##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549
   FORM 10-Q (Mark One) þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
April 2, 2005
 or o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934For 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)
 Registrants Telephone
Number, Including Area Code (800) 257-4335   Indicate by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 of 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 þ No o Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act). Yes o No þ As
of May 10, 2005, the Registrant had outstanding 500,000 shares of voting convertible
preferred stock, 1,614,019 shares of non-voting convertible preferred stock and 500,000 shares of
voting class B common stock and 1,234,190 shares of non-voting class B common stock.




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AMH HOLDINGS, INC.
REPORT FOR THE QUARTER ENDED APRIL 2, 2005  
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated
Balance Sheets April 2, 2005 (Unaudited) and January 1, 2005
    
    
    1Consolidated Statements of Operations (Unaudited) Quarters ended April 2, 2005 and April 3, 2004
    
    
    2Consolidated Statements of Cash Flows (Unaudited) Quarters ended April 2, 2005 and April 3, 2004
    
    
    3Notes to Consolidated Financial Statements (Unaudited)
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    20Item 4. Controls and Procedures
    
    
    20PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    21Item 6. Exhibits and Reports on Form 8-K
    
    
    21SIGNATURES
    
    
    22EX-31.1 Certification of CEO Pursuant to Rule 13A-14EX-31.2 Certification of CFO Pursuant to Rule 13A-14EX-32.1 Certification of CEO Pursuant to 18 USC Sect. 1350EX-32.2 Certification of CFO Pursuant to 18 USC Sect. 1350




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##### Table of Contents



Part I. Financial Information 
 Item 1. Financial Statements
 AMH HOLDINGS, INC. 
   (Unaudited)April 2,
    
    
    January 1,2005
    
    
    2005AssetsCurrent assets:Cash and cash equivalents
    
    $
    9,689
    
    
    $
    58,054Accounts receivable, net
    
    
    129,345
    
    
    
    125,666Receivable from parent
    
    
    1,562
    
    
    
    1,241Inventory
    
    
    139,846
    
    
    
    114,787Income tax receivable
    
    
    12,623
    
    
    
    9,210Deferred income taxes
    
    
    18,253
    
    
    
    18,253Other current assets
    
    
    11,904
    
    
    
    12,938Total current assets
    
    
    323,222
    
    
    
    340,149Property, plant and equipment, net
    
    
    143,467
    
    
    
    138,697Goodwill
    
    
    234,804
    
    
    
    234,795Other intangible assets, net
    
    
    112,221
    
    
    
    113,044Other assets
    
    
    28,309
    
    
    
    29,169Total assets
    
    $
    842,023
    
    
    $
    855,854Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    78,855
    
    
    $
    75,139Accrued liabilities
    
    
    47,241
    
    
    
    54,379Notes payable
    
    
    
    
    
    
    11,607Current portion of long-term debt
    
    
    1,313
    
    
    
    875Total current liabilities
    
    
    127,409
    
    
    
    142,000Deferred income taxes
    
    
    50,674
    
    
    
    53,883Other liabilities
    
    
    43,271
    
    
    
    44,058Long-term debt
    
    
    672,886
    
    
    
    621,981Convertible preferred stock
    
    
    150,000
    
    
    
    150,000Stockholders deficit
    
    
    (202,217
    )
    
    
    (156,068
    )Total liabilities and stockholders equity
    
    $
    842,023
    
    
    $
    855,854
 See accompanying footnotes. -1-




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AMH HOLDINGS, INC. 
    Quarter
    
    
    QuarterEnded
    
    
    EndedApril 2,
    
    
    April 3,2005
    
    
    2004Net sales
    
    $
    218,569
    
    
    $
    204,321Cost of sales
    
    
    169,537
    
    
    
    153,966Gross profit
    
    
    49,032
    
    
    
    50,355Selling, general and administrative expense
    
    
    50,751
    
    
    
    45,394Transaction costs - bonuses
    
    
    
    
    
    
    14,498Facility closure costs
    
    
    2,553
    
    
    
    Loss from operations
    
    
    (4,272
    )
    
    
    (9,537
    )Interest expense, net
    
    
    15,296
    
    
    
    8,436Foreign currency (gain) loss
    
    
    (3
    )
    
    
    6Loss before income taxes
    
    
    (19,565
    )
    
    
    (17,979
    )Income tax benefit
    
    
    (7,483
    )
    
    
    (7,276
    )Net loss
    
    $
    (12,082
    )
    
    $
    (10,703
    )
 See accompanying notes. -2-




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AMH HOLDINGS, INC. 
    Quarter
    
    
    QuarterEnded
    
    
    EndedApril 2,
    
    
    April 3,2005
    
    
    2004Operating ActivitiesNet loss
    
    $
    (12,082
    )
    
    $
    (10,703
    )Adjustments to reconcile net loss to net cash used in operating
activities:Depreciation and amortization
    
    
    4,955
    
    
    
    5,106Amortization of debt discount and deferred financing costs
    
    
    8,741
    
    
    
    2,789Amortization of management fee
    
    
    1,000
    
    
    
    Stock compensation expense
    
    
    319
    
    
    
    Tax benefit from stock option exercises
    
    
    132
    
    
    
    2,526Deferred taxes
    
    
    (3,163
    )
    
    
    Changes in operating assets and liabilities:Accounts receivable, net
    
    
    (4,260
    )
    
    
    (9,205
    )Inventories
    
    
    (25,347
    )
    
    
    (18,053
    )Income taxes
    
    
    (3,387
    )
    
    
    (13,981
    )Accounts payable and accrued liabilities
    
    
    (2,631
    )
    
    
    13,692Other
    
    
    (1,639
    )
    
    
    (1,030
    )Net cash used in operating activities
    
    
    (37,362
    )
    
    
    (28,859
    )Investing ActivitiesAdditions to property, plant and equipment
    
    
    (9,128
    )
    
    
    (5,307
    )Net cash used in investing activities
    
    
    (9,128
    )
    
    
    (5,307
    )Financing ActivitiesNet increase in revolving line of credit
    
    
    43,619
    
    
    
    22,300Dividends
    
    
    (33,713
    )
    
    
    Settlement of promissory notes
    
    
    (11,607
    )
    
    
    Proceeds from issuance of 11 1/4% senior discount notes
    
    
    
    
    
    
    258,265Options exercised
    
    
    
    
    
    
    1,760Redemption of preferred stock
    
    
    
    
    
    
    (177,844
    )Common stock dividend
    
    
    
    
    
    
    (57,684
    )Financing costs
    
    
    
    
    
    
    (10,104
    )Net cash provided by (used in) financing activities
    
    
    (1,701
    )
    
    
    36,693Net increase (decrease) in cash
    
    
    (48,191
    )
    
    
    2,527Effect of exchange rate changes on cash
    
    
    (174
    )
    
    
    24Cash at beginning of period
    
    
    58,054
    
    
    
    4,282Cash at end of period
    
    $
    9,689
    
    
    $
    6,833Supplemental information:Cash paid for interest
    
    $
    2,129
    
    
    $
    1,562Cash paid (received) for income taxes
    
    $
    (1,004
    )
    
