##### Table of Contents



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 September 29, 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 
September 29, 2007 (Unaudited) and December 30, 2006
    
    
    1Consolidated Statements of Operations (Unaudited)
 Quarters ended September 29, 2007 and September 30, 2006 Nine months ended September 29, 2007 and September 30, 2006
    
    
    2Consolidated Statements of Cash Flows (Unaudited) 
Nine months ended September 29, 2007 and September 30, 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
    
    
    25Item 6. Exhibits
    
    
    25SIGNATURES
    
    
    26EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 AMH HOLDINGS, INC.
 
   (Unaudited)September 29,
    
    
    December 30,2007
    
    
    2006AssetsCurrent assets:Cash and cash equivalents
    
    $
    13,609
    
    
    $
    15,015Accounts receivable, net
    
    
    179,774
    
    
    
    135,539Inventories
    
    
    153,170
    
    
    
    134,319Deferred income taxes
    
    
    8,787
    
    
    
    8,787Other current assets
    
    
    11,036
    
    
    
    9,645Total current assets
    
    
    366,376
    
    
    
    303,305Property, plant and equipment, net
    
    
    132,758
    
    
    
    134,290Goodwill
    
    
    231,223
    
    
    
    231,332Other intangible assets, net
    
    
    103,360
    
    
    
    105,541Other assets
    
    
    15,859
    
    
    
    19,397Total assets
    
    $
    849,576
    
    
    $
    793,865Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    109,871
    
    
    $
    78,492Payable to parent
    
    
    2,688
    
    
    
    2,700Accrued liabilities
    
    
    73,604
    
    
    
    64,764Income taxes payable
    
    
    20,028
    
    
    
    7,890Total current liabilities
    
    
    206,191
    
    
    
    153,846Deferred income taxes
    
    
    9,456
    
    
    
    19,130Other liabilities
    
    
    46,006
    
    
    
    46,046Long-term debt
    
    
    624,032
    
    
    
    622,967Stockholders deficit
    
    
    (36,109
    )
    
    
    (48,124
    )Total liabilities and stockholders deficit
    
    $
    849,576
    
    
    $
    793,865
  -1-




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AMH HOLDINGS, INC.
 
    Quarter
    
    
    Quarter
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedSeptember 29,
    
    
    September 30,
    
    
    September 29,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net sales
    
    $
    349,603
    
    
    $
    343,402
    
    
    $
    905,718
    
    
    $
    951,011Cost of sales
    
    
    258,046
    
    
    
    258,307
    
    
    
    675,379
    
    
    
    719,571Gross profit
    
    
    91,557
    
    
    
    85,095
    
    
    
    230,339
    
    
    
    231,440Selling, general and
administrative expense
    
    
    53,128
    
    
    
    50,692
    
    
    
    155,472
    
    
    
    154,159Facility closure costs, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (92
    )Income from operations
    
    
    38,429
    
    
    
    34,403
    
    
    
    74,867
    
    
    
    77,373Interest expense, net
    
    
    17,836
    
    
    
    17,700
    
    
    
    52,469
    
    
    
    51,694Foreign currency (gain) loss
    
    
    (116
    )
    
    
    99
    
    
    
    (216
    )
    
    
    (865
    )Income before income taxes
    
    
    20,709
    
    
    
    16,604
    
    
    
    22,614
    
    
    
    26,544Income taxes
    
    
    12,292
    
    
    
    8,976
    
    
    
    13,491
    
    
    
    13,768Net income
    
    $
    8,417
    
    
    $
    7,628
    
    
    $
    9,123
    
    
    $
    12,776
  -2-




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##### Table of Contents



AMH HOLDINGS, INC.
 
