##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2007
 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: 333-115543
 AMH Holdings, Inc.
  Delaware
    
    16-1693178(State or Other Jurisdiction of Incorporation of Organization)
    
    (I.R.S. Employer Identification No.)3773 State Rd. Cuyahoga Falls, Ohio
    
    44223(Address of Principal Executive Offices)
    
    (Zip Code)
 (330) 929 -1811
 
   þ o
  o o þ
  o þ




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##### 



AMH HOLDINGS, INC.
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets
June 30, 2007 (Unaudited) and December 30, 2006
    
    
    1Consolidated Statements of Operations (Unaudited)
Quarters ended June 30, 2007 and July 1, 2006
Six months ended June 30, 2007 and July 1, 2006
    
    
    2Consolidated Statements of Cash Flows (Unaudited)
Six months ended June 30, 2007 and July 1, 2006
    
    
    3Notes to Consolidated Financial Statements (Unaudited)
    
    
    4Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    24PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors
    
    
    24Item 6. Exhibits
    
    
    25SIGNATURES
    
    
    26




---



##### 



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 AMH HOLDINGS, INC.
 (Unaudited)June 30,
    
    
    December 30,2007
    
    
    2006AssetsCurrent assets:Cash and cash equivalents
    
    $
    13,506
    
    
    $
    15,015Accounts receivable, net
    
    
    174,366
    
    
    
    135,539Inventories
    
    
    149,431
    
    
    
    134,319Deferred income taxes
    
    
    8,787
    
    
    
    8,787Other current assets
    
    
    9,942
    
    
    
    9,645Total current assets
    
    
    356,032
    
    
    
    303,305Property, plant and equipment, net
    
    
    132,606
    
    
    
    134,290Goodwill
    
    
    231,273
    
    
    
    231,332Other intangible assets, net
    
    
    104,113
    
    
    
    105,541Other assets
    
    
    16,813
    
    
    
    19,397Total assets
    
    $
    840,837
    
    
    $
    793,865Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    104,940
    
    
    $
    78,492Payable to parent
    
    
    2,700
    
    
    
    2,700Accrued liabilities
    
    
    60,750
    
    
    
    64,764Income taxes payable
    
    
    8,779
    
    
    
    7,890Total current liabilities
    
    
    177,169
    
    
    
    153,846Deferred income taxes
    
    
    10,798
    
    
    
    19,130Other liabilities
    
    
    46,033
    
    
    
    46,046Long-term debt
    
    
    652,737
    
    
    
    622,967Stockholders deficit
    
    
    (45,900
    )
    
    
    (48,124
    )Total liabilities and stockholders deficit
    
    $
    840,837
    
    
    $
    793,865
  -1-




---



##### 



AMH HOLDINGS, INC.
 Quarter
    
    
    Quarter
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedJune 30,
    
    
    July 1,
    
    
    June 30,
    
    
    July 1,2007
    
    
    2006
    
    
    2007
    
    
    2006Net sales
    
    $
    337,951
    
    
    $
    348,329
    
    
    $
    556,115
    
    
    $
    607,609Cost of sales
    
    
    246,885
    
    
    
    261,088
    
    
    
    417,333
    
    
    
    461,264Gross profit
    
    
    91,066
    
    
    
    87,241
    
    
    
    138,782
    
    
    
    146,345Selling, general and
administrative expense
    
    
    53,244
    
    
    
    52,453
    
    
    
    102,344
    
    
    
    103,467Facility closure costs, net
    
    
    
    
    
    
    (92
    )
    
    
    
    
    
    
    (92
    )Income from operations
    
    
    37,822
    
    
    
    34,880
    
    
    
    36,438
    
    
    
    42,970Interest expense, net
    
    
    17,657
    
    
    
    17,293
    
    
    
    34,633
    
    
    
    33,994Foreign currency gains
    
    
    (94
    )
    
    
    (1,123
    )
    
    
    (100
    )
    
    
    (964
    )Income before income taxes
    
    
    20,259
    
    
    
    18,710
    
    
    
    1,905
    
    
    
    9,940Income taxes
    
    
    13,294
    
    
    
    9,318
    
    
    
    1,199
    
    
    
    4,792Net income
    
    $
    6,965
    
    
    $
    9,392
    
    
    $
    706
    
    
    $
    5,148
  -2-




---



##### 



AMH HOLDINGS, INC.
 Six Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30,
    
    
    July 1,2007
    
    
    2006Operating ActivitiesNet income
    
    $
    706
    
    
    $
    5,148Adjustments to reconcile net income to net cash used in
operating activities:Depreciation and amortization
    
    
    10,892
    
    
    
    10,756Amortization of debt discount and deferred financing costs
    
    
    21,568
    
    
    
    19,712Amortization of management fee
    
    
    250
    
    
    
    250Stock compensation expense
    
    
    
    
    
    
    27Deferred taxes
    
    
    (8,649
    )
    
    
    (7,029
    )Loss (gain) on sale of assets
    
    
    289
    
    
    
    (346
    )Changes in operating assets and liabilities, adjusted for
the effects of the acquisition of supply center:Accounts receivable, net
    
    
    (35,891
    )
    
    
    (38,409
    )Inventories
    
    
    (11,539
    )
    
