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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2003

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: 333-54122

Atrium Corporation



(Exact name of registrant as specified in its charter)

|                                |  |                       
|------------------------------- |  | ----------------------
|Delaware                        |  | 75-2814598            
|                                |  |                       
|(State or other jurisdiction of |  | (I.R.S. Employer      
|incorporation or organization)  |  | Identification Number)

1341 W. Mockingbird Lane, Suite 1200W, Dallas, Texas 75247, (214) 630-5757

---

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes No X

As of May 15, 2003, the registrant had 187,157 shares of Common Stock, par value
$.01 per share outstanding.





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TABLE OF CONTENTS



|                              |                                                                                               |                                                                             |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | Item 1. Consolidated Financial Statements (unaudited):                                       
|                              |                                                                                               | CONSOLIDATED BALANCE SHEETS                                                
|                              |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS                                      
|                              |                                                                                               | CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY AND OTHER COMPREHENSIVE LOSS
|                              |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS                                      
|                              |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                 
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                              | Item 4. Controls and Procedures                                                              
|PART II. OTHER INFORMATION   
|                              | Item 1. Legal Proceedings                                                                    
|                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                   
|CERTIFICATIONS               



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ATRIUM CORPORATION
FORM 10-Q
QUARTER ENDED MARCH 31, 2003
INDEX

|                                                                         |  |                                                                                                                       |  |      
|------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------- |  | -----
|                                                                         |  |                                                                                                                       |  | Page 
|                                                                         |  |                                                                                                                       |  |      
|PART I                                                                   |  | FINANCIAL INFORMATION                                                                                                 |  |      
|Item 1.                                                                  |  | Consolidated Financial Statements (unaudited):                                                                        |  |      
|                                                                         |  | Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002                                                |  | 3    
|                                                                         |  | Consolidated Statements of Operations for the Three Months Ended
March 31, 2003 and 2002                              |  | 4    
|                                                                         |  | Consolidated Statement of Stockholders Equity and Other Comprehensive
Loss for the Three Months Ended March 31, 2003 |  | 5    
|                                                                         |  | Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2003 and 2002                              |  | 6    
|                                                                         |  | Notes to Consolidated Financial Statements                                                                            |  | 7-13 
|Item 2.                                                                  |  | Managements Discussion and Analysis of Financial Condition
and Results of Operations                                 |  | 14-17
|Item 3.                                                                  |  | Quantitative and Qualitative Disclosures about Market Risk                                                            |  | 17   
|Item 4.                                                                  |  | Controls and Procedures                                                                                               |  | 17-18
|PART II                                                                  |  | OTHER INFORMATION                                                                                                     |  |      
|Item 1.                                                                  |  | Legal Proceedings                                                                                                     |  | 18   
|Items 2, 3, 4 and 5 are not applicable                                   |  |                                                                                                                      
|Item 6.                                                                  |  | Exhibits and Reports on Form 8-K                                                                                      |  | 18   
|Signatures                                                               |  | 18                                                                                                                   
|Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |  | 19-20                                                                                                                

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ATRIUM CORPORATION
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share amounts)

|                                             |                                                                                                                                                                 |                                            |         |         |         |             |         |              |         |  |  | 
|-------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------- | ------- | ----------- | ------- | ------------ | ------- |  |  | 
|                                             |                                                                                                                                                                 |                                            |         |         |         | March 31,   |         | December 31,
|                                             |                                                                                                                                                                 |                                            |         |         |         | 2003        |         | 2002        
|                                             |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|                                             |                                                                                                                                                                 |                                            |         |         |         | (unaudited) |         |              |         | 
|ASSETS                                       |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|CURRENT ASSETS:                              |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|                                             | Cash and cash equivalents                                                                                                                                       |                                            | $       | 4,959   |         |             | $       | 1,131        |        
|                                             | Accounts receivable, net                                                                                                                                        |                                            |         | 2,825   |         |             |         | 1,847        |        
|                                             | Retained interest in sold accounts receivable                                                                                                                   |                                            |         | 15,774  |         |             |         | 25,209       |        
|                                             | Inventories                                                                                                                                                     |                                            |         | 37,573  |         |             |         | 33,712       |        
|                                             | Prepaid expenses and other current assets                                                                                                                       |                                            |         | 4,857   |         |             |         | 6,109        |        
|                                             | Deferred tax asset                                                                                                                                              |                                            |         | 924     |         |             |         | 922          |        
|                                             |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|                                             |                                                                                                                                                                 | Total current assets                       |         |         | 66,912  |             |         |              | 68,930  | 
|PROPERTY, PLANT AND EQUIPMENT, net           |                                                                                                                                                                 |                                            | 56,917  |         |         |             | 55,322  |             
|GOODWILL                                     |                                                                                                                                                                 |                                            | 348,153 |         |         |             | 345,239 |             
|DEFERRED FINANCING COSTS, net                |                                                                                                                                                                 |                                            | 13,583  |         |         |             | 14,401  |             
|OTHER ASSETS, net                            |                                                                                                                                                                 |                                            | 8,392   |         |         |             | 8,134   |             
|                                             |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|                                             |                                                                                                                                                                 | Total assets                               |         | $       | 493,957 |             |         | $            | 492,026 | 
|                                             |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|LIABILITIES
AND STOCKHOLDERS EQUITY         |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|CURRENT LIABILITIES:                         |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|                                             | Current portion of notes payable                                                                                                                                |                                            | $       | 6,515   |         |             | $       | 6,524        |        
|                                             | Accounts payable                                                                                                                                                |                                            |         | 27,246  |         |             |         | 22,535       |        
|                                             | Accrued liabilities                                                                                                                                             |                                            |         | 31,136  |         |             |         | 31,441       |        
|                                             |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|                                             |                                                                                                                                                                 | Total current liabilities                  |         |         | 64,897  |             |         |              | 60,500  | 
|                                             |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|LONG-TERM LIABILITIES:                       |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|                                             | Notes payable                                                                                                                                                   |                                            |         | 331,094 |         |             |         | 329,880      |        
|                                             | Deferred tax liability                                                                                                                                          |                                            |         | 924     |         |             |         | 922          |        
|                                             | Other long-term liabilities                                                                                                                                     |                                            |         | 953     |         |             |         | 560          |        
|                                             |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|                                             |                                                                                                                                                                 | Total long-term liabilities                |         |         | 332,971 |             |         |              | 331,362 | 
|                                             |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|                                             |                                                                                                                                                                 | Total liabilities                          |         |         | 397,868 |             |         |              | 391,862 | 
|                                             |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|COMMON STOCK SUBJECT TO MANDATORY REDEMPTION |                                                                                                                                                                 |                                            | 15,604  |         |         |             | 15,604  |             
|                                             |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|COMMITMENTS AND CONTINGENCIES                |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|STOCKHOLDERS EQUITY:                        |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|                                             | Common stock $.01 par value, 245,000 shares authorized, 170,675 and 170,700 shares
issued and outstanding at March 31, 2003 and December 31, 2002, respectively |                                            |         | 2       |         |             |         | 2            |        
|                                             | Paid-in capital                                                                                                                                                 |                                            |         | 179,679 |         |             |         | 179,704      |        
|                                             | Accumulated deficit                                                                                                                                             |                                            |         | (95,929 | )       |             |         | (90,706      | )      
|                                             | Accumulated other comprehensive loss                                                                                                                            |                                            |         | (3,267  | )       |             |         | (4,440       | )      
|                                             |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|                                             |                                                                                                                                                                 | Total stockholders equity                 |         |         | 80,485  |             |         |              | 84,560  | 
|                                             |                                                                                                                                                                 |                                            |         |         |         |             |         |             
|                                             |                                                                                                                                                                 | Total liabilities and stockholders equity |         | $       | 493,957 |             |         | $            | 492,026 | 
|                                             |                                                                                                                                                                 |                                            |         |         |         |             |         |             