    Nine Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 29,
    
    
    September 30,2007
    
    
    2006Operating ActivitiesNet income
    
    $
    9,123
    
    
    $
    12,776Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    16,371
    
    
    
    16,181Deferred income taxes
    
    
    (10,197
    )
    
    
    (10,043
    )Amortization of deferred financing costs
    
    
    33,371
    
    
    
    30,207Amortization of management fee
    
    
    375
    
    
    
    375Stock compensation expense
    
    
    
    
    
    
    27Loss (gain) on sale of assets
    
    
    347
    
    
    
    (330
    )Changes in operating assets and liabilities,
adjusted for the effects of the acquisition of
supply center:Accounts receivable, net
    
    
    (38,819
    )
    
    
    (29,256
    )Inventories
    
    
    (12,860
    )
    
    
    (24,315
    )Accounts payable and accrued liabilities
    
    
    34,253
    
    
    
    22,388Income taxes
    
    
    11,827
    
    
    
    10,012Other
    
    
    (700
    )
    
    
    (1,116
    )Net cash provided by operating activities
    
    
    43,091
    
    
    
    26,906Investing ActivitiesAcquisition of supply center
    
    
    (801
    )
    
    
    Additions to property, plant and equipment
    
    
    (7,297
    )
    
    
    (11,876
    )Proceeds from disposal of property, plant and equipment
    
    
    
    
    
    
    2,881Net cash used in investing activities
    
    
    (8,098
    )
    
    
    (8,995
    )Financing ActivitiesRepayments of term loan
    
    
    (29,000
    )
    
    
    (10,000
    )Dividends
    
    
    (8,018
    )
    
    
    (7,735
    )Financing costs
    
    
    
    
    
    
    (128
    )Net cash used in financing activities
    
    
    (37,018
    )
    
    
    (17,863
    )Effect of exchange rate changes on cash
    
    
    619
    
    
    
    167Net (decrease) increase in cash
    
    
    (1,406
    )
    
    
    215Cash at beginning of period
    
    
    15,015
    
    
    
    12,300Cash at end of period
    
    $
    13,609
    
    
    $
    12,515Supplemental information:Cash paid for interest
    
    $
    15,231
    
    
    $
    17,467Cash paid for income taxes
    
    $
    11,699
    
    
    $
    13,801
  -3-




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




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##### Table of Contents



Note 2  Inventories
  September 29,
    
    
    December 30,2007
    
    
    2006Raw materials
    
    $
    33,242
    
    
    $
    30,406Work-in-process
    
    
    11,573
    
    
    
    11,867Finished goods and purchased stock
    
    
    108,355
    
    
    
    92,046$
    153,170
    
    
    $
    134,319
 Note 3  Goodwill and Other Intangible Assets
  AverageAmortization
    
    
    September 29, 2007
    
    
    December 30, 2006Period
    
    
    
    
    
    
    Accumulated
    
    
    Net Carrying
    
    
    
    
    
    
    Accumulated
    
    
    Net Carrying(in Years)
    
    
    Cost
    
    
    Amortization
    
    
    Value
    
    
    Cost
    
    
    Amortization
    
    
    ValueTrademarks and
trade names
    
    
    15
    
    
    $
    108,290
    
    
    $
    9,886
    
    
    $
    98,404
    
    
    $
    108,290
    
    
    $
    8,449
    
    
    $
    99,841Patents
    
    
    10
    
    
    
    6,230
    
    
    
    3,384
    
    
    
    2,846
    
    
    
    6,230
    
    
    
    2,918
    
    
    
    3,312Customer base
    
    
    7
    
    
    
    5,264
    
    
    
    3,154
    
    
    
    2,110
    
    
    
    4,818
    
    
    
    2,430
    
    
    
    2,388Total other
intangible assets
    
    
    
    
    
    $
    119,784
    
    
    $
    16,424
    
    
    $
    103,360
    
    
    $
    119,338
    
    
    $
    13,797
    
    
    $
    105,541
 ® ® ®
 Note 4  Long-Term Debt
  September 29,
    
    
    December 30,2007
    
    
    20069 3/4% notes
    
    $
    165,000
    
    
    $
    165,00011 1/4% senior discount notes
    
    
    382,032
    
    
    
    351,967Term loan under credit facility
    
    
    77,000
    
    
    
    106,000Total debt
    
    $
    624,032
    
    
    $
    622,967
  -5-




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Note 5  Income Taxes
    Note 6  Comprehensive Income
  Quarter
    
    
    Quarter
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedSeptember 29,
    
    
    September 30,
    
    
    September 29,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income as reported
    