    
    (26,856
    )Accounts payable and accrued liabilities
    
    
    19,216
    
    
    
    24,493Income taxes
    
    
    873
    
    
    
    5,684Other
    
    
    40
    
    
    
    (350
    )Net cash used in operating activities
    
    
    (2,245
    )
    
    
    (6,920
    )Investing ActivitiesAcquisition of supply center
    
    
    (801
    )
    
    
    Additions to property, plant and equipment
    
    
    (4,850
    )
    
    
    (6,874
    )Proceeds from disposal of property, plant and equipment
    
    
    
    
    
    
    2,881Net cash used in investing activities
    
    
    (5,651
    )
    
    
    (3,993
    )Financing ActivitiesNet increase in revolving line of credit
    
    
    9,972
    
    
    
    16,750Dividends
    
    
    (3,973
    )
    
    
    (3,833
    )Financing costs
    
    
    
    
    
    
    (108
    )Net cash provided by financing activities
    
    
    5,999
    
    
    
    12,809Effect of exchange rate changes on cash
    
    
    388
    
    
    
    208Net (decrease) increase in cash
    
    
    (1,509
    )
    
    
    2,104Cash at beginning of period
    
    
    15,015
    
    
    
    12,300Cash at end of period
    
    $
    13,506
    
    
    $
    14,404Supplemental information:Cash paid for interest
    
    $
    12,518
    
    
    $
    14,092Cash paid for income taxes
    
    $
    8,939
    
    
    $
    6,119
  -3-




---



##### 



AMH HOLDINGS, INC.
 Note 1  Basis of Presentation
      Recent Accounting Pronouncements
    -4-




---



##### 



Note 2  Inventories
  June 30,
    
    
    December 30,2007
    
    
    2006Raw materials
    
    $
    32,874
    
    
    $
    30,406Work-in-process
    
    
    11,620
    
    
    
    11,867Finished goods and purchased stock
    
    
    104,937
    
    
    
    92,046$
    149,431
    
    
    $
    134,319
 Note 3  Goodwill and Other Intangible Assets
  AverageAmortization
    
    
    June 30, 2007
    
    
    December 30, 2006Period
    
    
    
    
    
    
    Accumulated
    
    
    Net Carrying
    
    
    
    
    
    
    Accumulated
    
    
    Net Carrying(in Years)
    
    
    Cost
    
    
    Amortization
    
    
    Value
    
    
    Cost
    
    
    Amortization
    
    
    ValueTrademarks and
trade names
    
    
    15
    
    
    $
    108,290
    
    
    $
    9,407
    
    
    $
    98,883
    
    
    $
    108,290
    
    
    $
    8,449
    
    
    $
    99,841Patents
    
    
    10
    
    
    
    6,230
    
    
    
    3,229
    
    
    
    3,001
    
    
    
    6,230
    
    
    
    2,918
    
    
    
    3,312Customer base
    
    
    7
    
    
    
    5,108
    
    
    
    2,879
    
    
    
    2,229
    
    
    
    4,818
    
    
    
    2,430
    
    
    
    2,388Total other
intangible assets
    
    
    
    
    
    $
    119,628
    
    
    $
    15,515
    
    
    $
    104,113
    
    
    $
    119,338
    
    
    $
    13,797
    
    
    $
    105,541
 ® ® ®
 Note 4  Long-Term Debt
  June 30,
    
    
    December 30,2007
    
    
    20069 3/4% notes
    
    $
    165,000
    
    
    $
    165,00011 1/4% senior discount notes
    
    
    371,765
    
    
    
    351,967Term loan under credit facility
    
    
    106,000
    
    
    
    106,000Revolving loans under credit facility
    
    
    9,972
    
    
    
    Total debt
    
    $
    652,737
    
    
    $
    622,967
  -5-




---



##### 



Note 5  Income Taxes
    Note 6  Comprehensive Income
  Quarter
    
    
    Quarter
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedJune 30,
    
    
    July 1,
    
    
    June 30,
    
    
    July 1,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income as reported
    
    $
    6,965
    
    
    $
    9,392
    
    
    $
    706
    
    
    $
    5,148Reclassification adjustments for
actuarial gains or losses and prior
service costs, net of tax
    
    
    143
    
    
    
    
    
    
    
    286
    
    
    
    Foreign currency translation adjustments
    
    
    4,672
    
    
    
    1,691
    
    
    
    5,204
    
    
    
    1,493Comprehensive income
    
    $
    11,780
    
    
    $
    11,083
    
    
    $
    6,196
    
    
    $
    6,641
 Note 7  Retirement Plans
  -6-




---



##### 



Quarter
    
    
    QuarterEnded
    
    
    EndedJune 30,
    
    
    July 1,2007
    
    
    2006Domestic
    
    
    Foreign
    
    
    Domestic
    
    
    ForeignPlans
    
    
    Plans
    
    
    Plans
    
    
    PlansNet periodic pension costService cost
    
    $
    136
    
    
    $
    537
    
    
    $
    127
    
    
    $
    512Interest cost
    
    
    719
    
    
    
    691
    
    
    
    688
    
    
    
    613Expected return on assets
    
    
    (832
    )
    
    
    (820
    )
    
    
    (732
    )
    