    $
    4,159
 See accompanying notes. -3-




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AMH HOLDINGS, INC. 
    Note 1 - Basis of Presentation AMH Holdings, Inc. (AMH) was incorporated in Delaware on February 19, 2004. AMH has no
material assets or operations other than its 100% ownership of Associated Materials Holdings Inc.
(Holdings), its direct subsidiary, which in turn has no material assets or operations other than
its 100% ownership of Associated Materials Incorporated (AMI), collectively referred to as the
Company. As part of a restructuring agreement dated as of March 4, 2004, stockholders and option
holders of Holdings became stockholders and option holders of AMH and are no longer stockholders
and option holders of Holdings. AMH is a wholly owned subsidiary of AMH Holdings II, Inc. (AMH II), which is controlled by
affiliates of Investcorp S.A. (Investcorp) and Harvest Partners, Inc. (Harvest Partners). AMH
and AMH II were incorporated in connection with the recapitalization transactions described in Note
2. AMH and AMH II do not have material assets or operations other than a direct or indirect
ownership of the common stock of AMI. AMI was incorporated in Delaware in 1983 and is a leading, vertically integrated manufacturer
and North American distributor of exterior residential building products. The Companys core
products are vinyl windows, vinyl siding, aluminum trim coil, aluminum and steel siding and
accessories, and vinyl fencing, decking and railing. Because most of the Companys building
products are intended for exterior use, the Companys sales and operating profits tend to be lower
during periods of inclement weather. Weather conditions in the first quarter of each year
historically result in that quarter producing significantly less sales revenue and profits than in
any other period of the year. Therefore, the results of operations for any interim period are not
necessarily indicative of the results of operations for a full year. The unaudited financial statements of AMH have been prepared in accordance with accounting
principles generally accepted in the United States 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 accounting principles generally accepted in the United
States for complete financial statements. In the opinion of management, these interim
consolidated financial statements contain all of the normal recurring accruals and adjustments
considered necessary for a fair presentation of the unaudited results for the three month periods
ended April 2, 2005 and April 3, 2004. These financial statements should be read in conjunction
with the Companys financial statements and notes thereto included in its annual report on Form
10-K for the year ended January 1, 2005. A detailed description of the Companys significant accounting policies and management
judgments is located in the audited financial statements for the year ended January 1, 2005,
included in the Companys Form 10-K filed with the Securities and Exchange Commission. Certain prior period amounts have been reclassified to conform with the current period
presentation. New Accounting Pronouncements In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 151, Inventory Costs, an amendment of ARB 43, Chapter
4. SFAS No. 151 requires certain inventory costs to be recognized as current period expenses. This
standard also provides guidance for the allocation of fixed production overhead costs. This
standard is effective for inventory costs incurred during the fiscal years beginning after June 15,
2005. The Company will adopt this standard in fiscal 2006. The Company has not yet determined the
impact, if any, this standard will have on the financial statements of the Company. In December 2004, the FASB issued SFAS No. 123 (Revised), Share-Based Payment. This standard
revises SFAS No. 123, APB Opinion No. 25 and related accounting interpretations, and eliminates the
use of the intrinsic value method. The Company currently uses the intrinsic value method under APB
Opinion No. 25 to value stock options. SFAS No. 123 (Revised) requires the expensing of all
stock-based compensation, including stock options, using a fair value based method. The standard is
effective for fiscal 2006. The Company is in the process of determining the impact this standard
will have on its financial statements. -4-




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Note 2 - Recapitalization Transactions As part of a restructuring agreement dated as of March 4, 2004, stockholders and option
holders of Holdings became stockholders and option holders of AMH and are no longer stockholders
and option holders of Holdings. AMH has no material assets or operations other than its 100%
ownership of Holdings, AMIs direct parent company. On March 4, 2004, AMH completed an offering of
$446 million aggregate principal at maturity of 11 1/4% senior discount notes (11 1/4% notes).
The total gross proceeds were approximately $258.3 million. In connection with the note offering,
certain options to acquire preferred and common shares were exercised and the proceeds from the
note offering were used to redeem all of AMHs preferred stock including accrued and unpaid
dividends, pay a dividend to AMHs common stockholders and pay a bonus to certain members of the
Companys senior management and a director. Through Holdings, AMH contributed $14.5 million to AMI
to pay the bonus. The completion of the aforementioned transactions constituted the March 2004
dividend recapitalization. On December 22, 2004, AMH completed a recapitalization transaction in which the then
outstanding capital stock of AMH was reclassified as a combination of voting and non-voting shares
of Class B common stock and shares of voting and non-voting convertible preferred stock. All of the
shares of the convertible preferred stock were immediately sold to affiliates of Investcorp for an
aggregate purchase price of $150 million, which was distributed by the Company to the existing
shareholders. As a result of this transaction, affiliates of Investcorp acquired a 50% equity
interest in AMH and the existing shareholders, led by Harvest Partners, retained shares of Class B
common stock representing a 50% equity interest in AMH, all on a fully diluted basis. Each of
Investcorp and Harvest Partners, through their respective affiliates, have a 50% voting interest in
AMH. Immediately following these transactions, pursuant to a restructuring agreement, the
shareholders of AMH contributed their shares of the capital stock of AMH to AMH II, a Delaware
corporation formed for the purpose of becoming the direct parent company of AMH, in exchange for
shares of the capital stock of AMH II mirroring (in terms of type and class, voting rights,
preferences and other rights) the shares of AMH capital stock contributed by such shareholders. In
connection with this transaction, on December 22, 2004, the Company increased its senior credit
facility by $42 million and AMH II issued $75 million of 13 5/8% senior notes due 2014 (13 5/8%
notes). AMH II then declared and paid a dividend on shares of its Class B common stock in an
aggregate amount of approximately $96.4 million, which included approximately $3.4 million in
aggregate proceeds received by AMH II through AMH, upon the exercise of options to purchase AMH
common stock. Of this $96.4 million dividend, approximately $62.7 million was paid in cash and
approximately $33.7 million was paid in the form of promissory notes issued by AMH II to each of
its Class B common shareholders. In December of 2004, AMH made a payment to AMH II for the proceeds
received upon exercise of the options. In the first quarter of 2005, AMI made an intercompany loan
of $33.7 million to AMH II through its direct and indirect parent companies. Subsequently, AMI and
its direct and indirect parent companies declared a dividend in forgiveness of the intercompany
loan. On December 22, 2004, in connection with such transactions, AMI paid a bonus in the aggregate
amount of approximately $22.3 million to certain members of AMIs management and a director.
Approximately $14.3 million of the bonus, including payroll taxes, was paid in cash on December 22,
2004, with promissory notes issued by AMI for the remaining $8.0 million. These promissory notes
were settled in cash during the first quarter of fiscal year 2005. AMI incurred transaction related
costs of $28.4 million, which includes $16.3 million paid for investment banking and legal
expenses, which have been classified as recapitalization transaction costs in the Companys
statements of operations, and $12.1 million for financing related costs which have been recorded in
other assets on the Companys balance sheet. AMI issued promissory notes of $3.6 million in
December 2004 for the payment of a portion of these fees related to the transaction, which were
settled in cash in the first quarter of 2005. AMI also recognized stock compensation expense of
$30.8 million, including payroll taxes, related to stock options exercised in the transaction. The
completion of the aforementioned transactions constituted the December 2004 recapitalization
transaction. -5-




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Note 3 - Inventories Inventories are valued at the lower of cost (first in, first out) or market. Inventories
consisted of the following (in thousands): April 2,
    
    
    January 1,2005
    
    
    2005Raw materials
    
    $
    33,305
    
    
    $
    27,127Work-in-process
    
    
    13,612
    
    
    
    9,570Finished goods and purchased stock
    
    
    92,929
    
    
    
    78,090$
    139,846
    
    
    $
    114,787
 Note 4  Goodwill and Other Intangible Assets Goodwill represents the purchase price in excess of the fair value of the tangible and
intangible net assets acquired and consists of $234.8 million including $198.3 million from the
purchase price for the April 2002 merger transaction and $36.5 million from the acquisition of
Gentek in 2003. None of the Companys goodwill is deductible for income tax purposes. The
Companys other intangible assets consists of the following (in thousands): AverageAmortization
    
    
    April 2, 2005
    
    
    January 1, 2005Period
    
    
    
    
    
    
    Accumulated
    
    
    Net Carrying
    
    
    
    
    
    
    Accumulated
    
    
    Net Carrying(in Years)
    
    
    Cost
    
    
    Amortization
    
    
    Value
    
    
    Cost
    
    
    Amortization
    
    
    ValueTrademarks and trade names
    
    
    15
    
    
    $
    109,280
    
    
    $
    5,178
    
    
    $
    104,102
    
    
    $
    109,280
    
    
    $
    4,712
    
    
    $
    104,568Patents
    
    
    10
    
    
    
    6,550
    
    
    
    1,927
    
    
    
    4,623
    
    
    
    6,550
    
    
    
    1,763
    
    
    
    4,787Customer base
    
    
    7
    
    
    
    4,736
    
    
    
    1,240
    
    
    
    3,496
    
    
    
    4,762
    
    
    
    1,073
    
    
    
    3,689Total other intangible assets
    
    
    