    $
    8,417
    
    
    $
    7,628
    
    
    $
    9,123
    
    
    $
    12,776Reclassification adjustments for
actuarial gains or losses and prior
service costs, net of tax
    
    
    145
    
    
    
    
    
    
    
    431
    
    
    
    Foreign currency translation adjustments
    
    
    5,274
    
    
    
    (60
    )
    
    
    10,478
    
    
    
    1,433Comprehensive income
    
    $
    13,836
    
    
    $
    7,568
    
    
    $
    20,032
    
    
    $
    14,209
 Note 7  Retirement Plans
  -6-




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Quarter
    
    
    QuarterEnded
    
    
    EndedSeptember 29,
    
    
    September 30,2007
    
    
    2006Domestic
    
    
    Foreign
    
    
    Domestic
    
    
    ForeignPlans
    
    
    Plans
    
    
    Plans
    
    
    PlansNet periodic pension costService cost
    
    $
    117
    
    
    $
    560
    
    
    $
    127
    
    
    $
    508Interest cost
    
    
    739
    
    
    
    720
    
    
    
    714
    
    
    
    608Expected return on assets
    
    
    (827
    )
    
    
    (856
    )
    
    
    (774
    )
    
    
    (671
    )Amortization of prior service costs
    
    
    7
    
    
    
    8
    
    
    
    8
    
    
    
    7Amortization of unrecognized net loss
    
    
    126
    
    
    
    5
    
    
    
    182
    
    
    
    10Net periodic pension cost
    
    $
    162
    
    
    $
    437
    
    
    $
    257
    
    
    $
    462
 Nine Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 29,
    
    
    September 30,2007
    
    
    2006Domestic
    
    
    Foreign
    
    
    Domestic
    
    
    ForeignPlans
    
    
    Plans
    
    
    Plans
    
    
    PlansNet periodic pension costService cost
    
    $
    389
    
    
    $
    1,591
    
    
    $
    382
    
    
    $
    1,513Interest cost
    
    
    2,176
    
    
    
    2,046
    
    
    
    2,089
    
    
    
    1,812Expected return on assets
    
    
    (2,491
    )
    
    
    (2,430
    )
    
    
    (2,238
    )
    
    
    (2,001
    )Amortization of prior service costs
    
    
    7
    
    
    
    22
    
    
    
    8
    
    
    
    21Amortization of unrecognized net loss
    
    
    478
    
    
    
    14
    
    
    
    638
    
    
    
    30Net periodic pension cost
    
    $
    559
    
    
    $
    1,243
    
    
    $
    879
    
    
    $
    1,375
 Note 8  Business Segments
  Quarter
    
    
    Quarter
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedSeptember 29,
    
    
    September 30,
    
    
    September 29,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Vinyl windows
    
    $
    116,305
    
    
    $
    112,215
    
    
    $
    307,022
    
    
    $
    305,805Vinyl siding products
    
    
    86,115
    
    
    
    89,843
    
    
    
    221,531
    
    
    
    256,591Metal products
    
    
    65,241
    
    
    
    62,301
    
    
    
    167,287
    
    
    
    172,233Third party manufactured products
    
    
    60,405
    
    
    
    53,951
    
    
    
    151,967
    
    
    
    145,837Other products and services
    
    
    21,537
    
    
    
    25,092
    
    
    
    57,911
    
    
    
    70,545$
    349,603
    
    
    $
    343,402
    
    
    $
    905,718
    
    
    $
    951,011
 Note 9  Product Warranty Costs and Service Returns
  -7-




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Quarter
    
    
    Quarter
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedSeptember 29,
    
    
    September 30,
    
    
    September 29,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Balance at the beginning of the period
    
    $
    26,354
    
    
    $
    22,556
    
    
    $
    25,035
    
    
    $
    21,739Provision for warranties issued
    
    
    4,089
    
    
    
    2,569
    
    
    
    9,534
    
    
    
    7,262Claims paid
    
    
    (3,322
    )
    
    
    (2,133
    )
    
    
    (7,448
    )
    