    
    (677
    )Amortization of prior service costs
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    7Amortization of unrecognized net loss
    
    
    176
    
    
    
    5
    
    
    
    228
    
    
    
    10Net periodic pension cost
    
    $
    199
    
    
    $
    420
    
    
    $
    311
    
    
    $
    465
 Six Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30,
    
    
    July 1,2007
    
    
    2006Domestic
    
    
    Foreign
    
    
    Domestic
    
    
    ForeignPlans
    
    
    Plans
    
    
    Plans
    
    
    PlansNet periodic pension costService cost
    
    $
    272
    
    
    $
    1,031
    
    
    $
    255
    
    
    $
    1,005Interest cost
    
    
    1,437
    
    
    
    1,326
    
    
    
    1,375
    
    
    
    1,204Expected return on assets
    
    
    (1,664
    )
    
    
    (1,574
    )
    
    
    (1,464
    )
    
    
    (1,330
    )Amortization of prior service costs
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    14Amortization of unrecognized net loss
    
    
    352
    
    
    
    9
    
    
    
    456
    
    
    
    20Net periodic pension cost
    
    $
    397
    
    
    $
    806
    
    
    $
    622
    
    
    $
    913
 Note 8  Business Segments
  Quarter
    
    
    Quarter
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedJune 30,
    
    
    July 1,
    
    
    June 30,
    
    
    July 1,2007
    
    
    2006
    
    
    2007
    
    
    2006Vinyl windows
    
    $
    116,228
    
    
    $
    112,433
    
    
    $
    190,717
    
    
    $
    193,590Vinyl siding products
    
    
    82,331
    
    
    
    94,533
    
    
    
    135,416
    
    
    
    166,748Metal products
    
    
    60,936
    
    
    
    62,450
    
    
    
    102,046
    
    
    
    109,932Third party manufactured products
    
    
    57,385
    
    
    
    54,231
    
    
    
    91,562
    
    
    
    91,886Other products and services
    
    
    21,071
    
    
    
    24,682
    
    
    
    36,374
    
    
    
    45,453$
    337,951
    
    
    $
    348,329
    
    
    $
    556,115
    
    
    $
    607,609
 Note 9  Product Warranty Costs and Service Returns
  -7-




---



##### 



Quarter
    
    
    Quarter
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedJune 30,
    
    
    July 1,
    
    
    June 30,
    
    
    July 1,2007
    
    
    2006
    
    
    2007
    
    
    2006Balance at the beginning of the period
    
    $
    25,587
    
    
    $
    22,066
    
    
    $
    25,035
    
    
    $
    21,739Provision for warranties issued
    
    
    3,254
    
    
    
    2,712
    
    
    
    5,445
    
    
    
    4,693Claims paid
    
    
    (2,487
    )
    
    
    (2,222
    )
    
    
    (4,126
    )
    
    
    (3,876
    )Balance at the end of the period
    
    $
    26,354
    
    
    $
    22,556
    
    
    $
    26,354
    
    
    $
    22,556
 Note 10  Subsidiary Guarantors
  -8-




---



##### 



ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
 Guarantor
    
    
    Non-Guarantor
    
    
    ReclassificationParent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    /Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    8,318
    
    
    $
    88
    
    
    $
    5,100
    
    
    $
    
    
    
    $
    13,506Accounts receivable, net
    
    
    111,392
    
    
    
    26,151
    
    
    
    36,823
    
    
    
    
    
    
    
    174,366Intercompany receivables
    
    
    
    
    
    
    23,747
    
    
    
    18,727
    
    
    
    (42,474
    )
    
    
    Inventories
    
    
    92,409
    
    
    
    17,725
    
    
    
    39,297
    
    
    
    
    
    
    
    149,431Deferred income taxes
    
    
    5,675
    
    
    
    2,694
    
    
    
    418
    
    
    
    
    
    
    
    8,787Income taxes receivable
    
    
    
    
    
    
    5,285
    
    
    
    
    
    
    
    (5,285
    )
    
    
    Other current assets
    
    
    6,753
    
    
    
    924
    
    
    
    2,265
    
    
    
    
    
    
    
    9,942Total current assets
    
    
    224,547
    
    
    
    76,614
    
    
    
    102,630
    
    
    
    (47,759
    )
    
    
    356,032Property, plant and equipment, net
    
    
    94,794
    
    
    
    3,485
    
    
    
    34,327
    
    
    
    
    
    
    
    132,606Goodwill
    
    
    194,814
    
    
    
    36,459
    
    
    
    
    
    
    
    
    
    
    
    231,273Other intangible assets, net
    
    
    92,370
    
    
    
    10,874
    
    
    
    869
    
    
    
    
    
    
    
    104,113Investment in subsidiaries
    
    
    156,410
    
    
    
    68,898
    
    
    
    
    
    
    
    (225,308
    )
    
    
    Other assets
    
    
    9,804
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,804Total assets
    
    $
    772,739
    
    
    $
    196,330
    
    
    $
    137,826
    
    
    $
    (273,067
    )
    
    $
    833,828Liabilities And Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    56,334
    
    
    $
    13,859
    
    
    $
    34,747
    
    
    $
    
    
    
    $
    104,940Intercompany payables
    
    
    34,803
    
    
    