    
    
    $
    120,566
    
    
    $
    8,345
    
    
    $
    112,221
    
    
    $
    120,592
    
    
    $
    7,548
    
    
    $
    113,044
 The Company has determined that trademarks and trade names totaling $81.1 million
consisting primarily of the Alside®, Revere® and Gentek® trade
names have indefinite useful lives. Amortization expense related to other intangible assets was
approximately $0.8 million for quarters ended April 2, 2005 and April 3, 2004. Note 5  Long-Term Debt Long-term debt consists of the following (in thousands): April 2,
    
    
    January 1,2005
    
    
    20059 3/4% notes
    
    $
    165,000
    
    
    $
    165,00011 1/4% senior discount notes
    
    
    290,580
    
    
    
    282,856Term loan under credit facility
    
    
    175,000
    
    
    
    175,000Revolving loans under credit facility
    
    
    43,619
    
    
    
    Total debt
    
    
    674,199
    
    
    
    622,856Less current portion
    
    
    1,313
    
    
    
    875Long-term debt
    
    $
    672,886
    
    
    $
    621,981
 Under the term loan facility AMI is required to make minimum quarterly principal amortization
payments of 1% per year due beginning September 30, 2005, and on an annual basis beginning with the
year ended December 31, 2005, AMI is required to make principal payments based on a percentage of
excess cash flows as defined in the amended and restated credit facility. AMI records as a current
liability term loan principal payments that are estimable to be due within twelve months, which
includes excess cash flow principal repayments when the likelihood of those payments becomes
probable. The credit facility and the indentures governing the 9 3/4% notes and 11 1/4% notes contain
restrictive covenants that, among other things, limit AMIs ability to incur additional
indebtedness, make loans or advances to subsidiaries and other entities, invest in capital
expenditures, sell its assets or declare dividends. In addition, under the credit facility AMI is
required to achieve certain financial ratios relating to leverage, coverage of fixed charges and
coverage of interest expense. AMI was in compliance with its covenants as of April 2, 2005. -6-




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In December 2004, AMH II completed an offering of 13 5/8% senior notes, which mature on
December 1, 2014. The accreted value of the 13 5/8% notes as of April 2, 2005 was $75.8 million.
The Company does not guarantee the 13 5/8% notes and has no obligation to make any payments with
respect thereto. Total AMH II debt, including that of its consolidated subsidiaries, was
approximately $750.0 million as of April 2, 2005. Because AMH and AMH II are holding companies with no operations, they must receive
distributions, payments or loans from AMHs subsidiaries to satisfy obligations on the 11 1/4%
notes and 13 5/8% notes. None of AMHs subsidiaries guarantee either the 11 1/4% notes or the 13
5/8% notes, or have any obligation to make any payments with respect thereto. Note 6  Stock Plans The Company measures stock-based compensation using the intrinsic value method in accordance
with Accounting Principles Board Opinion No. 25  Accounting for Stock Issued to Employees. The
Company follows the disclosure provisions required under FASB SFAS No. 123  Accounting for Stock
Based Compensation. Pro forma information regarding net income is required by SFAS No. 123, and
has been determined as if the Company had accounted for its stock options under the fair value
method of that statement using a minimum value approach for companies with private equity. FASB
SFAS No. 148  Accounting for Stock-Based Compensation requires this information to be disclosed
on a quarterly basis. The pro forma effect on net loss for the quarters ended April 2, 2005 and
April 3, 2004 would have been (in thousands): Quarter
    
    
    QuarterEnded
    
    
    EndedApril 2,
    
    
    April 3,2005
    
    
    2004Net loss as reported
    
    $
    (12,082
    )
    
    $
    (10,703
    )Stock-based employee compensation
expense included in reported net
loss, net of tax
    
    
    187
    
    
    
    Pro forma stock based employee
compensation cost, net of tax
    
    
    (179
    )
    
    
    (28
    )Pro forma net loss
    
    $
    (12,074
    )
    
    $
    (10,731
    )
 Note 7  Income Taxes Due to the seasonal nature of the Companys operating results, the Company has recorded an
income tax benefit on the loss before income taxes for the quarters ended April 2, 2005 and April
3, 2004. The Companys effective tax rate for the quarter ended April 2, 2005 reflects adjustments
for a portion of the interest accretion on AMHs 11 1/4% senior discount notes, which is not
deductible for income tax purposes. Note 8  Comprehensive Loss Comprehensive loss differs from net loss due to foreign currency translation adjustments as
follows (in thousands): Quarter
    
    
    QuarterEnded
    
    
    EndedApril 2,
    
    
    April 3,2005
    
    
    2004Net loss as reported
    
    $
    (12,082
    )
    
    $
    (10,703
    )Foreign currency translation adjustments
    
    
    (807
    )
    
    
    (861
    )Comprehensive loss
    
    $
    (12,889
    )
    
    $
    (11,564
    )
 -7-




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Note 9  Retirement Plans The Companys Alside division sponsors a defined benefit pension plan which covers hourly
workers at its plant in West Salem, Ohio and a defined benefit retirement plan covering salaried
employees, which was frozen in 1998 and subsequently replaced with a defined contribution plan. The
Companys Gentek subsidiary sponsors a defined benefit pension plan for the hourly union employees
at its Woodbridge, New Jersey plant (together with the Alside sponsored defined benefit plans, the
Domestic Plans) as well as a defined benefit pension plan covering Gentek Canadian salaried
employees and hourly union employees at the Lambeth, Ontario Canadian plant, a defined benefit
pension plan for the hourly union employees at its Burlington, Ontario Canada plant and a defined
benefit pension plan for the hourly union employees at its Pointe Claire, Quebec Canada plant (the
Foreign Plans). Accrued pension liabilities are included in other liabilities in the
accompanying balance sheets. The actuarial valuation measurement date for the defined benefit
pension plans is December 31. Components of defined benefit pension plan costs are as follows (in
thousands): Quarter
    
    
    QuarterEnded
    
    
    EndedApril 2,
    
    
    April 3,2005
    
    
    2004Domestic
    
    
    Foreign
    
    
    Domestic
    
    
    ForeignPlans
    
    
    Plans
    
    
    Plans
    
    
    PlansNet periodic pension costService cost
    
    $
    123
    
    
    $
    331
    
    
    $
    104
    
    
    $
    277Interest cost
    
    
    670
    
    
    
    504
    
    
    
    628
    
    
    
    441Expected return on assets
    
    
    (758
    )
    
    
    (533
    )
    
    
    (704
    )
    
    
    (434
    )Amortization of unrecognized:Unrecognized net loss
    
    
    143
    
    
    
    
    
    
    
    70
    
    
    
    Net periodic pension cost
    
    $
    178
    
    
    $
    302
    
    
    $
    98
    
    
    $
    284
 The Company anticipates making cash contributions of $0.5 million to the Domestic Plans and
$2.6 million to the Foreign Plans during 2005. Note 10  Facility Closure During the fourth quarter of 2004, the Company committed to a plan to close its vinyl siding
manufacturing plant located in Freeport, Texas. The Company recorded $2.6 million in pre-tax
charges during the first quarter of 2005. The Company anticipates the total charge to be $7.5
million of which $7.1 million has been charged to expense as of April 2, 2005. The Company expects
the remainder of the charge to be recorded in the second quarter of 2005. The plant was closed to
rationalize production capacity and reduce fixed costs. The plant closure costs in the first quarter of 2005 of $2.6 million included relocation costs
for certain equipment and employees, facility shut down costs and contract termination costs. As of
April 2, 2005, approximately $0.2 million was included in accrued liabilities related to contract
termination costs. -8-




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##### Table of Contents



Note 11  Subsidiary Guarantors AMIs payment obligations under the 9 3/4% notes are fully and unconditionally guaranteed,
jointly and severally (collectively, the Subsidiary Guarantees) on a senior subordinated basis,
by its domestic wholly owned subsidiaries: Gentek Holdings, Inc., Gentek Building Products Inc. and
Alside, Inc. Alside, Inc. is a wholly owned subsidiary having no assets, liabilities or operations.
Gentek Building Products Limited (the Non-Guarantor Subsidiary) is a Canadian company and does
not guarantee the Companys 9 3/4% notes. In the opinion of management, separate financial
statements of the respective Guarantor Subsidiaries would not provide additional material
information, which would be useful in assessing the financial composition of the Guarantor
Subsidiaries. None of the Guarantor Subsidiaries has any significant legal restrictions on the
ability of investors or creditors to obtain access to its assets in event of default on the
Subsidiary Guarantee other than its subordination to senior indebtedness. ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
April 2, 2005
(In thousands)
(Unaudited) Guarantor
    
