturity of three months or less are considered
to be the
equivalent of cash for purposes of financial statement presentation.

Accounts Receivable and Allowance for Doubtful Accounts.We grant credit to customers under credit terms that are customary in the
industry and based
on the creditworthiness of the customer and generally do not require collateral. We also provide allowances for cash discounts and doubtful accounts based on contract terms, historical collection
experience, periodic evaluations of the aging of the accounts receivable and specific collectibility analysis.

Revenue Recognition.We recognize revenue in accordance with generally accepted accounting principles as outlined in the Financial
Accounting
Standards Board's ("FASB"), Accounting Standard Codification ("ASC" or "Codification") topic 605, "Revenue Recognition," which requires that four basic
criteria be met before revenue can be recognized: (i) persuasive evidence of an arrangement exists; (ii) the price is fixed or determinable; (iii) collectibility is reasonably
assured; and (iv) product delivery has

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Table of Contents

Georgia Gulf Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF BUSINESS (Continued)

occurred.
We primarily recognize revenue as products are shipped based on free on board ("FOB") terms when title passes to customers, and the customer takes ownership and assumes risk of loss.

Sales Incentives.We offer sales incentives, primarily in the form of volume rebates, slotting fees and advertising allowances to our
customers,
which are classified as a reduction of net sales and are calculated based on contractual terms of customer contracts. We accrue for these sales incentives based on contract terms and historical
experience.

Shipping Costs.All amounts billed to a customer in a sale transaction related to shipping are classified as revenue. Shipping fees
billed to
customers and included in sales and cost of goods sold were $62.0 million in 2009, $74.0 million in 2008, and $90.3 million in 2007.

Advertising Costs.Advertising costs and promotion expenses generally relate to our vinyl-based building and home improvement products
marketed under
the Royal Group brand names and are charged to earnings during the period in which they are incurred. Advertising and promotion expenses are included in selling, general and administrative expenses
and were $5.7 million, $8.3 million and $11.7 million, in 2009, 2008 and 2007, respectively.

Inventories.Inventories are valued at the lower of cost or market. Cost is determined using the first-in, first-out method
for the majority of inventory and the weighted average cost method for the remainder. Costs include raw materials, direct labor and manufacturing overhead. Market is based on current replacement cost
for raw materials and supplies and on net realizable value for finished goods.

Property, Plant and Equipment.Property, plant and equipment are stated at cost. Maintenance and repairs are charged to expense as
incurred, and
major renewals and improvements are capitalized. Interest expense attributable to funds used in financing the construction of major plant and equipment is capitalized. Interest expense capitalized
during 2009, 2008 and 2007 was $1.0 million, $0.4 million, and $5.7 million, respectively. Depreciation is computed using the straight-line method over the estimated
useful lives of the assets. Depreciation expense totaled approximately $98.5 million, $128.2 million and $134.8 million, for the years ended December 31, 2009, 2008, and
2007, respectively. The net book value of our idled Pasadena, Texas phenol/acetone plant was approximately $0.7 million as of December 31, 2009, and is included in property, plant and
equipment on our consolidated balance sheet. The estimated useful lives of our assets are as follows:

Buildings

27-30 yearsLand improvements

15 yearsMachinery and equipment

3-15 yearsDies and moulds

4-6 yearsOffice furniture and equipment

3-10 yearsComputer equipment and software

3-5 years


Asset Retirement Obligation.We account for asset retirement obligations in accordance with ASC topic 410 sub-topic 20, Asset Retirement Obligation, which requires the fair value of a liability for an asset retirement obligation be recognized in the period in which it is
incurred and capitalized as part of the carrying amount of the long-lived asset. When a liability is initially recorded, we capitalize the cost by increasing the carrying value of the
related long-lived asset. The liability is accreted to its future value each

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Table of Contents

Georgia Gulf Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF BUSINESS (Continued)

period,
and the capitalized cost is depreciated over the estimated useful life of the related asset. Upon settlement of the liability, a gain or loss is recorded. We had $2.3 million and
$2.2 million of asset retirement obligations recorded in other non-current liabilities in the consolidated balance sheets as of December 31, 2009 and 2008, respectively.

Other Assets.Other assets primarily consist of advances for long-term raw materials purchase contracts (see Note 11), our
investment in joint ventures (see Notes 8 and 12) and unamortized debt issuance costs (see Note 8). Advances for long-term raw materials purchase contracts are being
amortized as additional raw materials costs over the life of the related contracts in proportion to raw materials delivery or related contract terms. Debt issuance costs are being amortized to
interest expense using the effective interest rate and straight-line methods over the term of the related debt instruments.

Goodwill and Other Intangible Assets.We account for our goodwill and other intangible assets in accordance with ASC topic 350,
IntangiblesGoodwill and Other.Goodwill is the excess of cost of an acquired entity over the amounts specifically assigned to assets
acquired and liabilities assumed in purchase accounting for business combinations. Our other identifiable intangible assets include customer lists, trade names and purchased technology. We test the
carrying value of our goodwill and other intangible assets with indefinite lives for impairment on an annual basis on October 1. The carrying value will be tested for impairment between annual
impairment tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Indicators include, but are not limited to, significant declines in the markets and
industries that buy our products, changes in the estimated future cash flows of our reporting units, changes in capital markets and changes in our market capitalization. Impairment testing for
goodwill and indefinite lived intangible assets is a two-step test performed at a reporting unit level. Our reporting units subject to such testing are window and door profiles; mouldings;
deck, fence and rail products and compounds (vinyl and additives). An impairment loss may be recognized when the carrying amount of the reporting unit's net assets exceeds the estimated fair value of
the reporting unit. Intangible assets with definite lives are amortized on a straight-line basis over their estimated useful lives. See Note 9 for a summary of goodwill and other
intangible assets by reportable segment.

Long-Lived Assets.Our long-lived assets, such as property, plant, and equipment, and intangible assets with definite lives
are analyzed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to the estimated fair value of the asset based on undiscounted cash flows. If the carrying amount of an asset exceeds estimated fair value of the
asset, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the estimated fair value of the asset based on discounted cash flows. Assets to be disposed
of would be recorded at the lower of the carrying amount or fair value less costs to sell and no longer depreciated.

Pension Plans and Other Postretirement Benefit Plans.We have defined contribution pension plans covering substantially all of our
employees. In
addition, we have two defined benefit pension plans and had one postretirement benefit plan. For the defined benefit pension plans, the benefits are based on years of service and the employee's
compensation. Our postretirement benefit plan was terminated and paid out in the second quarter of 2009. Our policy on funding the defined benefit plans is to contribute an amount within the range of
the minimum required and the maximum tax-deductible contribution.

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Table of Contents

Georgia Gulf Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF BUSINESS (Continued)

Accounting
for employee retirement plans involves estimating the cost of benefits that are to be provided in the future and attempting to match, for each employee, that estimated cost to
the period worked. To accomplish this, we make assumptions about discount rates, expected long-term rates of return on plan assets, salary increases and employee turnover and mortality,
among others. We reevaluate all assumptions annually with our independent actuaries taking into consideration existing as well as forecasted economic conditions, and our policy and strategy with
regard to the plans. As of December 31, 2009, we had frozen any further benefits associated with the defined contribution and defined benefit plans.

Income Taxes.Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized
for the future
tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

We
adopted ASC topic 740,Income Taxes, formerly Financial Accounting Standards Board Interpretation ("FIN") 48, effective
January 1, 2007. ASC topic 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. See Note 16, for further explanation of our adoption of ASC topic 740.

Self-Insurance Accruals.We are self-insured up to certain limits for costs associated with workers' compensation and
employee group medical coverage. Liabilities for insurance claims and reserves include accruals of estimated settlements for known claims, as well as accruals of estimates of incurred, but not
reported claims. These accruals are included in other current liabilities in the accompanying consolidated balance sheets. We also use information provided by independent consultants to assist in the
determination of estimated accruals. In estimating these costs, we consider historical loss experience and make judgments about the expected levels of costs per claim.

Warranty Costs.We provide warranties for certain building and home improvement products against
defects in material, performance and workmanship. We accrue for warranty claims at the time of sale based on historical warranty claims experience. Our warranty liabilities are included in other
accrued liabilities in the consolidated balance sheets. Activity in our warranty liabilities for the years ended December 31, 2009, 2008 and 2007 is as follows:

In thousands

2009

2008

2007January 1,

$
7,498

$
12,160

$
7,664Warranty provisions


3,005


2,189


6,728Estimated fair value of warranty liability assumed in Royal Group acquisition








5,224Foreign currency translation


896


(1,659
)

874Warranty claims paid


(4,031
)

(5,192
)

(8,330
)December 31,

$
7,368

$
7,498

$
12,160


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Table of Contents

Georgia Gulf Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF BUSINESS (Continued)

The
adjustment in the year ended December 31, 2007 to the estimated fair value of warranty liabilities assumed in the Royal Group acquisition on October 3, 2006 reflects an
adjustment to the preliminary purchase price allocation.

Derivative Financial Instruments.Derivatives that are not hedges must be adjusted to fair value through earnings in accordance with ASC
topic 815, Derivatives and Hedging. If the derivative is a hedge, depending on the nature of the hedge, changes in its fair value are either offset against the
change in fair value of assets, liabilities, or firm commitments through earnings or recognized in other
comprehensive income until the hedged item is recognized in earnings. We engage in activities that expose us to market risks, including the effects of changes in interest rates, foreign currency and
changes in commodity prices. Financial exposures are managed as an integral part of our risk management program, which seeks to reduce the potentially adverse effect that the volatility of the
interest rate, foreign currency, and commodity markets may have on operating results. We do not engage in speculative transactions nor do we hold or issue financial instruments for trading purposes.
Long-term supply agreements that meet the appropriate criteria are accounted for under the normal purchase provisions within ASC topic 815.

We
formally document all hedging instruments and hedging transactions, as well as our risk management objective and strategy for undertaking hedged transactions. This process includes
linking all derivatives that are designated as fair value and cash flow hedges to specific assets or liabilities on the consolidated balance sheet or to forecasted transactions. We also formally
assess, both at inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair value or cash flows of hedged
transactions. When it is determined that a derivative is not highly effective or the derivative expires or is sold, terminated, exercised, or discontinued because it is unlikely that a forecasted
transaction will occur, we discontinue the use of hedge accounting for that specific hedge instrument.

Litigation.In the normal course of business, we are involved in legal proceedings. We accrue a liability for such matters when it is
probable that a
material liability has been incurred and the amount can be reasonably estimated. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal
fees and other directly related costs expected to be incurred.

Environmental Expenditures.Environmental expenditures related to current operations or future revenues are expensed or capitalized
consistent with
our capitalization policy. Expenditures that relate to an existing condition caused by past operations and that do not contribute to future revenues are expensed in the period incurred. Liabilities
are recognized when material environmental assessments or cleanups are probable and the costs can be reasonably estimated.

Accumulated Other Comprehensive loss.Accumulated other comprehensive loss includes foreign currency translation of assets and
liabilities of foreign
subsidiaries, effects of exchange rate changes on intercompany balances of a long-term nature, unrealized gains and losses on derivative financial instruments designated as cash flow
hedges, and adjustments to pension liabilities as required by ASC topic

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Table of Contents

Georgia Gulf Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF BUSINESS (Continued)

715.
Amounts recorded in accumulated other comprehensive loss, net of tax, on the consolidated statements of stockholders' equity as of December 31, 2009 and 2008 are as follows:

December 31,In thousands

2009

2008Unrealized gain (loss) on derivative contracts

$
160

$
(1,661
)Pension liability adjustment including affect of ASC topic 715


(23,377
)

(18,908
)Currency translation adjustment


16,903


(6,686
)Total accumulated other comprehensive loss

$
(6,314
)
$
(27,255
)


Stock-Based Compensation.Stock based compensation is accounted for in accordance with ASC topic 718,Compensation-Stock
Compensation,using the modified prospective method of adoption. ASC topic 718 requires all share-based payments to employees, including grants of employee stock options,
restricted stock, restricted stock units and non-employee director deferred shares and restricted stock units to be recognized in the financial statements based on their fair values at the
grant date.

ASC
topic 718 required the elimination of unearned compensation (contra-equity account) related to earlier awards against the appropriate equity accounts, additional paid-in
capital, in our circumstance. ASC topic 718 requires tax benefits relating to excess share-based compensation deductions to be prospectively presented in the statements of cash flows as a financing
activity cash inflow.

Earnings (Loss) Per Share.We calculate earnings per share in accordance with ASC subtopic 260-10,Earnings per
Share,using the two-class method. The two-class method requires that share-based awards with non-forfeitable dividends be classified as
participating securities. In calculating basic earnings per share, this method requires net income to be reduced by the amount of dividends declared in the current period for each participating
security and by the contractual amount of dividends or other participation payments that are paid or accumulated for the current period. Undistributed earnings for the period are allocated to
participating securities based on the contractual participation rights of the security to share in those current earnings assuming all earnings for the period are distributed. Recipients of our
restricted stock awards have contractual participation rights that are equivalent to those of common stockholders. Therefore, we allocate undistributed earnings to restricted stock and common
stockholders based on their respective ownership percentage, as of the end of the period.

The
two-class method also requires the denominator to include the weighted average restricted stock when calculating basic earnings per share. Diluted earnings per share also
include the additional share equivalents from the assumed conversion of stock options calculated using the treasury stock method, subject to the anti-dilution provisions of ASC subtopic
260-10. The two-class method has been retroactively applied for all periods presented.

In
computing diluted loss per share for the year ended December 31, 2009, options to purchase common stock of 0.2 million shares were not included due to their
anti-dilutive effect. In computing diluted loss per share for the years ended December 31, 2008 and 2007, all common stock equivalents were excluded as a result of their
anti-dilutive effect.

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Table of Contents

Georgia Gulf Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF BUSINESS (Continued)

Computations
of basic and diluted earnings (loss) per share are presented in the following table:

Basic and Diluted Earnings (Loss) Per ShareTwo-class Method

Year ended December 31,In thousands, except per share data

2009

2008 (a)

2007 (a)Basic Earnings (loss) per shareUndistributed income (loss)

$
145,789

$
(266,022
)
$
(277,126
)Restricted stock ownership


6
%


%


%Restricted stock interest on undistributed income

$
8,753

$


$
Weighted average restricted sharesBasic


952


16


12Total restricted shareholders basic earnings per share

$
9.20

$


$
Undistributed income (loss)

$
145,789

$
(266,022
)
$
(277,126
)Common stock ownership


94
%

100
%

100
%Common stockholders interest in undistributed income (loss)

$
137,036

$
(266,022
)
$
(277,126
)Weighted average common sharesBasic


14,903


1,378


1,374Total common stockholders basic earnings (loss) per share

$
9.20

$
(193.00
)
$
(201.71
)Total basic earnings (loss) per share

$
9.20

$
(193.00
)
$
(201.71
)Total basic loss per share from discontinued operations








(7.91
)Total basic earnings (loss) per share from continuing operations

$
9.20

$
(193.00
)
$
(193.80
)Diluted earnings (loss) per shareUndistributed income (loss)

$
145,789

$
(266,022
)
$
(277,126
)Deduct: Undistributed earningsrestricted stock


8,753





Common stockholders interest in undistributed income (loss) used in diluted earnings per share

$
137,036

$
(266,022
)
$
(277,126
)Weighted average common sharesbasic


14,903


1,378


1,374Stock Options


5





Weighted average common sharesdiluted


14,908


1,378


1,374Total diluted earnings (loss) per share

$
9.19

$
(193.00
)
$
(201.71
)Total diluted earnings (loss) per share

$
9.19

$
(193.00
)
$
(201.71
)Total diluted loss per share from discontinued operations








(7.91
)Total diluted earnings (loss) per share from continuing operations

$
9.19

$
(193.00
)
$
(193.80
)


(a)In
accordance with ASC subtopic 260-10, undistributed losses have been entirely allocated to the common stockholders and corresponding common
stockholders basic and diluted loss per share due to the fact that the restricted stock owners are not contractually obligated to share in the losses of the company.


64

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Table of Contents

Georgia Gulf Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF BUSINESS (Continued)

On July 28, 2009, we affected a 1-for-25 reverse stock split of our common stock. This reverse stock split has been reflected in share data and earnings
per share data contained herein for all periods presented. The par value of the common stock was not affected by the reverse stock split and remains at $0.01 per share. Consequently, on the company's
consolidated balance sheets and consolidated statements of stockholders' equity (deficit), the aggregate par value of the issued common stock was reduced by reclassifying the par value amount of the
eliminated shares of common stock to additional paid-in capital. On July 29, 2009, in connection with the debt for equity
exchange, we issued approximately 1.3 million common shares and approximately 30.2 million convertible preferred shares to our bond holders that tendered their notes. These newly issued common
shares are included in the above year ended December 31, 2009 earnings per share on a weighted average basis from the date of issuance. On September 17, 2009, the convertible preferred
shares were converted to common shares. These newly issued preferred shares that converted to common shares were eligible to participate in any dividends that we issue and thus were treated as common
share equivalents from the period issued until the date they formally converted to common shares in the calculations above.

2. NEW ACCOUNTING PRONOUNCEMENTS

In June 2009, the FASB issued ASC subtopic 105-10,Generally Accepted Accounting Principles. The Codification is now the
single source of authoritative nongovernmental U.S. generally accepted accounting principles ("GAAP"). Rules and interpretive releases of the Securities and Exchange Commission ("SEC") under authority
of federal securities laws are also sources of authoritative GAAP for SEC registrants. This statement was effective for interim and annual reporting periods ending after September 15, 2009. All
existing accounting standards are superseded as described in this statement. All other accounting literature not included in the Codification is nonauthoritative. The adoption of the Codification on
September 30, 2009 did not have an impact on our consolidated financial statements.

In
June 2009, the FASB issued ASC topic 810,Amendments to FASB Interpretation No. 46(R), which amends the consolidation guidance
applicable to variable interest entities and the definition of a variable interest entity ("VIE") and requires enhanced disclosures to provide more information about an enterprise's involvement in a
VIE. In addition, it requires an enterprise to perform an analysis to determine whether the enterprise's variable interest gives it a controlling interest in a VIE. The analysis identifies the primary
beneficiary of the VIE as the enterprise that has both (a) the power to direct the activities of the VIE and (b) the obligation to absorb losses of the VIE. This statement will be
effective for us beginning in the first quarter of 2010. We are currently evaluating the impact of this statement on our consolidated financial statements.

In
June 2009, the FASB issued ASC topic 860,Accounting for Transfers of Financial Assetsan amendment of FASB Statement
No. 140, which improves the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial statements
about a transfer of financial assets; the effects of a transfer on its financial position, financial performance and cash flows; and a transferor's continuing involvement, if any, in the transferred
assets. This statement is effective for financial asset transfers occurring after the beginning of an entity's first fiscal year that begins after November 15, 2009. Early adoption is
prohibited. We are currently evaluating the impact of this statement on our consolidated financial statements.