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



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ATRIUM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Three Months Ended March 31, 2003 and 2002
(dollars in thousands)
(unaudited)

|                                                                                                                               |  |      |         |      |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ------- | ---- |  | - | ------- | -
|                                                                                                                               |  | 2003 |         | 2002
|                                                                                                                               |  |      |         |     
|NET SALES                                                                                                                      |  | $    | 113,554 |      |  | $ | 113,289 |  
|COST OF GOODS SOLD                                                                                                             |  |      | 78,597  |      |  |   | 78,242  |  
|                                                                                                                               |  |      |         |      |  |   |         |  
|Gross profit                                                                                                                   |  |      | 34,957  |      |  |   | 35,047  |  
|                                                                                                                               |  |      |         |      |  |   |         |  
|OPERATING EXPENSES:                                                                                                            |  |      |         |      |  |   |         |  
|Selling, delivery, general and administrative expenses (excluding
securitization, stock compensation and amortization expense) |  |      | 27,967  |      |  |   | 26,628  |  
|Securitization expense                                                                                                         |  |      | 236     |      |  |   | 256     |  
|Stock compensation expense                                                                                                     |  |      | 100     |      |  |   | 75      |  
|Amortization expense                                                                                                           |  |      | 932     |      |  |   | 804     |  
|                                                                                                                               |  |      |         |      |  |   |         |  
|SELLING, DELIVERY, GENERAL AND ADMINISTRATIVE
EXPENSES                                                                         |  |      | 29,235  |      |  |   | 27,763  |  
|                                                                                                                               |  |      |         |      |  |   |         |  
|Income from operations                                                                                                         |  |      | 5,722   |      |  |   | 7,284   |  
|INTEREST EXPENSE                                                                                                               |  |      | 10,933  |      |  |   | 11,124  |  
|OTHER INCOME (EXPENSE), net                                                                                                    |  |      | (27     | )    |  |   | 216     |  
|                                                                                                                               |  |      |         |      |  |   |         |  
|Loss before income taxes                                                                                                       |  |      | (5,238  | )    |  |   | (3,624  | )
|PROVISION (BENEFIT) FOR INCOME TAXES                                                                                           |  |      | (15     | )    |  |   | 156     |  
|                                                                                                                               |  |      |         |      |  |   |         |  
|NET LOSS                                                                                                                       |  | $    | (5,223  | )    |  | $ | (3,780  | )
|                                                                                                                               |  |      |         |      |  |   |         |  

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



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ATRIUM CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS
EQUITY AND OTHER COMPREHENSIVE LOSS
For the Three Months Ended March 31, 2003
(dollars in thousands, except share amounts)
(unaudited)

|                                  |                                                                              |  |         |   |         |   |             |   |               |   |               |   |        |   |         |        |   |   |             |       |  |   |        |        |  
|--------------------------------- | ---------------------------------------------------------------------------- |  | ------- | - | ------- | - | ----------- | - | ------------- | - | ------------- | - | ------ | - | ------- | ------ | - | - | ----------- | ----- |  | - | ------ | ------ | -
|                                  |                                                                              |  |         |   |         |   |             |   |               |   |               |   |        |   |         |        |   |   | Accumulated |       |  |   |       
|                                  |                                                                              |  | Class A |   |         |   |             |   |               |   |               |   | Other  |   | Total  
|                                  |                                                                              |  |         |   | Paid-in |   | Accumulated |   | Comprehensive |   | Stockholders
|                                  |                                                                              |  | Shares  |   | Amount  |   | Capital     |   | Deficit       |   | Loss          |   | Equity
|                                  |                                                                              |  |         |   |         |   |             |   |               |   |               |   |       
|Balance, December 31, 2002        |                                                                              |  | 170,700 |   |         | $ | 2           |   |               | $ | 179,704       |   |        | $ | (90,706 | )      |   | $ | (4,440      | )     |  | $ | 84,560 |       
|Repurchase of class A shares      |                                                                              |  | (25     | ) |         |   |            |   |               |   | (25           | ) |        |   |        |        |   |   |            |       |  |   | (25    | )     
|Comprehensive income (loss):      |                                                                              |  |         |   |         |   |             |   |               |   |               |   |        |   |         |        |   |   |             |       |  |   |        |       
|                                  | Net loss                                                                     |  |         |  |         |   |             |  |               |   |               |  |        |   |         | (5,223 | ) |   |             |      |  |   |        | (5,223 | )
|                                  | Net fair market value adjustment of derivative
instruments, net of tax of $0 |  |         |  |         |   |             |  |               |   |               |  |        |   |         |       |   |   |             | 1,173 |  |   |        | 1,173  |  
|                                  |                                                                              |  |         |   |         |   |             |   |               |   |               |   |        |   |         |        |   |   |             |       |  |   |        |       
|Total comprehensive income (loss) |                                                                              |  |        |   |         |   |            |   |               |   |              |   |        |   | (5,223  | )      |   |   | 1,173       |       |  |   | (4,050 | )     
|                                  |                                                                              |  |         |   |         |   |             |   |               |   |               |   |        |   |         |        |   |   |             |       |  |   |        |       
|Balance, March 31, 2003           |                                                                              |  | 170,675 |   |         | $ | 2           |   |               | $ | 179,679       |   |        | $ | (95,929 | )      |   | $ | (3,267      | )     |  | $ | 80,485 |       
|                                  |                                                                              |  |         |   |         |   |             |   |               |   |               |   |        |   |         |        |   |   |             |       |  |   |        |       

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



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ATRIUM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2003 and 2002
(dollars in thousands)
(unaudited)