    
    Non-Guarantor
    
    
    Reclassification/Parent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    6,339
    
    
    $
    1,640
    
    
    $
    1,710
    
    
    $
    
    
    
    $
    9,689Accounts receivable, net
    
    
    84,965
    
    
    
    20,692
    
    
    
    23,688
    
    
    
    
    
    
    
    129,345Intercompany receivables
    
    
    
    
    
    
    (7,074
    )
    
    
    14,120
    
    
    
    (7,046
    )
    
    
    Receivable from parent
    
    
    3,835
    

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,835Inventory
    
    
    78,073
    
    
    
    23,601
    
    
    
    38,172
    
    
    
    
    
    
    
    139,846Income taxes receivable
    
    
    12,273
    
    
    
    
    
    
    
    703
    
    
    
    (703
    )
    
    
    12,273Deferred income taxes
    
    
    
    
    
    
    16,319
    
    
    
    3,393
    
    
    
    (1,459
    )
    
    
    18,253Other current assets
    
    
    9,797
    
    
    
    1,054
    
    
    
    1,053
    
    
    
    
    
    
    
    11,904Total current assets
    
    
    195,282
    
    
    
    56,232
    
    
    
    82,839
    
    
    
    (9,208
    )
    
    
    325,145Property, plant and equipment, net
    
    
    105,933
    
    
    
    5,018
    
    
    
    32,516
    
    
    
    
    
    
    
    143,467Goodwill
    
    
    198,271
    
    
    
    36,533
    
    
    
    
    
    
    
    
    
    
    
    234,804Other intangible assets, net
    
    
    98,478
    
    
    
    12,338
    
    
    
    1,405
    
    
    
    
    
    
    
    112,221Investment in subsidiaries
    
    
    90,015
    
    
    
    60,622
    
    
    
    
    
    
    
    (150,637
    )
    
    
    Other assets
    
    
    18,857
    
    
    
    
    
    
    
    152
    
    
    
    
    
    
    
    19,009Total assets
    
    $
    706,836
    
    
    $
    170,743
    
    
    $
    116,912
    
    
    $
    (159,845
    )
    
    $
    834,646Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    45,299
    
    
    $
    11,813
    
    
    $
    21,743
    
    
    $
    
    
    
    $
    78,855Intercompany payables
    
    
    7,046
    
    
    
    
    
    
    
    
    
    
    
    (7,046
    )
    
    
    Accrued liabilities
    
    
    34,547
    
    
    
    6,616
    
    
    
    6,078
    
    
    
    
    
    
    
    47,241Deferred income taxes
    
    
    1,459
    
    
    
    
    
    
    
    
    
    
    
    (1,459
    )
    
    
    Current portion of long term debt
    
    
    1,313
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,313Income taxes payable
    
    
    328
    
    
    
    375
    
    
    
    
    
    
    
    (703
    )
    
    
    Total current liabilities
    
    
    89,992
    
    
    
    18,804
    
    
    
    27,821
    
    
    
    (9,208
    )
    
    
    127,409Deferred income taxes
    
    
    50,416
    
    
    
    5,559
    
    
    
    6,699
    
    
    
    
    
    
    
    62,674Other liabilities
    
    
    18,610
    
    
    
    16,010
    
    
    
    8,651
    
    
    
    
    
    
    
    43,271Long-term debt
    
    
    369,187
    
    
    
    
    
    
    
    13,119
    
    
    
    
    
    
    
    382,306Stockholders equity
    
    
    178,631
    
    
    
    130,370
    
    
    
    60,622
    
    
    
    (150,637
    )
    
    
    218,986Total liabilities and
stockholders equity
    
    $
    706,836
    
    
    $
    170,743
    
    
    $
    116,912
    
    
    $
    (159,845
    )
    
    $
    834,646
 -9-




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##### Table of Contents



ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Quarter Ended April 2, 2005
(In thousands) (Unaudited) Guarantor
    
    
    Non-Guarantor
    
    
    Reclassification/Parent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Elimination
    
    
    ConsolidatedNet sales
    
    $
    154,714
    
    
    $
    45,122
    
    
    $
    46,021
    
    
    $
    (27,288
    )
    
    $
    218,569Cost of sales
    
    
    118,169
    
    
    
    40,371
    
    
    
    38,285
    
    
    
    (27,288
    )
    
    
    169,537Gross profit
    
    
    36,545
    
    
    
    4,751
    
    
    
    7,736
    
    
    
    
    
    
    
    49,032Selling, general and administrative expense
    
    
    38,732
    
    
    
    5,920
    
    
    
    6,099
    
    
    
    
    
    
    
    50,751Facility closure costs
    
    
    2,553
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,553Income (loss) from operations
    
    
    (4,740
    )
    
    
    (1,169
    )
    
    
    1,637
    
    
    
    
    
    
    
    (4,272
    )Interest expense, net
    
    
    7,198
    
    
    
    2
    
    
    
    111
    
    
    
    
    
    
    
    7,311Foreign currency (gain) loss
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    (3
    )Income (loss) from continuing operations before
income taxes
    
    
    (11,938
    )
    
    
    (1,171
    )
    
    
    1,529
    
    
    
    
    
    
    
    (11,580
    )Income taxes (benefit)
    
    
    (4,378
    )
    
    
    (481
    )
    
    
    540
    
    
    
    
    
    
    
    (4,319
    )Income (loss) before equity income from subsidiaries
    
    
    (7,560
    )
    
    
    (690
    )
    
    
    989
    
    
    
    
    
    
    
    (7,261
    )Equity income (loss) from subsidiaries
    
    
    299
    
    
    
    989
    
    
    
    
    
    
    
    (1,288
    )
    
    
    Net income (loss)
    
    $
    (7,261
    )
    
    $
    299
    
    
    $
    989
    
    
    $
    (1,288
    )
    
    $
    (7,261
    )
 ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Quarter Ended April 2, 2005
(In thousands)
(Unaudited) Guarantor
    
    
    Non-GuarantorParent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    ConsolidatedNet cash provided by (used in) operating activities
    
    $
    (14,155
    )
    
    $
    (9,984
    )
    
    $
    (13,223
    )
    
    $
    (37,362
    )Investing ActivitiesAdditions to property, plant and equipment
    
    
    (8,627
    )
    
    
    (315
    )
    
    
    (186
    )
    
    
    (9,128
    )Net cash used in investing activities
    
    
    (8,627
    )
    
    
    (315
    )
    
    
    (186
    )
    
    
    (9,128
    )Financing ActivitiesNet increase in revolving line of credit
    
    
    30,666
    
    
    
    
    
    
    
    12,953
    
    
    
    43,619Dividends
    
    
    (33,713
    )
    
    
    
    
    
    
    
    
    
    
    (33,713
    )Settlement of promissory notes
    
    
    (11,607
    )
    
    
    
    
    
    
    
    
    
    
    (11,607
    )Intercompany transactions
    
    
    82
    
    
    
    5,056
    
    
    
    (5,138
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    (14,572
    )
    
    
    5,056
    
    
    
    7,815
    
    
    
    (1,701
    )Net increase (decrease) in cash from continuing operations
    
    
    (37,354
    )
    
    
    (5,243
    )
    
    
    (5,594
    )
    
    
    (48,191
    )Effect of exchange rates on cash
    
    
    
    
    
    
    
    
    
    
    (174
    )
    
    
    (174
    )Cash at beginning of period
    
    
    43,693
    
    
    
    6,883
    
    
    
    7,478
    
    
    
    58,054Cash at end of period
    
    $
    6,339
    
    
    $
    1,640
    
    
    $
    1,710
    
    
    $
    9,689
 -10-




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##### Table of Contents



ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
January 1, 2005
(In thousands) Guarantor
    