    
    (6,009
    )Balance at the end of the period
    
    $
    27,121
    
    
    $
    22,992
    
    
    $
    27,121
    
    
    $
    22,992
 Note 10  Subsidiary Guarantors
  -8-




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ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
 Guarantor
    
    
    Non-Guarantor
    
    
    ReclassificationParent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    /Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    8,415
    
    
    $
    773
    
    
    $
    4,421
    
    
    $
    
    
    
    $
    13,609Accounts receivable, net
    
    
    111,788
    
    
    
    25,311
    
    
    
    42,675
    
    
    
    
    
    
    
    179,774Intercompany receivables
    
    
    
    
    
    
    28,218
    
    
    
    22,924
    
    
    
    (51,142
    )
    
    
    Inventories
    
    
    97,979
    
    
    
    16,137
    
    
    
    39,054
    
    
    
    
    
    
    
    153,170Deferred income taxes
    
    
    5,675
    
    
    
    2,694
    
    
    
    418
    
    
    
    
    
    
    
    8,787Income taxes receivable
    
    
    
    
    
    
    3,662
    
    
    
    
    
    
    
    (3,662
    )
    
    
    Other current assets
    
    
    8,013
    
    
    
    927
    
    
    
    2,096
    
    
    
    
    
    
    
    11,036Total current assets
    
    
    231,870
    
    
    
    77,722
    
    
    
    111,588
    
    
    
    (54,804
    )
    
    
    366,376Property, plant and equipment, net
    
    
    92,851
    
    
    
    3,480
    
    
    
    36,427
    
    
    
    
    
    
    
    132,758Goodwill
    
    
    194,814
    
    
    
    36,409
    
    
    
    
    
    
    
    
    
    
    
    231,223Other intangible assets, net
    
    
    91,799
    
    
    
    10,717
    
    
    
    844
    
    
    
    
    
    
    
    103,360Investment in subsidiaries
    
    
    168,687
    
    
    
    82,860
    
    
    
    
    
    
    
    (251,547
    )
    
    
    Other assets
    
    
    9,113
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,113Total assets
    
    $
    789,134
    
    
    $
    211,188
    
    
    $
    148,859
    
    
    $
    (306,351
    )
    
    $
    842,830Liabilities And Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    58,442
    
    
    $
    15,298
    
    
    $
    36,131
    
    
    $
    
    
    
    $
    109,871Intercompany payables
    
    
    51,142
    
    
    
    
    
    
    
    
    
    
    
    (51,142
    )
    
    
    Payable to parent
    
    
    751
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    751Accrued liabilities
    
    
    55,442
    
    
    
    7,853
    
    
    
    10,309
    
    
    
    
    
    
    
    73,604Income taxes payable
    
    
    20,507
    
    
    
    
    
    
    
    3,557
    
    
    
    (3,662
    )
    
    
    20,402Total current liabilities
    
    
    186,284
    
    
    
    23,151
    
    
    
    49,997
    
    
    
    (54,804
    )
    
    
    204,628Deferred income taxes
    
    
    45,679
    
    
    
    3,583
    
    
    
    2,189
    
    
    
    
    
    
    
    51,451Other liabilities
    
    
    16,426
    
    
    
    15,767
    
    
    
    13,813
    
    
    
    
    
    
    
    46,006Long-term debt
    
    
    242,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    242,000Stockholders equity
    
    
    298,745
    
    
    
    168,687
    
    
    
    82,860
    
    
    
    (251,547
    )
    
    
    298,745Total liabilities and
stockholder s equity
    
    $
    789,134
    
    
    $
    211,188
    
    
    $
    148,859
    
    
    $
    (306,351
    )
    
    $
    842,830
 -9-




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##### Table of Contents



ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
 Guarantor
    
    
    Non-Guarantor
    
    
    Reclassification/Parent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    239,182
    
    
    $
    63,726
    
    
    $
    98,005
    
    
    $
    (51,310
    )
    
    $
    349,603Cost of sales
    
    
    175,169
    
    
    
    60,818
    
    
    
    73,369
    
    
    
    (51,310
    )
    
    
    258,046Gross profit
    
    
    64,013
    
    
    