|                                               |                                                                                       |                                                     |                                           |        |        |        |       |        |        |        |  
|---------------------------------------------- | ------------------------------------------------------------------------------------- | --------------------------------------------------- | ----------------------------------------- | ------ | ------ | ------ | ----- | ------ | ------ | ------ | -
|                                               |                                                                                       |                                                     |                                           |        | 2003   |        | 2002 
|                                               |                                                                                       |                                                     |                                           |        |        |        |      
|CASH FLOWS FROM OPERATING ACTIVITIES:          |                                                                                       |                                                     |                                           |        |        |        |       |       
|                                               | Net loss                                                                              |                                                     | $                                         | (5,223 | )      |        | $     | (3,780 | )     
|                                               | Adjustments to reconcile net loss to net cash flows provided by operating activities: |                                                     |                                           |        |        |        |       |        |       
|                                               | Depreciation and amortization                                                         |                                                     |                                           | 4,025  |        |        |       | 3,429  |       
|                                               | Non-cash stock compensation expense                                                   |                                                     |                                           | 100    |        |        |       | 75     |       
|                                               | Amortization of deferred financing costs                                              |                                                     |                                           | 825    |        |        |       | 884    |       
|                                               | Accretion of discount on notes payable                                                |                                                     |                                           | 56     |        |        |       | 49     |       
|                                               | Accretion of discount on senior payment-in-kind notes                                 |                                                     |                                           | 2,523  |        |        |       | 1,961  |       
|                                               | Amortization of gain from sale/leaseback of building                                  |                                                     |                                           | (7     | )      |        |       | (9     | )     
|                                               | Loss on sale of receivables                                                           |                                                     |                                           | 162    |        |        |       | 201    |       
|                                               | Loss on disposals of assets                                                           |                                                     |                                           | 108    |        |        |       |       |       
|                                               | Changes in assets and liabilities, net of acquisitions:                               |                                                     |                                           |        |        |        |       |        |       
|                                               |                                                                                       | Accounts receivable                                 |                                           |        | (978   | )      |       |        | (191   | )     
|                                               |                                                                                       | Retained interest in sold accounts receivable       |                                           |        | (3,846 | )      |       |        | (6,219 | )     
|                                               |                                                                                       | Sale of accounts receivable                         |                                           |        | 13,300 |        |       |        | (3,600 | )     
|                                               |                                                                                       | Inventories                                         |                                           |        | (3,666 | )      |       |        | (1,480 | )     
|                                               |                                                                                       | Prepaid expenses and other current assets           |                                           |        | 1,252  |        |       |        | 735    |       
|                                               |                                                                                       | Accounts payable                                    |                                           |        | 1,064  |        |       |        | 8,729  |       
|                                               |                                                                                       | Accrued liabilities and other long-term liabilities |                                           |        | 513    |        |       |        | 220    |       
|                                               |                                                                                       |                                                     |                                           |        |        |        |       |       
|                                               |                                                                                       |                                                     | Net cash provided by operating activities |        |        | 10,208 |       |        |        | 1,004  |  
|                                               |                                                                                       |                                                     |                                           |        |        |        |       |       
|CASH FLOWS FROM INVESTING ACTIVITIES:          |                                                                                       |                                                     |                                           |        |        |        |       |       
|                                               | Purchases of property, plant and equipment                                            |                                                     |                                           | (3,906 | )      |        |       | (3,280 | )     
|                                               | Proceeds from sales of assets                                                         |                                                     |                                           | 39     |        |        |       | (10    | )     
|                                               | Acquisition of MD Casting, Inc.                                                       |                                                     |                                           | (3,341 | )      |        |       |       |       
|                                               | Other assets                                                                          |                                                     |                                           | (1,191 | )      |        |       | (1,013 | )     
|                                               |                                                                                       |                                                     |                                           |        |        |        |       |       
|                                               |                                                                                       |                                                     | Net cash used in investing activities     |        |        | (8,399 | )     |        |        | (4,303 | )
|                                               |                                                                                       |                                                     |                                           |        |        |        |       |       
|CASH FLOWS FROM FINANCING ACTIVITIES:          |                                                                                       |                                                     |                                           |        |        |        |       |       
|                                               | Payments of capital lease obligations                                                 |                                                     |                                           | (3     | )      |        |       | (9     | )     
|                                               | Net borrowings under revolving credit facility                                        |                                                     |                                           |       |        |        |       | 3,250  |       
|                                               | Deferred financing costs                                                              |                                                     |                                           | (7     | )      |        |       |       |       
|                                               | Repurchase
of class A shares                                                          |                                                     |                                           | (25    | )      |        |       |       |       
|                                               | Scheduled principal payments on term loans                                            |                                                     |                                           | (1,370 | )      |        |       | (1,374 | )     
|                                               | Checks drawn in excess of bank balances                                               |                                                     |                                           | 3,424  |        |        |       | 1,887  |       
|                                               |                                                                                       |                                                     |                                           |        |        |        |       |       
|                                               |                                                                                       |                                                     | Net cash provided by financing activities |        |        | 2,019  |       |        |        | 3,754  |  
|                                               |                                                                                       |                                                     |                                           |        |        |        |       |       
|NET INCREASE IN CASH AND CASH EQUIVALENTS      |                                                                                       |                                                     | 3,828                                     |        |        |        | 455   |       
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |                                                                                       |                                                     | 1,131                                     |        |        |        | 1,247 |       
|                                               |                                                                                       |                                                     |                                           |        |        |        |       |       
|CASH AND CASH EQUIVALENTS, END OF PERIOD       |                                                                                       | $                                                   | 4,959                                     |        |        | $      | 1,702 |       
|                                               |                                                                                       |                                                     |                                           |        |        |        |       |       

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

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ATRIUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003 and 2002
(dollars in thousands, except share amounts)
(unaudited)

1. Basis of Presentation

Atrium Corporation
(the Company) is engaged in the manufacture and sale of
patio doors, windows and various building materials throughout the
United States through its wholly-owned subsidiary Atrium Companies,
Inc. (Atrium Companies).

The unaudited
consolidated financial statements of the Company for the three months ended March 31, 2003 and 2002, and
financial position as of March 31, 2003 and December 31, 2002 have been
prepared in accordance with generally accepted accounting principles for
interim financial reporting, the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.

These consolidated financial statements and footnotes should be read in
conjunction with the Companys audited financial statements for the fiscal year
ended December 31, 2002 included in the Companys annual report on Form 10-K as
filed with the Securities and Exchange Commission on March 31, 2003. In the
opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation of the interim
financial information have been included. The results of operations for any
interim period are not necessarily indicative of the results of operations for
a full year.

2. New Accounting Pronouncements

During January 2003, the Financial Accounting Standards Board (FASB)
issued FASB Interpretation No. (FIN) 46, Consolidation of Variable Interest
Entities (FIN 46). FIN 46 provides guidance for companies having ownership
of variable interest entities, typically referred to as special purpose
entities, in determining whether to consolidate such variable interest
entities. FIN 46 has immediate applicability for variable interest entities
created after January 31, 2003 or interest in variable interests created after
that date. For interests in variable interest entities obtained prior to
February 1, 2003, FIN 46 becomes effective on July 1, 2003. The Company does
not believe adoption of FIN 46 will have a significant effect on its
consolidated financial position or results of operations.

In April 2003, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 149, Amendment of Statement 133 on Derivative Instruments and
Hedging Activities (SFAS 149). SFAS 149 amends and clarifies the accounting
and reporting for derivative contracts, including hedging instruments. The
amendments and clarifications under SFAS 149 generally serve to codify the
conclusions reached by the Derivative Implementation Group, to incorporate
other FASB projects on financial instruments, and to clarify other
implementation issues. SFAS 149 becomes effective prospectively for derivative
contracts entered into or modified by the Company after June 30, 2003. The
Company does not expect that the implementation of SFAS 149 will have a
material effect on its consolidated financial position or results of
operations.

3. Adoption of New Accounting Pronouncements

SFAS No. 143  Accounting for Asset Retirement Obligations:

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations (SFAS 143). SFAS 143 addresses financial accounting
and reporting obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. Under SFAS 143, the fair
value of a liability for an asset retirement obligation covered under the scope
of SFAS 143 would be recognized in the period in which the liability is
incurred, with an offsetting increase in the carrying amount of the related
long-lived asset. The Company adopted SFAS 143 on January 1,
2003. Adoption of SFAS 143 did not have a significant effect on the
Company as of March 2003.

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SFAS No. 145  Rescission of FASB Statements No. 4, 44, and 64, Amendment of
FASB Statement No. 13, and Technical Corrections:

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections (SFAS 145). SFAS 145 rescinds SFAS No. 4, Reporting Gains and
Losses from Extinguishment of Debt, requiring that gains and losses from the
extinguishment of debt be classified as extraordinary items only if certain
criteria are met. SFAS 145 also amends SFAS No. 13, Accounting for Leases,
and the required accounting for sale-leaseback transactions and certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions. SFAS 145 was effective for the Company on January 1, 2003. The
Company will reclassify previously reported extraordinary items as a component
of earnings before income taxes during the periods that gains and losses
related to the extinguishment of debt occurred.

SFAS No. 146  Accounting for Costs Associated with Exit or Disposal
Activities:

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities (SFAS 146). SFAS 146 requires
that a liability for a cost associated with an exit or disposal activity be
recognized initially at fair value when the liability is incurred. SFAS 146
was adopted by the Company on January 1, 2003. Adoption of
SFAS 146 did not have a significant effect on the Company as of
March 2003.