    
    Non-Guarantor
    
    
    ReclassificationParent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    43,693
    
    
    $
    6,883
    
    
    $
    7,478
    
    
    $
    
    
    
    $
    58,054Accounts receivable, net
    
    
    88,930
    
    
    
    18,167
    
    
    
    18,569
    
    
    
    
    
    
    
    125,666Intercompany receivables
    
    
    
    
    
    
    (1,554
    )
    
    
    8,582
    
    
    
    (7,028
    )
    
    
    Receivable from parent
    
    
    3,490
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,490Inventories
    
    
    65,854
    
    
    
    19,435
    
    
    
    29,498
    
    
    
    
    
    
    
    114,787Deferred income taxes
    
    
    
    
    
    
    16,471
    
    
    
    3,393
    
    
    
    (1,611
    )
    
    
    18,253Income taxes receivable
    
    
    10,347
    
    
    
    
    
    
    
    
    
    
    
    (1,487
    )
    
    
    8,860Other current assets
    
    
    10,844
    
    
    
    1,302
    
    
    
    792
    
    
    
    
    
    
    
    12,938Total current assets
    
    
    223,158
    
    
    
    60,704
    
    
    
    68,312
    
    
    
    (10,126
    )
    
    
    342,048Property, plant and equipment, net
    
    
    100,184
    
    
    
    5,033
    
    
    
    33,480
    
    
    
    
    
    
    
    138,697Goodwill
    
    
    198,270
    
    
    
    36,526
    
    
    
    
    
    
    
    
    
    
    
    234,796Other intangible assets, net
    
    
    99,038
    
    
    
    12,510
    
    
    
    1,496
    
    
    
    
    
    
    
    113,044Investment in subsidiaries
    
    
    99,321
    
    
    
    59,996
    
    
    
    
    
    
    
    (159,317
    )
    
    
    Other assets
    
    
    19,460
    
    
    
    
    
    
    
    174
    
    
    
    
    
    
    
    19,634Total assets
    
    $
    739,431
    
    
    $
    174,769
    
    
    $
    103,462
    
    
    $
    (169,443
    )
    
    $
    848,219Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    41,446
    
    
    $
    13,753
    
    
    $
    19,940
    
    
    $
    
    
    
    $
    75,139Intercompany payables
    
    
    7,028
    
    
    
    
    
    
    
    
    
    
    
    (7,028
    )
    
    
    Accrued liabilities
    
    
    39,569
    
    
    
    7,146
    
    
    
    7,664
    
    
    
    
    
    
    
    54,379Notes payable
    
    
    11,607
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,607Current portion of long-term debt
    
    
    875
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    875Deferred income taxes
    
    
    1,611
    
    
    
    
    
    
    
    
    
    
    
    (1,611
    )
    
    
    Income taxes payable
    
    
    
    
    
    
    855
    
    
    
    632
    
    
    
    (1,487
    )
    
    
    Total current liabilities
    
    
    102,136
    
    
    
    21,754
    
    
    
    28,236
    
    
    
    (10,126
    )
    
    
    142,000Deferred income taxes
    
    
    50,264
    
    
    
    5,711
    
    
    
    6,745
    
    
    
    
    
    
    
    62,720Other liabilities
    
    
    19,150
    
    
    
    16,423
    
    
    
    8,485
    
    
    
    
    
    
    
    44,058Long-term debt
    
    
    339,125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    339,125Stockholders equity
    
    
    228,756
    
    
    
    130,881
    
    
    
    59,996
    
    
    
    (159,317
    )
    
    
    260,316Total liabilities and
stockholders equity
    
    $
    739,431
    
    
    $
    174,769
    
    
    $
    103,462
    
    
    $
    (169,443
    )
    
    $
    848,219
 -11-




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##### Table of Contents



ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Quarter Ended April 3, 2004
(In thousands)
(Unaudited) Guarantor
    
    
    Non-Guarantor
    
    
    Reclassification/Parent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Elimination
    
    
    ConsolidatedNet sales
    
    $
    140,431
    
    
    $
    39,770
    
    
    $
    38,803
    
    
    $
    (14,683
    )
    
    $
    204,321Cost of sales
    
    
    102,069
    
    
    
    34,394
    
    
    
    32,186
    
    
    
    (14,683
    )
    
    
    153,966Gross profit
    
    
    38,362
    
    
    
    5,376
    
    
    
    6,617
    
    
    
    
    
    
    
    50,355Selling, general and administrative expense
    
    
    34,290
    
    
    
    5,589
    
    
    
    5,515
    
    
    
    
    
    
    
    45,394Transaction costs - bonuses
    
    
    14,498
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,498Income (loss) from operations
    
    
    (10,426
    )
    
    
    (213
    )
    
    
    1,102
    
    
    
    
    
    
    
    (9,537
    )Interest expense, net
    
    
    5,977
    
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    6,012Foreign currency loss
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    6Income (loss) from continuing operations before
income taxes
    
    
    (16,403
    )
    
    
    (213
    )
    
    
    1,061
    
    
    
    
    
    
    
    (15,555
    )Income taxes (benefit)
    
    
    (6,808
    )
    
    
    (97
    )
    
    
    449
    
    
    
    
    
    
    
    (6,456
    )Income (loss) before equity income from subsidiaries
    
    
    (9,595
    )
    
    
    (116
    )
    
    
    612
    
    
    
    
    
    
    
    (9,099
    )Equity income (loss) from subsidiaries
    
    
    496
    
    
    
    612
    
    
    
    
    
    
    
    (1,108
    )
    
    
    Net income (loss)
    
    $
    (9,099
    )
    
    $
    496
    
    
    $
    612
    
    
    $
    (1,108
    )
    
    $
    (9,099
    )
 ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Quarter Ended April 3, 2004
(In thousands)
(Unaudited) Guarantor
    
    
    Non-Guarantor
    
    
    Reclassification/Parent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Elimination
    
    
    ConsolidatedNet cash provided by (used in) operating activities
    
    $
    (23,576
    )
    
    $
    (6,701
    )
    
    $
    (302
    )
    
    $
    1,099
    
    
    $
    (29,480
    )Investing ActivitiesAdditions to property, plant and equipment
    
    
    (4,812
    )
    
    
    (333
    )
    
    
    (162
    )
    
    
    
    
    
    
    (5,307
    )Net cash used in investing activities
    
    
    (4,812
    )
    
    
    (333
    )
    
    
    (162
    )
    
    
    
    
    
    
    (5,307
    )Financing ActivitiesNet increase in revolving line of credit
    
    
    22,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,300Equity contribution from Holdings
    
    
    14,498
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,498Financing costs
    
    
    (67
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (67
    )Intercompany transactions
    
    
    (6,026
    )
    
    
    4,768
    
    
    
    1,258
    
    
    
    
    
    
    
    Net cash provided by financing activities
    
    
    30,705
    
    
    
    4,768
    
    
    
    1,258
    
    
    
    
    
    
    
    36,731Net increase (decrease) in cash from continuing operations
    
    
    2,317
    
    
    
    (2,266
    )
    
    
    794
    
    
    
    1,099
    
    
    
    1,944Effect of exchange rates on cash
    
    
    
    
    
    
    
    
    
    
    24
    
    
    
    
    
    
    
    24Cash at beginning of period
    
    
    2,399
    
    
    
    2,982
    
    
    
    
    
    
    
    (1,099
    )
    
    
    4,282Cash at end of period
    
    $
    4,716
    
    
    $
    716
    
    
    $
    818
    
    
    $
    
    
    