    
    
    
    
    7,671
    
    
    
    (42,474
    )
    
    
    Payable to parent
    
    
    763
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    763Accrued liabilities
    
    
    45,946
    
    
    
    6,652
    
    
    
    8,152
    
    
    
    
    
    
    
    60,750Income taxes payable
    
    
    14,050
    
    
    
    
    
    
    
    388
    
    
    
    (5,285
    )
    
    
    9,153Total current liabilities
    
    
    151,896
    
    
    
    20,511
    
    
    
    50,958
    
    
    
    (47,759
    )
    
    
    175,606Deferred income taxes
    
    
    45,603
    
    
    
    3,575
    
    
    
    2,067
    
    
    
    
    
    
    
    51,245Other liabilities
    
    
    16,768
    
    
    
    15,834
    
    
    
    13,431
    
    
    
    
    
    
    
    46,033Long-term debt
    
    
    278,500
    
    
    
    
    
    
    
    2,472
    
    
    
    
    
    
    
    280,972Stockholders equity
    
    
    279,972
    
    
    
    156,410
    
    
    
    68,898
    
    
    
    (225,308
    )
    
    
    279,972Total liabilities and
stockholder s equity
    
    $
    772,739
    
    
    $
    196,330
    
    
    $
    137,826
    
    
    $
    (273,067
    )
    
    $
    833,828
 -9-




---



##### 



ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
 Guarantor
    
    
    Non-Guarantor
    
    
    Reclassification/Parent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    235,768
    
    
    $
    63,344
    
    
    $
    88,067
    
    
    $
    (49,228
    )
    
    $
    337,951Cost of sales
    
    
    169,324
    
    
    
    60,493
    
    
    
    66,296
    
    
    
    (49,228
    )
    
    
    246,885Gross profit
    
    
    66,444
    
    
    
    2,851
    
    
    
    21,771
    
    
    
    
    
    
    
    91,066Selling, general and
administrative expense
    
    
    40,216
    
    
    
    4,558
    
    
    
    8,470
    
    
    
    
    
    
    
    53,244Income (loss) from operations
    
    
    26,228
    
    
    
    (1,707
    )
    
    
    13,301
    
    
    
    
    
    
    
    37,822Interest expense, net
    
    
    7,119
    
    
    
    (10
    )
    
    
    207
    
    
    
    
    
    
    
    7,316Foreign currency gains
    
    
    
    
    
    
    
    
    
    
    (94
    )
    
    
    
    
    
    
    (94
    )Income (loss) before income taxes
    
    
    19,109
    
    
    
    (1,697
    )
    
    
    13,188
    
    
    
    
    
    
    
    30,600Income taxes
    
    
    7,259
    
    
    
    1,812
    
    
    
    4,510
    
    
    
    
    
    
    
    13,581Income (loss) before equity
income from subsidiaries
    
    
    11,850
    
    
    
    (3,509
    )
    
    
    8,678
    
    
    
    
    
    
    
    17,019Equity income from subsidiaries
    
    
    5,169
    
    
    
    8,678
    
    
    
    
    
    
    
    (13,847
    )
    
    
    Net income
    
    $
    17,019
    
    
    $
    5,169
    
    
    $
    8,678
    
    
    $
    (13,847
    )
    
    $
    17,019
 ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
 Guarantor
    
    
    Non-Guarantor
    
    
    Reclassification/Parent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    390,731
    
    
    $
    104,710
    
    
    $
    141,011
    
    
    $
    (80,337
    )
    
    $
    556,115Cost of sales
    
    
    290,292
    
    
    
    99,868
    
    
    
    107,510
    
    
    
    (80,337
    )
    
    
    417,333Gross profit
    
    
    100,439
    
    
    
    4,842
    
    
    
    33,501
    
    
    
    
    
    
    
    138,782Selling, general and
administrative expense
    
    
    77,512
    
    
    
    8,971
    
    
    
    15,861
    
    
    
    
    
    
    
    102,344Income (loss) from operations
    
    
    22,927
    
    
    
    (4,129
    )
    
    
    17,640
    
    
    
    
    
    
    
    36,438Interest expense, net
    
    
    14,032
    
    
    
    (32
    )
    
    
    309
    
    
    
    
    
    
    
    14,309Foreign currency gains
    
    
    
    
    
    
    
    
    
    
    (100
    )
    
    
    
    
    
    
    (100
    )Income (loss) before income taxes
    
    
    8,895
    
    
    
    (4,097
    )
    
    
    17,431
    
    
    
    
    
    
    
    22,229Income taxes
    
    
    3,337
    
    
    
    550
    
    
    
    5,961
    
    
    
    
    
    
    
    9,848Income (loss) before equity
income from subsidiaries
    
    
    5,558
    
    
    
    (4,647
    )
    
    
    11,470
    
    
    
    
    
    
    
    12,381Equity income from subsidiaries
    
    
    6,823
    
    
    
    11,470
    
    
    
    
    
    
    
    (18,293
    )
    
    
    Net income
    
    $
    12,381
    
    
    $
    6,823
    
    
    $
    11,470
    
    
    $
    (18,293
    )
    
    $
    12,381
 -10-




---



##### 



ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
 Guarantor
    
    
    Non-GuarantorParent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    ConsolidatedNet cash provided by (used in) operating activities
    