    2,908
    
    
    
    24,636
    
    
    
    
    
    
    
    91,557Selling, general and
administrative expense
    
    
    39,441
    
    
    
    4,612
    
    
    
    9,075
    
    
    
    
    
    
    
    53,128Income (loss) from operations
    
    
    24,572
    
    
    
    (1,704
    )
    
    
    15,561
    
    
    
    
    
    
    
    38,429Interest expense, net
    
    
    7,286
    
    
    
    (18
    )
    
    
    38
    
    
    
    
    
    
    
    7,306Foreign currency (gain) loss
    
    
    
    
    
    
    
    
    
    
    (116
    )
    
    
    
    
    
    
    (116
    )Income (loss) before income taxes
    
    
    17,286
    
    
    
    (1,686
    )
    
    
    15,639
    
    
    
    
    
    
    
    31,239Income taxes
    
    
    6,868
    
    
    
    1,623
    
    
    
    5,349
    
    
    
    
    
    
    
    13,840Income (loss) before equity
income from subsidiaries
    
    
    10,418
    
    
    
    (3,309
    )
    
    
    10,290
    
    
    
    
    
    
    
    17,399Equity income from subsidiaries
    
    
    6,981
    
    
    
    10,290
    
    
    
    
    
    
    
    (17,271
    )
    
    
    Net income
    
    $
    17,399
    
    
    $
    6,981
    
    
    $
    10,290
    
    
    $
    (17,271
    )
    
    $
    17,399
 ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
 Guarantor
    
    
    Non-Guarantor
    
    
    Reclassification/Parent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    629,913
    
    
    $
    168,436
    
    
    $
    239,016
    
    
    $
    (131,647
    )
    
    $
    905,718Cost of sales
    
    
    465,461
    
    
    
    160,686
    
    
    
    180,879
    
    
    
    (131,647
    )
    
    
    675,379Gross profit
    
    
    164,452
    
    
    
    7,750
    
    
    
    58,137
    
    
    
    
    
    
    
    230,339Selling, general and
administrative expense
    
    
    116,953
    
    
    
    13,583
    
    
    
    24,936
    
    
    
    
    
    
    
    155,472Income (loss) from operations
    
    
    47,499
    
    
    
    (5,833
    )
    
    
    33,201
    
    
    
    
    
    
    
    74,867Interest expense, net
    
    
    21,318
    
    
    
    (50
    )
    
    
    347
    
    
    
    
    
    
    
    21,615Foreign currency (gain) loss
    
    
    
    
    
    
    
    
    
    
    (216
    )
    
    
    
    
    
    
    (216
    )Income (loss) before income taxes
    
    
    26,181
    
    
    
    (5,783
    )
    
    
    33,070
    
    
    
    
    
    
    
    53,468Income taxes
    
    
    10,205
    
    
    
    2,173
    
    
    
    11,310
    
    
    
    
    
    
    
    23,688Income (loss) before equity
income from subsidiaries
    
    
    15,976
    
    
    
    (7,956
    )
    
    
    21,760
    
    
    
    
    
    
    
    29,780Equity income from subsidiaries
    
    
    13,804
    
    
    
    21,760
    
    
    
    
    
    
    
    (35,564
    )
    
    
    Net income
    
    $
    29,780
    
    
    $
    13,804
    
    
    $
    21,760
    
    
    $
    (35,564
    )
    
    $
    29,780
 -10-




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##### Table of Contents



ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
 Guarantor
    
    
    Non-GuarantorParent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    ConsolidatedNet cash provided by (used in) operating activities
    
    $
    27,968
    
    
    $
    (7,255
    )
    
    $
    22,378
    
    
    $
    43,091Investing ActivitiesAcquisition of supply center
    
    
    (801
    )
    
    
    
    
    
    
    
    
    
    
    (801
    )Additions to property, plant and equipment
    
    
    (5,146
    )
    
    
    (879
    )
    
    
    (1,272
    )
    
    
    (7,297
    )Net cash used in investing activities
    
    
    (5,947
    )
    
    
    (879
    )
    
    
    (1,272
    )
    