    $
    6,250
 -12-




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations Overview AMH Holdings, Inc. (AMH) was incorporated in Delaware on February 19, 2004. AMH has no
material assets or operations other than its 100% ownership of Associated Materials Holdings Inc.
(Holdings), its direct subsidiary, which in turn has no material assets or operations other than
its 100% ownership of Associated Materials Incorporated (AMI), collectively referred to as the
Company. As part of a restructuring agreement dated as of March 4, 2004, stockholders and option
holders of Holdings became stockholders and option holders of AMH and are no longer stockholders
and option holders of Holdings. AMH is a wholly owned subsidiary of AMH Holdings II, Inc. (AMH II) which is controlled by
affiliates of Investcorp S.A. (Investcorp) and Harvest Partners, Inc. (Harvest Partners). AMH
and AMH II were incorporated in connection with the recapitalization transactions described in Note
2 of the financial statements. AMH and AMH II do not have material assets or operations other than
a direct or indirect ownership of the common stock of AMI. AMI is a leading, vertically integrated manufacturer and North American distributor of
exterior residential building products. The Companys core products are vinyl windows, vinyl
siding, aluminum trim coil, aluminum and steel siding and accessories, and vinyl fencing, decking
and railing. Vinyl windows and vinyl siding together comprise approximately 60% of the Companys
total net sales. These products are marketed under the Alside®, Revere® and
Gentek® brand names and sold on a wholesale basis to more than 50,000 professional
contractors engaged in home remodeling and new home construction principally through the Companys
North American network of 126 supply centers. Approximately two-thirds of the Companys products
are sold to contractors engaged in the home repair and remodeling market with one-third sold to the
new construction market. The supply centers provide one-stop shopping to the Companys
contractor customers, carrying products, accessories and tools necessary to complete a vinyl window
or siding project. In addition, the supply centers provide high quality product literature,
product samples and installation training to these customers. Because its exterior residential building products are consumer durable goods, the Companys
sales are impacted by the availability of consumer credit, consumer interest rates, employment
trends, changes in levels of consumer confidence, national and regional trends in new housing
starts and general economic conditions. The Companys sales are also affected by changes in
consumer preferences with respect to types of building products. The Company believes it can
sustain moderate short-term interest rate and mortgage rate increases without a significant
negative impact on its net sales. While the Company believes the overall fundamentals for the
building products industry remain strong, the Company does believe that certain industry dynamics
have weakened in the first quarter of 2005 with mortgage interest rates increasing and consumer
confidence trending lower. Additionally, after two strong months of single family housing starts,
March 2005 single family housing starts decreased significantly. Due to the high price of oil and natural gas, as well as expected continued strong demand for
these commodities, the Company, along with the entire building products industry, has experienced
significant inflation in key raw material commodity costs. These costs are expected to remain at
current high levels or even possibly continue to increase in 2005. To offset these increases, the
Company announced price increases on certain of its product offerings in 2004 as well as the first
quarter of 2005. The Company estimates that increases in raw material costs, net of price
increases, resulted in a decrease in gross profit of approximately $1.9 million for the quarter
ended April 2, 2005. The results of operations for individual quarters can and have been
negatively impacted by a delay between the time of raw material cost increases and price increases
on the Companys products. The Companys ability to maintain gross margin levels on its products
depends on the Companys ability to obtain its announced selling price increases. The Company operates with significant operating and financial leverage. Significant portions
of the Companys manufacturing, selling, general and administrative expenses are fixed costs that
neither increase nor decrease proportionately with sales. In addition, a significant portion of
the Companys interest expense is fixed. There can be no assurance that the Company will be able to
reduce its fixed costs in response to a decline in its net sales. As a result, a decline in the
Companys net sales could result in a higher percentage decline in its income from operations. Because most of the Companys building products are intended for exterior use, sales tend to
be lower during periods of inclement weather. Weather conditions in the first quarter of each
calendar year usually result in that quarter producing significantly less net sales and net cash
flows from operations than in any other period of the year. Consequently, the Company has
historically had small profits or losses in the first quarter and reduced profits from operations
in the fourth quarter of each calendar year. To meet seasonal cash flow needs during the periods of
reduced sales and net cash flows from operations, the Company typically -13-




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makes borrowings under the revolving loan portion of its credit facility. The Company
typically generates the majority of its cash flow in the fourth quarter. The Company seeks to distinguish itself from other suppliers of residential building products
and to sustain its profitability through a business strategy focused on increasing sales at
existing supply centers, expanding its supply center network, increasing sales through independent
specialty distributor customers, realizing synergies from the Gentek acquisition, developing
innovative new products, and driving operational excellence by reducing costs and increasing
customer service levels. The Company expects to recognize $6.7 million of synergies related to the
Gentek acquisition during 2005. Results of Operations The following table sets forth for the periods indicated the results of the Companys
operations (in thousands): Quarter
    
    
    QuarterEnded
    
    
    EndedApril 2, 2005
    
    
    April 3, 2004Net sales
    
    
    218,569
    
    
    $
    204,321Gross profit
    
    
    49,032
    
    
    
    50,355Selling, general and administrative expense
    
    
    50,751
    
    
    
    45,394Transaction costs - bonus
    
    
    
    
    
    
    14,498Facility closure costs
    
    
    2,553
    
    
    
    Loss from operations
    
    
    (4,272
    )
    
    
    (9,537
    )Interest expense, net
    
    
    15,296
    
    
    
    8,436Foreign currency (gain) loss
    
    
    (3
    )
    
    
    6Loss before income taxes
    
    
    (19,565
    )
    
    
    (17,979
    )Income tax benefit
    
    
    (7,483
    )
    
    
    (7,276
    )Net loss
    
    $
    (12,082
    )
    
    $
    (10,703
    )Other Data:EBITDA (a)
    
    $
    687
    
    
    $
    (4,437
    )Adjusted EBITDA (a)
    
    
    4,556
    
    
    
    10,067
   (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 -14-




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adjusted EBITDA. The definition of EBITDA under the indentures governing the notes also
excludes certain items. Adjusted EBITDA has not been prepared in accordance with
accounting principles generally accepted in the United States (GAAP). Adjusted EBITDA as
presented by the Company may not be comparable to similarly titled measures reported by
other companies. Adjusted EBITDA is not a measure determined in accordance with GAAP and
should not be considered as an alternative 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) or as a measure of the
Companys liquidity. The reconciliation of the Companys net income (loss) to EBITDA and
adjusted EBITDA is as follows (in thousands): Quarter
    
    
    QuarterEnded
    
    
    EndedApril 2,
    
    
    April 3,2005
    
    
    2004Reconciliation of net loss to EBITDA and Adjusted EBITDA :Net loss
    
    $
    (12,082
    )
    
    $
    (10,703
    )Interest
    
    
    15,296
    
    
    
    8,436Taxes
    
    
    (7,483
    )
    
    
    (7,276
    )Depreciation and amortization
    
    
    4,956
    
    
    
    5,106EBITDA
    
    
    687
    

    
    
    (4,437
    )Foreign currency (gain) loss
    
    
    (3
    )
    
    
    6Amortization of management fee (b)
    
    
    1,000
    
    
    
    Stock compensation expense
    
    
    319
    
    
    
    Facility closure costs (c)
    
    
    2,553
    
    
    
    Transaction costs - bonus (d)
    
    
    
    
    
    
    14,498Adjusted EBITDA
    
    $
    4,556
    
    
    $
    10,067
  (b)
    
    Represents amortization of a prepaid management fee paid to Investcorp
International Inc. in connection with the December 2004 recapitalization transaction.(c)
    
    Represents one-time costs associated with the closure of the Freeport, Texas
manufacturing facility consisting primarily of equipment relocation expenses. Total
pre-tax expenses related to the Freeport closing are expected to be $7.5 million, which
includes a $4.5 million pre-tax charge recorded in the fourth quarter of 2004.(d)
    
    Represents management and director bonuses paid in connection with the March 2004
dividend recapitalization. -15-