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Notes to Consolidated Financial Statements (Continued)

2. NEW ACCOUNTING PRONOUNCEMENTS (Continued)

In
April 2009, the FASB issued ASC subtopic 820-10,Fair Value Measurements and Disclosures,section 65-4, Transition Related to FASB Staff Position ("FSP") SFAS 157-4,
Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly.This ASC subtopic emphasizes that even if there has been a significant decrease in the volume and
level of activity for the asset or liability and regardless of the valuation technique(s) used, the objective of a fair value measurement remains the same. Fair value is the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under
current market conditions. This ASC subtopic was effective for the second quarter of 2009 and did not have a material impact on our consolidated financial statements. On August 28, 2009, the
FASB issued Accounting Standards Update ("ASU") 2009-05,Measuring Liabilities at Fair Value,(previously exposed for comments as proposed
FSP 157-f) to provide guidance on measuring the fair value of liabilities under ASC 820. This ASU clarifies that the quoted price for the identical liability, when traded as an asset in an
active market, is also a Level 1 measurement for that liability when no adjustment to the quoted price is required. The ASU also provides guidance in the absence of a Level 1
measurement. The ASU was effective for the first interim or annual reporting period beginning after the ASU's issuance. The adoption of this ASU did not have a material impact on our consolidated
financial statements.

In
April 2009, the FASB issued ASC subtopic 825-10,Financial Instruments,section 65-1, Transition Related to FSP SFAS 107-1 and Accounting Principles Bulletin ("APB")
No. 28-1, Interim Disclosures About Fair Value of
Financial Instruments.This ASC subtopic states that an entity shall disclose in the body or in the accompanying notes of its summarized financial information for interim
reporting periods and in its financial statements for annual reporting periods the fair value of all financial instruments for which it is practicable to estimate that value, whether recognized or not
recognized in the statement of financial position, as required by Statement 107. Fair value information disclosed in the notes must be presented together with the related carrying amount in a form
that makes it clear whether the fair value and carrying amount represent assets or liabilities and how the carrying amount relates to what is reported in the statement of financial position. An entity
also must disclose the method(s) and significant assumptions used to estimate the fair value of financial instruments and describe changes in method(s) and significant assumptions, if any, during the
period. These new disclosures became effective for
interim and annual periods ending after June 15, 2009. See Note 18, for disclosures related to this statement.

In
December 2008, the FASB issued ASC subtopic 715-20,CompensationRetirement Benefits,section 65-2,Transition Related to FSP SFAS 132(R)-1, Employer's Disclosure about Postretirement Benefit Plan
Assets, which amends ASC subtopic 715-20 to require more detailed disclosures about employers' pension plan assets. New disclosures will include more information on
investment strategies, major categories of assets, concentrations of risk within plan assets and valuation techniques used to measure the fair value of plan assets. This new ASC subtopic requires new
disclosures for us for the year ending December 31, 2009. The new disclosures are reflected in Note 15.

3. DISCONTINUED OPERATIONS, AND ASSETS HELD-FOR-SALE

Discontinued OperationsOutdoor Building Products Segment.As part of our strategic plan for the acquired Royal Group businesses,
we
exited certain non-core businesses included in our outdoor building

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Notes to Consolidated Financial Statements (Continued)

3. DISCONTINUED OPERATIONS, AND ASSETS HELD-FOR-SALE (Continued)

products
segment. The results of all discontinued operations in our outdoor building products segment for the year ended December 31, 2007 were as follows:

(In thousands)

December 31,
2007Net sales

$
19,039Operating (loss) from discontinued operations


(12,388
)Benefit from income taxes


1,524Total loss from discontinued operations

$
(10,864
)


Assets Held-For-Sale.As part of our cost reduction initiatives strategic plan, we also continue to sell certain
non-core assets and businesses. Assets held for sale include U.S. and Canadian real estate totaling $14.9 million at December 31, 2009 and U.S. real estate totaling
$0.5 million at December 31, 2008. In March 2008, we executed a contingent sale agreement and received net proceeds of $12.6 million for certain Canadian real estate. The
contingency was based on the buyer satisfying certain property zoning conditions. The contingency was resolved in June 2008. This transaction resulted in a $3.3 million loss recorded in March
2008. In June 2008, we sold property for $3.2 million and received $1.2 million in cash and a short-term note for $2.0 million. Both gains and losses resulting from
each transaction are included in (gains) losses on sale of assets in the accompanying condensed consolidated statement of operations for the year ended December 31, 2008. See Note 10.

Divestitures.In March 2008, we sold the assets and operations of our outdoor storage buildings business that were previously a part of
our outdoor
building products segment. The outdoor storage buildings business was sold for $13.0 million and resulted in a loss of approximately $4.6 million. We sold the land and building from our
Winnipeg, Manitoba Window and Door Profiles plant for $4.5 million, resulting in a recognized gain of $0.3 million in March 2008. In June 2008, we sold land for net proceeds of
$36.5 million, which resulted in a gain of $28.8 million. Additionally, in June 2008, we sold and leased back equipment for $10.6 million resulting in a $2.2 million
currently recognized gain, a
short-term deferred gain of $0.8 million and a non-current deferred gain of $7.2 million. The deferred gain will be recognized ratably over the term of the
equipment leases. In addition we sold the Oklahoma City, Oklahoma polyvinyl chloride ("PVC" or "vinyl resin") plant in December 2008 for $1.3 million. See Note 10.

4. RESTRUCTURING ACTIVITIES

In March 2008, we initiated plans to permanently shut down the Oklahoma City, Oklahoma 500 million pound PVC plant, the "Oklahoma City Restructuring Plan" which was a part of the
Chlorovinyls segment. The plant ceased operations in March 2008. We wrote down the plant's property, plant and equipment in accordance with ASC subtopic 360-10, Property, Plant and Equipment, resulting
in a $15.5 million impairment charge and incurred additional termination benefits and closing costs of
$2.0 million that were expensed as incurred, in accordance with ASC 420-10,Exit or Disposal Cost Obligations. No significant costs
related to the Oklahoma City Restructuring Plan were incurred in the year ended December 31, 2009, and we do not expect there to be any future costs associated with the Oklahoma City
Restructuring Plan.

Additionally,
the restructuring costs for the year ended December 31, 2009 and 2008 include our divestiture and closure of our outdoor storage buildings business assets and
operations. The outdoor

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Notes to Consolidated Financial Statements (Continued)

4. RESTRUCTURING ACTIVITIES (Continued)

storage
building business was sold for $13.0 million and resulted in a loss of approximately $4.6 million ("Outdoor Storage Plan"). During the third quarter of 2009 we reached a
favorable settlement on a legal claim which resulted in the reversal of a litigation accrual of $3.1 million and a credit of restructuring costs for the same amount for the year ended
December 31, 2009. The amount is noted as a reduction in the additions column in the table below.

In
the fourth quarter of 2008, we initiated a restructuring plan (the "Fourth Quarter 2008 Restructuring Plan") that included the permanent shut down of our 450 million pound PVC
manufacturing facility in Sarnia, Ontario, the exit of a recycled PVC compound manufacturing facility in Woodbridge, Ontario, the consolidation of various manufacturing facilities, and elimination of
certain duplicative activities in our operations. In connection with the Fourth Quarter 2008 Restructuring Plan, we incurred costs related to termination benefits, including severance, pension and
postretirement benefits, operating lease termination costs, asset impairment charges, relocation and other exit costs and have recognized these costs in accordance with ASC 420-10 and
related accounting standards. We expect to pay these termination benefits and other qualified restructuring activity costs through December 2010 as employees are being paid on a salary continuance
basis rather than a lump sum. In addition, plant remediation or environmental costs associated with the closing of these facilities are expected to be paid through June 2010. Any costs incurred
associated with the Fourth Quarter 2008 Restructuring Plan that will benefit future periods, such as relocation costs, will be expensed in the periods incurred. Total restructuring expenses incurred
for the year ended December 31, 2009 includes a $4.0 million credit adjustment for the wind up of the Canadian pension plan (see Note 14). The amount is noted as a reduction in
the additions column in the table below. Additionally, future costs for the Fourth Quarter 2008 Restructuring Plan are estimated to be approximately $0.3 million, consisting of future severance
and non-workforce related costs. We incurred severance and non-workforce related costs for the year ended December 31, 2007 associated with a 2007 restructuring plan,
which is included in the table below.

In
May 2009, we initiated plans to further consolidate plants in our window and door profiles and mouldings products segment ("2009 Window and Door Consolidation Plan"). As a result we
incurred restructuring costs, including impairment of the plants' fixed assets for the year ended December 31, 2009. For the year ended December 31, 2009, we incurred
$21.6 million of impairment charges for real estate and other fixed assets associated with the consolidation of these plants. The details of restructuring and impairment expenses incurred for
the year ended December 31, 2009 are noted in the tables below. Additional future costs for the 2009 Window and Door Consolidation Plan are estimated to be approximately $1.1 million,
consisting primarily of future non-workforce related costs.

The
expenses associated with the Fourth Quarter 2008 Restructuring Plan, the Outdoor Storage Plan and the 2009 Window and Door Consolidation Plan for the year ended December 31,
2009 for severance and other exit costs was $4.4 million and are included in restructuring costs in the consolidated statement of operations. A summary of our restructuring activities
recognized as a result of the Fourth Quarter 2008

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Georgia Gulf Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

4. RESTRUCTURING ACTIVITIES (Continued)

Restructuring
Plan, the Outdoor Storage Plan and the 2009 Window and Door Consolidation Plan, by reportable segment for the years ended December 31, 2008 and 2009 is as follows:

(In thousands)

Balance at
December 31,
2007

Additions

Cash
Payments

Foreign
Exchange
and Other
Adjustments

Balance at
December 31,
2008ChlorovinylsFourth Quarter 2008 Restructuring Plan:Involuntary termination benefits

$


$
3,468

$
(256
)
$
34

$
3,246Exit costs





4,902


(751
)

34


4,185Other





1,184








1,184Window and door profiles and mouldings productsFourth Quarter 2008 Restructuring Plan:Involuntary termination benefits


2,328


1,600


(2,096
)

(360
)

1,472Exit costs


690


(83
)

(568
)

(38
)

1Other





1,459








1,459Outdoor building productsFourth Quarter 2008 Restructuring Plan:Involuntary termination benefits


370


1,457


(548
)

4


1,283Other





508








508Outdoor Storage Plan:Involuntary termination benefits





1,574


(847
)

(204
)

523Exit costs





4,814


(2,854
)

(181
)

1,779CorporateFourth Quarter 2008 Restructuring Plan:Involuntary termination benefits





1,090


(1,131
)

41


Total

$
3,388

$
21,973

$
(9,051
)
$
(670
)
$
15,640


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Notes to Consolidated Financial Statements (Continued)

4. RESTRUCTURING ACTIVITIES (Continued)



(In thousands)

Balance at
December 31,
2008

Additions

Cash
Payments

Foreign
Exchange
and Other
Adjustments

Balance at
December 31,
2009ChlorovinylsFourth Quarter 2008 Restructuring Plan:Involuntary termination benefits

$
3,246

$
(3,566
)(a)
$
(2,900
)
$
4,250

$
1,030Exit costs


4,185


3,525


(5,477
)

(257
)(b)

1,976Other


1,184








(1,184
)

Window and door profiles and mouldings productsFourth Quarter 2008 Restructuring Plan:Involuntary termination benefits


1,472


1,529


(2,269
)

492


1,224Exit costs


1


22


(23
)




Other


1,459








(1,459
)

2009 Window and Door Consolidation Plan:Involuntary termination benefits





1,124


(390
)

145


879Exit costs





576


(397
)




179Outdoor building productsFourth Quarter 2008 Restructuring Plan:Involuntary termination benefits


1,283


2,093


(2,279
)

97


1,194Exit costs





23


(23
)




Other


508








(508
)

Outdoor Storage Plan:Involuntary termination benefits


523


138


(315
)

(183
)

163Exit costs


1,779


(1,244
)

(1,943
)

1,408


CorporateFourth Quarter 2008 Restructuring Plan:Involuntary termination benefits





171


(123
)




48Total

$
15,640

$
4,391

$
(16,139
)
$
2,801

$
6,693


(a)Includes
a $4.0 million adjustment for the wind up of the Canadian post retirement health and welfare and pension plans that were previously
reflected in accumulated other comprehensive income.(b)Includes
a reclassification of $0.8 million of Other Post Retirement Benefits from Exit Costs to Involuntary Termination Benefits for the Fourth
Quarter 2008 Restructuring Plan in the Chlorovinyls segment.


In
the first quarter of 2009, we engaged the services of several consultants to assist us in performance improvement, transportation management and indirect sourcing cost reduction
initiatives among other areas of the business, with the ultimate goal to restructure our businesses and improve and sustain profitability for the long-term. For the year ended
December 31, 2009, we incurred $2.5 million related to fees paid to these consultants to advise us on the restructuring strategies noted above which are included in restructuring costs
in the consolidated statements of operations.

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Notes to Consolidated Financial Statements (Continued)

4. RESTRUCTURING ACTIVITIES (Continued)

A
summary of impairment of tangible long-lived assets incurred in connection with our restructuring activities as a result of the Fourth Quarter 2008 Restructuring Plan, the
Outdoor Storage Plan and the 2009 Window and Door Consolidation Plan, by reportable segment for the years ended December 31, 2008 and 2009 is as follows:

(In thousands)

Year Ended
December 31,
2009

Year Ended
December 31,
2008ChlorovinylsImpairment of Long-Lived Assets

$
201

$
44,310Window and door profiles and mouldings productsImpairment of Long-Lived Assets


21,603


2,246Outdoor building productsImpairment of Long-Lived Assets





634Other, including unallocated corporateImpairment of Long-Lived Assets





(187
)Total

$
21,804

$
47,003


The
total impairment of tangible long-lived assets for the years ended December 31, 2009 and 2008 is included in long-lived asset impairment charges in the
consolidated statement of operations. For the year ended December 31, 2007, there were no similar charges.

5. ACCOUNTS RECEIVABLE SECURITIZATION

We had an agreement pursuant to which we sold an undivided percentage ownership interest in a certain defined pool of our U.S. trade receivables on a revolving basis through a wholly
owned subsidiary to two third parties (the "Securitization"). This wholly owned subsidiary was funded through advances on sold trade receivables and collections of these trade receivables and its
activities were exclusively related to the Securitization. As collections reduced accounts receivable included in the pool, we sold ownership interests in new receivables to bring the ownership
interests sold up to a maximum of $165.0 million, as permitted by the Securitization. At December 31, 2008 and 2007 the unpaid balance of accounts receivable in the defined pool was
approximately $158.2 million and
$244.2 million, respectively and the balance of receivables sold was $111.0 million and $147.0 million, respectively.

Our
Securitization was accounted for as a sale in accordance with the provisions of ASC topic 860,Transfers and Servicing,and therefore,
the receivables sold are not included in the debt and related accounts receivable accounts on our consolidated balance sheets. We continued to provide an allowance for doubtful accounts related to
these receivables based on our historical experience and aging of the accounts receivable. At December 31, 2008 and 2007, we had a subordinated interest of approximately $47.2 million
and $97.2 million, respectively, in the defined pool of receivables, which represented the excess of receivables sold over the amount funded to us. The fair value of the retained interest
approximated the carrying amount because of the short period of time it takes for the portfolio to be liquidated. From December 31, 2007 to December 31, 2008, we reduced the balance of
receivables sold from $147.0 million to $111.0 million, which resulted in a net decrease of cash flow of $36.0 million.

On
March 17, 2009, we entered into a new Asset Securitization agreement pursuant to which we sold an undivided percentage ownership interest in a certain defined pool of our U.S.
and Canadian trade

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Notes to Consolidated Financial Statements (Continued)

5. ACCOUNTS RECEIVABLE SECURITIZATION (Continued)

accounts
receivable on a revolving basis through a wholly owned subsidiary to a third party (the "New Securitization"). This wholly owned subsidiary was funded through advances on sold trade
receivables and collections of these trade receivables and its activities are exclusively related to the New Securitization. Under the New Securitization agreement we could sell ownership interests in
new receivables to bring the ownership interests sold up to a maximum of $175.0 million. As collections reduce accounts receivable included in the pool, we could sell ownership interests in new
receivables to bring the ownership interests sold up to a maximum of $175.0 million, as permitted by the New Securitization. In conjunction with the sales of receivables, we recorded losses of
$6.6 million, $7.1 million and $8.2 million for fiscal years 2009, 2008 and 2007, respectively, which are included as selling, general and administrative expenses in the
accompanying consolidated statements of operations. The losses were determined by applying a discount factor, as prescribed under the relevant Securitization, to the monthly balance in the ownership
interests sold.

As
of December 22, 2009 the Asset Securitization was replaced with a four-year term senior secured asset-based revolving credit facility that provides for a maximum of
$300 million of revolving credit, subject to borrowing base availability and other terms and conditions (the "ABL Revolver") (see Note 10). As a result of the termination and replacement
of our trade receivables securitization facility and the execution of the ABL Revolver, we repurchased $110.0 million of previously sold accounts receivable. The repurchase of these trade
receivables did not result in any significant losses.

6. INVENTORIES

The major classes of inventories were as follows:

December 31,(In thousands)

2009

2008Raw materials, work-in-progress, and supplies

$
97,351

$
94,618Finished goods


154,046


145,581Inventories

$
251,397

$
240,199


7. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consisted of the following:

(In thousands)

December 31,
2009

December 31,
2008Machinery and equipment

$
1,346,740

$
1,328,701Land and land improvements


86,013


86,167Buildings


195,602


197,481Construction-in-progress


25,629


33,036Property, plant and equipment, at cost


1,653,984


1,645,385Accumulated depreciation


966,414


884,625Property, plant and equipment, net

$
687,570

$
760,760


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Notes to Consolidated Financial Statements (Continued)

8. OTHER ASSETS, NET

Other assets, net of accumulated amortization, consisted of the following:

(In thousands)

December 31,
2009

December 31,
2008Advances for long-term purchase contracts

$
67,257

$
85,310Investment in joint ventures


12,804


16,104Deferred financing costs, net


25,654


42,167Long-term receivables


3,714


3,640Other


7,065


3,422Total other assets, net

$
116,494

$
150,643


During
2009, in connection with refinancing our capital structure, we (i) on July 27, 2009, effected a debt for equity exchange and (ii) on December 22, 2009
we (A) issued $500.0 million aggregate principal amount of senior secured 9.0 percent notes, (B) entered into the ABL Revolver, (C) terminated our senior secured
credit facility, and (D) terminated our asset securitization program (see Note 10, "Long-Term Debt"). We incurred $79.7 million of related financing fees of which
$24.4 million were deferred and included in other assets, net at December 31, 2009 and the remaining amount was expensed in the year ended December 31, 2009 in connection with the
respective refinancings referred to above. Debt issuance cost amortized as interest expense during 2009, 2008 and 2007 was $9.6 million, $6.9 million and $5.8 million,
respectively.

9. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill Impairment Charges.There were no goodwill impairment charges in 2009. Goodwill impairment charges totaled $63.4 million
and
$125.7 million in 2008 and 2007, respectively. We performed our annual impairment testing for goodwill and other intangible assets in accordance with ASC topic 350 sub-topic 020 Goodwill. We
evaluate goodwill and other intangible assets for impairment using the two-step process prescribed by ASC topic 350. The first
step is to identify potential impairment by comparing the fair value of the reporting unit to the book value, including goodwill. If the fair value of the reporting unit exceeds the book value,
goodwill is not considered impaired. If the book value exceeds the fair value, the second step of the process is performed to measure the amount of impairment. Our goodwill evaluations utilized
discounted cash flow analyses and market multiple analyses in estimating fair value. Our weighting of the discounted cash flow and market approaches varies by each reporting unit based on factors
specific to each reporting unit. Our weighting of the two approaches ranges from 50% to 100% of discounted cash flows and nil to 50% of the market approach. Inherent in our fair value determinations
are certain judgments and estimates relating to future cash flows, including interpretation of current economic indicators and market conditions, overall economic conditions and our strategic
operational plans with regard to our operations. From October 1, 2009 (our annual testing date) to December 31, 2009, our stock price and resulting market capitalization significantly
declined. We do not believe this decline in market capitalization is permanent and we have evaluated the factors contributing to such decline and have considered such in our impairment testing. Our
evaluation of the market capitalization decline included reconsidering our cash flow projections and discount rates utilized in our October 1, 2009 impairment test and evaluating whether they
remained appropriate as of December 31, 2009. We further evaluated our reporting units with significant goodwill using a 100 basis point increase in our discount rates above those that were
supported by our valuation work on the basis that a change in such assumptions may cause a

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Notes to Consolidated Financial Statements (Continued)

9. GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)

change
in the results of the analyses performed; however, it did not. Similar overall analyses were performed in 2008 and 2007. In addition, to the extent significant changes occur in market
conditions, overall economic conditions or our strategic operational plan; it is possible that goodwill not currently impaired may become impaired in the future.

Goodwill.The following table provides the detail of the changes made to goodwill by reportable segment during the years ended
December 31,
2009, 2008 and 2007.

In thousands

Chlorovinyls

Window and Door
Profiles and
Mouldings

Outdoor
Building
Products

TotalGross goodwill at January 1, 2007

$
221,357

$
135,756

$
20,011

$
377,124Foreign currency translation adjustment


23,990


(61
)

3,334


27,263Adjustment to preliminary purchase allocation of Royal Group


860


4,155


(1,383
)

3,632Gross goodwill at December 31, 2007


246,207


139,850


21,962


408,019Accumulated impairment losses at January 1, 2007











Impairment charges


(55,487
)

(50,430
)

(19,820
)

(125,737
)Accumulated impairment losses at December 31, 2007


(55,487
)

(50,430
)

(19,820
)

(125,737
)Net goodwill at December 31, 2007

$
190,720

$
89,420

$
2,142

$
282,282Gross goodwill at December 31, 2007

$
246,207

$
139,850

$
21,962

$
408,019Settlement of pre-acquisition tax contingency and other





(14,128
)

(262
)

(14,390
)Foreign currency translation adjustment


(21,569
)

6,269


(209
)

(15,509
)Gross goodwill at December 31, 2008


224,638


131,991


21,491


378,120Accumulated impairment losses at December 31, 2007


(55,487
)

(50,430
)

(19,820
)

(125,737
)Impairment charges





(63,380
)




(63,380
)Accumulated impairment losses at December 31, 2008


(55,487
)

(113,810
)

(19,820
)

(189,117
)Net goodwill at December 31, 2008

$
169,151

$
18,181

$
1,671

$
189,003Gross goodwill at December 31, 2008

$
224,638

$
131,991

$
21,491

$
378,120Foreign currency translation adjustment


14,806








14,806Gross goodwill at December 31, 2009


239,444


131,991


21,491


392,926Accumulated impairment losses at December 31, 2009


(55,487
)

(113,810
)

(19,820
)

(189,117
)Net goodwill at December 31, 2009

$
183,957

$
18,181

$
1,671

$
203,809


Indefinite lived intangible assets.At December 31, 2009 and 2008, we held trade names. Our indefinite lived intangible asset
evaluations
utilized discounted cash flows analyses in estimating fair value. The following table provides the detail of the changes made to indefinite-lived intangible assets by reporting segment during years
ended December 31, 2009 and 2008.

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Notes to Consolidated Financial Statements (Continued)

9. GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)

Indefinite-lived intangible assets-trade names

In thousands

Chlorovinyls

Window and Door
Profiles and
Mouldings

Outdoor
Building
Products

TotalBalance at December 31, 2007

$
1,135

$
9,646

$
459

$
11,240Impairment charges


(608
)

(5,023
)

(93
)

(5,724
)Foreign currency translation adjustment


(224
)

(1,089
)

(46
)

(1,359
)Balance at December 31, 2008

$
303

$
3,534

$
320

$
4,157Foreign currency translation adjustment


50


283





333Balance at December 31, 2009

$
353

$
3,817

$
320

$
4,490


Finite-lived intangible assets.At December 31, 2009 and 2008, we also had customer relationship and technology intangibles.
Impairment
charges in 2008 and 2007 were determined utilizing discounted cash flow analyses. There were no similar charges in 2009. The following table provides the detail of the changes made to finite-lived
intangible assets by reportable segment during years ended December 31, 2009 and 2008.

Finite-lived intangible assets

In thousands

Chlorovinyls

Window and Door
Profiles and
Mouldings

TotalGross carrying amounts at December 31, 2009:Customer relationships

$
199

$
11,422

$
11,621Technology





11,867


11,867Total


199


23,289


23,488Accumulated amortization at December 31, 2009:Customer relationships


(124
)

(4,868
)

(4,992
)Technology





(6,004
)

(6,004
)Total


(124
)

(10,872
)

(10,996
)Foreign currency translation adjustment and other at December 31, 2009:Customer relationships


(75
)

(1,684
)

(1,759
)Technology








Total


(75
)

(1,684
)

(1,759
)Net carrying amounts at December 31, 2009:Customer relationships





4,870


4,870Technology





5,863


5,863Total

$


$
10,733

$
10,733


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9. GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)



In thousands

Chlorovinyls

Window and Door
Profiles and
Mouldings

TotalGross carrying amounts at December 31, 2007:Customer relationships

$
1,000

$
34,523

$
35,523Technology





31,000


31,000Total


1,000


65,523


66,523Impairment charges for the year-ended December 31, 2008:Customer relationships


(801
)

(23,101
)

(23,902
)Technology





(19,133
)

(19,133
)Total


(801
)

(42,234
)

(43,035
)Gross carrying amounts at December 31, 2008:Customer relationships


199


11,422


11,621Technology





11,867


11,867Total


199


23,289


23,488Accumulated amortization at December 31, 2008:Customer relationships


(124
)

(4,530
)

(4,654
)Technology





(5,334
)

(5,334
)Total


(124
)

(9,864
)

(9,988
)Foreign currency translation adjustment and other at December 31, 2008:Customer relationships


(75
)

(1,677
)

(1,752
)Technology








Total


(75
)

(1,677
)

(1,752
)Net carrying amounts at December 31, 2008:Customer relationships





5,215


5,215Technology





6,533


6,533Total

$


$
11,748

$
11,748


The
average estimated useful life for the customer relationships and technology are 18 years and 12 years, respectively. Amortization expense for the finite-lived
intangible assets was $1.0 million, $3.8 million and $5.6 million for the years ended December 31, 2009, 2008 and 2007, respectively. Total finite-lived intangible asset
estimated annual amortization expense for the next five fiscal years is approximately $1.0 million per year.

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10. LONG-TERM DEBT

Long-term debt consisted of the following:

In thousands

December 31,
2009

December 31,
2008Senior secured credit facility:Revolving credit facility expires 2011

$


$
125,762Term loan B due 2013





350,350Senior secured ABL revolving credit facility due 2013


56,462


9.0% senior secured notes due 2017


496,739


7.125% senior notes due 2013


8,965


100,0009.5% senior notes due 2014


13,151


497,24010.75% senior subordinated notes due 2016


41,360


197,407Lease financing obligation


106,436


91,473Other


15,892


31,918Total debt

$
739,005

$
1,394,150Less current portion


(28,231
)

(56,843
)Long-term debt

$
710,774

$
1,337,307


On
December 22, 2009, we refinanced our senior secured credit facility and our $175 million asset securitization agreement. At the time of the refinancing our senior
secured credit facility was comprised of a $300 million revolving credit facility and a $347.7 million Term Loan B. We replaced the senior secured credit facility and asset
securitization facility with a four-year term senior secured asset-based revolving credit agreement (the "ABL Revolver") and the issuance of $500.0 million in principal amount of
our 9.0 percent senior secured notes.

The
ABL Revolver provides for a maximum of $300 million of revolving credit through December 2013, subject to borrowing base availability, including sub-limits for
letters of credit and swing line loans. The borrowing base is equal to specified percentages of our eligible accounts receivable and inventories, less a fixed $15 million availability reserve
and other reserves reasonably determined by the co-collateral agents. The borrowings under the ABL Revolver are secured by substantially all of our assets.

Borrowings
under the ABL Revolver bear, and borrowings under the senior secured credit facility also bore interest at a rate per annum on either the prime rate plus the applicable
pricing margin or the London Interbank Offered Rate, (LIBOR) plus the applicable pricing margin. For the years ended December 31, 2009, 2008, and 2007, the average interest rates for the former
senior credit facility were 9.09, 6.51, and 7.94 percent, respectively. As of December 31, 2009, the interest rate under the ABL Revolver was 6.0 percent. In addition to paying
interest on outstanding principal under the ABL Revolver, we are required to pay a commitment fee in respect of the unutilized commitments and we must also pay customary letter of credit fees equal to
the applicable margin on LIBOR loans and agency fees.

The
ABL Revolver requires that if excess availability is less than $45 million, we comply with a minimum fixed charge coverage ratio test of 1.10 to 1.00. At December 31,
2009 excess availability was $134.5 million. In addition, the ABL Revolver includes affirmative and negative covenants that, subject to significant exceptions, limit our ability and the ability
of our subsidiaries to, among other things: incur, assume or permit to exist additional indebtedness or guarantees; incur liens; make investments and loans; pay dividends, make payments or redeem or
repurchase capital stock; engage in mergers, acquisitions and

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10. LONG-TERM DEBT (Continued)

asset
sales; prepay, redeem or purchase certain indebtedness including the 9.0 percent senior secured notes; amend or otherwise alter terms of certain indebtedness, including the
9.0 percent senior secured notes; engage in certain transactions with affiliates; and alter the business that we conduct.

If
at any time the aggregate amount of outstanding loans, unreimbursed letter of credit drawings and undrawn letters of credit under the ABL Revolver exceeds the lesser of (i) the
commitment amount and (ii) the borrowing base, we will be required to repay outstanding loans and cash collateralize letters of credit in an aggregate amount equal to such excess, with no
reduction of the commitment amount. If the amount available under the ABL Revolver is less than $60 million for a period of three consecutive business days or certain events of default have
occurred, we will be required to deposit cash from our material deposit accounts (including all concentration accounts) daily in a collection account maintained with the administrative agent under the
ABL Revolver, which will be used to repay outstanding loans and cash collateralize letters of credit.

At
December 31, 2009, we had $56.5 million in outstanding principal borrowed under the ABL Revolver and had outstanding letters of credit totaling $45.2 million.
Over the next twelve months, we expect to
pay off $28.2 million of borrowings under our ABL Revolver. Therefore, we have classified this debt as current in our consolidated balance sheet as of December 31, 2009. For the year
ended December 31, 2009 borrowings and repayments on our revolving credit facility have previously been presented on a gross basis in our consolidated statement of cash flows. Such borrowings
and repayments on our revolving credit facilities for the years ended December 31, 2008 and 2007 have been presented on a gross basis in the accompanying consolidated statement of cash flows to
conform to the presentation for the year end December 31, 2009.

On
December 22, 2009, we also issued $500.0 million principal amount of senior secured 9.0 percent notes due in 2017. Interest on these notes is payable
January 15 and July 15 of each year. On or after January 15, 2014, we may redeem the notes in whole or in part, initially at 104.5 percent of their principal amount, and
thereafter at prices declining annually to 100 percent on or after January 15, 2016. During any twelve-month period prior to January 15, 2014 we may make optional redemptions of
up to 10 percent of the aggregate principal amount of the 9.0 percent notes at a redemption price of 103.0 percent of such principal amount plus any accrued and unpaid interest.
In addition, prior to January 15, 2013, we may redeem up to 35 percent of the aggregate principal amount of the notes at a redemption price equal to 109.0 of such principal amount, plus
any accrued and unpaid interest. In addition, we may redeem some or all of the notes at anytime prior to January 15, 2014 at a price equal to the principal amount thereof plus a
make-whole premium and any accrued and unpaid interest. The 9.0 percent notes are secured by substantially all of our assets and contain certain restrictive covenants including
restrictions on debt incurrence, granting of liens, dividends, acquisitions and investments.

Management
believes based on current and projected levels of operations and conditions in our markets that cash flow from operations, together with our cash and cash equivalents on hand
of $38.8 million and the availability to borrow an additional $134.5 million under our senior secured ABL Revolver as of December 31, 2009, will be adequate for the foreseeable
future to make required payments of principal and interest on our debt and fund our working capital and capital expenditure requirements, meet the restrictive covenants and comply with the financial
ratios of the senior secured ABL Revolver and the indenture related to the senior secured 9.0 percent notes. As of December 31, 2009, we are in compliance with all required debt
covenants.

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10. LONG-TERM DEBT (Continued)

Under
our old senior secured credit facility and our asset securitization agreement, we were subject to certain restrictive covenants, the most significant of which required us to
maintain certain financial ratios and limit our ability to pay dividends, make investments, incur debt, grant liens, sell our assets and engage in certain other activities. In September 2008, we began
executing a series of amendments (the fourth through eighth amendments) to our senior secured credit facility to allow us more flexibility to improve our capital structure. Commencing in March 2009,
these amendments also permitted us to withhold about $38.0 million in aggregate interest on our 7.125 percent, 9.5 percent and 10.75 percent notes, which constituted
defaults under the related indentures, in connection with the debt exchange
detailed below. During this time, we also obtained forbearances from certain of the note holders with respect to the withheld interest payments and the related defaults.

The
Fifth Amendment to the senior secured credit facility was accounted for as an extinguishment of the Term Loan B in accordance with ASC subtopic 50 section 40, Debt Modifications and Extinguishments. As required by ASC subtopic 50 section 40, due to the fact that the Fifth and Fourth Amendment were
within the same consecutive twelve month period, the evaluation compared the present value of future cash flows under the terms of the Fifth Amendment to the present value of the remaining cash flows
under the terms of the Term Loan B agreement prior to the Fourth Amendment. We determined that the net present value of the Term Loan B future cash flows under the terms of the Fifth Amendment was
more than 10 percent different from the present value of the remaining cash flows under the terms of the Term Loan B agreement prior to the Fourth Amendment. Due to the substantial difference,
we determined an extinguishment of debt had occurred with the Fifth Amendment. Accordingly, we recorded the amended Term Loan B at its estimated fair value of $207.1 million at the date of
extinguishment. The difference between the fair value of the amended Term Loan B and the carrying value of the original Term Loan B less the related financing cost at the date of debt extinguishment
of $121.0 million was recorded as a gain and is included in loss on modification and extinguishment of debt, net in the consolidated statement of operations for the year ended
December 31, 2009. The difference between the fair value and the carrying value of the Term Loan B on the date of the modification was $142.3 million and was recorded as a debt discount
against the principal amount of the Term Loan B. The $142.3 million Term Loan B debt discount was being accreted ratably as interest expense over the remaining term of the Term Loan B. The
December 22, 2009 full extinguishment of the senior secured credit facility resulted in a loss of $163.8 million including the write off of the unamortized debt discount of
$129.4 million and the related deferred financing fees, and is included in loss on modification and extinguishment of debt, net in the consolidated statement of operations for the year ended
December 31, 2009.

The
fair value of the Term Loan B was estimated to be approximately 59.3 percent of par value by taking a weighted average of the bid prices in the broker market for the Term Loan
B during the period from March 17, 2009 through April 23, 2009 and debt pricing for recent new debt issuances for companies with comparable credit ratings. A weighted average approach
was used due to the fact that the Term Loan B is not widely traded on any given day, including March 17, 2009.

The
daily bid price from March 17, 2009 to April 23, 2009 ranged from 41.8 percent to 61.0 percent of par. We weighted our estimate to the latter part of the
thirty trading days after March 17, 2009 as we believed it took some time for the market to understand the extent of the Fifth Amendment and adjust the pricing accordingly. The average bid
price during the twenty to twenty-five trading days and twenty-five to thirty trading days subsequent to the Fifth Amendment was 59.0 percent and 60.7 percent of
par, respectively. The average pricing of then recent publicly available new debt issuances for companies with comparable credit ratings was estimated to be approximately 61.0 percent of par. A
100 basis point

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10. LONG-TERM DEBT (Continued)

difference
relative to the outstanding par of our Term Loan B at the time of the substantial modification was approximately $3.5 million.

On
March 31, 2009, we commenced private exchange offers for our outstanding 7.125 percent senior notes due 2013 (the "2013 notes"), 9.5 percent senior notes due 2014
(the "2014 notes"), and 10.75 percent senior subordinated notes due 2016 (the "2016 notes" and collectively with the 2013 notes and 2014 notes, the "notes"). After numerous extensions and
amendments, on July 29, 2009, we consummated our private exchange of equity for approximately $736.0 million (principal amount), or 92.0 percent, in aggregate principal amount of
the notes. The $736.0 million was comprised of $91.0 million of the $100 million of 2013 notes, $486.8 million of the $500 million of 2014 notes, and
$158.1 million of the $200 million of 2016 notes. An aggregate of approximately 30.2 million shares of convertible preferred stock and approximately 1.3 million shares of
common stock was issued in exchange for the tendered notes after giving effect to a 1-for-25 reverse stock split, which reduced the outstanding common shares, before the
issuance of common shares in the debt exchange, to approximately 1.4 million shares. In exchange for each $1,000 in principal amount of the 2013 notes and 2014 notes, we issued 47.30 shares of
convertible preferred stock and 2.11 shares of common stock and in exchange for each $1,000 in principal amount of the 2016 notes, we issued 18.36 shares of convertible preferred stock and 0.82 shares
of common stock. In September 2009 approximately 30.2 million preferred shares converted to an equal number of common shares. After giving effect to the debt exchange, at December 31,
2009 we had outstanding $9.0 million of the 2013 notes, $13.2 million of the 2014 notes and $41.4 million of the 2016 notes.

In
accordance with ASC subtopic 470-60,Troubled Debt Restructuring by Debtors,this debt for equity exchange was a troubled
debt restructuring and thus an extinguishment of the notes for which we recognized a net gain of $400.8 million. The $400.8 million net gain from the debt for equity exchange represents
basic earnings per share of approximately $16.61 for the year ended December 31, 2009. This gain included $731.5 million of principal debt, net of original issuance discounts,
$53.7 million accrued interest, $14.1 million deferred financing fees written off and $12.4 million of third party fees which was exchanged for the $357.9 million fair
value of the common and preferred shares. The $357.9 million fair value of the common and preferred shares was estimated using a combination of discounted future cash flows, market multiples
for similar companies and recent comparable transactions. In addition, the resulting fair value of the equity approximates $11.36 per share that was also evaluated relative to the public markets and
determined to be reasonable. Due to the fact that the determination of the fair value of the equity exchanged was primarily derived by projected future cash flows, we evaluated the sensitivity of the
major assumptions including discount rates and forecasted cash flows. A 100 basis point increase or decrease in the discount rate or a 10% increase or decrease in the annual forecasted cash flows
results in an approximately $30.0 million increase or decrease in the estimated fair value of the equity exchanged.