    
    (8,098
    )Financing ActivitiesRepayments of term loan
    
    
    (29,000
    )
    
    
    
    
    
    
    
    
    
    
    (29,000
    )Dividends
    
    
    (8,018
    )
    
    
    
    
    
    
    
    
    
    
    (8,018
    )Intercompany transactions
    
    
    13,398
    
    
    
    7,215
    
    
    
    (20,613
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    (23,620
    )
    
    
    7,215
    
    
    
    (20,613
    )
    
    
    (37,018
    )Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    619
    
    
    
    619Net increase (decrease) in cash
    
    
    (1,599
    )
    
    
    (919
    )
    
    
    1,112
    
    
    
    (1,406
    )Cash at beginning of period
    
    
    10,014
    
    
    
    1,692
    
    
    
    3,309
    
    
    
    15,015Cash at end of period
    
    $
    8,415
    
    
    $
    773
    
    
    $
    4,421
    
    
    $
    13,609
 -11-




---



##### Table of Contents



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-




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##### Table of Contents



ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
 Guarantor
    
    
    Non-Guarantor
    
    
    Reclassification/Parent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    241,211
    
    
    $
    60,685
    
    
    $
    84,026
    
    
    $
    (42,520
    )
    
    $
    343,402Cost of sales
    
    
    177,561
    
    
    
    58,913
    
    
    
    64,353
    
    
    
    (42,520
    )
    
    
    258,307Gross profit
    
    
    63,650
    
    
    
    1,772
    
    
    
    19,673
    
    
    
    
    
    
    
    85,095Selling, general and
administrative expense
    
    
    38,749
    
    
    
    4,673
    
    
    
    7,270
    
    
    
    
    
    
    
    50,692Income (loss) from operations
    
    
    24,901
    
    
    
    (2,901
    )
    
    
    12,403
    
    
    
    
    
    
    
    34,403Interest expense, net
    
    
    7,975
    
    
    
    
    
    
    
    259
    
    
    
    
    
    
    
    8,234Foreign currency (gain) loss
    
    
    
    
    
    
    
    
    
    
    99
    
    
    
    
    
    
    
    99Income (loss) before income taxes
    
    
    16,926
    
    
    
    (2,901
    )
    
    
    12,045
    
    
    
    
    
    
    
    26,070Income taxes
    
    
    4,698
    
    
    
    3,347
    
    
    
    3,441
    
    
    
    
    
    
    
    11,486Income (loss) before equity
income from subsidiaries
    
    
    12,228
    
    
    
    (6,248
    )
    
    
    8,604
    
    
    
    
    
    
    
    14,584Equity income from subsidiaries
    
    
    2,356
    
    
    
    8,604
    
    
    
    
    
    
    
    (10,960
    )
    
    
    Net income
    
    $
    14,584
    
    
    $
    2,356
    
    
    $
    8,604
    
    
    $
    (10,960
    )
    
    $
    14,584
 ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
 Guarantor
    
    
    Non-Guarantor
    
    
    Reclassification/Parent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    665,234
    
    
    $
    187,507
    
    
    $
    231,159
    
    
    $
    (132,889
    )
    
    $
    951,011Cost of sales
    
    
    492,905
    
    
    
    178,183
    
    
    
    181,372
    
    
    
    (132,889
    )
    
    
    719,571Gross profit
    
    
    172,329
    
    
    
    9,324
    
    
    
    49,787
    
    
    
    
    
    
    
    231,440Selling, general and
administrative expense
    
    
    118,102
    
    
    
    14,528
    
    
    
    21,529
    
    
    
    
    
    
    
    154,159Facility closure costs, net
    
    
    (92
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (92
    )Income (loss) from operations
    
    
    54,319
    
    
    
    (5,204
    )
    
    
    28,258
    
    
    
    
    
    
    
    77,373Interest expense, net
    
    
    23,132
    
    
    
    
    
    
    
    825
    
    
    
    
    
    
    
    23,957Foreign currency (gain) loss
    
    
    
    
    
    
    
    
    
    
    (865
    )
    
    
    
    
    
    
    (865
    )Income (loss) before income taxes
    
    
    31,187
    
    
    