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Quarter Ended April 2, 2005 Compared to Quarter Ended April 3, 2004 Net sales increased 7.0%, or $14.2 million, during the first quarter of 2005 compared to the
same period in 2004, driven primarily by price increases implemented during 2005 and 2004 as well
as increased sales volumes for windows and third-party products. While the Company experienced
unit volume percentage increases in the low single digits for windows and in the middle to high
single digits for third-party manufactured products, the growth was at lower rates than in the
first quarter of 2004. Siding units for the first quarter of 2005 were unchanged from the same
period in the prior year, which compares to lower reported industry units during the first quarter
of 2005. The Company also experienced overall sales weakness in the Midwest region of the U.S.,
which it believes is due in part to unfavorable weather conditions during the first quarter of
2005. Gross profit in the first quarter of 2005 was $49.0 million, or 22.4% of net sales, compared
to gross profit of $50.4 million, or 24.6% of net sales, in the first quarter of 2004. The
decrease in gross profit margin percentage is primarily due to significantly increased commodity
costs of the Companys key raw materials  aluminum, steel and vinyl resin, which were partially
offset by the impact of price increases. The Company estimates that commodity cost increases, net
of price increases, negatively impacted gross profit for the first quarter of 2005 by approximately
$1.9 million. In addition, the Company incurred substantially higher freight costs, due primarily
to fuel cost increases, which had a negative impact on gross profit for the first quarter of 2005
compared to the prior year of approximately $1.5 million. Selling, general and administrative
expense increased to $50.8 million, or 23.2% of net sales, for the first quarter of 2005 versus
$45.4 million, or 22.2% of net sales, for the same period in 2004. The increase in selling,
general and administrative expense was due primarily to increased expenses relating to the
Companys supply center network, including increased salaries and wages, medical costs, building
and truck leases, and fuel costs, as well as expenses relating to new supply centers opened in the
last twelve months. Selling, general and administrative expense for the first quarter of 2005 also
includes $1.0 million of amortization of prepaid management fees paid to Investcorp International
Inc. in December 2004 and non-cash stock compensation expense of $0.3 million. During the first
quarter of 2005, the Company incurred facility closure costs of approximately $2.6 million relating
to the closing of its Freeport, Texas manufacturing plant. During the first quarter of 2004, the
Company paid $14.5 million of bonuses to certain members of senior management and a director in
conjunction with the March 2004 dividend recapitalization. The loss from operations was $4.3
million in the first quarter of 2005 compared to a loss of $9.5 million for the same period in
2004. Interest expense increased $6.9 million during the first quarter of 2005 compared to the same
period in 2004. The increase in interest expense is due to a full quarter of debt accretion on the
11 1/4% notes in 2005, additional borrowings on the term loan as a result of the December 2004
recapitalization transaction and additional borrowings on the revolving loan portion of the credit
facility to meet the seasonal working capital needs of the Company. Due to the seasonal nature of
the Companys operating results, the Company has recorded an income tax benefit on the loss before
income taxes for the quarters ended April 2, 2005 and April 3, 2004 at an effective rate of 38.2%
and 40.5%, respectively. The net loss increased to $12.1 million for the quarter ended April 2, 2005 compared to $10.7
million for the quarter ended April 3, 2004. The increase in the net loss is a result of higher
expenses in 2005, including interest expense, selling, general and administrative expense and
facility closure costs partially offset by higher expense in 2004 related to the $14.5 million
management bonus paid in 2004. EBITDA for the first quarter of 2005 was $0.7 million compared to a loss of $4.4 million for
the first quarter of 2004. Adjusted EBITDA for the first quarter of 2005 was $4.6 million compared
to $10.1 million for the same period in 2004. As compared to EBITDA, adjusted EBITDA for the
quarter ended April 2, 2005 excludes facility closure costs of $2.6 million, amortization of a
prepaid management fee of $1.0 million and non-cash stock compensation expense of $0.3 million.
For the quarter ended April 3, 2004 adjusted EBITDA excludes a bonus paid to certain members of
Company management totaling approximately $14.5 million related to the completion of the March 2004
dividend recapitalization. The plant closure costs in the first quarter of 2005 of $2.6 million included relocation costs
for certain equipment and employees, facility shut down costs and contract termination costs
related to the closing of the Freeport, Texas vinyl siding manufacturing facility. The Company
anticipates the total charge to be $7.5 million of which $7.1 million has been charged to expense
as of April 2, 2005. The Company expects the remainder of the charge to be recorded in the second
quarter of 2005. The plant was closed to rationalize production capacity and reduce fixed costs. -16-




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Liquidity and Capital Resources The following sets forth a summary of the Companys cash flows for the three months ended
April 2, 2005 and April 3, 2004 (in thousands): Quarter
    
    
    QuarterEnded
    
    
    EndedApril 2,
    
    
    April 3,2005
    
    
    2004Cash used in operating activities
    
    $
    (37,362
    )
    
    $
    (28,859
    )Cash used in investing activities
    
    
    (9,128
    )
    
    
    (5,307
    )Cash provided by (used in) financing activities
    
    
    (1,701
    )
    
    
    36,693
 Cash Flows At April 2, 2005, the Company had cash and cash equivalents of $9.7 million and available
borrowing capacity of approximately $30.4 million under the revolving portion of its credit
facility. Outstanding letters of credit as of April 2, 2005 totaled $6.0 million securing various
insurance letters of credit. Cash Flows from Operating Activities Net cash used in operations was $37.4 million and $28.9 million for the quarters ended April
2, 2005 and April 3, 2004, respectively. The cash used in operations for both periods reflects the
operating results for each quarter, the seasonal increase of inventory levels required for the
summer selling season, as well as payments of accrued profit sharing and customer sales incentives. Cash Flows from Investing Activities Capital expenditures totaled $9.1 million and $5.3 million for the quarters ended April 2,
2005 and April 3, 2004, respectively. Capital expenditures in 2005 were primarily to increase
capacity at the Companys Ennis, Texas siding facility and to purchase land and equipment for the
new window plant to be leased in Yuma, Arizona, which is expected to begin window production in the
third quarter of 2005. The plant is being built to meet growing product demand in the Companys
Western markets and to alleviate capacity constraints at the Companys Bothell, Washington window
plant. Capital expenditures in 2004 were primarily to increase extrusion capacity at the Companys
West Salem, Ohio manufacturing location and to increase capacity at two of the Companys window
manufacturing facilities. The Companys estimate for total capital expenditures for 2005 is
approximately $27 million. The Company plans to open between three to five stores during 2005. Cash Flows from Financing Activities Cash flows from financing activities for the quarter ended April 2, 2005 include borrowings on
the revolving loan portion of the Companys credit facility of $43.6 million offset by dividend
payments of $33.7 million and payments on promissory notes of $11.6 million. Cash flows from
financing activities for the quarter ended April 3, 2004 include proceeds from the issuance of the
11 1/4% notes of $258.3 million, borrowings on the revolving portion of AMIs credit facility of
$22.3 million, proceeds from the exercise of stock options of $1.8 million, redemption of the
Companys then outstanding preferred stock of $177.8 million, common stock dividends of $57.7
million and financing costs of $10.1 million, consisting primarily of banking and legal fees paid
in connection with the issuance of AMHs 11 1/4% senior discount notes. The increase in borrowings
on the revolver for the quarter ended April 2, 2005 of $21.3 million as compared to the same period
in the prior year is primarily due to increased inventory dollars resulting from higher raw
material costs and increased metal inventory levels. Description of the Companys Outstanding Indebtedness AMIs 9 3/4% notes pay interest semi-annually in April and October. AMIs credit facility as
of April 2, 2005 includes $175 million of outstanding term loans due through 2010 that bear
interest at the London Interbank Offered Rate (LIBOR) plus 2.25% payable quarterly at the end of
each calendar quarter, and up to $80 million of available borrowings provided by the revolving
loans (including a Canadian subfacility of $20 million), which expire in 2009 and bear interest at
LIBOR plus a margin of 3.00%, which can decline to as low as 2.25% based on AMIs leverage ratio,
as defined in the credit facility. Outstanding borrowings on the revolving loan portion of AMIs
credit facility totaled $43.6 million at April 2, 2005. -17-