SFAS No. 148  Accounting for Stock-Based Compensation:

In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation (SFAS 148) which became effective for the Company
upon its issuance. SFAS 148 provides three transition options for companies
that account for stock-based compensation, such as stock options, under the
intrinsic-value method to convert to the fair value method. SFAS 148 also
revised the prominence and character of the disclosures related to the
Companies stock-based compensation. In complying with the new reporting
requirements of SFAS 148, the Company elected to continue using the
intrinsic-value method to account for qualifying stock-based compensation, as
permitted by SFAS 148. The Company has adopted the disclosures prescribed by
SFAS 148.

FASB Interpretation No. 45  Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Indebtedness of Others:

During November 2002, the FASB issued FIN 45, Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others (FIN 45). FIN 45 generally requires a guarantor to
recognize a liability for obligations arising from guarantees. FIN 45 also
requires new disclosures for guarantees meeting certain criteria outlined in
the pronouncement. The recognition and measurement provisions of FIN 45 are
applicable on a prospective basis for guarantees issued or modified after
December 31, 2002. The Companys consolidated financial statements have not
been affected as a result of adopting this pronouncement.

4. Stock-Based Compensation

As of March 31, 2003, the Company had several stock-based compensation
plans. The Company accounts for these plans under the recognition and
measurement principles of the Accounting Principles Board Opinion (APB) No.
25, Accounting for Stock Issued to Employees, (APB 25) and related
interpretations. Stock-based employee compensation costs related to the
issuance of stock options is not reflected in the Companys earnings, as all
options granted under those plans had an exercise price equal to or in excess
of the estimated market value of the underlying common stock on the date of
grant.

The following table illustrates the effect of the Companys reported net
loss if the Company had applied the fair value recognition provisions
of SFAS No. 123, Accounting for Stock-based Compensation, to stock-based compensation
plans and warrants.

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|                      |                                                                                                                         |  |                              |     |      |  |        |     |  
|--------------------- | ----------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | --- | ---- |  | ------ | --- | -
|                      |                                                                                                                         |  | Three Months Ended March 31,
|                      |                                                                                                                         |  |                             
|                      |                                                                                                                         |  | 2003                         |     | 2002
|                      |                                                                                                                         |  |                              |     |     
|Net loss, as reported |                                                                                                                         |  | (5,223                       | )   |      |  | (3,780 | )  
|Adjustments:          |                                                                                                                         |  |                              |     |      |  |        |    
|                      | Stock based employee compensation expense included in
reported net loss, net of related tax effects                     |  |                              |    |      |  |        |    |  
|                      | Stock-based employee compensation expense determined
under fair value method for all awards, net of related tax
effects |  |                              | (39 | )    |  |        | (94 | )
|                      |                                                                                                                         |  |                              |     |      |  |        |    
|Adjusted net loss     |                                                                                                                         |  | (5,262                       | )   |      |  | (3,874 | )  
|                      |                                                                                                                         |  |                              |     |      |  |        |    

The above pro forma disclosures are not representative of pro forma
effects for future periods because the determination of the fair value of all
options granted excludes an expected volatility factor and additional option
grants are expected.

5. Inventories

Inventories are valued at the lower of cost or market using the last-in,
first-out (LIFO) method of accounting. Work-in-process and finished goods
inventories consist of materials, labor and manufacturing overhead.
Inventories consisted of the following:

|                |  |           |        |              |  |   |        |  
|--------------- |  | --------- | ------ | ------------ |  | - | ------ | -
|                |  | March 31, |        | December 31,
|                |  | 2003      |        | 2002        
|                |  |           |        |             
|Raw materials   |  | $         | 23,723 |              |  | $ | 22,047 |  
|Work-in process |  |           | 1,215  |              |  |   | 1,041  |  
|Finished goods  |  |           | 12,785 |              |  |   | 10,667 |  
|                |  |           |        |              |  |   |        |  
|                |  |           | 37,723 |              |  |   | 33,755 |  
|LIFO reserve    |  |           | (150   | )            |  |   | (43    | )
|                |  |           |        |              |  |   |        |  
|                |  | $         | 37,573 |              |  | $ | 33,712 |  
|                |  |           |        |              |  |   |        |  

6. Notes Payable

Notes payable consisted of the following:

|                                                     |                |   |           |         |              |   |         |         | 
|---------------------------------------------------- | -------------- | - | --------- | ------- | ------------ | - | ------- | ------- | 
|                                                     |                |   | March 31, |         | December 31,
|                                                     |                |   | 2003      |         | 2002        
|                                                     |                |   |           |         |             
|Revolving credit facility                            |                | $ |          |         |              | $ |        |        
|Term loan A                                          |                |   | 3,850     |         |              |   | 4,660   |        
|Term loan B                                          |                |   | 55,367    |         |              |   | 55,647  |        
|Term loan C                                          |                |   | 64,413    |         |              |   | 64,693  |        
|Senior subordinated notes                            |                |   | 175,000   |         |              |   | 175,000 |        
|Senior payment-in-kind notes                         |                |   | 52,888    |         |              |   | 50,794  |        
|Other                                                |                |   | 3         |         |              |   | 6       |        
|                                                     |                |   |           |         |              |   |         |        
|                                                     |                |   | 351,521   |         |              |   | 350,800 |        
|Less:                                                |                |   |           |         |              |   |         |        
|Unamortized discount on senior subordinated notes    |                |   | (1,925    | )       |              |   | (1,981  | )      
|Unamortized discount on senior payment-in-kind notes |                |   | (11,987   | )       |              |   | (12,415 | )      
|Current maturities of long-term debt                 |                |   | (6,515    | )       |              |   | (6,524  | )      
|                                                     |                |   |           |         |              |   |         |        
|                                                     | Long-term debt |   | $         | 331,094 |              |   | $       | 329,880 | 
|                                                     |                |   |           |         |              |   |         |        

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The senior subordinated notes (the Notes), senior payment-in-kind notes
(the PIK Notes) and credit agreement require the Company to meet certain
financial tests pertaining to total leverage, senior leverage, interest
coverage and fixed charge coverage. As of March 31, 2003, the Company was in
compliance with all related covenants.

Additionally, the term loans have an excess cash flows provision
mandating additional principal payments if certain cash flow targets are met
during the year. For 2002 and 2001, the excess cash flow payments were $1,058
and $684, respectively. As these amounts are to be paid within 100 days of the
fiscal year end, they have been reflected in current maturities of long-term
debt. In December 2002, the Company voluntarily paid $6,544 on the Term Loans,
which reduced the mandated excess cash flow payment for 2002 to $1,058, which
was paid in April 2003.

Interest on the Companys PIK Notes accrues at a rate of 15%, except under
the following two conditions: If a default occurs as defined by the agreement,
and remains uncured or, if the ratio of total consolidated indebtedness to
consolidated cash flow of the Company commencing with March 2002 is greater
than 3.75x, then the rate shall increase to 17%. The interest rate will return
to 15% upon curing of a default or upon the ratio being equal to or less than
the 3.75x limit. The interest rate on the PIK Notes increased to 17% in April
2002 as a result of the ratio not being met. The interest on the PIK Notes
will continue to accrue at 17% until the default clears.

Atrium Companies has an interest rate swap agreement to hedge exposure to
interest rate fluctuations. As of March 31, 2003, Atrium Companies had an interest
rate swap with a notional amount totaling $100,000. The swap expires in
November 2003.

7. Contingencies

Atrium Companies and its subsidiary, formerly known as Champagne Industries,
Inc. (Champagne, renamed Atrium Door and Window Company of the Rockies), are
defendants in a purported class action lawsuit pending in federal district
court in Boulder, Colorado in which 63 homeowners have sued Atrium Companies and
Champagne, along with three other home builder and home product manufacturer
defendants. The claims asserted against Champagne allege manufacturing and
design defects associated with its Imperial window, a half-jamb wood window
manufactured by Champagne and installed in plaintiffs homes between 1987 and
1997. The claims asserted against Atrium Companies, which purchased Champagne in
1999, are based on alter ego and successor liability theories. The plaintiffs,
which claim to represent a purported class of 4,500 homeowners with Imperial
windows, seek damages in an unspecified amount for repair and replacement of
windows and other resulting damage, together with other relief permitted under
applicable law and equity. In addition, one of the home builder defendants has
filed a cross-claim against Champagne seeking indemnification in an amount of
$2,800. We believe Atrium Companies and Champagne have meritorious defenses and are
vigorously defending against these claims.