    (5,204
    )
    
    
    28,298
    
    
    
    
    
    
    
    54,281Income taxes
    
    
    10,686
    
    
    
    3,736
    
    
    
    8,885
    
    
    
    
    
    
    
    23,307Income (loss) before equity
income from subsidiaries
    
    
    20,501
    
    
    
    (8,940
    )
    
    
    19,413
    
    
    
    
    
    
    
    30,974Equity income from subsidiaries
    
    
    10,473
    
    
    
    19,413
    
    
    
    
    
    
    
    (29,886
    )
    
    
    Net income
    
    $
    30,974
    
    
    $
    10,473
    
    
    $
    19,413
    
    
    $
    (29,886
    )
    
    $
    30,974
 -13-




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##### Table of Contents



ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
 Guarantor
    
    
    Non-GuarantorParent
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    ConsolidatedNet cash provided by (used in) operating activities
    
    $
    29,335
    
    
    $
    (10,549
    )
    
    $
    8,120
    
    
    $
    26,906Investing ActivitiesAdditions to property, plant and equipment
    
    
    (9,923
    )
    
    
    (96
    )
    
    
    (1,857
    )
    
    
    (11,876
    )Proceeds from disposal of property, plant and
equipment
    
    
    2,772
    
    
    
    41
    
    
    
    68
    
    
    
    2,881Net cash used in investing activities
    
    
    (7,151
    )
    
    
    (55
    )
    
    
    (1,789
    )
    
    
    (8,995
    )Financing ActivitiesRepayments of term loan
    
    
    (10,000
    )
    
    
    
    
    
    
    
    
    
    
    (10,000
    )Dividends
    
    
    (7,735
    )
    
    
    
    
    
    
    
    
    
    
    (7,735
    )Financing costs
    
    
    (128
    )
    
    
    
    
    
    
    
    
    
    
    (128
    )Intercompany transactions
    
    
    (3,945
    )
    
    
    10,931
    
    
    
    (6,986
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    (21,808
    )
    
    
    10,931
    
    
    
    (6,986
    )
    
    
    (17,863
    )Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    167
    
    
    
    167Net increase (decrease) in cash
    
    
    376
    
    
    
    327
    
    
    
    (488
    )
    
    
    215Cash at beginning of period
    
    
    7,010
    
    
    
    1,046
    
    
    
    4,244
    
    
    
    12,300Cash at end of period
    
    $
    7,386
    
    
    $
    1,373
    
    
    $
    3,756
    
    
    $
    12,515
 -14-




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##### Table of Contents



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




---



##### Table of Contents



Results of Operations
  Quarter
    
    
    Quarter
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedSeptember 29,
    
    
    September 30,
    
    
    September 29,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net sales
    
    $
    349,603
    
    
    $
    343,402
    
    
    $
    905,718
    
    
    $
    951,011Cost of sales
    
    
    258,046
    
    
    
    258,307
    
    
    
    675,379
    
    
    
    719,571Gross profit
    
    
    91,557
    
    
    
    85,095
    
    
    
    230,339
    
    
    
    231,440Selling, general and
administrative expense
    
    
    53,128
    
    
    
    50,692
    
    
    
    155,472
    
    
    
    154,159Facility closure costs, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (92
    )Income from operations
    
    
    38,429
    
    
    
    34,403
    
    
    
    74,867
    
    
    
    77,373Interest expense, net
    
    
    17,836
    
    
    
    17,700
    
    
    
    52,469
    
    
    
    51,694Foreign currency (gain) loss
    
    
    (116
    )
    
    
    99
    
    
    
    (216
    )
    
    
    (865
    )Income before income taxes
    
    
    20,709
    
    
    
    16,604
    
    
    
    22,614
    
    
    
    26,544Income taxes
    
    
    12,292
    
    
    
    8,976
    
    
    
    13,491
    
    
    
    13,768Net income
    
    $
    8,417
    
    
    $
    7,628
    
    
    $
    9,123
    
    
    $
    12,776Other Data:EBITDA (a)
    
    $
    44,024
    
    
    $
    39,729
    
    
    $
    91,454
    
    
    $
    94,419Adjusted EBITDA (a)
    