    $
    1,895
    
    
    $
    (10,955
    )
    
    $
    6,815
    
    
    $
    (2,245
    )Investing ActivitiesAcquisition of supply center
    
    
    (801
    )
    
    
    
    
    
    
    
    
    
    
    (801
    )Additions to property, plant and equipment
    
    
    (3,376
    )
    
    
    (675
    )
    
    
    (799
    )
    
    
    (4,850
    )Net cash used in investing activities
    
    
    (4,177
    )
    
    
    (675
    )
    
    
    (799
    )
    
    
    (5,651
    )Financing ActivitiesNet increase in revolving line of credit
    
    
    7,500
    
    
    
    
    
    
    
    2,472
    
    
    
    9,972Dividends
    
    
    (3,973
    )
    
    
    
    
    
    
    
    
    
    
    (3,973
    )Intercompany transactions
    
    
    (2,941
    )
    
    
    10,026
    
    
    
    (7,085
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    586
    
    
    
    10,026
    
    
    
    (4,613
    )
    
    
    5,999Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    388
    
    
    
    388Net increase (decrease) in cash
    
    
    (1,696
    )
    
    
    (1,604
    )
    
    
    1,791
    
    
    
    (1,509
    )Cash at beginning of period
    
    
    10,014
    
    
    
    1,692
    
    
    
    3,309
    
    
    
    15,015Cash at end of period
    
    $
    8,318
    
    
    $
    88
    
    
    $
    5,100
    
    
    $
    13,506
 -11-




---



##### 



ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
 Guarantor
    
    
    Non-Guarantor
    
    
    ReclassificationParent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    /Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    10,014
    
    
    $
    1,692
    
    
    $
    3,309
    
    
    $
    
    
    
    $
    15,015Accounts receivable, net
    
    
    93,959
    
    
    
    21,047
    
    
    
    20,533
    
    
    
    
    
    
    
    135,539Intercompany receivables
    
    
    
    
    
    
    33,714
    
    
    
    18,786
    
    
    
    (52,500
    )
    
    
    Inventories
    
    
    84,629
    
    
    
    17,668
    
    
    
    32,022
    
    
    
    
    
    
    
    134,319Deferred income taxes
    
    
    5,675
    
    
    
    2,694
    
    
    
    418
    
    
    
    
    
    
    
    8,787Income taxes receivable
    
    
    
    
    
    
    5,915
    
    
    
    88
    
    
    
    (6,003
    )
    
    
    Other current assets
    
    
    7,154
    
    
    
    1,240
    
    
    
    1,251
    
    
    
    
    
    
    
    9,645Total current assets
    
    
    201,431
    
    
    
    83,970
    
    
    
    76,407
    
    
    
    (58,503
    )
    
    
    303,305Property, plant and equipment, net
    
    
    99,060
    
    
    
    3,225
    
    
    
    32,005
    
    
    
    
    
    
    
    134,290Goodwill
    
    
    194,814
    
    
    
    36,518
    
    
    
    
    
    
    
    
    
    
    
    231,332Other intangible assets, net
    
    
    93,408
    
    
    
    11,189
    
    
    
    944
    
    
    
    
    
    
    
    105,541Investment in subsidiaries
    
    
    144,347
    
    
    
    52,210
    
    
    
    
    
    
    
    (196,557
    )
    
    
    Other assets
    
    
    11,843
    
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    11,863Total assets
    
    $
    744,903
    
    
    $
    187,112
    
    
    $
    109,376
    
    
    $
    (255,060
    )
    
    $
    786,331Liabilities And Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    43,811
    
    
    $
    15,359
    
    
    $
    19,322
    
    
    $
    
    
    
    $
    78,492Intercompany payables
    
    
    37,744
    
    
    
    
    
    
    
    14,756
    
    
    
    (52,500
    )
    
    
    Payable to parent
    
    
    763
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    763Accrued liabilities
    
    
    49,217
    
    
    
    7,599
    
    
    
    7,948
    
    
    
    
    
    
    
    64,764Income taxes payable
    
    
    14,267
    
    
    
    
    
    
    
    
    
    
    
    (6,003
    )
    
    
    8,264Total current liabilities
    
    
    145,802
    
    
    
    22,958
    
    
    
    42,026
    
    
    
    (58,503
    )
    
    
    152,283Deferred income taxes
    
    
    45,450
    
    
    
    3,560
    
    
    
    1,918
    
    
    
    
    
    
    
    50,928Other liabilities
    
    
    16,577
    
    
    
    16,247
    
    
    
    13,222
    
    
    
    
    
    
    
    46,046Long-term debt
    
    
    271,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    271,000Stockholders equity
    
    
    266,074
    
    
    
    144,347
    
    
    
    52,210
    
    
    
    (196,557
    )
    
    
    266,074Total liabilities and
stockholder s equity
    
    $
    744,903
    
    
    $
    187,112
    
    
    $
    109,376
    
    
    $
    (255,060
    )
    
    $
    786,331
 -12-




---



##### 



ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
 Guarantor
    
    
    Non-Guarantor
    
    
    Reclassification/Parent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    241,674
    
    
    $
    68,964
    
    
    $
    86,820
    
    
    $
    (49,129
    )
    