The case is currently before the court on plaintiffs motion for class
certification, which the trial judge is expected to rule upon sometime in the
next one to six months. While a vigorous defense of the case has been
presented related to the class certification issues, we believe there is a
likelihood that class certification will be granted. Because of the fact that
little discovery has been taken to date with respect to alleged damages,
together with the uncertainty with regard to class certification, apportionment
of liability among the defendants and insurance coverage, it is not possible at
this time reasonably to predict the final outcome of this lawsuit, or
reasonably to estimate any possible loss. We believe that most, if not all of
any such loss would be covered by third party insurance such that the ultimate
outcome of this matter is not likely to result in a material adverse affect on
the Company.

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The Company and its insurance carriers have been involved in settlement
discussions and we currently anticipate that most, if not all of the cash funds
for any settlement would be covered by insurance. However, if the case were to
proceed to trial, there can be no assurance that a judgment would not be
awarded that is significantly higher than the current settlement demand, or
that a significant portion of any judgment amount would not be covered by
insurance.

The Company has four unionized facilities within the State of Texas, all
of which are represented by the Union of Needletrades, Industrial and Textile
Employees (UNITE!). During May of 2001, the Company entered into a new
three-year collective bargaining agreement with UNITE! which will expire in
2004.

Atrium Companies is involved in various stages of investigation and cleanup
related to environmental protection matters, some of which relate to waste
disposal sites. The potential costs related to such matters and the possible
impact thereof on future operations are uncertain due in part to: the
uncertainty as to the extent of pollution; the complexity of government laws
and regulations and their interpretations; the varying costs and effectiveness
of alternative cleanup technologies and methods; the uncertain level of
insurance or other types of recovery; and the questionable level of Atrium Companies involvement. Atrium Companies
 was named in 1988 as a potentially
responsible party (PRP) in two superfund sites pursuant to the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended.

Atrium Companies is a PRP at the Chemical Recycling, Inc. or CRI Superfund
site in Wylie, Texas. The Company is a very small contributor at the CRI site,
being assigned approximately 2.788% of the damages based on its waste volume at
the site. The site was a solvent reclamation facility, and the Company sent
paint waste to the site for recycling. The site has soil and groundwater
contamination. Major removal actions have occurred and a Work Plan for Risk
Assessment/Feasibility Study was submitted to the Environmental Protection
Agency (EPA) in October 1996. According to the studies performed by the
sites steering committee, affected groundwater has not migrated off-site.
According to the EPA general counsel in charge of the site, the site is low
priority compared to other sites in the region. There are 115 PRPs at this
site with approximately 85 that are members of the sites steering committee.
Two main PRPs, Glidden and Sherwin Williams, account for approximately 46% of
all liability. The Companys costs to date associated with this site have been
approximately $78, with a current credit for overpayment of $30.

The second site is the Diaz Refinery site in Jackson County, Arkansas.
There is no documentation linking Atrium Companies to the site. In connection with
a De Minimis Buyout Agreement, the Company paid $11 to exclude itself from
future liability. Because of the lack of documentation linking Atrium Companies to
the site and the De Minimis Buyout Agreement, it is not expected that the costs
will be incurred in the future. Records indicate that, through agreements with
the sites steering committee and the Arkansas Department of Pollution Control
(the ADPCE), the Company will not receive any orders or be allocated further
costs for continuing work because Atrium Companies does not have a volume
contribution assigned to the site (because of the lack of records showing it
used the site). The facility was a solvent recovery, supplemental fuel
blending and hazardous waste facility from the mid 1970s to 1988, resulting in
impacted soil and groundwater. In 1995, the ADPCE approved a work plan and no
further requirements have been assigned. Additionally, monitoring actions were
completed in 2000 and no further activities have occurred since then.

The Company believes that based on the information currently available,
including the substantial number of other PRPs and relatively small share
allocated to it at such sites, its liability, if any, associated with either of
these sites will not have a material adverse effect on the Companys
consolidated financial position, results of operations or liquidity.

Atrium Companies owned one parcel of real estate that requires future costs
related to environmental clean-up. The estimated costs of clean-up have been
reviewed by third-party sources and are expected not to exceed $150. The
previous owner of the property has established an escrow of $400 to remediate
the associated costs. This property was sold in December 1999. Atrium Companies has
established a letter of credit of $250 to cover any costs of remediation
exceeding the previous owners escrow. The Company believes the existing escrow
amount is adequate to cover costs associated with this clean-up. No additional
liabilities are believed to exist in regards to the Companys remaining
operations.

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In connection with the sale of one of Atrium Companies facilities in December
2002, a $250 escrow was established. The escrow is receivable upon the Company
obtaining an environmental certification on the building. The Company is
currently in the process of applying for the certification and expects to be
refunded the entire $250 escrow paid at closing during 2003.

In addition to the foregoing contingencies, the Company is party to various
claims, legal actions and complaints arising in the ordinary course of
business. In the opinion of management, all such matters are without
merit or
are of such kind, or involve such amounts, that an unfavorable disposition
would not have a material effect on the consolidated financial position,
results of operations or liquidity of the Company.

8. Wing Divestiture and Woodville Closing

During the three months ended March 31, 2003, the Company reduced its
accrued provisions for the Wing Industries, Inc. divestiture by $253 for a
legal settlement and exit costs related to idle facilities, leaving a
remaining accrual of $387 for unpaid liabilities, a portion of which
is still under negotiation. In the same
period, the Company decreased its accrued provisions for the Woodville closing by
$45, reducing the remaining accrual to $187.

9. Acquisition

On January 31, 2003, Atrium Companies, through its newly-formed and
wholly-owned subsidiary, MD Casting, Inc. (MD Casting) completed the
acquisition of substantially all of the operating assets of Miniature Die
Casting of Texas, L.P. for a purchase price of $3,250, excluding transaction
fees of approximately $91, with an additional amount of up to $600 to be paid
over three years upon the achievement of certain financial targets. MD Casting
is a zinc die cast hardware manufacturer located in Fort Worth, Texas. The
Company financed the acquisition through its revolving credit facility.

The acquisition was accounted for in accordance with SFAS No. 141,
Business Combinations (SFAS 141). The aggregate purchase price has been
allocated to the underlying assets and liabilities based upon their respective
estimated fair market values at the date of acquisition. The excess of
purchase price over the estimated fair value of the net assets acquired
(goodwill) was $2,914. The results of MD Castings operations were included
in the Companys financial statements beginning on February 1, 2003. The
purchase price allocation, preliminary in nature and subject to change, is as
follows:

|                                   |                      |   |       |       | 
|---------------------------------- | -------------------- | - | ----- | ----- | 
|Accounts receivable                |                      | $ | 181   |      
|Inventory                          |                      |   | 195   |      
|Property, plant and equipment, net |                      |   | 929   |      
|Goodwill                           |                      |   | 2,914 |      
|Accounts payable                   |                      |   | (224  | )    
|Accrued liabilities                |                      |   | (254  | )    
|Other long-term liabilities        |                      |   | (400  | )    
|                                   |                      |   |       |      
|                                   | Total purchase price |   | $     | 3,341 | 
|                                   |                      |   |       |      

10. Subsequent Event

On April 1,
2003, Atrium Companies acquired substantially all of the assets of
Danvid Window Company (Danvid), a wholly-owned subsidiary of American
Architectural Products Corporation (AAPC), for approximately $5,500 in cash
and the assumption of certain liabilities. The proceeds used to complete the
transaction were funded through the Companys revolving credit facility. The
assets of Danvid have been acquired out of bankruptcy (with both Danvid and
AAPC operating as a debtor-in-possession under Chapter 11) pursuant to an
auction sale under Sections 363 and 365 of the Bankruptcy Code. The
acquisition of Danvid, an aluminum and vinyl window and door manufacturer, located in Dallas,
Texas, further strengthens the Companys market share in the Southern regions
of the United States.