    
    44,033
    
    
    
    39,953
    
    
    
    93,480
    
    
    
    95,949
 -16-




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##### Table of Contents



Quarter
    
    
    Quarter
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedSeptember 29,
    
    
    September 30,
    
    
    September 29,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Vinyl windows
    
    $
    116,305
    
    
    $
    112,215
    
    
    $
    307,022
    
    
    $
    305,805Vinyl siding products
    
    
    86,115
    
    
    
    89,843
    
    
    
    221,531
    
    
    
    256,591Metal products
    
    
    65,241
    
    
    
    62,301
    
    
    
    167,287
    
    
    
    172,233Third party manufactured products
    
    
    60,405
    
    
    
    53,951
    
    
    
    151,967
    
    
    
    145,837Other products and services
    
    
    21,537
    
    
    
    25,092
    
    
    
    57,911
    
    
    
    70,545$
    349,603
    
    
    $
    343,402
    
    
    $
    905,718
    
    
    $
    951,011
 
 (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): Nine Months
    
    
    Nine MonthsQuarter Ended
    
    
    Quarter Ended
    
    
    Ended
    
    
    EndedSeptember 29,
    
    
    September 30,
    
    
    September 29,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income
    
    $
    8,417
    
    
    $
    7,628
    
    
    $
    9,123
    
    
    $
    12,776Interest expense, net
    
    
    17,836
    
    
    
    17,700
    
    
    
    52,469
    
    
    
    51,694Income taxes
    
    
    12,292
    
    
    
    8,976
    
    
    
    13,491
    
    
    
    13,768Depreciation and amortization
    
    
    5,479
    
    
    
    5,425
    
    
    
    16,371
    
    
    
    16,181EBITDA
    
    
    44,024
    
    
    
    39,729
    
    
    
    91,454
    
    
    
    94,419Foreign currency (gain) loss
    
    
    (116
    )
    
    
    99
    
    
    
    (216
    )
    
    
    (865
    )Separation costs (b)
    
    
    
    
    
    
    
    
    
    
    699
    
    
    
    2,085Amortization of management fee (c)
    
    
    125
    
    
    
    125
    
    
    
    375
    
    
    
    375Transaction costs (d)
    
    
    
    
    
    
    
    
    
    
    1,168
    
    
    
    Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27Facility closure costs, net (e)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (92
    )Adjusted EBITDA
    
    $
    44,033
    
    
    $
    39,953
    
    
    $
    93,480
    
    
    $
    95,949
 
 (b)
    
    For the nine months ended September 29, 2007, amount represents separation costs, including
payroll taxes, related to the resignation of Mr. Deighton, former Chief Operating Officer of
the Company. For the nine months ended September 30, 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 September 29, 2007 Compared to Quarter Ended September 30, 2006
  -17-




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Nine Months Ended September 29, 2007 Compared to Nine Months Ended September 30, 2006
   -18-




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##### Table of Contents



Recent Accounting Pronouncements
    -19-




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##### Table of Contents



Liquidity and Capital Resources
  Nine Months
    
    Nine MonthsEnded
    
    EndedSeptember 29,
    
    September 30,2007
    
    2006Cash provided by operating activities
    
    $
    43,091
    
    
    $
    26,906Cash used in investing activities
    
    
    (8,098
    )
    
    
    (8,995
    )Cash used in financing activities
    
    
    (37,018
    )
    
    
    (17,863
    )
 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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##### Table of Contents



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;
 -22-




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##### Table of Contents




    
    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 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
  -24-




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##### Table of Contents



Item 1A. Risk Factors
  
 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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##### Table of Contents



SIGNATURES
  AMH HOLDINGS, INC.
       (Registrant)Date:  November 13, 2007
    By:
    /s/ Thomas N. ChieffeThomas N. ChieffePresident and Chief Executive Officer
(Principal Executive Officer)By:
    /s/ Cynthia L. SobeCynthia L. SobeVice President  Finance,
Interim Chief Financial Officer,
Treasurer and Secretary
(Principal Financial Officer and
Principal Accounting Officer) -26-