    $
    348,329Cost of sales
    
    
    178,009
    
    
    
    64,547
    
    
    
    67,661
    
    
    
    (49,129
    )
    
    
    261,088Gross profit
    
    
    63,665
    
    
    
    4,417
    
    
    
    19,159
    
    
    
    
    
    
    
    87,241Selling, general and
administrative expense
    
    
    39,789
    
    
    
    4,988
    
    
    
    7,676
    
    
    
    
    
    
    
    52,453Facility closure costs, net
    
    
    (92
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (92
    )Income (loss) from operations
    
    
    23,968
    
    
    
    (571
    )
    
    
    11,483
    
    
    
    
    
    
    
    34,880Interest expense, net
    
    
    7,663
    
    
    
    
    
    
    
    334
    
    
    
    
    
    
    
    7,997Foreign currency gains
    
    
    
    
    
    
    
    
    
    
    (1,123
    )
    
    
    
    
    
    
    (1,123
    )Income (loss) before income taxes
    
    
    16,305
    
    
    
    (571
    )
    
    
    12,272
    
    
    
    
    
    
    
    28,006Income taxes (benefit)
    
    
    7,825
    
    
    
    (204
    )
    
    
    4,111
    
    
    
    
    
    
    
    11,732Income (loss) before equity
income from subsidiaries
    
    
    8,480
    
    
    
    (367
    )
    
    
    8,161
    
    
    
    
    
    
    
    16,274Equity income from subsidiaries
    
    
    7,794
    
    
    
    8,161
    
    
    
    
    
    
    
    (15,955
    )
    
    
    Net income
    
    $
    16,274
    
    
    $
    7,794
    
    
    $
    8,161
    
    
    $
    (15,955
    )
    
    $
    16,274
 ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
 Guarantor
    
    
    Non-Guarantor
    
    
    Reclassification/Parent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    424,023
    
    
    $
    126,822
    
    
    $
    147,133
    
    
    $
    (90,369
    )
    
    $
    607,609Cost of sales
    
    
    315,344
    
    
    
    119,270
    
    
    
    117,019
    
    
    
    (90,369
    )
    
    
    461,264Gross profit
    
    
    108,679
    
    
    
    7,552
    
    
    
    30,114
    
    
    
    
    
    
    
    146,345Selling, general and
administrative expense
    
    
    79,353
    
    
    
    9,855
    
    
    
    14,259
    
    
    
    
    
    
    
    103,467Facility closure costs, net
    
    
    (92
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (92
    )Income (loss) from operations
    
    
    29,418
    
    
    
    (2,303
    )
    
    
    15,855
    
    
    
    
    
    
    
    42,970Interest expense, net
    
    
    15,157
    
    
    
    
    
    
    
    566
    
    
    
    
    
    
    
    15,723Foreign currency gains
    
    
    
    
    
    
    
    
    
    
    (964
    )
    
    
    
    
    
    
    (964
    )Income (loss) before income taxes
    
    
    14,261
    
    
    
    (2,303
    )
    
    
    16,253
    
    
    
    
    
    
    
    28,211Income taxes
    
    
    5,988
    
    
    
    389
    
    
    
    5,444
    
    
    
    
    
    
    
    11,821Income (loss) before equity
income from subsidiaries
    
    
    8,273
    
    
    
    (2,692
    )
    
    
    10,809
    
    
    
    
    
    
    
    16,390Equity income from subsidiaries
    
    
    8,117
    
    
    
    10,809
    
    
    
    
    
    
    
    (18,926
    )
    
    
    Net income
    
    $
    16,390
    
    
    $
    8,117
    
    
    $
    10,809
    
    
    $
    (18,926
    )
    
    $
    16,390
 -13-




---



##### 



ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
 Guarantor
    
    
    Non-GuarantorParent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    ConsolidatedNet cash provided by (used in) operating activities
    
    $
    (5,190
    )
    
    $
    (3,659
    )
    
    $
    1,929
    
    
    $
    (6,920
    )Investing ActivitiesAdditions to property, plant and equipment
    
    
    (5,196
    )
    
    
    (76
    )
    
    
    (1,602
    )
    
    
    (6,874
    )Proceeds from disposal of property, plant and
equipment
    
    
    2,772
    
    
    
    41
    
    
    
    68
    
    
    
    2,881Net cash used in investing activities
    
    
    (2,424
    )
    
    
    (35
    )
    
    
    (1,534
    )
    
    
    (3,993
    )Financing ActivitiesNet increase in revolving line of credit
    
    
    
    
    
    
    
    
    
    
    16,750
    
    
    
    16,750Dividends
    
    
    (3,833
    )
    
    
    
    
    
    
    
    
    
    
    (3,833
    )Financing costs
    
    
    (108
    )
    
    
    
    
    
    
    
    
    
    
    (108
    )Intercompany transactions
    
    
    10,423
    
    
    
    3,717
    
    
    
    (14,140
    )
    
    
    Net cash provided by financing activities
    
    
    6,482
    
    
    
    3,717
    
    
    
    2,610
    
    
    
    12,809Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    208
    
    
    
    208Net increase (decrease) in cash
    
    
    (1,132
    )
    
    
    23
    
    
    
    3,213
    
    
    