The acquisition will be accounted for in accordance with SFAS 141. The
aggregate purchase price will be allocated to the underlying assets and
liabilities based upon their respective estimated fair market values at the
date of acquisition. The results of the acquired business will be included in
the Companys consolidated financial statements beginning on April 1, 2003.

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11. Atrium Corporation Financial
Information

Condensed Balance Sheets

|                                     |                                              |                                            |   |           |         |              |   |         |         | 
|------------------------------------ | -------------------------------------------- | ------------------------------------------ | - | --------- | ------- | ------------ | - | ------- | ------- | 
|                                     |                                              |                                            |   | March 31, |         | December 31,
|                                     |                                              |                                            |   | 2003      |         | 2002        
|                                     |                                              |                                            |   |           |         |             
|Assets                               |                                              |                                            |   |           |         |              |   |        
|                                     | Investment in subsidiary                     |                                            | $ | 133,013   |         |              | $ | 134,434 |        
|                                     | Deferred financing costs, net                |                                            |   | 3,977     |         |              |   | 4,109   |        
|                                     |                                              |                                            |   |           |         |              |   |        
|                                     |                                              | Total assets                               |   | $         | 136,990 |              |   | $       | 138,543 | 
|                                     |                                              |                                            |   |           |         |              |   |        
|Liabilities and Stockholders Equity |                                              |                                            |   |           |         |              |   |        
|                                     | Notes payable                                |                                            | $ | 40,901    |         |              | $ | 38,379  |        
|                                     | Common stock subject to mandatory redemption |                                            |   | 15,604    |         |              |   | 15,604  |        
|                                     | Stockholders equity                         |                                            |   | 80,485    |         |              |   | 84,560  |        
|                                     |                                              |                                            |   |           |         |              |   |        
|                                     |                                              | Total liabilities and stockholders equity |   | $         | 136,990 |              |   | $       | 138,543 | 
|                                     |                                              |                                            |   |           |         |              |   |        

Condensed Statements of Operations

|                                           |          |   |                              |        |      |   |       |        |  
|------------------------------------------ | -------- | - | ---------------------------- | ------ | ---- | - | ----- | ------ | -
|                                           |          |   | Three months ended March 31,
|                                           |          |   |                             
|                                           |          |   | 2003                         |        | 2002
|                                           |          |   |                              |        |     
|Interest expense                           |          | $ | 2,654                        |        |      | $ | 2,092 |       
|Equity in undistributed loss of subsidiary |          |   | 2,569                        |        |      |   | 1,688 |       
|                                           |          |   |                              |        |      |   |       |       
|                                           | Net loss |   | $                            | (5,223 | )    |   | $     | (3,780 | )
|                                           |          |   |                              |        |      |   |       |       

Condensed Statements of Cash Flows

|                                             |                                            |                                           |   |                              |     |      |   |        |     |  
|-------------------------------------------- | ------------------------------------------ | ----------------------------------------- | - | ---------------------------- | --- | ---- | - | ------ | --- | -
|                                             |                                            |                                           |   | Three months ended March 31,
|                                             |                                            |                                           |   |                             
|                                             |                                            |                                           |   | 2003                         |     | 2002
|                                             |                                            |                                           |   |                              |     |     
|Cash flows from operating activities:        |                                            |                                           |   |                              |     |      |   |       
|                                             | Net loss                                   |                                           | $ | (5,223                       | )   |      | $ | (3,780 | )  
|                                             | Equity in undistributed loss of subsidiary |                                           |   | 2,569                        |     |      |   | 1,688  |    
|                                             | Accretion of senior payment-in-kind notes  |                                           |   | 2,523                        |     |      |   | 1,961  |    
|                                             | Amortization of deferred financing costs   |                                           |   | 131                          |     |      |   | 131    |    
|                                             | Changes in assets and liabilities          |                                           |   |                             |     |      |   | (25    | )  
|                                             |                                            |                                           |   |                              |     |      |   |       
|                                             |                                            | Net cash used in operating activities     |   |                              |    |      |   |        | (25 | )
|                                             |                                            |                                           |   |                              |     |      |   |       
|Cash flows from investing activities:        |                                            |                                           |   |                              |     |      |   |       
|                                             | Cash received from subsidiary              |                                           |   | 25                           |     |      |   | 25     |    
|                                             |                                            |                                           |   |                              |     |      |   |       
|                                             |                                            | Net cash provided by investing activities |   |                              | 25  |      |   |        | 25  |  
|                                             |                                            |                                           |   |                              |     |      |   |       
|Cash flows from financing activities:        |                                            |                                           |   |                              |     |      |   |       
|                                             | Repurchase of common stock                 |                                           |   | (25                          | )   |      |   |       |    
|                                             |                                            |                                           |   |                              |     |      |   |       
|                                             |                                            | Net cash used in financing activities     |   |                              | (25 | )    |   |        |    |  
|                                             |                                            |                                           |   |                              |     |      |   |       
|Net increase in cash and cash equivalents    |                                            |                                           |  |                              |     |      |  |       
|Cash and cash equivalents, beginning of year |                                            |                                           |  |                              |     |      |  |       
|                                             |                                            |                                           |   |                              |     |      |   |       
|Cash and cash equivalents, end of year       |                                            | $                                         |  |                              |     | $    |  |       
|                                             |                                            |                                           |   |                              |     |      |   |       

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

Certain Forward-Looking Statements

This Form 10-Q contains certain forward-looking statements (as such term
is defined in the Private Securities Litigation Reform Act of 1995) relating to
the Registrant based on beliefs of management that involve substantial risks
and uncertainties. When used in this Form 10-Q, the words anticipate,
believe, estimate, expect, intend, and similar expressions, as they
relate to the Registrant or the Registrants management, identify
forward-looking statements. Such statements reflect the current views of the
Registrant with respect to the risks and uncertainties regarding the operations
and the results of operations of the Registrant, as well as its customers and
suppliers, including the availability of credit, interest rates, employment
trends, changes in levels of consumer confidence, changes in consumer
preferences, national and regional trends in new housing starts, raw material
costs, pricing pressures, shifts in market demand and general economic
conditions. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions or estimates prove incorrect, actual results may
vary materially from those described herein as anticipated, believed,
estimated, expected or intended.

Results of Operations

The operations of the Company are cyclical in nature and generally result
in increases during the peak building season which coincides with the second
and third quarters of the year. Accordingly, results of operations for the
first quarter ended March 31, 2003 are not necessarily indicative of results
expected for the full year.

Net Sales.Net sales increased by $265 from $113,289 during the first
quarter of 2002 to $113,554 during the first quarter of 2003. The increase in
net sales was primarily the result of sales growth at the Companys aluminum
window and extrusion operations and the acquisition of MD Casting on January
31, 2003, offset by a decline in net sales at the Companys vinyl window and
Darby operations. Net sales at the Companys aluminum window operations
increased approximately $3,138, or 8.0% over the prior year due to increased
unit volume with the Companys existing customers. Net sales at the Companys
aluminum extrusion operations increased $1,570, or 16.7%, over the prior year
due to increased volume with new customers. Net sales at the Companys vinyl operations
decreased approximately $3,498, or 6.1%, as a result of weather conditions in
the East during the first quarter. Darby's sales declined as a result of
inclement weather and softer demand in the multi-family market.