Interest
on these notes is payable semiannually. The 2013 notes, 2014 notes and 2016 notes are redeemable at specified prices on or after December 15, 2011, October 15,
2010 and October 15, 2011, respectively. The 2014 notes and 2016 notes were issued at discounts to yield of 9.625 percent and 11.0 percent, respectively, under the effective
interest method.

On
September 29, 2008, we obtained the consent of a majority of the holders of the unsecured 7.125 percent senior notes to an amendment to the related indenture, (the
"Indenture Amendment"), and paid a consent fee of $1.5 million to all consenting note holders pro rata to their respective holdings. The Indenture Amendment amends certain covenants in the
indenture, and provides a waiver of defaults, if

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10. LONG-TERM DEBT (Continued)

any.
Approval of the lenders under our old senior secured credit facility was required for the consent fee payment and the Indenture Amendment.

Scheduled maturities and cash interest.Scheduled maturities of long-term debt outstanding at December 31, 2009 are nil in 2010,
nil in 2011, $18.0 million in 2012, $65.4 million in 2013, $13.2 million in 2014 and $541.9 million thereafter. Cash payments for interest during the years ended
December 31, 2009, 2008 and 2007 were $69.9 million, $129.5 million, and $136.5 million, respectively.

Lease financing transaction.The lease financing obligation is the result of the 2007 sale and concurrent leaseback of certain land and
buildings in
Canada. In connection with this transaction a collateralized letter of credit was issued in the favor of the buyer-lessor resulting in the transaction being recorded as a financing transaction rather
than a sale, and the land and building and related accounts continue to be recognized in the consolidated balance sheet. The future minimum lease payments under the terms of the related lease
agreements at December 31, 2009 are $6.8 million in 2010, $7.1 million in 2011, $7.1 million in 2012, $7.4 million in 2013, $7.4 million in 2014 and
$17.3 million thereafter. The change in the future minimum lease payments and the lease financing obligation from the December 31, 2008 balance is due to the change in the Canadian
dollar exchange rate during the year ended December 31, 2009.

11. COMMITMENTS AND CONTINGENCIES

Leases.We lease railcars, storage terminals, computer equipment, automobiles and warehouse and office space under non-cancelable
operating leases with varying maturities through the year 2018. Future minimum payments under these non-cancelable operating leases as of December 31, 2009 are $20.2 million
in 2010, $13.3 million in 2011, $11.8 million in 2012, $8.6 million in 2013, $9.9 million in 2014 and $12.7 million thereafter. Total lease expense was approximately
$33.8 million, $41.4 million and $32.6 million for the years ended December 31, 2009, 2008 and 2007, respectively. Lease expense is recognized on a
straight-line basis over the term of the lease.

Letters of Credit.As of December 31, 2009 and 2008, we had outstanding letters of credit totaling approximately
$45.2 million and
$99.7 million, respectively. These outstanding letters of credit directly reduced the availability under our ABL Revolver and our revolving credit facility as of December 31, 2009 and
2008, respectively. These letters of credit, which typically have terms from one month to one year, primarily provide additional security for payments to real property lessors, suppliers, and
financial assurance to states for environmental closure, post-closure costs, and potential third party liability awards.

Purchase Commitments.We have long-term raw material purchase agreements with variable and fixed payments through 2014. The variable
component of future payments is based on market prices of commodities used in production. Under these contracts we were required to prepay a certain portion of the fixed and determinable costs, of
which we have capitalized $67.3 million and $85.3 million as of December 31, 2009 and 2008, respectively, in the accompanying consolidated balance sheets. We amortize these
advances based on the physical delivery from the manufacturer to our plants. We analyze the recoverability of these prepaid manufacturing costs based on the creditworthiness of the manufacturer and
the performance under the terms of the contract. In addition, these purchase commitments are not in excess of market prices and are designed to assure a source of supply and are not in excess of our
normal manufacturing requirements. We have historically taken physical delivery of the raw materials under these purchase agreements and intend to take physical delivery over the contract term.
Therefore, we account

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11. COMMITMENTS AND CONTINGENCIES (Continued)

for
them under the normal purchase provisions of ASC topic 815 and its amendments. The aggregate amount of payments made under the agreements for purchases in 2009, 2008 and 2007 was
$122.3 million, $199.6 million and $207.9 million, respectively.

We
also have other long-term supply contracts for raw materials, which are at prices not in excess of market, designed to assure a source of supply and not expected to be in
excess of our normal manufacturing operations requirements. Historically, we have taken physical delivery under these contracts and we intend to take physical delivery in the future. Therefore, at
inception we designate these contracts as normal purchase agreements and account for them under the normal purchase provisions of ASC topic 815.

Legal Proceedings.In October 2004, the United States Environmental Protection Agency ("USEPA") notified us that we have been identified
as a
potentially responsible party ("PRP") for a Superfund site in Galveston, Texas. The site is a former industrial waste recycling, treatment and disposal facility. Over one thousand PRPs have been
identified by the USEPA. We contributed a relatively small proportion of the total amount of waste shipped to the site. In the notice, the USEPA informed us of the agency's willingness to settle with
us and other potentially responsible parties that contributed relatively small proportions of the total quantity of waste shipped to the Superfund site. In the fourth quarter of 2007, we accepted a
settlement offer from USEPA. Under the terms of this settlement, we were required to pay $63,771 for cleanup costs incurred, or to be incurred, by USEPA, in exchange for a covenant not to sue and
protection from contribution actions brought by other parties. The settlement agreement was finally approved by USEPA and payment of the $63,771 settlement amount was made in June 2009.

In
August 2004 and January and February 2005, the USEPA conducted environmental investigations of our manufacturing facilities in Aberdeen, Mississippi and Plaquemine, Louisiana,
respectively. The USEPA informed us that it identified several "areas of concern," and indicated that such areas of concern may, in its view, constitute violations of applicable requirements, thus
warranting monetary
penalties and possible injunctive relief. In lieu of pursuing such relief through its traditional enforcement process, the USEPA proposed that the parties enter into negotiations in an effort to reach
a global settlement of the areas of concern and that such a global settlement cover our manufacturing facilities at Lake Charles, Louisiana and Oklahoma City, Oklahoma as well. During the second
quarter of 2006, we were informed by the USEPA that its regional office responsible for Oklahoma and Louisiana desired to pursue resolution of these matters on a separate track from the regional
office responsible for Mississippi. During the second quarter of 2007, we reached agreement with the USEPA responsible for Mississippi on the terms and conditions of a consent decree that would settle
USEPA's pending enforcement action against our Aberdeen, Mississippi facility. All parties have executed a consent decree setting forth the terms and conditions of the settlement. The consent decree
has been approved by the federal district court in Atlanta, Georgia. Under the consent decree, we were required to, among other things, pay a $610,000 fine, which was paid in March 2008, and undertake
certain other environmental improvement projects. While the cost of such additional projects will likely exceed $1 million, we do not believe that these projects will have a material effect on
our financial position, results of operations, or cash flows.

We
have not yet achieved a settlement with the USEPA regional office responsible for Oklahoma and Louisiana. However, on November 17, 2009, we received a unilateral administrative
order (UAO) from this USEPA regional office. The UAO, issued pursuant to Section 3013(a) of the Resource Conservation and Recovery Act ("RCRA"), requires us to take certain monitoring and
assessment activities in and around several of our wastewater and storm water conveyance systems. In addition, on December 17, 2009,

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we
received a Notice of Potential Penalty (NOPP) from the Louisiana Department of Environmental Quality. The NOPP contains allegations of violation that may potentially be similar in nature to
allegations of violation by USEPA discussed above. The NOPP does not identify a specific penalty amount. It is likely that any settlement, if achieved, will result in the imposition of monetary
penalties, capital expenditures for installation of environmental controls, and/or other relief. We do not know the total cost of monetary penalties, environmental projects, or other relief that would
be imposed in any settlement or order. While we expect that such costs will exceed $100,000, we do not expect that such costs will have a material effect on our financial position, results of
operations, or cash flows.

During
the first quarter of 2007, we voluntarily disclosed possible noncompliance with environmental requirements, including hazardous waste management and disposal requirements, at our
Pasadena facility to the Texas Commission on Environmental Quality ("TCEQ"). In the second quarter of 2008, we entered into an Agreed Order with TCEQ to resolve certain issues related to the voluntary
disclosure. Under the Agreed Order, we paid a required fine of $23,608. We do not expect any further enforcement action from this voluntary disclosure. However, if such additional action is taken, we
do not expect the cost of any penalties, injunctive relief, or other ordered actions to have a material effect on our financial position, results of operations, or cash flows.

Royal
Group and certain of its former officers and former board members were named defendants in two shareholder class action lawsuits in the United States District Court for the
Southern District of New York and the Ontario Superior Court of Justice concerning, among other things, alleged
inadequate disclosure to shareholders during the cumulative period of February 26, 1998 and October 18, 2004 of related party transactions. In March 2007, Royal Group entered into a
stipulation and agreement of settlement with the respective plaintiffs in each case, after a mediation process among Royal Group and the plaintiffs, for the full settlement of all claims raised in
those actions against Royal Group and all of the defendants on behalf of class members in return for the payment of Canadian dollar $9.0 million towards a global settlement fund by Royal Group
and its insurer. Following execution of the stipulation and agreement of settlement, Royal Group paid the Canadian dollar $9.0 million settlement amount in cash into escrow. The settlement was
conditional upon, among other things, approval by both the Ontario Superior Court of Justice and United States District Court for the Southern District of New York and the corresponding orders
approving the settlement becoming final. By order dated December 17, 2007, the Ontario Superior Court of Justice approved the settlement and, subject to all conditions to the stipulations and
settlement agreement being satisfied including final approval of the settlement by the United States District Court for the Southern District of New York, dismissed the Ontario action. The United
States District Court for the Southern District of New York approved the settlement at a hearing on March 6, 2008. The settlement contains no admission of wrongdoing by Royal Group or any of
the other defendants.

On
June 6, 2008, we received notice and a letter of transmittal (collectively, the "Notice") from persons ("Claimants") claiming to own at least 25 percent of our
7.125 percent notes due 2013 (the "Notes"), which were issued under an indenture dated December 3, 2003 (the "Indenture") between us and U.S. Bank National Association, the trustee,
under the Indenture. The Notice asserted that borrowings under our senior secured credit facility resulted in the incurrence of debt obligations in excess of the amount permitted under
Section 3.3 of the Indenture. Believing that all existing indebtedness was incurred in compliance with the provisions of the Indenture, we disputed the Notice. We filed a complaint in the Court
of Chancery of the State of Delaware on June 8, 2008 seeking to enjoin the Claimants and seeking a declaratory judgment to the effect that we were not in default under Section 3.3 of the
Indenture (the "Complaint").

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11. COMMITMENTS AND CONTINGENCIES (Continued)

On
July 15, 2008, we entered into a settlement agreement with the Claimants. In connection with the settlement, the Claimants withdrew their notice of default, and the parties
dismissed the litigation. The terms of the settlement include mutual releases of the parties, certain restrictions and obligations upon the Claimants with regard to their holdings of our securities,
and the payment by us of $1.4 million of legal fees to the Claimants.

On
September 29, 2008, we obtained the consent of holders of a majority of the 7.125 percent notes to an amendment to the related Indenture and paid a consent fee of
$1.5 million to all consenting note holders pro rata to their respective holdings. The amendment amends certain covenants in the Indenture, and provides a waiver of defaults, if any. Approval
of the lenders under our senior secured credit agreement was required for the consent fee payment and the Indenture amendment.

In
addition, we are subject to other claims and legal actions that may arise in the ordinary course of business. We believe that the ultimate liability, if any, with respect to these
other claims and legal actions will not have a material effect on our financial position or on our results of operations.

Environmental Regulation.Our operations are subject to increasingly stringent federal, state and local laws and regulations relating
to
environmental quality. These regulations, which are enforced principally by the USEPA and comparable state agencies and Canadian federal and provincial agencies, govern the management of solid
hazardous waste, emissions into the air and discharges into surface and underground waters, and the manufacture of chemical substances. In addition to the matters involving environmental regulation
above, we have the following potential environmental issues.

In
the first quarter of 2007, the USEPA informed us of possible noncompliance at our Aberdeen, Mississippi facility with certain provisions of the Toxic Substances Control Act.
Subsequently, we discovered possible non-compliance involving our Plaquemine, Louisiana and Pasadena, Texas facilities, which were then disclosed. We expect that all of these disclosures
will be resolved in one settlement agreement with USEPA. While the penalties, if any, for such noncompliance may exceed $100,000, we do not expect that any penalties will have a material effect on our
financial position, results of operations, or cash flows.

There
are several serious environmental issues concerning the VCM facility at Lake Charles, Louisiana we acquired from CONDEA Vista Company ("CONDEA Vista" is now Sasol North
America, Inc.) on November 12, 1999. Substantial investigation of the groundwater at the site has been conducted, and groundwater contamination was first identified in 1981. Groundwater
remediation through the installation of groundwater recovery wells began in 1984. The site currently contains an extensive network of monitoring wells and recovery wells. Investigation to determine
the full extent of the contamination is ongoing. It is possible that offsite groundwater recovery will be required, in addition to groundwater monitoring. Soil remediation could also be required.

Investigations
are currently underway by federal environmental authorities concerning contamination of an estuary near the Lake Charles VCM facility we acquired known as the Calcasieu
Estuary. It is likely that this estuary will be listed as a Superfund site and will be the subject of a natural resource damage recovery claim. It is estimated that there are about 200 PRPs associated
with the estuary contamination. CONDEA Vista is included among these parties with respect to its Lake Charles facilities, including the VCM facility we acquired. The estimated cost for investigation
and remediation of the estuary is unknown and could be quite costly. Also, Superfund statutes may impose joint and several liabilities for the cost of investigations and remedial actions on any
company that generated the waste, arranged for disposal of the

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Notes to Consolidated Financial Statements (Continued)

11. COMMITMENTS AND CONTINGENCIES (Continued)

waste,
transported the waste to the disposal site, selected the disposal site, or presently or formerly owned, leased or operated the disposal site or a site otherwise contaminated by hazardous
substances. Any or all of the responsible parties may be required to bear all of the costs of cleanup regardless of fault, legality of the original disposal or ownership of the disposal site.
Currently, we discharge our wastewater to CONDEA Vista, which has a permit to discharge treated wastewater into the estuary.

CONDEA
Vista has agreed to retain responsibility for substantially all environmental liabilities and remediation activity relating to the vinyls business we acquired from it, including
the Lake Charles, Louisiana VCM facility. For all matters of environmental contamination that were currently known at the time of acquisition (November 1999), we may make a claim for indemnification
at any time. For environmental matters that were then unknown, we must generally have made such claims for indemnification before November 12, 2009.

At
our Lake Charles VCM facility, CONDEA Vista continued to conduct the ongoing remediation at its expense until November 12, 2009. We are now responsible for remediation costs up
to about $150,000 of expense per year, as well as costs in any year in excess of this annual amount up to an aggregate one-time amount of about $2.3 million. As part of our ongoing
assessment of our environmental contingencies, we determined these remediation costs to be probable and estimable and therefore maintained a $2.2 million accrual in non-current
liabilities at December 31, 2009.

As
for employee and independent contractor exposure claims, CONDEA Vista is responsible for exposures before November 12, 2009, and we are responsible for exposures after
November 12, 2009, on a pro rata basis determined by years of employment or service before and after November 12, 1999, by any claimant.

In
May 2008, our corporate management was informed that further efforts to remediate a spill of styrene reducer at our Royal Mouldings facility in Atkins, Virginia would be necessary.
The spill was the result of a supply line rupture from an external holding tank. As a result of this spill, the facility entered into a voluntary remediation agreement with the Virginia Department of
Environmental Quality ("VDEQ") in August 2003 and began implementing the terms of the voluntary agreement shortly thereafter. In August 2007, the facility submitted a report on the progress of the
remediation to
the VDEQ. Subsequently, the VDEQ responded by indicating that continued remediation of the area impacted by the spill is required. While the additional remediation costs may exceed $100,000, we do not
expect such costs will have a material effect on our financial position, results of operations or cash flows.

We
believe that we are in material compliance with all current environmental laws and regulations. We estimate that any expenses incurred in maintaining compliance with these
requirements will not materially affect earnings or cause us to exceed our level of anticipated capital expenditures. However, there can be no assurance that regulatory requirements will not change,
and it is not possible to accurately predict the aggregate cost of compliance resulting from any such changes.

Although
we are not aware of any significant environmental liabilities associated with Royal Group, should any arise, we would have no third party indemnities for environmental
liabilities, including liabilities resulting from Royal Group's operations prior to our acquisition of the company.

12. RELATED PARTY TRANSACTIONS

Joint Ventures.Our joint ventures are accounted for using the equity method. We own a 50 percent interest in PHH Monomers,
 LLC
("PHH"), a manufacturing joint venture with PPG Industries, Inc.,

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Notes to Consolidated Financial Statements (Continued)

12. RELATED PARTY TRANSACTIONS (Continued)

("PPG"),
to produce VCM included in our chlorovinyl segment. We receive 50 percent of the VCM production of PHH and consume the majority of the production to produce vinyl resins. Pursuant to
the terms of the operating agreement and the manufacturing and services agreement, PPG is the operator of PHH. We purchase our share of the raw materials and pay 50 percent of the processing
costs for the right to 50 percent of the VCM production of PHH. PHH has capacity to produce 1.15 million pounds. The chlorine needs of the PHH facility are supplied via pipeline, under a
long-term market price based contract with PPG. PHH is an integral part of our manufacturing operations.

At
December 31, 2009 and 2008, our investment in joint ventures included in our chlorovinyl segment was $7.1 million and $10.2 million, respectively, which primarily
represents 50 percent of the property, plant and equipment of the PHH production facility, and is included in other long-term assets.

We
own a 50 percent interest in several manufacturing joint ventures in the window and door profiles and outdoor building products segments. We sell raw materials to these joint
ventures at market prices. Sales of materials to these joint ventures for fiscal year 2009, 2008 and 2007 were $12.4 million, $20.5 million and $23.4 million, respectively. As of
December 31, 2009, and 2008, our investment in these manufacturing joint ventures was $5.7 million, and $5.9 million, respectively.

At
December 31, 2009 and 2008, we had $7.1 million and $1.6 million, respectively, of liabilities due to these related parties included in accounts payable. At
December 31, 2009 and 2008, we had $7.4 million and $11.8 million, respectively, of receivables due from these related parties included in accounts receivable. Our equity in
earnings from our joint ventures was $2.0 million, $3.1 million, and $4.6 million for the years ended December 31, 2009, 2008, and 2007, respectively.

13. STOCKHOLDERS' EQUITY

Each outstanding share of common stock is accompanied by a preferred stock purchase right, which entitles the holder to purchase from us 25/100ths of a share of Junior Participating
Preferred Stock for $90.00, subject to adjustment in certain circumstances. The rights expire on April 27, 2010, and may be redeemed by us for $0.01 per right until the earlier to occur of
(1) the tenth calendar day following announcement by us that a person or group (other than us or certain related persons) beneficially owns 15 percent or more of our outstanding shares
of common stock (an "Acquiring Person") or (2) the tenth
business day following the commencement of a tender or exchange offer that would result in a person or group becoming an Acquiring Person (the earliest of any such date, the "Distribution Date"). The
rights first become exercisable on the Distribution Date. Subject to certain conditions, if a person or group becomes an Acquiring Person, each right will entitle its holder (other than the Acquiring
Person) to receive, upon exercise, common stock having a market value equal to two times the right's exercise price.