    2,104Cash at beginning of period
    
    
    7,010
    
    
    
    1,046
    
    
    
    4,244
    
    
    
    12,300Cash at end of period
    
    $
    5,878
    
    
    $
    1,069
    
    
    $
    7,457
    
    
    $
    14,404
 -14-




---



##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
  ® ® ®
    -15-




---



##### 



Results of Operations
  Quarter
    
    
    Quarter
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    Six Months EndedJune 30,
    
    
    July 1,
    
    
    June 30,
    
    
    July 1,2007
    
    
    2006
    
    
    2007
    
    
    2006Net sales
    
    $
    337,951
    
    
    $
    348,329
    
    
    $
    556,115
    
    
    $
    607,609Cost of sales
    
    
    246,885
    
    
    
    261,088
    
    
    
    417,333
    
    
    
    461,264Gross profit
    
    
    91,066
    
    
    
    87,241
    
    
    
    138,782
    
    
    
    146,345Selling, general and
administrative expense
    
    
    53,244
    
    
    
    52,453
    
    
    
    102,344
    
    
    
    103,467Facility closure costs, net
    
    
    
    
    
    
    (92
    )
    
    
    
    
    
    
    (92
    )Income from operations
    
    
    37,822
    
    
    
    34,880
    
    
    
    36,438
    
    
    
    42,970Interest expense, net
    
    
    17,657
    
    
    
    17,293
    
    
    
    34,633
    
    
    
    33,994Foreign currency gains
    
    
    (94
    )
    
    
    (1,123
    )
    
    
    (100
    )
    
    
    (964
    )Income before income taxes
    
    
    20,259
    
    
    
    18,710
    
    
    
    1,905
    
    
    
    9,940Income taxes
    
    
    13,294
    
    
    
    9,318
    
    
    
    1,199
    
    
    
    4,792Net income
    
    $
    6,965
    
    
    $
    9,392
    
    
    $
    706
    
    
    $
    5,148Other Data:EBITDA (a)
    
    $
    43,382
    
    
    $
    41,379
    
    
    $
    47,430
    
    
    $
    54,690Adjusted EBITDA (a)
    
    
    44,581
    
    
    
    40,316
    
    
    
    49,447
    
    
    
    55,996
 -16-




---



##### 



Quarter
    
    
    Quarter
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    Six Months EndedJune 30,
    
    
    July 1,
    
    
    June 30,
    
    
    July 1,2007
    
    
    2006
    
    
    2007
    
    
    2006Vinyl windows
    
    $
    116,228
    
    
    $
    112,433
    
    
    $
    190,717
    
    
    $
    193,590Vinyl siding products
    
    
    82,331
    
    
    
    94,533
    
    
    
    135,416
    
    
    
    166,748Metal products
    
    
    60,936
    
    
    
    62,450
    
    
    
    102,046
    
    
    
    109,932Third party manufactured products
    
    
    57,385
    
    
    
    54,231
    
    
    
    91,562
    
    
    
    91,886Other products and services
    
    
    21,071
    
    
    
    24,682
    
    
    
    36,374
    
    
    
    45,453$
    337,951
    
    
    $
    348,329
    
    
    $
    556,115
    
    
    $
    607,609
 
 (a)
    
    EBITDA is calculated as net income plus interest, taxes, depreciation and
amortization. Adjusted EBITDA excludes certain items. The Company considers adjusted EBITDA
to be an important indicator of its operational strength and performance of its business.
The Company has included adjusted EBITDA because it is a key financial measure used by
management to (i) assess the Companys ability to service its debt and / or incur debt and
meet the Companys capital expenditure requirements; (ii) internally measure the Companys
operating performance; and (iii) determine the Companys incentive compensation programs. In
addition, the Companys credit facility has certain covenants that use ratios utilizing this
measure of adjusted EBITDA. EBITDA and adjusted EBITDA have not been prepared in accordance
with U.S. generally accepted accounting principles (GAAP). Adjusted EBITDA as presented by
the Company may not be comparable to similarly titled measures reported by other companies.
EBITDA and adjusted EBITDA are not measures determined in accordance with GAAP and should
not be considered as alternatives to, or more meaningful than, net income (as determined in
accordance with GAAP) as a measure of the Companys operating results or cash flows from
operations (as determined in accordance with GAAP) as a measure of the Companys liquidity.
The reconciliation of the Companys net income to EBITDA and adjusted EBITDA is as follows
(in thousands): Quarter Ended
    
    
    Quarter Ended
    
    
    Six Months Ended
    
    
    Six Months EndedJune 30, 2007
    
    
    July 1, 2006
    
    
    June 30, 2007
    
    
    July 1, 2006Net income
    
    $
    6,965
    
    
    $
    9,392
    
    
    $
    706
    
    
    $
    5,148Interest expense, net
    
    
    17,657
    
    
    
    17,293
    
    
    
    34,633
    
    
    
    33,994Income taxes
    
    
    13,294
    
    
    
    9,318
    
    
    
    1,199
    
    
    
    4,792Depreciation and amortization
    
    
    5,466
    
    
    
    5,376
    
    
    
    10,892
    
    
    
    10,756EBITDA
    
    
    43,382
    
    
    
    41,379
    
    
    