Cost of Goods Sold.Cost of goods sold increased from 69.1% of net sales
during the first quarter of 2002 to 69.2% of net sales during the first quarter
of 2003. Material cost of goods sold decreased from 40.6% of net sales during
the first quarter of 2002 to 39.3% of net sales during the first quarter of
2003. The decrease in material costs as a percentage of net sales is primarily
related to the Companys increased purchasing power and increased automation at
the Companys manufacturing facilities, which resulted in lower scrap rates.
These improvements were partially offset by an increase in the cost of vinyl
resins. Direct manufacturing expenses increased from 28.4% of net sales during
the first quarter of 2002 to 29.9% of net sales during the first quarter of
2003. This increase was primarily caused by higher insurance and labor costs.
Overall, changes in the cost of goods sold as a percentage of net sales for one
period as compared to another period may reflect a number of factors, including
changes in the relative mix of products sold and the effects of changes in
sales prices, material costs and changes in productivity levels.

Selling, Delivery, General and Administrative Expenses.Selling,
delivery, general and administrative expenses increased $1,339 from $26,628
(23.5% of net sales during the first quarter of 2002) to $27,967 (24.6% of net
sales during the first quarter of 2003). General and administrative expenses
increased $801, from 9.5% of net sales to 10.2% of net sales, primarily due to
increases in insurance costs and professional fees. Delivery expenses
increased $594, from 6.6% of net sales to 7.1% of net sales, due largely to
higher fuel prices and an increase in the volume of products shipped into the
Southern California market resulting in a longer average distance per
truckload. Selling expenses were essentially flat over prior years,
as these expenses are primarily variable.

Securitization Expense.Securitization expense decreased $20 from $256
for the first quarter of 2002 to $236 for the first quarter of 2003.
Securitization expense incurred by the Company represents the losses on the

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sales of the Companys accounts receivable during the first quarter of 2003 and
2002, which includes both the interest expense and commitment fee components of
the transaction.

Stock
Compensation Expense.Stock compensation expense
increased $25 from $75
during the first quarter of 2002 to $100 during the first quarter of 2003.
Stock compensation expense for both periods represents payments for services
rendered in the form of the Companys common stock to Ardshiel, Inc.

Amortization Expense.Amortization expense increased $128 from $804
during the first quarter of 2002 to $932 during the first quarter of 2003. The
increase in amortization expense was due to amortization on software
implementation costs that were capitalized in 2002.

Interest
Expense.Interest expense decreased $191 from $11,124 during the
first quarter of 2002 to $10,933 during the first quarter of 2003. The decrease
was due to reduced debt levels and the expiration of one of its interest rate swap
agreements in December of 2002. The decrease was partially
offset by an interest rate increase on the Companys PIK Notes
from 15% to 17% in April 2002 (see Note 6).

Liquidity and Capital Resources

Cash generated from
operations, availability under Atrium Companies revolving
credit facility and availability under Atrium Companies accounts receivable
securitization facility are the Companys principal sources of liquidity.
During the first quarter of 2003, cash was primarily used for capital
expenditures and the acquisition of MD Casting. Net cash provided by operating
activities was $10,208 during the first quarter of 2003 compared to
$1,004
during the first quarter of 2002. The increase in cash provided by operating
activities is largely due to an increase in amounts borrowed against
Atrium Companies accounts receivable securitization facility offset by a decrease in
cash provided by changes in working capital. Net cash used in investing
activities during the first quarter of 2003 was $8,399 compared to $4,303
during the first quarter of 2002. The increase in cash used in investing
activities was primarily due to the acquisition of MD Casting during the first
quarter of 2003. Cash provided by financing activities during the first
quarter 2003 was $2,019 compared to $3,754 during the first quarter of 2002.
The decrease in cash provided by financing activities was primarily due to a
reduction of net borrowings under the revolving credit facility, offset by an
increase in checks drawn in excess of bank balances.

Additionally, the term loans have an excess cash flows provision
mandating additional principal payments if certain cash flow targets are met
annually at December 31. For 2002 and 2001, the excess cash flow payments were
$1,058 and $684, respectively. As these amounts are to be paid within 100 days
of the fiscal year end, they have been reflected in current maturities of
long-term debt. In December 2002, the Company voluntarily paid $6,544 on the
term loans, which reduced the mandated excess cash flow payment for 2002 to
$1,058, which was paid in April of 2003.

Other Capital Resources

Atrium Companies credit agreement, as amended, provides for a revolving
credit facility in the amount of $47,000, which includes a $10,000 letter of
credit sub-facility. The revolving credit facility has a maturity date of June
30, 2004. Additionally, Atrium Companies has an accounts receivable securitization
facility, which can make additional funds available to the Company depending on
certain borrowing base levels. On July 30, 2002, the receivables
purchase agreement was amended, at the Company's discretion, to reduce the size of the accounts receivable
securitization facility from $50,000 to $42,000.

At March 31, 2003, the Company had $44,248 of availability under the
revolving credit facility, net of outstanding letters of credit totaling
$2,752. As of May 14, 2003, the Company had cash of $1,015 and $32,748 of
availability under the revolving credit facility, net of borrowings
of $11,500 and outstanding letters of
credit totaling $2,752. At March 31, 2003, the Company had $1,800 of
availability under the accounts receivable securitization facility and an
additional $6,600 currently unavailable due to borrowing base limitations, net
of securitizations of $33,600. As of

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May 14, 2003, the Company had no availability under the accounts receivable securitization
facility.

Capital Expenditures

The Company had capital expenditures of $3,867 during the first quarter of
2003 compared to $3,290 during the first quarter of 2002. Capital expenditures
during these periods were a result of the Companys effort to increase plant
capacity and to increase efficiency through automation at its various
manufacturing facilities. The Company expects capital expenditures (exclusive
of acquisitions) in 2003 to be approximately $15,000, however, actual capital
requirements may change based on management and strategic decisions.

The Companys ability to meet debt service, working capital obligations
and capital expenditure requirements is dependent upon the Companys future
performance which, in turn, will be subject to general economic conditions and
to financial, business and other factors, including factors beyond the
Companys control.

New Accounting Pronouncements

During January 2003, the Financial Accounting Standards Board (FASB)
issued FASB Interpretation No. (FIN) 46, Consolidation of Variable Interest
Entities (FIN 46). FIN 46 provides guidance for companies having ownership
of variable interest entities, typically referred to as special purpose
entities, in determining whether to consolidate such variable interest
entities. FIN 46 has immediate applicability for variable interest entities
created after January 31, 2003 or interest in variable interests created after
that date. For interests in variable interest entities obtained prior to
February 1, 2003, FIN 46 becomes effective on July 1, 2003. The Company does
not believe adoption of FIN 46 will have a significant effect on its
consolidated financial position or results of operations.

In April 2003, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 149, Amendment of Statement 133 on Derivative Instruments and
Hedging Activities (SFAS 149). SFAS 149 amends and clarifies the accounting
and reporting for derivative contracts, including hedging instruments. The
amendments and clarifications under SFAS 149 generally serve to codify the
conclusions reached by the Derivative Implementation Group, to incorporate
other FASB projects on financial instruments, and to clarify other
implementation issues. SFAS 149 becomes effective prospectively for derivative
contracts entered into or modified by the Company after June 30, 2003. The
Company does not expect that the implementation of SFAS 149 will have a
material effect on its consolidated financial position or results of
operations.