In
addition, subject to certain conditions, if we are involved in a merger or certain other business combination transactions, each right will entitle its holder (other than an Acquiring
Person) to receive, upon exercise, common stock of the acquiring company having a market value equal to two times the right's exercise price.

In
connection with the stock purchase rights described above, 15.0 million of the authorized shares of preferred stock are designated Junior Participating Preferred Stock. If
issued, the Junior Participating Preferred Stock would be entitled, subject to the prior rights of any senior preferred stock, to a dividend equal to the greater of $0.01 or that which is paid on the
common shares.

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Notes to Consolidated Financial Statements (Continued)

14. STOCK-BASED COMPENSATION

On September 17, 2009, our stockholders approved the 2009 Equity and Performance Incentive Plan (the "2009 Plan"). The 2009 Plan provides for the issuance of up to 3,033,000 (post
the 1  for  25 reverse split) shares of our common stock. On July 27, 2009, the 2009 Plan was adopted in connection with the completion of
our private debt for equity exchange described in Notes 10 and 13. Additionally, on July 27, 2009 restricted share units for 2,274,745 shares in
the aggregate were granted under the 2009 Plan. The fair value used to determine stock compensation for this grant was the closing stock price of our common stock on July 27, 2009, the date of
grant.

Under
the 1998, 2002, and 2009 Equity and Performance Incentive Plans, we are authorized by our stockholders to grant awards for up to 3,313,000 shares of our common stock to employees
and non-employee directors. As of December 31, 2009, we had various types of share-based payment arrangements with our employees and non-employee directors including
restricted and deferred stock units, and employee stock options.

Stock Options.Option prices are equal to the closing price of our common stock on the day prior to the date of grant. Options vest
over a one or
three-year period from the date of grant and expire no more than ten years after the date of grant. A summary of stock option activity under all plans during 2009 is as follows:

Year ended December 31, 2009Shares

Weighted
Average
Remaining
Contractual
Terms

Weighted
Average
Exercise
Price

Aggregate
Intrinsic Value(In thousands)Outstanding on January 1, 2009


124,854



$
536.94Granted


52,108




21.12Exercised







Forfeited


(2,478
)



74.82Expired


(15,370
)



814.17Outstanding on December 31, 2009


159,114

6.7 years

$
348.52

$
12Vested or expected to vest at December 31, 2009


158,320

6.7 years


349.89


10Exercisable on December 31, 2009


79,766

4.7 years

$
595.78

$
Shares available on December 31, 2009 for options that may be granted


762,755


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Notes to Consolidated Financial Statements (Continued)

14. STOCK-BASED COMPENSATION (Continued)

The weighted-average grant date fair value of options granted during 2009, 2008 and 2007 was $16.77, $54.25, and $174.50, respectively. There were no options exercised or related
intrinsic value during the years ended December 31, 2009, 2008, and 2007. The intrinsic value is calculated as the difference between the market value on December 31, 2009 and the
exercise price of the shares. The following table summarizes information about stock options at December 31, 2009:

Outstanding

ExercisableRange of Exercise Prices

Shares

Weighted Average
Exercise
Price

Weighted Average Remaining
Contractual Life

Shares

Weighted Average
Exercise
Price$8.75


1,400

$
8.75

9.6 years




$
$21.25


46,108


21.25

9.2 years





$21.50 to $168.00


32,100


138.56

8.4 years


9,798


149.45$181.75 to $510.75


40,776


454.05

5.3 years


31,238


466.05$583.75 to $1,334.50


38,730


813.32

4.0 years


38,730


813.32Total $8.75 to $1,334.50


159,114

$
348.52

6.7 years


79,766

$
595.78


Stock-Based Compensation related to Stock Option Plan.The fair value of stock options granted has been estimated as of the date of
grant using the
Black-Scholes option-pricing model. The use of a valuation model requires us to make certain assumptions with respect to selected model inputs. We use the historical volatility for our stock, as we
believe that historical volatility is more representative than implied volatility. The expected life of the awards is based on historical and other economic data trended into the future. The
risk-free interest rate assumption is based on observed interest rates appropriate for the terms of our awards. The dividend yield assumption is based on our history and expectation of
dividend payouts. The weighted average assumptions used in the Black-Scholes model are as follows:

Stock option grantsYear Ended December 31,2009

2008AssumptionsRisk-free interest rate


2.13
%

2.76
%Expected life


6.0 years


6.0 yearsExpected volatility


101
%

55
%Expected dividend yield





4.21
%


Compensation
expense, net of tax, for 2009, 2008 and 2007 for our stock options was approximately $1.0 million, $1.5 million and $3.3 million, respectively.

Restricted and Deferred Stock.During 2009, 2008 and 2007, we granted 2,274,745, 10,959 and 8,108 restricted stock units and deferred
stock units,
respectively, to our key employees and non-employee directors. The 2009 grant was made in connection with the company's debt exchange completed on July 29, 2009. The restricted
stock units and deferred stock units vest over a three-year period, except that one-half of the restricted stock units granted to the officers and non-officer employees who
were grantees on July 27, 2009 vested on December 22, 2009, due to the company refinancing its senior secured credit facility. Restricted stock surrendered in satisfaction of required
minimum tax withholding obligations was

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Notes to Consolidated Financial Statements (Continued)

14. STOCK-BASED COMPENSATION (Continued)

396,906,
659 and 1,459 shares during 2009, 2008, and 2007, respectively. A summary of restricted and deferred stock units and related changes therein is as follows:

Year ended December 31, 2009Shares

Weighted
Average
Remaining
Contractual
Terms

Weighted
Average
Grant Date
Fair Value

Aggregate
Intrinsic Value
(In thousands)Outstanding on January 1, 2009


17,927




330.32Granted


2,274,745




8.75Vested and released


(1,154,465
)



11.67Forfeited


(4,781
)



19.54Outstanding on December 31, 2009


1,133,426

1.6 years


10.82


19,699Vested or expected to vest at December 31, 2009


1,101,839

1.5 years


10.88


19,147


The
weighted average grant date fair value per share of restricted and deferred stock units granted during 2009, 2008 and 2007 was $8.75, $168.00 and $477.25, respectively, which is
based on the stock price as of the date of grant. The total intrinsic value of restricted and deferred stock units and
restricted stock that vested during the years ended December 31, 2009, 2008 and 2007 was $20.1 million, $0.1 million and $2.1 million, respectively.

Compensation
expense, net of tax, for 2009, 2008 and 2007, from restricted stock units, restricted stock and deferred stock units was $10.4 million, $1.6 million and
$3.4 million, respectively.

Nonvested shares.A summary of the status of the nonvested share activity under all plans is as follows:

Year ended
December 31, 2009Shares

Weighted
Average Grant
Date Fair ValueNonvested on January 1, 2009


69,178


152.50Granted


2,326,853


8.94Vested


(1,160,807
)

11.89Forfeited and expired


(22,634
)

564.72Nonvested on December 31, 2009


1,212,590


12.66


As
of December 31, 2009, we had approximately $5.9 million of total unrecognized compensation cost related to nonvested share-based compensation, which we will record in
our statements of operations over a weighted average recognition period of less than two years. The total fair value of shares vested during 2009, 2008 and 2007, was $13.8 million,
$6.5 million and $8.5 million, respectively.

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Notes to Consolidated Financial Statements (Continued)

15. EMPLOYEE RETIREMENT PLANS

We have certain employee retirement plans that cover substantially all of our employees. The expense incurred for these plans was approximately a credit of $1.3 million, an
expense of $7.4 million and an expense of $9.5 million for the years ended December 31, 2009, 2008 and 2007, respectively. These plans are discussed below.

Most
employees are covered by defined contribution plans under which we made contributions to individual employee accounts. We had expense related to these defined contribution plans of
approximately $1.8 million, $2.5 million and $4.6 million for the years ended December 31, 2009, 2008 and 2007, respectively. On June 12, 2009, the Company announced
to its employees that it would discontinue the Company matching contribution feature of the 401(k) Plan effective with the first
payroll period having a disbursement date after July 31, 2009. Most of our U.S. employees are covered by a defined benefit cash balance pension plan. In addition, employees who worked at our
now-closed manufacturing facility in Sarnia, Ontario are covered by a defined benefit pension plan for which the benefits are based on years of service and the employee's compensation. We
sponsored a postretirement health care plan, which covered employees at our closed manufacturing facility in Sarnia, Ontario. We use a measurement date of December 31 for our pension and other
postretirement plans.

In
December 2008, we announced that we would close our manufacturing facility in Sarnia, Ontario. As a result, we wound up the defined benefit pension plan during 2009, and terminated
the postretirement health care plan, which covered employees who worked at this facility. Due to the wind up of the pension plan, special termination retirement benefits were available to certain
employees who are covered by this plan. A special termination benefit charge of $2.0 million was recognized in the fourth quarter of fiscal 2008 for these additional benefits. In addition,
curtailment gains were recognized in the fourth quarter of fiscal 2008 due to reductions in staff at this facility. As a result of the curtailment, a curtailment gain of $0.6 million related to
the defined benefit pension plan, and a curtailment gain of $0.4 million related to the other postretirement plan was recorded in the fourth quarter of fiscal 2008. Curtailment gains of
$1.4 million were recognized as of December 31, 2009 when the remaining employees were released and the plant decommissioning was complete. We will recognize ongoing benefit costs for
the Canadian pension plan until the wind up deficit is fully funded over a period of up to five years. All future benefit obligations in the Canadian Other Post-retirement Benefits Plan
were fully settled as of December 31, 2009. The Company recognized benefit income for this plan of $2.5 million for the year ended December 31, 2009, which included a curtailment
gain of $0.8 million and a settlement gain of $1.7 million. Also in 2009, we made a cash payout offer to the remaining participants in the postretirement health care plan, which each
accepted, thus completing the wind up of the plan.

In
February 2009, upon approval by the Compensation Committee of the Board of Directors, we announced to our U.S. employees that we were freezing the benefits for the Georgia Gulf
Corporation Retirement Plan (the "Plan") as of March 31, 2009. No future benefits accrued under this plan after March 31, 2009. As a result, we recognized a curtailment gain of
$4.3 million at the end of the first quarter of fiscal 2009 due to accelerated recognition of prior service credits. In addition, as a result of freezing the Plan on March 31, 2009, we
changed the amortization method for gains and losses from the average expected future service period for active plan participants to the average expected future lifetime for all plan participants.
This change in amortization method decreased pension costs from April 1, 2009 through December 31, 2009 by approximately $1.6 million.

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Notes to Consolidated Financial Statements (Continued)

15. EMPLOYEE RETIREMENT PLANS (Continued)

Benefit Obligations.The reconciliation of the beginning and ending balances of the projected benefit obligation for defined benefit
plans is as
follows:

Pension BenefitsIn thousands

2009

2008Change in Benefit ObligationBenefit obligation, beginning of year

$
118,666

$
117,569Service cost


1,231


5,136Interest cost


7,803


7,427Actuarial (gain) loss


9,104


(5,281
)Foreign currency exchange rate changes


850


(1,662
)Gross benefits paid


(3,886
)

(4,674
)Plan amendments





(36
)Special termination benefits





2,036Curtailments


(539
)

(1,849
)Benefit obligation, end of year

$
133,229

$
118,666Accumulated benefit obligation, end of year

$
133,229

$
118,388


The
accumulated benefit obligation is defined as the actuarial present value of pension benefits (whether vested or unvested) attributed to employee service rendered before
December 31, 2009 and 2008, respectively, and based on employee service and compensation prior to the applicable date. The accumulated benefit obligation differs from the projected benefit
obligation in that it includes no assumption about future compensation levels. The accumulated benefit obligation is equal to the projected benefit obligation at December 31, 2009 because no
future benefits are accruing under the pension plans.

Plan Assets.The summary and reconciliation of the beginning and ending balances of the fair value of the plans' assets were as follows:

Pension BenefitsIn thousands

2009

2008Change in Plan AssetsFair value of plan assets, beginning of year

$
99,611

$
140,856Actual return on plan assets


18,099


(36,591
)Foreign currency exchange rate changes


817


(1,178
)Employer contribution


972


1,197Gross benefits paid


(3,886
)

(4,674
)Fair value of plan assets, end of year

$
115,613

$
99,610


In
accordance with ASC topic 820, the Plan classifies its investments based on the lowest level of input that is significant to the fair value measurement. The following table sets forth
by level within the fair value

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Notes to Consolidated Financial Statements (Continued)

15. EMPLOYEE RETIREMENT PLANS (Continued)

hierarchy
a summary of the Plan's investments measured at fair value and the target and current allocation percentages by asset type at December 31, 2009:

Asset Category
(In thousands,
except percentages)

Target Allocation
2010

Total

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Percentage of
Plan Assets,
December 31,
2009

Percentage of
Plan Assets,
December 31,
2008Short-term investment fund

0% to 10%

$
14,229

$


$
14,229

$



12
%

20
%US Equity securities:

40% to 65%


46,374


46,374








40
%

35
%International equity securities:

10% to 30%


21,488


21,488








19
%

16
%Fixed income securities:

10% to 30%


25,198


25,198








22
%

22
%Other types of investments:



















Pooled Segregated Fund

0%


6,500





6,500





6
%

4
%Real estate

$0 to $5 million


1,824





0


1,824


1
%

3
%Total

100%

$
115,613

$
93,060

$
20,729

$
1,824


100
%

100
%


Equity
securities do not include any of our common stock at the end of 2009 and 2008.

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Notes to Consolidated Financial Statements (Continued)

15. EMPLOYEE RETIREMENT PLANS (Continued)

Funded Status.The funded status of the plans, reconciled to the amounts reported on the balance sheets follows:

Pension Benefits
December 31,In thousands

2009

2008Funded status, end of year:Fair value of plan assets

$
115,613

$
99,610Benefit obligations


133,229


118,666Funded status


(17,616
)

(19,056
)Amount recognized, end of year

$
(17,616
)
$
(19,056
)Amounts recognized in the balance sheets consist of:Noncurrent asset

$


$
Current liability


(419
)

(419
)Noncurrent liability


(17,197
)

(18,637
)$
(17,616
)
$
(19,056
)Gross amounts recognized in accumulated other
comprehensive income consist of:Net actuarial loss

$
37,760

$
40,608Prior service credit





(4,431
)Deferred curtailment gain





(1,200
)$
37,760

$
34,977


Accumulated Other Comprehensive Income (Loss).The following table summarizes the amounts recorded in accumulated other comprehensive
loss, which
have not yet been recognized as a component of net periodic cost benefit cost (pretax; in thousands):

Other Changes in Plan Assets and Benefit Obligations
Recognized in Other Comprehensive Loss for Pension and
Other Postretirement Benefits December 31,In thousands

2009

2008End of year:Curtailment effects

$
6,224

$
(1,923
)Current year actuarial (gain) loss


70


40,711Amortization of actuarial (loss) gain


(1,480
)

12Current year prior service credit





(36
)Amortization of prior service credit


129


546Total recognized in other comprehensive income (loss)

$
4,943

$
39,310Total recognized in net periodic benefit cost and other comprehensive income (loss)

$
(936
)
$
41,579


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Notes to Consolidated Financial Statements (Continued)

15. EMPLOYEE RETIREMENT PLANS (Continued)

The
estimated amount that will be amortized from accumulated other comprehensive (loss) income into net periodic benefit cost in 2010 is $0.8 million consisting of:

In thousands

Pension
and Other
Postretirement
BenefitsActuarial loss

$
817Prior service credit


Deferred curtailment gain


Total

$
817


Net Periodic Cost (Income).The amount of net periodic benefit (income) cost recognized includes the following components:

Pension Benefit
Year Ended December 31,In thousands

2009

2008

2007Components of periodic benefit (income) cost:Service cost

$
1,231

$
5,136

$
4,276Interest cost


7,803


7,427


7,202Expected return on assets


(8,135
)

(11,024
)

(10,471
)Amortization of:Transition obligation








81Prior service (credit) cost


(129
)

(546
)

179Actuarial loss (gain)


1,524


(12
)

(16
)Special termination benefits





2,036


14Curtailment gain


(5,690
)

(649
)

(95
)Settlement gain








Total net periodic benefit (income) cost

$
(3,396
)
$
2,368

$
1,170


Additional Information.At December 31, 2009 and 2008 the projected benefit obligation, accumulated benefit obligation, and fair
value of plan
assets for pension plans with a projected benefit

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Notes to Consolidated Financial Statements (Continued)

15. EMPLOYEE RETIREMENT PLANS (Continued)

obligation
in excess of plan assets, and for pension plans with an accumulated benefit obligation in excess of plan assets, were as follows:

Accumulated
Benefit
Obligation in
Excess of the
Fair Value of
Plan Assets
December 31,

Projected Benefit
Obligation in Excess
of the Fair Value of
Plan Assets
December 31,In thousands

2009

2008

2009

2008End of year:Projected benefit obligation

$
133,229

$
118,666

$
133,229

$
118,666Accumulated benefit obligation


133,229


118,388


133,229


118,388Fair value of plan assets


115,613


99,610


115,613


99,610


Assumptions.Our major assumptions used to determine benefit obligations for our pension plans are presented as weighted-averages:

Pension BenefitsIn thousands

2009

2008Weighted-average assumptions used to determine benefit obligation at end of year:Discount rate


6.00
%

6.50
%Rate of compensation increase


N/A
(1)

4.51
%


---

Our
major assumptions used to determine net periodic benefit cost for pension plans are presented as weighted-averages:

Year Ended
December 31,2009

2008

2007Discount rate


6.67
%

6.19
%

5.99
%Expected return on plan assets


8.67
%

7.94
%

7.94
%Rate of compensation increase


4.51
%

4.19
%

4.15
%


The
expected long-term rate of return on plan assets assumption is based on historical and projected rates of return for current and planned asset classes in the plan's
investment portfolio. Projected rates of return for each of the plan's projected asset classes were selected after analyzing historical experience and future expectations of the returns and volatility
of the various asset classes. Based on the target asset allocation for each asset class, the overall expected rate of return for the portfolio was developed and adjusted for historical and expected
experience of active portfolio management results compared to the benchmark returns and for the effect of expenses paid from plan assets.

Our
investment committee establishes investment policies and strategies and regularly monitors the performance of the plan's funds. Our investment strategy with respect to pension assets
is to invest the assets in accordance with the "prudent investor" guidelines contained in the Employee Retirement Income

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Notes to Consolidated Financial Statements (Continued)

15. EMPLOYEE RETIREMENT PLANS (Continued)

Security
Act of 1974, and fiduciary standards. Our policy on funding is to contribute an amount within the range of the minimum required and the maximum tax-deductible contribution.

Employer
contributions include direct benefits paid under all pension plans of $0.4 million from employer assets in 2009, 2008 and 2007, respectively. We previously sponsored a
post-retirement benefit program for certain Canadian employees which was terminated and fully settled during 2009. Benefit obligations for the post-retirement benefit program
were nil, $0.4 million and $3.3 million as of December 31, 2009, 2008 and 2007, respectively. Benefit costs related to our other post-retirement program were income of
$2.5 million in 2009, income of $0.1 million in 2008, and costs of $0.2 million in 2007.