    47,430
    
    
    
    54,690Foreign currency gains
    
    
    (94
    )
    
    
    (1,123
    )
    
    
    (100
    )
    
    
    (964
    )Separation costs (b)
    
    
    
    
    
    
    
    
    
    
    699
    
    
    
    2,085Amortization of management fee (c)
    
    
    125
    
    
    
    125
    
    
    
    250
    
    
    
    250Transaction costs (d)
    
    
    1,168
    
    
    
    
    
    
    
    1,168
    
    
    
    Stock compensation expense
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    27Facility closure costs, net (e)
    
    
    
    
    
    
    (92
    )
    
    
    
    
    
    
    (92
    )Adjusted EBITDA
    
    $
    44,581
    
    
    $
    40,316
    
    
    $
    49,447
    
    
    $
    55,996
 
 (b)
    
    For the six months ended June 30, 2007, amount represents separation costs,
including payroll taxes, related to the resignation of Mr. Deighton, former Chief Operating
Officer of the Company. For the six months ended July 1, 2006, amount represents separation
costs, including payroll taxes and benefits, related to the resignation of Mr. Caporale,
former Chairman, President and Chief Executive Officer of the Company by mutual agreement
with the Companys Board of Directors.(c)
    
    Represents amortization of a prepaid management fee of $6 million paid to Investcorp
International Inc. in connection with the December 2004 recapitalization transaction. The
Company is expensing the prepaid management fee based on the services provided over the life
of the agreement, as defined in the Management Advisory Agreement with Investcorp
International Inc. In accordance with the Management Advisory Agreement, the Company
recorded $4 million as expense for the year ended December 31, 2005, with the remaining
unamortized amount to be expensed equally over the remaining four-year term of the agreement.(d)
    
    Represents legal and accounting fees incurred in connection with an unsuccessful bid
for an acquisition target.(e)
    
    Amounts recorded during 2006 include the gain realized upon the final sale of the
Companys former manufacturing facility in Freeport, Texas, partially offset by other
non-recurring expenses associated with the closure of this facility. Quarter Ended June 30, 2007 Compared to Quarter Ended July 1, 2006
  -17-




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Six Months Ended June 30, 2007 Compared to Six Months Ended July 1, 2006
   -18-




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##### 



Recent Accounting Pronouncements
    -19-




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##### 



Liquidity and Capital Resources
  Six Months
    
    Six MonthsEnded
    
    EndedJune 30,
    
    July 1,2007
    
    2006Cash used in operating activities
    
    $
    (2,245
    )
    
    $
    (6,920
    )Cash used in investing activities
    
    
    (5,651
    )
    
    
    (3,993
    )Cash provided by financing activities
    
    
    5,999
    
    
    
    12,809
 Cash Flows
  Cash Flows from Operating Activities
  Cash Flows from Investing Activities
  Cash Flows from Financing Activities
  -20-




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##### 



Description of the Companys Outstanding Indebtedness
        -21-




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##### 



Effects of Inflation
  Certain Forward-Looking Statements
  
    
    the Companys operations and results of operations;
    
    changes in home building industry, economic conditions, interest rates,
foreign currency exchange rates and other conditions;
    
    changes in availability of consumer credit, employment trends, levels of
consumer confidence and consumer preferences;
 -22-




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
    
    changes in raw material costs and availability;
    
    market acceptance of price increases;
    
    changes in national and regional trends in new housing starts and home remodeling;
    
    changes in weather conditions;
    
    the Companys ability to comply with certain financial covenants in the
credit facility and indenture governing its indebtedness;
    
    the Companys ability to make distributions, payments or loans to its
parent company to allow it to make required payments on its debt;
    
    increases in competition from other manufacturers of vinyl and metal
exterior residential building products as well as alternative building products;
    
    shifts in market demand;
    
    increases in the Companys indebtedness;
    
    increases in costs of environmental compliance;
    
    increases in capital expenditure requirements;
    
    potential conflict between existing Alside and Gentek distribution channels;
    
    the other factors discussed under the heading Risk Factors in the
Companys annual report on Form 10-K for the year ended December 30, 2006 and elsewhere
in this report.
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
   -23-




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##### 



Foreign Currency Exchange Risk
  Commodity Price Risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  -24-




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##### 



Item 6. Exhibits
 (a) Exhibits
 ExhibitNumber
    
    Description31.1
    
    Certification of the Chief Executive Officer pursuant to Rule 13a-14 of the Exchange Act, as
adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of the Chief Financial Officer pursuant to Rule 13a-14 of the Exchange Act, as
adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*32.2
    
    Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
 
 *
    
    This document is being furnished in accordance with Item 601(b)(32)(ii) of Regulation S-K and
SEC Release Nos. 33-8238 and 34-47986. -25-




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##### 



SIGNATURES
  AMH HOLDINGS, INC.(Registrant)Date:  August 14, 2007
    By:
    /s/ Thomas N. ChieffeThomas N. ChieffePresident and Chief Executive Officer
(Principal Executive Officer)By:
    /s/ D. Keith LaVanwayD. Keith LaVanwayVice President  Finance,
Chief Financial Officer,
Treasurer and Secretary
(Principal Financial Officer and
Principal Accounting Officer) -26-