Adoption of New Accounting Pronouncements

SFAS No. 143  Accounting for Asset Retirement Obligations:

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations (SFAS 143). SFAS 143 addresses financial accounting
and reporting obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. Under SFAS 143, the fair
value of a liability for an asset retirement obligation covered under the scope
of SFAS 143 would be recognized in the period in which the liability is
incurred, with an offsetting increase in the carrying amount of the related
long-lived asset. The Company adopted SFAS 143 on January 1,
2003. Adoption of SFAS 143 did not have a significant effect on the
Company as of March 2003.

SFAS No. 145  Rescission of FASB Statements No. 4, 44, and 64, Amendment of
FASB Statement No. 13, and Technical Corrections:

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections (SFAS 145). SFAS 145 rescinds SFAS No. 4, Reporting Gains and
Losses from Extinguishment of Debt, requiring that gains and losses from the
extinguishment of debt be classified as extraordinary items only if certain
criteria are met. SFAS 145 also amends

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SFAS No. 13, Accounting for Leases,
and the required accounting for sale-leaseback transactions and certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions. SFAS 145 was effective for the Company on January 1, 2003. The
Company will reclassify previously reported extraordinary items as a component
of earnings before income taxes during the periods that gains and losses
related to the extinguishment of debt occurred.

SFAS No. 146  Accounting for Costs Associated with Exit or Disposal
Activities:

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities (SFAS 146). SFAS 146 requires
that a liability for a cost associated with an exit or disposal activity be
recognized initially at fair value when the liability is incurred. SFAS 146
was adopted by the Company on January 1, 2003. Adoption of
SFAS 146 did not have a significant effect on the Company as of
March 2003.

SFAS No. 148  Accounting for Stock-Based Compensation:

In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation (SFAS 148) which became effective for the Company
upon its issuance. SFAS 148 provides three transition options for companies
that account for stock-based compensation, such as stock options, under the
intrinsic-value method to convert to the fair value method. SFAS 148 also
revised the prominence and character of the disclosures related to the
Companies stock-based compensation. In complying with the new reporting
requirements of SFAS 148, the Company elected to continue using the
intrinsic-value method to account for qualifying stock-based compensation, as
permitted by SFAS 148. The Company has adopted the disclosures prescribed by
SFAS 148.

FASB Interpretation No. 45  Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Indebtedness of Others:

During November 2002, the FASB issued FIN 45, Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others (FIN 45). FIN 45 generally requires a guarantor to
recognize a liability for obligations arising from guarantees. FIN 45 also
requires new disclosures for guarantees meeting certain criteria outlined in
the pronouncement. The recognition and measurement provisions of FIN 45 are
applicable on a prospective basis for guarantees issued or modified after
December 31, 2002. The Companys consolidated financial statements have not
been affected as a result of adopting this pronouncement.




Item 3.Quantitative and Qualitative Disclosures About Market Risk

Market Risk

The Company is exposed to market risk from changes in interest rates and
commodity pricing. The Company uses derivative financial instruments on a
limited basis to hedge economic exposures including interest rate protection
agreements and forward commodity delivery agreements. The Company does not
enter into derivative financial instruments or other financial instruments for
speculative trading purposes.

On November 1,
2000, Atrium Companies entered into a $100,000 interest rate
swap agreement to limit the effect of changes in interest rates on long-term
borrowings. Under the agreement, the Company pays interest at a fixed rate of
6.66% on the notional amount and receives interest therein at the three-month
LIBOR on a quarterly basis. This swap expires in November 2003. The fair
value of this swap is a liability of $3,251, which is included in accrued
liabilities.

There have not been
any material changes in the Companys market risk during the
three months ended March 31, 2003. For additional information
refer to Section 7A of the Company's annual report on Form 8-K for the
fiscal year ended December 31, 2002.




Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of the
Companys disclosure controls and procedures (as defined in Rule 13a-14(c)
under the Securities Exchange Act of 1934, as amended (the Exchange Act))

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was
carried out within the 90-day period prior to the filing of this quarterly
report. This evaluation was made under the supervision and with the
participation of the Companys management, including its Chief Executive
Officer and Chief Financial Officer. Based upon this evaluation, the Companys
Chief Executive Officer and Chief Financial Officer have concluded that the
Companys disclosure controls and procedures (a) are effective to ensure that
information required to be disclosed by the Company in reports filed or
submitted under the Exchange Act is timely recorded, processed, summarized and
reported and (b) include, without limitation, controls and procedures designed
to ensure that information required to be disclosed by the Company in reports
filed or submitted under the Exchange Act is
accumulated and communicated to the Companys management, including its
Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosure.

Changes in Internal Controls

There have been no significant changes in the Companys internal controls
or in other factors that could significantly affect these controls subsequent
to the date of the Companys initial evaluation.




PART II. OTHER INFORMATION




Item 1. Legal Proceedings

The Company is party to various claims, legal actions, and complaints
arising in the ordinary course of business. In the opinion of management, all
such matters are without merit or are of such kind, or involve such amounts,
that an unfavorable disposition would not have a material adverse effect on the
financial position, results of operations or liquidity of the Company.




Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits  None

(b)  Reports on Form 8-K  None




SIGNATURES

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

|      |  |              |  |                    |  |                                       
|----- |  | ------------ |  | ------------------ |  | --------------------------------------
|      |  |              |  | ATRIUM CORPORATION
|      |  |              |  | (Registrant)      
|      |  |              |  |                    |  |                                       
|Date: |  | May 15, 2003 |  | By:                |  | /s/ Jeff L. Hull                      
|      |  |              |  |                    |  |                                       
|      |  |              |  |                    |  |                                       
|      |  |              |  |                    |  | Jeff L. Hull                          
|      |  |              |  |                    |  | President, Chief Executive Officer and
|      |  |              |  |                    |  | Director (Principal Executive Officer)
|      |  |              |  |                    |  |                                       
|Date: |  | May 15, 2003 |  | By:                |  | /s/ Eric W. Long                      
|      |  |              |  |                    |  |                                       
|      |  |              |  |                    |  |                                       
|      |  |              |  |                    |  | Eric W. Long                          
|      |  |              |  |                    |  | Executive Vice President and Chief    
|      |  |              |  |                    |  | Financial Officer (Principal Financial
|      |  |              |  |                    |  | and Accounting Officer)               

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CERTIFICATION

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jeff L. Hull, certify that:



|(1) |  | I have reviewed this quarterly
report on Form 10-Q of Atrium Corporation;                                                                                                                                                                                                                                                              
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
|   
|(3) |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrants as of, and for, the periods presented in this
quarterly report;                           
|   
|(4) |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                              



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which the periodic reports
are being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing of this
quarterly report (the Evaluation Date); and                                                                                                       
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|(5) |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|(6) |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|      |  |              |  |                                       
|----- |  | ------------ |  | --------------------------------------
|Date: |  | May 15, 2003 |  | By: /s/ Jeff L. Hull                  
|      |  |              |  |                                       
|      |  |              |  |                                       
|      |  |              |  | Jeff L. Hull                          
|      |  |              |  | President, Chief Executive Officer and
|      |  |              |  | Director (Principal Executive Officer)

19



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CERTIFICATION

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Eric W. Long, certify that:



|(1) |  | I have reviewed this quarterly
report on Form 10-Q of Atrium Corporation;                                                                                                                                                                                                                                                              
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
|   
|(3) |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrants as of, and for, the periods presented in this
quarterly report;                           
|   
|(4) |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                              



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which the periodic reports
are being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing of this
quarterly report (the Evaluation Date); and                                                                                                       
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|(5) |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|(6) |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|      |  |              |  |                                   
|----- |  | ------------ |  | ----------------------------------
|Date: |  | May 15, 2003 |  | By: /s/ Eric W. Long              
|      |  |              |  |                                   
|      |  |              |  | Eric W. Long                      
|      |  |              |  | Executive Vice President and      
|      |  |              |  | Chief Financial Officer (Principal
|      |  |              |  | Financial and Accounting Officer) 

20