Expected Cash Flows.We expect to make contributions of $1.4 million to our pension plans during 2010. Our expected contribution
in the form
of direct benefit payments for 2010 is approximately $0.4 million for all pension plans. Expected benefit payments for all pension plans are as follows:

In thousands

Pension BenefitsExpected benefit payments:2010


4,9832011


5,5122012


6,1192013


6,7722014


7,3882015-2019


45,375


16. INCOME TAXES

For the years ended December 31, 2009, 2008 and 2007, income (loss) from continuing operations before taxes consists of the following:

Year Ended December 31,In thousands

2009

2008

2007U.S. operations

$
253,795

$
(143,030
)
$
(11,115
)Foreign operations


(28,244
)

(134,592
)

(200,048
)Total

$
225,551

$
(277,622
)
$
(211,163
)


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Table of Contents

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Notes to Consolidated Financial Statements (Continued)

16. INCOME TAXES (Continued)

The
provision for (benefit from) income taxes from continuing operations consists of the following:

Year Ended December 31,In thousands

2009

2008

2007Current income taxes:Federal

$
(52,760
)
$
8,871

$
1,193State


2,115


973


235Foreign


5,450


(626
)

3,851Total current


(45,195
)

9,218


5,279Deferred income taxes:Federal


113,628


(25,828
)

(361
)State


11,329


(2,332
)

678Foreign





(1,037
)

38,404Total deferred


124,957


(29,197
)

38,721Provision for (benefit from) income taxes

$
79,762

$
(19,979
)
$
44,000


Income
tax expense attributable to income (loss) before income taxes from continuing operations differs from the amounts computed by applying the U.S. statutory federal
income tax rate to income (loss) before income taxes from continuing operations as follows:

Year Ended December 31,In thousands

2009

2008

2007Statutory federal income tax rate


35.0
%

35.0
%

35.0
%State and local income taxes, net of federal benefit


3.6


0.4


Difference between U.S. and foreign tax rates


1.7


(2.4
)

(2.6
)Tax Credits


(3.6
)




Manufacturing deduction





(0.1
)

(0.1
)Non-deductible compensation


0.6





(0.2
)Percentage depletion


(0.3
)

0.2


0.3Legislation changes impacting rate





(0.2
)

(0.8
)Debt Restructuring


(7.8
)




Change in valuation allowance


3.2


(18.3
)

(24.6
)Interest accruals on unrecognized income tax benefits


2.3


(0.5
)

(4.3
)Non-deductible goodwill, other intangibles and other long-lived asset impairment





(7.6
)

(21.3
)Other, net


0.7


0.7


(2.2
)Effective income tax rate


35.4
%

7.2
%

(20.8
)%


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Table of Contents

Georgia Gulf Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

16. INCOME TAXES (Continued)

Cash payments for income taxes during 2009, 2008 and 2007 were $10.0 million, $27.9 million and $9.4 million, respectively.

Our
net deferred tax liability consisted of the following major items:

December 31,In thousands

2009

2008Deferred tax assets:Receivables

$
2,793

$
2,762Inventories


5,148


5,667Vacation accrual





19Foreign currency loss





12,685Net operating loss carryforwards


34,208


54,219Employee compensation


9,574


9,651Accrued liabilities


2,550


7,373Tax credits


21,632


11,304Spare parts inventories


83


872Environmental


1,892


1,571Other Financing





8,814Property, plant and equipmentforeign


61,485


Pension


6,765


7,505Federal benefit of state unrecognized tax benefits


1,712


2,414Valuation allowance


(107,812
)

(92,316
)Total deferred tax assets


40,030


32,540Deferred tax liability:Property, plant and equipmentdomestic


(100,510
)

(51,252
)Intangible assets


(46,150
)

(19,004
)Foreign currency translation


(1,852
)

(9,645
)Other


(1,124
)

(275
)Debt Restructuring


(40,639
)

Foreign currency loss (gain)


(10,104
)

Total deferred tax liability


(200,379
)

(80,176
)Net deferred tax liability

$
(160,349
)
$
(47,636
)


As
of December 31, 2009, we had U.S. state and foreign net operating loss carryforwards ("NOLs"). Our foreign NOLs principally relate to our operations in Canada and reside in
both federal and provincial tax jurisdictions. The jurisdictional amount of NOLs as of December 31, 2009, and the years in which they will expire, are as follows (in thousands):

Jurisdiction

NOL
amount

Year of
expirationU.S. federal





U.S. state


74,815


2012-2029Canada federal


111,979


2011-2029Canada provincial


111,979


2010-2029


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Table of Contents

Georgia Gulf Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

16. INCOME TAXES (Continued)

As
a result of the debt exchange completed in July 2009, we experienced a change in control as defined by the Internal Revenue Code. Because of this change in control, we will be unable
to realize a benefit from the U.S. federal net operating losses arising before the acquisition of the Royal Group. Therefore, we no longer carry those net operating losses as a deferred tax asset.
This change in control will also limit our ability to deduct certain expenses in the future and we have recorded deferred tax liabilities to reflect this. The debt exchange may also limit our ability
to realize the benefit of the previously accrued state net operating losses and we have recorded a valuation allowance to offset that tax benefit. In addition, in 2009 and 2008 we recorded a
$7.3 million and a $55.5 million valuation allowance, respectively, on certain deferred tax assets in Canada that, in the judgment of management, are not more likely than not to be
realized. In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future
taxable income during the periods in which those temporary differences are deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available
carryback and carryforward periods), projected taxable income, and tax-planning strategies available to us in making this assessment. In order to fully realize the deferred tax assets, we
will need to generate future taxable income before the expiration of the deferred tax assets.

Subsequently
recognized tax benefits related to the valuation allowance for deferred tax assets as of December 31, 2009 will result in an income tax benefit if realized in a
future year of $107.8 million.

As
of December 31, 2009, we had U.S. federal, state and foreign tax credit carryovers. These tax credits expire over varying amounts and periods as follows (in thousands):

Jurisdiction

Tax credit
amount

Year of
expirationU.S. federal tax credits

$
276


U.S. state tax credits

$
16,081


unlimitedForeign tax credits

$
5,275


2010-2029


The
foreign investment tax credit includes approximately $4.2 million of foreign investment tax credits that were recorded as a result of our acquisition of Royal Group. The
balance of the foreign investment tax credits was earned during the period from the acquisition date through December 31, 2009.

Under
ASC subtopic 740-30Accounting for Income TaxesSpecial Areas, we are not permanently reinvested with
respect to earnings of our foreign subsidiaries. Accordingly, we record a deferred tax liability with respect to the tax effect of repatriating the earnings of our foreign subsidiaries. As a result of
losses with respect to our foreign jurisdictions, we did not record any additional deferred tax liability with respect to the losses of our foreign subsidiaries for the years ended on
December 31, 2009 and 2008.

Adoption of ASC topic 740, Income Taxes.

Effective January 1, 2007, we adopted ASC topic 740,Income Taxes, which
clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements. ASC topic 740 prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Under ASC topic 740, we recognize the financial statement effects of a tax position
when it is more likely than not, based upon the technical merits, that the position will be sustained upon examination. Conversely, we derecognize a previously recognized tax position in the first
period in which it is no longer more likely than not that the tax position

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Notes to Consolidated Financial Statements (Continued)

16. INCOME TAXES (Continued)

would
be sustained upon examination. A tax position that meets the more likely than not recognition threshold will initially and subsequently be measured as the largest amount of tax benefit that is
greater than fifty percent likely of being realized upon ultimate settlement with a taxing authority. We also recognize interest expense by applying a rate of interest to the difference between the
tax position recognized in accordance with ASC topic 740 and the amount previously taken or expected to be taken in a tax return. We classify interest expense and related penalties, if any, with
respect to our uncertain tax positions in the provision for income taxes.

As
of December 31, 2009 and 2008, our liability for unrecognized income tax benefits was approximately $65.2 million and $54.5 million, respectively. Of these
amounts, as of December 31, 2009 and 2008, approximately $27.3 million and $22.2 million, respectively, relates to accrued interest and penalties. If recognized, all of this
amount would affect our effective tax rate. The implementation of ASC topic 740 resulted in an increase in the liability for unrecognized tax benefits of approximately $1.4 million, a decrease
in retained earnings as of January 1, 2007 of approximately $2.2 million and an increase in goodwill of approximately $0.7 million. For the years ended December 31, 2009,
2008 and 2007, we recognized approximately $3.6 million, $6.8 million and $9.8 million, respectively, of additional interest expense in our income tax provision related to our
liability for unrecognized income tax benefits. Our liability for unrecognized income tax benefits increased during the year ended December 31, 2009, primarily as the result of foreign currency
translation adjustments and the accrual of additional interest expense related to our liabilities for unrecognized tax benefits, offset by the lapsing of the statute of limitations on certain issues.
Prior to the adoption of ASC topic 740 we accounted for reserves for income tax contingencies in accordance with ASC topic 450,Contingencies. During
2010, it is reasonably possible that uncertain tax positions in the U.S. and Canada will be recognized as a result of the lapse of the applicable statute of limitations. The aggregate amount of these
positions is about $7.6 million.

In
March 2008, we reached a settlement with the provinces of Quebec and Ontario and the Canada Customs and Revenue Agency with respect to their assessments resulting from the retroactive
application of tax law changes promulgated by Bill 15, which amended the Quebec Taxation Act and other legislative provisions. Royal Group, in connection with its tax advisors, established tax
structures that used a Quebec Trust to minimize its overall tax liabilities in Canada. Bill 15 has eliminated the ability to use the Quebec Trust structure on a retroactive basis. As of
December 31, 2007, we had
recorded a liability for the unrecognized tax benefit of $46.1 million related to the Quebec Trust matter. We settled this matter with all relevant jurisdictions by making cash payments
totaling $20.1 million ("Quebec tax settlement"). We recognized an income tax benefit of $9.2 million related to the reversal of $5.8 million in interest accrued on this liability
and the reversal of $3.4 million of a previously established valuation allowance for net operating loss carryforwards, the value of which was realized via this settlement. In addition, we
reduced goodwill by $16.5 million as a result of the settlement of the preacquisition tax contingency. Finally, we were able to obtain the release of a letter of credit in favor of the trustee
for the Quebec Trust for C$44.0 million.

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Table of Contents

Georgia Gulf Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

16. INCOME TAXES (Continued)

The
following table describes the tax years that remain subject to examination by major tax jurisdiction:

Tax Jurisdiction

Open YearsUnited States Federal


2006-2009Canada


2005-2009Various States


2001-2009


A
reconciliation of the liability for unrecognized tax benefits for the years ended December 31, 2009, 2008 and 2007 follows:

In thousands

2009

2008

2007Balance as of beginning of the year

$
54,494

$
109,163

$
87,789Additions for current year tax positions


141


719


Additions for prior year tax positions (including interest & penalties of $5,687, $6,756 and $9,830 for the year ended December 31, 2009,
2008 and 2007 respectively)


5,715


7,074


11,113Reductions for prior year tax positions


(415
)

(26,096
)

(153
)Settlements


(1,607
)

(23,581
)

(1,184
)Reductions related to expirations of statute of limitations


(847
)

(706
)

(1,423
)Foreign currency translation


7,691


(12,079
)

13,021Balance as of the end of the year

$
65,172

$
54,494

$
109,163


We
are under examination by the Internal Revenue Service for the years ended December 31, 2006 and 2007. The results of the IRS examination cannot presently be determined. In
addition, we have accrued a reserve for non-income tax contingencies of $8.7 million and $7.4 million at December 31, 2009 and 2008, respectively. The increase in the
reserve is related primarily to the accrued interest related to these matters and the changes in the Canadian dollar exchange rates. We accrue for non-income tax contingencies when it is
probable that a liability to a taxing authority has been incurred and the amount of the contingency can be reasonably estimated. The non-income tax contingency reserve is adjusted for,
among other things, changes in facts and circumstances, receipt of tax assessments, expiration of statutes of limitations, interest and settlements and additional uncertainties.

On
November 6, 2009, the Worker, Homeownership, and Business Assistance Act of 2009, which includes a temporary five-year NOL carryback provision, became law. Pursuant
to ASC topic 740, any adjustment to deferred tax liabilities and assets for the effect of a change in tax laws or rates is included in income from continuing operations for the period that includes
the enactment date. Under the new act, any required adjustment to the valuation allowance will be included in income from continuing operations in the period that includes November 6, 2009. As
a result, we expect to file a carryback claim for taxes paid in a prior period and have recorded an income tax receivable and increased our deferred tax liabilities for $22.6 million for
the year ended December 31, 2009.

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Georgia Gulf Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

17. HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS

We use derivative financial instruments primarily to reduce our exposure to adverse fluctuations in interest rates, foreign currency exchange rates and commodity prices. When entered
into, we formally designate and document the financial instrument as a hedge of a specific underlying exposure, as well as the risk management objectives and strategies for undertaking the hedge
transactions. We formally assess both at the inception and at least quarterly thereafter, whether the financial instruments that are used in hedging transactions are effective at offsetting changes in
either the fair value or cash flows of the related underlying exposure. Because of the high degree of effectiveness between the hedging instrument and the underlying exposure being hedged,
fluctuations in the value of the derivative instruments are generally offset by changes in the fair values or cash flows of the underlying exposures being hedged. Any ineffective portion of a
financial instrument's change in fair value is immediately recognized in earnings. Virtually all of our derivatives are straightforward over-the-counter instruments with liquid
markets. We do not enter into derivative financial instruments for trading purposes.

The
fair values of derivatives used to hedge or modify our risks fluctuate over time. We do not view these fair value amounts in isolation, but rather in relation to the fair values or
cash flows of the underlying hedged transaction or other exposures. The notional amounts of the derivative financial instruments do not necessarily represent amounts exchanged by the parties and,
therefore, are not a direct measure of our exposure to the financial risks described above. The amounts exchanged are calculated by reference to the notional amounts and by other terms of the
derivatives, such as interest rates, foreign currency exchange rates or other financial indices.

We
recognize all derivative instruments as either assets or liabilities in our consolidated balance sheets at fair value. The accounting for changes in fair value of a derivative
instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. At the inception of the hedging relationship, we
must designate the instrument as a fair value hedge, a cash flow hedge, or a hedge of a net investment in a foreign operation, depending on the exposure being hedged.

Raw Materials and Natural Gas Price Risk Management.The availability and price of our raw materials and natural gas are subject to
fluctuations due
to unpredictable factors in global supply and demand. To reduce price risk caused by market fluctuations, we may or may not enter into derivative contracts, such as swaps, futures and option contracts
with financial counter-parties, which are generally less than one year in duration. We designate any natural gas or raw material derivatives as cash flow hedges. Our outstanding contracts are valued
at market with the offset going to other comprehensive income, net of applicable income taxes and any hedge ineffectiveness. Any gain or loss is recognized in cost of goods sold in the same period or
periods during which the hedged transaction affects earnings. The fair value of our natural gas swap contracts was a $0.3 million and $0.2 million current asset at December 31,
2009 and 2008, respectively.

Interest Rate Risk Management.We maintained floating rate debt, which exposes us to changes in interest rates. Our policy was to
manage our interest
rate risk through the use of a combination of fixed and floating rate instruments and interest rate swap agreements. We designated all our interest rate derivatives as cash flow hedges. At
December 31, 2009 and 2008, we had interest rate swaps with notional amounts of nil and $75 million, respectively, designated as cash flow hedges of underlying floating rate debt
obligations with estimated fair values as liabilities of nil and $2.9 million, respectively. At December 31, 2008, $2.9 million were current liabilities. Our last interest rate
swap hedge expired in November 2009. The effective portion of the mark-to-market effects of our cash flow hedge instruments

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Notes to Consolidated Financial Statements (Continued)

17. HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

was
recorded to accumulate other comprehensive income ("AOCI") until the underlying interest payments were realized. The unrealized amounts in AOCI fluctuated based on changes in the fair value of
open contracts at the end of each reporting period. During 2009, 2008 and 2007, the impact on the consolidated financial statements due to interest rate hedge ineffectiveness was immaterial.

Foreign Currency Risk Management.Our international operations require active participation in foreign exchange markets. We may or may
not enter into
foreign exchange forward contracts and options, and cross-currency swaps to hedge various currency exposures or create desired exposures. At December 31, 2009 and 2008, we had no assets or
liabilities related to forward contracts, options and cross-currency swaps to buy, sell, or exchange foreign currencies.

18. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, long-term debt, and interest rate swap
contracts. The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their fair value because of the nature of such instruments. The fair
value of our Term Loan B and 2011 revolving credit facility was based on rates for indebtedness with similar amounts, durations and credit risk. The fair values of our 7.125 percent senior
notes, our 9.0 percent senior secured notes, our 9.5 percent senior notes, our 10.75 percent senior subordinated notes, our interest rate swap contracts, and our natural gas swap
contract are based on quoted market values.

The
FASB ASC 820-10 establishes a fair value hierarchy that prioritizes observable and unobservable inputs to valuation techniques used to measure fair value. These levels,
in order of highest to lowest priority are described below:

Level 1Quoted
prices (unadjusted) in active markets for identical assets or liabilities at the measurement date.

Level 2Observable
prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3Prices
that are unobservable for the asset or liability and are developed based on the best information available in the circumstances, which might include the
company's own data.

Our
interest rate swaps and natural gas swap contracts are fair valued with Level 2 inputs. For further details concerning our derivative instruments refer to Note 17
"Hedging Transactions and Derivative Financial Instruments."

Our
Term Loan B fair value for purposes of recording the gain on substantial modification of our Term Loan B was determined by Level 3 inputs. For further details concerning the
fair value of Term Loan B debt see Note 10 "Long-term Debt."

Our
goodwill and other intangibles annual impairment evaluations and resulting impairment charges in the years ended December 31, 2008 and 2007 were determined by Level 3
inputs. For further details concerning the fair value of goodwill and other intangibles see Note 9, "Goodwill and Other Intangible Assets."

103

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Table of Contents

Georgia Gulf Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

18. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The
following is a summary of the carrying values and estimated fair values of our fixed-rate long-term debt, interest rate swaps and natural gas swaps as of
December 31, 2009 and 2008:

December 31, 2009

December 31, 2008In thousands

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
ValueLevel 1Long-term debt:7.125% senior notes due 2013

$
8,965

$
8,293

$
100,000

$
30,0009.0% senior secured notes due 2017


496,739


506,250





9.5% senior notes due 2014


13,151


12,157


497,240


152,50010.75% senior subordinated notes due 2016


41,360


38,591


197,407


48,000Level 2Long-term debt:ABL revolver expires 2013


56,462


56,462





Term loan B due 2013








350,350


229,479Revolving credit facility expires 2011








125,762


89,920Derivative instruments:Interest rate swap contracts








(2,850
)

(2,850
)Natural gas swap contracts


257


257


179


179


19. SEGMENT INFORMATION

We have identified four reportable segments through which we conduct our operating activities: (i) chlorovinyls; (ii) window and door profiles and mouldings products;
(iii) outdoor building products; and (iv) aromatics. These four segments reflect the organization used by our management for purposes of allocating resources, and assessing performance.
The chlorovinyls segment is a highly integrated chain of products, which includes chlorine, caustic soda, VCM, vinyl resins and compounds and compound additives. Our vinyl-based building and home
improvement products are marketed under the Royal Group brand names, and are managed within two reportable segments: window and door profiles and mouldings products and outdoor building products.
Outdoor building products include siding, pipe and pipe fittings, deck, fence and rail products, and until March 2008, outdoor storage buildings. The aromatics segment is also integrated and includes
cumene and the co-products phenol and acetone.