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The credit facility and the indenture governing the 9 3/4% notes contain restrictive covenants
that, among other things, limit AMIs ability to incur additional indebtedness, make loans or
advances to subsidiaries and other entities, invest in capital expenditures, sell its assets or
declare dividends. In addition, under the credit facility AMI is required to achieve certain
financial ratios relating to leverage, coverage of fixed charges and coverage of interest expense.
AMI was in compliance with its covenants as of April 2, 2005. Under the term loan facility AMI is
required to make minimum quarterly principal amortization payments of 1% per year due beginning
September 30, 2005, and on an annual basis beginning with the year ended December 31, 2005, AMI is
required to make principal payments based on a percentage of excess cash flows as defined in the
amended and restated credit facility. AMI records as a current liability term loan principal
payments that are estimable to be due within twelve months, which includes excess cash flow
principal repayments when the likelihood of those payments becomes probable. The Company may need
to refinance all or a portion of its indebtedness on or before their respective maturity dates.
There can be no assurance that the Company will be able to refinance any of its indebtedness on
commercially reasonable terms or at all. The indenture governing the 11 1/4% notes contain restrictive covenants that, among other
things, limit AMHs ability, and the ability of its subsidiaries, to incur additional indebtedness,
make certain restricted payments, pay dividends or make other distributions, make investments, sell
assets, incur liens (except with respect to its subsidiaries), issue capital stock of restricted
subsidiaries, enter into agreements restricting its subsidiaries ability to pay dividends, enter
into sale/leaseback transactions, enter into transactions with affiliates, and consolidate, merge
or sell all or substantially all of its assets. The notes are structurally subordinated to all
existing and future debt and other liabilities of AMHs existing and future subsidiaries, including
AMI and Holdings. Because AMH is a holding company with no operations, it must receive
distributions, payments or loans from subsidiaries to satisfy obligations on the 11 1/4% notes.
None of AMHs subsidiaries guarantee the 11 1/4% notes or have any obligation to make any payments
with respect thereto. In December 2004, AMH II completed an offering of 13 5/8% senior notes (13 5/8% notes),
which mature on December 1, 2014. The accreted value of the 13 5/8% notes as of April 2, 2005 was
$75.8 million. Because AMH II is a holding company with no operations, it must receive
distributions, payments or loans from subsidiaries to satisfy obligations on the 13 5/8% notes.
The Company does not guarantee the 13 5/8% notes and has no obligation to make any payments with
respect thereto. Total AMH II debt, including that of its consolidated subsidiaries, was
approximately $750.0 million as of April 2, 2005. The Company believes that for the foreseeable future cash flows from operations and its
borrowing capacity under its credit facility will be sufficient to satisfy its obligations to pay
principal and interest on its outstanding debt, maintain current operations, and provide sufficient
capital for presently anticipated capital expenditures. There can be no assurances, however, that
the cash generated by the Company will be sufficient for these purposes. Effects of Inflation The Companys principal raw materials, vinyl resin, aluminum, and steel have historically been
subject to significant price changes. Raw material pricing on the Companys key commodities
continued to increase for the quarter ended April 2, 2005. All of the Companys key raw material
commodities, vinyl resin, aluminum and steel, are at their highest levels in several years and the
Company expects that raw material prices will remain at the current high levels and may possibly
continue to increase in 2005. The Company estimates that increases in raw material costs, net of
price increases, resulted in a decrease in gross profit of approximately $1.9 million for the
quarter ended April 2, 2005. The Company announced price increases on certain of its products in
the first quarter of 2005 and throughout 2004, which partially offset the raw material inflation.
There can be no assurances that the Company will be able to achieve any future price increases
including the announced price increases; in addition, there may be a delay from quarter to quarter.
At April 2, 2005, the Company had no raw material hedge contracts in place. Certain Forward-Looking Statements All statements other than statements of historical facts included in this report regarding the
prospects of the industry and the Companys prospects, plans, financial position and business
strategy, may constitute forward-looking statements. In addition, forward-looking statements
generally can be identified by the use of forward-looking terminology such as may, will,
should, expect, intend, estimate, anticipate, believe, predict, potential or
continue or the negatives of these terms or variations of them or similar terminology. Although
the Company believes that the expectations reflected in these forward-looking statements are
reasonable, it does not assure that these expectations will prove to be correct. The following
factors are among those that may cause actual results to differ materially from the 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; -18-




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
    changes in availability of consumer credit, employment trends, levels of
consumer confidence and consumer preferences;
    changes in raw material costs and availability;
    market acceptance of price increases;
    changes in national and regional trends in new housing starts;
    changes in weather conditions;
    the Companys ability to comply with certain financial covenants in the
loan documents governing its indebtedness;
    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 achievement of anticipated synergies and operational efficiencies from the Gentek acquisition; and
    the other factors discussed under the heading Risk Factors in the
Companys annual report on Form 10-K for the year ended January 1, 2005 and elsewhere
in this report. All forward-looking statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the cautionary statements included in this report. These
forward-looking statements speak only as of the date of this report. The Company does not intend
to update these statements unless the securities laws require it to do so. -19-




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk AMI has outstanding borrowings under the term loan and revolving loan portions of its credit
facility and may borrow under the revolving credit facility from time to time for general corporate
purposes, including working capital and capital expenditures. Interest under the credit facility is based on the variable London Interbank
Offered Rate (LIBOR). At April 2, 2005, AMI had borrowings of $175.0 million under the term loan
and $43.6 million under the revolver. The effect of a 1/8% increase or decrease in interest rates
would increase or decrease total interest expense for the quarter ended April 2, 2005 by
approximately $0.1 million. AMH has $290.6 million of senior discount notes due 2014 that bear an interest rate of 11
1/4%. Interest accrues at a rate of 11 1/4% on the notes in the form of an increase in the
accreted value of the notes prior to March 1, 2009. Thereafter,
cash interest of 11 1/4% on the notes
accrues and is payable semi-annually in arrears on March 1 and September 1 of each year, commencing
on September 1, 2009. AMI has $165.0 million of senior subordinated notes due 2012 that bear a
fixed interest rate of 9 3/4%. The fair value of the Companys 11 1/4% notes and 9 3/4% notes is
sensitive to changes in interest rates. In addition, the fair value is affected by the Companys
overall credit rating, which could be impacted by changes in the Companys future operating
results. Foreign Currency Exchange Risk The Companys revenues are primarily from domestic customers and are realized in U.S. dollars.
However the Company does realize revenues from sales made through Genteks Canadian distribution
centers in Canadian dollars. The Companys Canadian manufacturing facilities acquire raw materials
and supplies from U.S. vendors, which results in foreign currency transactional gains and losses.
However, payment terms among Canadian manufacturing facilities and these vendors are short-term in
nature. Accordingly, the Company believes its direct foreign currency exchange risk is not
material. At April 2, 2005, the Company had no currency hedges in place. Commodity Price Risk See Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations  - Effects of Inflation for a discussion of the market risk related to the Companys
principal raw materials, vinyl resin, aluminum and steel. 
 Item 4. Controls and Procedures The Companys Chief Executive Officer and Chief Financial Officer have evaluated the
effectiveness of the Companys disclosure controls and procedures as of the end of the period
covered by this quarterly report (the Evaluation Date). Based on their evaluation as of the
Evaluation Date, the Chief Executive Officer and Chief Financial Officer have concluded that the
Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the
Exchange Act) are effective to ensure that information required to be disclosed by the Company in
reports that it files or submits under the Exchange Act is recorded, processed, summarized and
reported within required time periods. There have been no changes to the Companys internal control over financial reporting during
the quarter ended April 2, 2005 that have materially affected, or are reasonably likely to
materially affect, the Companys internal control over financial reporting. -20-




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##### Table of Contents



PART II. OTHER INFORMATION 
 Item 1. Legal Proceedings The Company is involved from time to time in litigation arising in the ordinary course of
business, none of which, after giving effect to the Companys existing insurance coverage, is
expected to have a material adverse effect on the Company. From time to time, the Company is involved in a number of proceedings and potential
proceedings relating to environmental and product liability matters. The Company handles these
claims in the ordinary course of business and maintains product liability insurance covering
certain types of claims. Although it is difficult to estimate the Companys potential exposure to
these matters, the Company believes that the resolution of these matters will not have a material
adverse effect on the Companys financial position, results of operations or liquidity. 
 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 200232.2
    
    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
 -21-




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized. AMH HOLDINGS, INC.(Registrant)Date: May 17, 2005
    
    By:
    
    /s/ Michael Caporale, Jr.Michael Caporale, Jr.Chairman, President andChief Executive Officer(Principal Executive Officer)By:
    
    /s/ D. Keith LaVanwayD. Keith LaVanwayVice President  Finance,Chief Financial Officer,Treasurer and Secretary(Principal Financial and Accounting Officer)
 -22-




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EXHIBIT INDEX 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 200232.2
    
    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
 -23-