Earnings
of our segments exclude interest income and expense, unallocated corporate expenses and general plant services, provision for income taxes and costs of our receivables
securitization program. Transactions between operating segments are valued at market-based prices. The revenues generated by these transfers are provided in the following table.

Identifiable
assets consist of property, plant and equipment used in the operations of the segment as well as inventory, receivables and other assets directly related to the segment.
Unallocated and other assets include cash, certain corporate receivables, data processing equipment and prepaid pension costs. The accounting polices of the reportable segments are the same as those
described in Note 2, "Summary of Significant Accounting Policies."

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Table of Contents

Georgia Gulf Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

19. SEGMENT INFORMATION (Continued)

Segments

In thousands

Chlorovinyls

Aromatics

Window and
Door Profiles
and
Mouldings
Products

Outdoor
Building
Products

Unallocated
and Other

TotalYear Ended December 31, 2009:Net sales

$
940,639

$
321,305

$
323,696

$
404,451

$


$
1,990,091Intersegment revenues


237,109





1,402


107


(238,618
)

Total net sales


1,177,748


321,305


325,098


404,558


(238,618
)

1,990,091Long-lived asset impairment charges


201





21,603








21,804Restructuring costs


(19
)




3,320


1,089


2,468


6,858(Gains) losses on sale of assets








(24
)

86





62Operating income (loss)


79,469


16,884


(33,767
)

7,054


(70,208
) (1)

(568
)Depreciation and amortization


60,362


4,297


26,873


10,973


15,185


117,690Capital expenditures


21,553


188


3,982


4,361





30,084Total assets


895,375


78,201


309,996


227,519


94,774


1,605,865Year Ended December 31, 2008:Net sales

$
1,379,957

$
618,837

$
408,880

$
508,803

$


$
2,916,477Intersegment revenues


287,321





3,121


1,750


(292,192
)

Total net sales


1,667,278


618,837


412,001


510,553


(292,192
)

2,916,477Long-lived asset impairment charges


62,535





112,883


727


(187
)

175,958Restructuring costs


10,579





1,445


8,709


1,240


21,973(Gains) losses on sale of assets


(1,689
)




1,210


2,027


(28,830
)

(27,282
)Operating income (loss)


60,205


(34,979
)

(137,415
)

(26,917
)

(1,047
) (2)

(140,153
)Depreciation and amortization


73,413


5,701


42,707


14,212


7,685


143,718Capital expenditures


39,516


485


15,587


6,957





62,545Total assets


825,109


50,269


367,904


258,514


108,605


1,610,401Year Ended December 31, 2007:Net sales

$
1,409,129

$
666,923

$
507,968

$
573,250

$


$
3,157,270Intersegment revenues


294,808





2,953


10,276


(308,037
)

Total net sales


1,703,937


666,923


510,921


583,526


(308,037
)

3,157,270Long-lived asset impairment charges


55,481





61,912


41,567





158,960Restructuring costs


306





2,315


1,038





3,659(Gains) losses on sale of assets


37





571


370


326


1,304Operating income (loss)


52,122


10,459


(54,477
)

(50,864
)

(40,926
) (1)

(83,686
)Loss from discontinued operations, net of a tax














(10,864
)

(10,864
)Depreciation and amortization


72,021


6,987


45,941


18,396


6,865


150,210Capital expenditures


59,449


46


15,922


8,253





83,670Total assets


1,046,417


152,000


572,728


321,381


109,138


2,201,664


---

105

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Table of Contents

Georgia Gulf Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

19. SEGMENT INFORMATION

Geographic Areas

Sales are attributable to geographic areas based on customer location and are as follows for the years ended December 31, 2009,
2008, and 2007.

Year Ended December 31,In thousands

2009

2008

2007Net sales:United States

$
1,286,991

$
2,164,611

$
2,288,515Non-U.S.


703,100


751,866


868,755Total

$
1,990,091

$
2,916,477

$
3,157,270


Export
sales were approximately 35 percent, 26 percent and 28 percent of our sales for the years ended December 31, 2009, 2008 and 2007, respectively. Based
on destination, the principal international markets we serve are Europe, Canada, and South and Central America. Net sales to Canada in 2009 were 23 percent as compared with 21 percent of
total sales in 2008 and 2007.

Long-lived
assets are attributable to geographic areas based on asset location. Long-lived assets by geographic area as of December 31, 2009 and 2008 are
as follows.

December 31,In thousands

2009

2008Long-lived assets:United States

$
448,688

$
522,062Non-U.S.


238,882


238,698Total

$
687,570

$
760,760


Net
assets (liabilities) are attributable to geographic areas based on the location of the legal entity. Net assets (liabilities) by geographic locations are as follows:

December 31,In thousands

2009

2008Net (liabilities) assets:United States

$
549,526

$
(43,206
)Non-U.S.


(156,198
)

(96,722
)Total

$
393,328

$
(139,928
)


106

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Table of Contents

Georgia Gulf Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

20. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following table sets forth certain quarterly financial data for the periods indicated:

In thousands, except per share data*

First
Quarter (1)

Second
Quarter (2)

Third
Quarter (3)

Fourth
Quarter (4)2009Net sales

$
407,331

$
524,343

$
556,342

$
502,075Gross margin


15,009


75,382


83,699


37,001Operating (loss) income


(25,704
)

5,130


38,596


(18,588
)Income (loss) from continuing operations


48,285


(2,951
)

230,151


(129,694
)Net income (loss)


48,285


(2,951
)

230,151


(129,694
)Basic earnings (loss) per share:Income (loss) from continuing operations


34.60


(2.13
)

9.21


(3.92
)Income (loss) from discontinued operations











Net income (loss)


34.60


(2.13
)

9.21


(3.92
)Diluted earnings (loss) per shareIncome (loss) from continuing operations


34.60


(2.13
)

9.20


(3.92
)Income (loss) from discontinued operations











Net income (loss)


34.60


(2.13
)

9.20


(3.92
)Dividends per common share











2008Net sales

$
712,460

$
849,843

$
818,564

$
535,609Gross margin


29,073


72,076


62,061


35,856Operating (loss) income


(44,769
)

63,102


14,248


(172,736
)(Loss) income from continuing operations


(69,495
)

27,941


(17,402
)

(198,689
)Net (loss) income


(69,495
)

27,941


(17,402
)

(198,689
)Basic (loss) earnings per share:(Loss) income from continuing operations


(52.54
)

18.01


(14.64
)

(144.06
)(Loss) income from discontinued operations











Net (loss) income


(52.54
)

18.01


(14.64
)

(144.06
)Diluted (loss) earnings per share(Loss) income from continuing operations


(52.54
)

18.01


(14.64
)

(144.06
)(Loss) income from discontinued operations











Net (loss) income


(52.54
)

18.01


(14.64
)

(144.06
)Dividends per common share


2.00


2.00


2.00





---

107

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Table of Contents

Georgia Gulf Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

20. QUARTERLY FINANCIAL DATA (UNAUDITED) (Continued)



21. SUPPLEMENTAL GUARANTOR INFORMATION

Our payment obligations under the indenture for our 9.0 percent senior secured notes are guaranteed by Georgia Gulf Lake Charles, LLC, Georgia Gulf Chemicals &
Vinyls, LLC, Royal Mouldings Limited, Royal Plastics Group (USA) Limited, Rome Delaware Corporation, Plastic Trends, Inc., Royal Group Sales (USA) Limited, Royal Outdoor
Products, Inc., Royal Window and Door Profiles Plant 13 Inc., and Royal Window and Door Profiles Plant 14 Inc. all of which are wholly owned subsidiaries (the "Guarantor
Subsidiaries") of Georgia Gulf Corporation. The guarantees are full, unconditional and joint and several. Georgia Gulf is in essence a holding company for all of its wholly and majority owned
subsidiaries. The following condensed consolidating balance sheet information, statements of operations information and statements of cash flows information present the combined financial statements
of the parent company, and the combined financial statements of our Guarantor Subsidiaries and our remaining subsidiaries (the "Non-Guarantor Subsidiaries"). Separate financial statements
of the Guarantor Subsidiaries are not presented because we have determined that they would not be material to investors.

108

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Table of Contents

Georgia Gulf Corporation and Subsidiaries        Supplemental Condensed Consolidating Balance Sheet Information        December 31, 2009

(In thousands)

Parent
Company

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations

ConsolidatedCash and cash equivalents

$


$
24,881

$
13,916

$


$
38,797Receivables, net


150,321


398,679


59,620


(399,679
)

208,941Inventories





176,891


74,506





251,397Prepaid expenses


604


19,084


4,608





24,296Income tax receivables





28,846


1,460





30,306Deferred income taxes





14,108








14,108Total current assets


150,925


662,489


154,110


(399,679
)

567,845Property, plant and equipment, net


196


448,492


238,882





687,570Long-term receivablesaffiliates


436,247








(436,247
)

Goodwill





97,572


106,237





203,809Intangibles, net





12,885


2,338





15,223Other assets, net


21,330


80,041


15,123





116,494Non-current assets held-for-sale





14,210


714





14,924Investment in subsidiaries


835,057


(1,374
)




(833,683
)

Total assets

$
1,443,755

$
1,314,315

$
517,404

$
(1,669,609
)
$
1,605,865Current portion of long-term debt

$
27,769

$


$
462

$


$
28,231Accounts payable


394,348


100,144


30,016


(399,679
)

124,829Interest payable


2,786





58





2,844Income taxes payable








1,161





1,161Accrued compensation


586


8,844


6,639





16,069Liability for unrecognized income tax benefits and other tax reserves





3,055


6,474





9,529Other accrued liabilities


434


17,208


25,594





43,236Total current liabilities


425,923


129,251


70,404


(399,679
)

225,899Long-term debt


604,338


41


106,395





710,774Long-term payablesaffiliates








436,247


(436,247
)

Liability for unrecognized income tax benefits





6,536


57,835





64,371Deferred income taxes


15,159


158,581


717





174,457Other non-current liabilities


5,007


29,991


2,038





37,036Total liabilities


1,050,427


324,400


673,636


(835,926
)

1,212,537Total stockholders' equity (deficit)


393,328


989,915


(156,232
)

(833,683
)

393,328Total liabilities and stockholders' equity deficit

$
1,443,755

$
1,314,315

$
517,404

$
(1,669,609
)
$
1,605,865


109

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Table of Contents

Georgia Gulf Corporation and Subsidiaries        Supplemental Condensed Consolidating Balance Sheet Information        December 31, 2008

(In thousands)

Parent
Company

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations

ConsolidatedCash and cash equivalents

$


$
49,724

$
40,251

$


$
89,975Receivables, net


72,753


273,053


192,176


(420,695
)

117,287Inventories





143,845


96,354





240,199Prepaid expenses


97


16,818


4,445





21,360Income tax receivable


(984
)

1,856


1,392





2,264Deferred income taxes


1,078


21,427








22,505Total current assets


72,944


506,723


334,618


(420,695
)

493,590Property, plant and equipment, net


226


521,837


238,697





760,760Long-term receivablesaffiliates


373,417








(373,417
)

Goodwill





97,572


91,431





189,003Intangibles, net





13,898


2,007





15,905Other assets, net


39,968


95,997


14,678





150,643Non-current assets held-for-sale





500








500Investment in subsidiaries


961,703


139,570





(1,101,273
)

Total assets

$
1,448,258

$
1,376,097

$
681,431

$
(1,895,385
)
$
1,610,401Current portion of long-term debt

$
56,790

$
53

$


$


$
56,843Accounts payable


261,795


175,439


88,513


(420,695
)

105,052Interest payable


16,115











16,115Income tax payable





1,988


1,488





3,476Accrued compensation


159


4,052


5,679





9,890Liability for unrecognized income tax benefits and other tax reserves





4,829


22,505





27,334Other accrued liabilities


3,341


18,069


28,283





49,693Total current liabilities


338,200


204,430


146,468


(420,695
)

268,403Long-term debt, less current portion


1,245,886


41


91,380





1,337,307Long-term payablesaffiliates








373,417


(373,417
)

Liability for unrecognized income tax benefits





6,597


27,995





34,592Deferred income taxes


(957
)

70,509


589





70,141Other non-current liabilities


5,057


31,491


3,338





39,886Total liabilities


1,588,186


313,068


643,187


(794,112
)

1,750,329Stockholders' (deficit) equity


(139,928
)

1,063,029


38,244


(1,101,273
)

(139,928
)Total liabilities and stockholders' (deficit) equity

$
1,448,258

$
1,376,097

$
681,431

$
(1,895,385
)
$
1,610,401


110

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Table of Contents

Georgia Gulf Corporation and Subsidiaries        Supplemental Condensed Consolidating Statement of Operations Information        Year Ended December 31, 2009

(In thousands)

Parent
Company

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations

ConsolidatedNet sales

$
15,632

$
1,598,653

$
522,231

$
(146,425
)
$
1,990,091Operating costs and expenses:Cost of sales





1,459,803


448,256


(129,061
)

1,778,998Selling, general and administrative expenses


52,228


82,328


65,745


(17,364
)

182,937Long-lived asset impairment charges





12,204


9,600





21,804Restructuring costs


2,468


1,261


3,129





6,858Losses (gains) on sale of assets








62





62Total operating costs and expenses


54,696


1,555,596


526,792


(146,425
)

1,990,659Operating (loss) income


(39,064
)

43,057


(4,561
)




(568
)Other income (expense):Interest expense, net


(141,911
)

29,905


(18,513
)




(130,519
)Loss on debt modification and extinguishment, net


(28,816
)




(13,981
)




(42,797
)Gain on debt exchange


400,835











400,835Foreign exchange gain (loss)


44


49


(1,493
)




(1,400
)Equity in income of subsidiaries


17,955


(20,355
)




2,400


Intercompany interest income (expense)


6,685





(6,685
)




Income (loss) from continuing operations before income taxes


215,728


52,656


(45,233
)

2,400


225,551Provision for income taxes


69,939


4,373


5,450





79,762Net income (loss)

$
145,789

$
48,283

$
(50,683
)
$
2,400

$
145,789


111

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Table of Contents

Georgia Gulf Corporation and Subsidiaries        Supplemental Condensed Consolidating Statement of Operations Information        Year Ended December 31, 2008

(In thousands)

Parent
Company

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations

ConsolidatedNet sales

$
13,563

$
2,423,523

$
708,995

$
(229,604
)
$
2,916,477Operating costs and expenses:Cost of sales


3


2,277,015


644,206


(203,815
)

2,717,409Selling, general and administrative expenses


22,989


82,739


88,633


(25,789
)

168,572Goodwill, intangibles and other long-lived asset impairment charges





128,561


47,397





175,958Restructuring costs


982


2,850


18,141





21,973(Gains) losses on sale of assets





(31,074
)

3,792





(27,282
)Total operating costs and expenses


23,974


2,460,091


802,169


(229,604
)

3,056,630Operating (loss) income


(10,411
)

(36,568
)

(93,174
)




(140,153
)Other income (expense):Interest expense, net


(129,541
)

11,131


(14,795
)




(133,205
)Foreign exchange gain (loss)


(432
)

(19
)

(3,813
)




(4,264
)Equity in income of subsidiaries


(146,114
)

(10,494
)




156,608


Intercompany interest income (expense)


20,207





(20,207
)




(Loss) income from continuing operations before income taxes


(266,291
)

(35,950
)

(131,989
)

156,608


(277,622
)(Benefit) provision for income taxes


(8,648
)

(7,978
)

(3,353
)




(19,979
)Net (loss) income

$
(257,643
)
$
(27,972
)
$
(128,636
)
$
156,608

$
(257,643
)


112

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Table of Contents

Georgia Gulf Corporation and Subsidiaries        Supplemental Condensed Consolidating Statement of Operations Information        Year Ended December 31, 2007

(In thousands)

Parent
Company

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations

ConsolidatedNet sales

$
12,041

$
2,348,938

$
879,415

$
(83,124
)
$
3,157,270Operating costs and expenses:Cost of sales





2,152,425


751,475


(52,474
)

2,851,426Selling, general and administrative


28,322


100,214


127,721


(30,650
)

225,607Goodwill, intangibles and other long-lived asset impairment charges





20,020


138,940





158,960Restructuring Costs





388


3,271





3,659(Gains) losses on sale of assets








1,304





1,304Total operating costs and expenses


28,322


2,273,047


1,022,711


(83,124
)

3,240,956Operating (loss) income


(16,281
)

75,891


(143,296
)




(83,686
)Other income (expense):Interest expense, net


(123,298
)

2,414


(12,879
)




(133,763
)Foreign exchange loss


10,601


344


(4,659
)




6,286Equity in income of subsidiaries


(148,044
)

(17,352
)




165,396


Intercompany interest income (expense)


31,340





(31,340
)




(Loss) income before income taxes


(245,682
)

61,297


(192,174
)

165,396


(211,163
)Provision for income taxes


20,345


(15,135
)

38,790





44,000(Loss) income from continuing operations


(266,027
)

76,432


(230,964
)

165,396


(255,163
)Loss from discontinued operations, net of tax





(2,834
)

(8,030
)




(10,864
)Net (loss) income

$
(266,027
)
$
73,598

$
(238,944
)
$
165,396

$
(266,027
)


113

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Table of Contents

Georgia Gulf Corporation and Subsidiaries        Supplemental Condensed Consolidating Statement of Cash Flows Information        Year Ended December 31, 2009

(In thousands)

Parent
Company

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations

ConsolidatedNet cash provided by (used in) operating activities

$
(109,473
)
$
(1,462
)
$
111,658

$


$
723Cash from investing activities:Proceeds from insurance recoveries related to property plant and equipment





1,781


199





1,980Capital expenditures





(25,109
)

(4,976
)




(30,085
)Proceeds from sale of assets








2,080





2,080Distribution from affiliate


118,012


118,012





(236,024
)

Net cash used in investing activities


118,012


94,684


(2,697
)

(236,024
)

(26,025
)Cash from financing activities:Net change in revolving line of credit


(125,762
)




(9,460
)




(135,222
)Net change in ABL revolver


56,000





462





56,462Long-term debt payments


(367,349
)

(53
)







(367,402
)Long-term debt proceeds


496,739











496,739Proceeds from issuance of common stock














Fees paid to amend or issue debt facilities


(68,240
)




(11,509
)




(79,749
)Return of capital to affiliate





(118,012
)

(118,012
)

236,024


Tax benefits from employee share based exercises


98











98Stock compensation plan activity


(25
)










(25
)Net cash (used in) provided by financing activities


(8,539
)

(118,065
)

(138,519
)

236,024


(29,099
)Effect of exchange rate changes on cash








3,223





3,223Net change in cash and cash equivalents





(24,843
)

(26,335
)




(51,178
)Cash and cash equivalents at beginning of period





49,724


40,251





89,975Cash and cash equivalents at end of period

$


$
24,881

$
13,916

$


$
38,797


114

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Table of Contents

Georgia Gulf Corporation and Subsidiaries        Supplemental Condensed Consolidating Statement of Cash Flows Information        Year Ended December 31, 2008

(In thousands)

Parent
Company

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations

ConsolidatedNet cash provided by (used in) operating activities

$
(36,649
)
$
37,155

$
40,886

$


$
41,392Cash from investing activities:Proceeds from issuance recoveries related to property, plant and equipment





7,308








7,308Capital expenditures





(49,958
)

(12,587
)




(62,545
)Proceeds from sale of property, plant and equipment and assets held for sale





48,456


31,350





79,806Net cash provided by investing activities





5,806


18,763





24,569Cash from financing activities:Net change in revolving line of credit


105,813





1,905





107,718Long-term debt payments


(73,951
)

(53
)







(74,004
)Intercompany financing


23,099





(23,099
)




Return of internal capital





(1,499
)

1,499





Stock compensation plan activity


(110
)










(110
)Fees paid to amend or issue debt facilities


(9,823
)










(9,823
)Dividends


(8,379
)










(8,379
)Net cash provided by (used in) financing activities


36,649


(1,552
)

(19,695
)




15,402Effect of exchange rate changes on cash








(615
)




(615
)Net change in cash and cash equivalents





41,409


39,339





80,748Cash and cash equivalents at beginning of year





8,315


912





9,227Cash and cash equivalents at end of year

$


$
49,724

$
40,251

$


$
89,975


115

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Table of Contents

Georgia Gulf Corporation and Subsidiaries        Supplemental Condensed Consolidating Statement of Cash Flows Information        Year Ended December 31, 2007

(In thousands)

Parent
Company

Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries

Eliminations

ConsolidatedNet cash provided by (used in) continuing operations

$
51,735

$
52,953

$
23,472

$


$
128,159Net cash (used in) provided by discontinued operations








398





398Net cash provided by operating activities


51,735


52,953


23,870





128,557Investing activities:Capital expenditures


(112
)

(65,814
)

(17,744
)




(83,670
)Proceeds from sale of property, plant and equipment





5,652


99,607





105,259Distribution from affiliates in excess of earnings


27,322


4,177





(31,499
)

Net cash provided by (used in) investing activities


27,210


(55,985
)

81,863


(31,499
)

21,589Financing activities:Net change in revolving line of credit


(5,950
)




(1,291
)




(7,241
)Long-term debt payments


(224,075
)

(52
)

(378
)




(224,505
)Intercompany financing


165,916





(165,916
)




Distribution to owner








(31,499
)

31,499


Proceeds from sales leaseback of property








95,865





95,865Fees paid to issue debt


(3,241
)










(3,241
)Stock compensation plan activity


(685
)










(685
)Dividends paid


(11,099
)










(11,099
)Net cash provided by (used in) financing activities


(79,134
)

(52
)

(103,219
)

31,499


(150,906
)Effect of exchange rate changes on cash and cash equivalents


189





157





346Net change in cash and cash equivalents





(3,085
)

2,671





(414
)Cash and cash equivalents at beginning of year





11,400


(1,759
)




9,641Cash and cash equivalents at end of year

$


$
8,315

$
912

$


$
9,227


116

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

None.

Item 9A.    CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures.We carried out an evaluation, under the supervision and with the participation of Georgia Gulf
management,
including the company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the company's disclosure controls and procedures as defined in
Rule 13a-15(e) under the Securities Exchange Act of 1934. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the company's
disclosure controls and procedures were effective as of December 31, 2009.

Changes in Internal Control.There have been no changes to our internal controls over financial reporting that occurred during the
three months ended
December 31, 2009 that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting.

Report of Management on Internal Control Over Financial Reporting

To
the Stockholders of Georgia Gulf Corporation:

Management
of the company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the
Securities Exchange Act of 1934. The company's internal control over financial reporting is designed to provide reasonable assurance to the company's management and board of directors regarding the
preparation and fair presentation of published financial statements.

Our
management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our internal controls over financial reporting will prevent all errors and all
fraud. Internal controls,
no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the internal controls are met. Because of the inherent limitations of internal
controls, internal controls over financial reporting may not prevent or detect all misstatements or fraud. Therefore, no evaluation of internal control can provide absolute assurance that all control
issues or instances of fraud will be prevented or detected.

Management
assessed the effectiveness of the company's internal control over financial reporting as of December 31, 2009 using the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission in Internal ControlIntegrated Framework. Based on this assessment, the company's management concluded that, as of December 31,
2009, the company's internal control over financial reporting was effective based on those criteria.

Deloitte &
Touche LLP, the company's independent registered public accounting firm, which also audited the company's consolidated financial statements included in this
annual report on Form 10-K, has issued an attestation report on the company's internal control over financial reporting, which is included below.

/s/ PAUL D. CARRICO Paul D. Carrico
President and Chief Executive Officer

/s/ GREGORY C. THOMPSON Gregory C. Thompson
Chief Financial Officer and TreasurerMarch 11, 2010


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON  INTERNAL CONTROL OVER FINANCIAL REPORTING

To
the Board of Directors and Stockholders of
Georgia Gulf Corporation
Atlanta, Georgia

We
have audited the internal control over financial reporting of Georgia Gulf Corporation and subsidiaries (the "Company") as of December 31, 2009, based on criteria established
inInternal ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's
management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Report of Management on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our
audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A
company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or
persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because
of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material
misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to
future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In
our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal ControlIntegrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission.

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Table of Contents

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement
schedule as of and for the year ended December 31, 2009 of the Company and our report dated March 11, 2010 expressed an unqualified opinion on those financial statements and financial
statement schedule.

DELOITTE &
TOUCHE LLP

Atlanta,
Georgia
March 11, 2010

Item 9B.    OTHER INFORMATION.

None.

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Table of Contents

PART III

Item 10.    DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.

The information set forth under the captions "Election of Directors," and "Section 16(a) Beneficial Ownership Reporting
Compliance" in our proxy statement for the Annual
Meeting of Stockholders to be held May 18, 2010, is hereby incorporated by reference in response to this item.

We
have adopted the Georgia Gulf Code of Ethics, which applies to all of our directors, officers and employees. The Code of Ethics is publicly available on our website at http://www.ggc.comunder Investor
Relations. If we make any substantive amendments to our Code of Ethics or we grant any waiver, including any implicit
waiver, from a provision of the Code of Ethics, which applies to our principal executive officer, principal financial officer, principal accounting officer or controller, we will disclose the nature
of the amendment or waiver on our website. Also, we may elect to also disclose the amendment or waiver in a report on Form 8-K filed with the SEC.

In
addition, our Corporate Governance Guidelines and the charters for our audit committee, compensation committee and nominating and governance committee are available on our website at http://www.ggc.comunder Investor Relations and are available in print to any stockholder who requests them from the Corporate Secretary of Georgia Gulf
Corporation, 115 Perimeter Center Place, Suite 460, Atlanta, GA 30346.

The
following is additional information regarding our executive officers who are not directors, as of March 11, 2010:

Joel
I. Beerman, 59, has served as Vice President, General Counsel and Secretary since February 1994.

Mark
E. Buckis, 45, has served as Vice President and Corporate Controller since December 2007 and prior thereto served as Corporate Controller since August 2003. He has also served as
interim Chief Financial Officer from June 2007 to February 2008.

William
H. Doherty, 55, has served as Vice President, PVC Compounds since December 2008. He was Vice President, Custom Products from October 2006 to December 2008. Before then,
Mr. Doherty served as Vice President, Vinyl Compounds Group since December 1999 and as General Manager Vinyl Compounds since May 1998 and as Business Manager Vinyl Compounds from May 1992 until
May 1998.

Mark
J. Orcutt, 54, has served as Executive Vice President, Building Products since December 2008. Before then, he was employed by PPG Industries, Inc., most recently as Vice
President Performance Glazing since 2003.

Mark
J. Seal, 58, has served as Vice President, Aromatics and Additives since December 2008. He was Vice President, Outdoor Building Products from October 2006 to December 2008. Before
then, Mr. Seal
had served as Vice President, Chemicals Group since May 2005 and as Vice President, Polymer Group since August 1993.

C.
Douglas Shannon, 58, has served as Vice President, Procurement since May 2005 and served as Vice President, Chemicals Group from December 1999 until May 2005. Before then,
Mr. Shannon served as Director of Business Area Management Commodity Chemicals from July 1998 until December 1999.

Gregory
C. Thompson, 54, has served as Chief Financial Officer and Treasurer since February 2008. Before then, he served as Senior Vice President and Chief Financial Officer of Invacare
Corporation, a medical equipment manufacturer, since 2002.

James
L. Worrell, 56, has served as Vice President, Human Resources, since September 2006. Before then, Mr. Worrell served as the Director of Human Resources since 1993, prior to
which he was a Manager of Human Resources since our inception.

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Table of Contents

Executive
officers are elected by, and serve at the pleasure of, the board of directors.

Item 11.    EXECUTIVE COMPENSATION.

The information set forth under the captions "Election of DirectorsCompensation of Directors," and "Executive
Compensation" in our proxy statement for the Annual Meeting of Stockholders to be held on May 18, 2010, is hereby incorporated by reference in response to this item.

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

The information set forth under the caption "Security Ownership of Principal Stockholders and Management" in our proxy statement for
the Annual Meeting of Stockholders to be held on May 18, 2010, is hereby incorporated by reference in response to this item.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides information with respect to compensation plans under which our equity securities are authorized for
issuance to employees as of December 31, 2009:

Plan category

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)Equity compensation plans approved by security holders


1,292,540

$
348.52
(1)

762,755Equity compensation plans not approved by security holders








Total


1,292,540

$
348.52


762,755


---

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

We have not had any related party transactions required to be reported under this item for the calendar year 2009, or for the period
from January 1, 2010 to the date of this report. The information set forth under the caption "Election of Directors" in our proxy statement for the Annual Meeting of Stockholders to be held on
May 18, 2010 is herby incorporated by reference in response to this item.

Item 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information contained in the section entitled "Appointment of Independent Registered Public Accounting Firm" in our proxy statement
for the Annual Meeting of Stockholders to be held on May 18, 2010, is incorporated herein by reference in response to this item.

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Table of Contents

PART IV

Item 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.



Exhibit Index

Exhibit
Number

Description3.1

Certificate of Incorporation of Georgia Gulf Corporation, as amended (filed as Exhibit 3.1 to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2009, on November 6, 2009
and incorporated herein by reference).3.2

Bylaws of Georgia Gulf Corporation (filed as Exhibit 99.1 to the Company's Current Report on Form 8-K on May 23, 2005 and incorporated herein by reference).4.1

Registration Rights Agreement, dated July 27, 2009, among Georgia Gulf Corporation and the parties identified on the signature pages thereto (filed as Exhibit 4.1 to the Company's current report on Form 8-K
on July 31, 2009 and incorporated herein by reference).4.2

Amended and Restated Rights Agreement, dated as of December 5, 2000, between Georgia Gulf Corporation and EquiServe Trust Company, N.A. (filed as Exhibit 4.1 to the Company's Form 8-A amendment on
December 13, 2000 and incorporated herein by reference).4.3

Amendment to Amended and Restated Rights Agreement, dated August 10, 2009, between Georgia Gulf Corporation and Computershare Trust Company, N.A, as successor rights agent (filed as Exhibit 4.1 to the Company's
current report on Form 8-K on August 14, 2009 and incorporated herein by reference).4.4

Indenture, dated December 22, 2009, between Georgia Gulf Corporation, the subsidiary guarantors named therein, and U.S. Bank National Association, as trustee and collateral agent, related to the 9% Senior Secured
Notes Due 2017.


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Table of Contents

Exhibit
Number

Description10.1

Credit Agreement, dated December 22, 2009, among Georgia Gulf Corporation and Royal Group, Inc., as Borrowers, the other persons party thereto that are designated as credit parties, General Electric Capital
Corporation, as a Lender and Swingline Lender, and as Administrative Agent, Co-Collateral Agent and Co-Syndication Agent, Wachovia Capital Finance Corporation (New England), as a Lender and as Co-Collateral Agent and Co-Syndication Agent and the
other financial institutions party thereto, as Lenders.10.2

Salt Contract (filed as Exhibit 10(v) to the Company's Registration Statement on Form S-1 (File No. 33-9902) declared effective on December 17, 1986 and incorporated herein by reference).10.3
*
Form of 2006 Restricted Shares Units Agreement (filed as Exhibit 10.1 to the Company's current report on Form 8-K on March 23, 2006 and incorporated herein by reference).10.4
*
Form of 2006 Nonqualified Stock Option Agreement (filed as Exhibit 10.2 to the Company's current report on Form 8-K on March 23, 2006 and incorporated herein by reference).10.5
*
Form of 2006 Nonqualified Stock Option Agreement for Non-Employee Directors (filed as Exhibit 10.3 to the Company's current report on Form 8-K on March 23, 2006 and incorporated herein by
reference).10.6
*
Form of Restricted Share Unit Agreement (filed as Exhibit 10.2 to the Company's current report on Form 8-K on September 18, 2009 and incorporated herein by reference).10.7
*
Form of Restricted Share Unit Agreement for Canadian Grantees (filed as Exhibit 10.3 to the Company's current report on Form 8-K on September 18, 2009 and incorporated herein by reference).10.8
*
Georgia Gulf Corporation 1998 Equity and Performance Incentive Plan (filed as Exhibit 4 to the Company's Form S-8 (File No. 33-59433) on July 20, 1998 and incorporated herein by reference).10.9
*
Georgia Gulf Corporation Second Amended and Restated 2002 Equity and Performance Incentive Plan (filed as Annex A to the Company's proxy statement on April 18, 2007 and incorporated herein by
reference).10.10
*
Description of the 2007 Management Incentive Bonus Plan (filed as Exhibit 10.1 to the Company's annual report on Form 10-K, for the year ended December 31, 2006, on April 2, 2007 and incorporated
herein by reference).10.11
*
Description of the 2008 Management Incentive Bonus Plan (filed as Exhibit 10.1 to the Company's annual report on Form 10-K, for the year ended December 31, 2007, on February 29, 2008 and incorporated
herein by reference).10.12
*
Description of the 2009 Annual Incentive Plan (filed as Exhibit 10.1 to the Company's annual report on Form 10-K, for the year ended December 31, 2008, on March 17, 2009 and incorporated herein by
reference).10.13
*
Description of the Georgia Gulf Corporation Deferred Compensation Plan (filed as Exhibit 10.2 to the Company's annual report on Form 10-K, for the year ended December 31, 2006, on April 2, 2007 and
incorporated herein by reference).10.14
*
Georgia Gulf Corporation Executive and Key Employee Change of Control Severance Plan, effective as of May 15, 2007 (filed as Exhibit 10.1 to the Company's current report on Form 8-K on May 16, 2007 and
incorporated herein by reference).10.15
*
Description of Gregory C. Thompson's Compensation Arrangement (filed as Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2008 on May 9, 2008 and incorporated
herein by reference).10.16
*
Letter agreement regarding employment of Mark J. Orcutt (filed as Exhibit 10.4 to the Company's quarterly report on Form 10-Q, for the quarter ended March 31, 2009, on May 15, 2009 and incorporated
herein by reference).


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Exhibit
Number

Description10.17
*
Form of Georgia Gulf Corporation Termination of Split Dollar Agreement and Implementation of Bonus Policy (filed as Exhibit 10.1 to the Company's quarterly report on Form 10-Q, for the quarter ended
September 30, 2004, on November 1, 2004 and incorporated herein by reference).10.18
*
Form of Executive Nonqualified Stock Option Agreement (filed as Exhibit 10.2 to the Company's quarterly report on Form 10-Q, for the quarter ended September 30, 2004, on November 1, 2004 and
incorporated herein by reference).10.19
*
Form of Non-Employee Director Nonqualified Stock Option Agreement (filed as Exhibit 10.3 to the Company's quarterly report on Form 10-Q, for the quarter ended September 30, 2004, on November 1, 2004
and incorporated herein by reference).10.20
*
Form of Executive Restricted Shares Agreement (filed as Exhibit 10.4 to the Company's quarterly report on Form 10-Q, for the quarter ended September 30, 2004, on November 1, 2004 and incorporated
herein by reference).10.21
*
Form of Deferred Shares Agreement (filed as Exhibit 10.5 to the Company's quarterly report on Form 10-Q, for the quarter ended September 30, 2004, on November 1, 2004 and incorporated herein by
reference).10.22
*
Georgia Gulf Corporation Senior Executive Bonus Plan (filed as Appendix C to the Company's proxy statement on April 13, 2004 and incorporated herein by reference).10.23

Form of Forfeiture Notice (filed as Exhibit 10.1 to the Company's current report on Form 8-K on May 27, 2009 and incorporated herein by reference).10.24
*
Georgia Gulf Corporation 2009 Equity and Performance Incentive Plan (filed as Annex B to the Company's proxy statement on August 24, 2009 and incorporated herein by reference).10.25

Form of Indemnification Agreement (filed as Exhibit 10.1 to the Company's Form 8-K filed January 19, 2010 and incorporated herein by reference).10.26
*
Form of Restricted Stock Unit Agreement (Directors) (filed as Exhibit 10.2 to the Company's Form 8-K filed January 19, 2010 and incorporated herein by reference).10.27
*
Description of the 2010 Annual Incentive Plan21

Subsidiaries of the Registrant.23

Consent of Deloitte & Touche LLP.31

Rule 13(a)-14(a)/15d-14(a) Certifications.32

Section 1350 Certifications.


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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.

GEORGIA GULF CORPORATION(Registrant)Date: March 11, 2010

By:

/s/ PAUL D. CARRICO Paul D. Carrico,
President and Chief Executive Officer


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

Signature

Title

Date/s/ PAUL D. CARRICO Paul D. Carrico

President, Chief Executive Officer and Director
(Principal Executive Officer)


March 11, 2010/s/ GREGORY C. THOMPSON Gregory C. Thompson

Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)


March 11, 2010Stephen E. Macadam

Director


March 11, 2010/s/ T. KEVIN DENICOLA T. Kevin DeNicola

Director


March 11, 2010/s/ ROBERT M. GERVIS Robert M. Gervis

Director


March 11, 2010/s/ PATRICK J. FLEMING Patrick J. Fleming

Director


March 11, 2010/s/ MARK L. NOETZEL Mark L. Noetzel

Director


March 11, 2010/s/ WAYNE C. SALES Wayne C. Sales

Director


March 11, 2010/s/ DAVID N. WEINSTEIN David N. Weinstein

Director


March 11, 2010


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GEORGIA GULF CORPORATION AND SUBSIDIARIES

SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS

(In thousands)

Year Ended December 31,

Balance at
beginning of
period

Charged to
costs and
expenses, net
of recoveries

Charged to
other accounts

Deductions (1)

Balance at
end of period2007Allowance for doubtful accounts

$
16,147

$
6,968

$
1,511
(2)
$
(11,811
)
$
12,8152008Allowance for doubtful accounts

$
12,815

$
9,999

$
(1,088
) (2)
$
(9,419
)
$
12,3072009Allowance for doubtful accounts

$
12,307

$
8,200

$
960
(2)
$
(5,014
)
$
16,453


---

NOTES:

126

---