<PAGE>
 
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                                   FORM 10-Q
 
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997 OR
 
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO __________


COMMISSION FILE NUMBER   1-4087
                       ----------
 
                           PLY GEM INDUSTRIES, INC.
-------------------------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


DELAWARE                                               11-1727150
------------------------------------------------------------------------------
(STATE OR OTHER JURISDICTION OF                      (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                      IDENTIFICATION NO.)


    777 THIRD AVENUE, NEW YORK, NEW YORK                   10017
------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                 (ZIP CODE)


REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 212-832-1550
                                                   ------------

          INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.  YES   X      NO _____
                                               ------           

          INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE:


    CLASS                                     OUTSTANDING AT MAY 8, 1997
---------------------------------------       -------------------------------
COMMON STOCK, PAR VALUE $.25 PER SHARE        13,926,978  SHARES
<PAGE>
 
                   PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES
                     CONSOLIDATED CONDENSED BALANCE SHEETS
                                (IN THOUSANDS)

<TABLE>
<CAPTION>
                                           MARCH  31,           DECEMBER 31,
ASSETS                                       1997                  1996
------                                    -----------           ----------- 
                                          (UNAUDITED)
            <S>                           <C>                   <C>     
CASH AND CASH EQUIVALENTS                 $  5,979              $  9,924
ACCOUNTS RECEIVABLE, NET OF ALLOWANCE                                   
  OF $3,235; $3,039 IN 1996                 39,027                28,003
INVENTORIES                                107,886                92,983
PREPAID AND DEFERRED INCOME TAXES           11,571                10,905
OTHER CURRENT ASSETS                        14,284                12,975
                                          --------              --------
     TOTAL CURRENT ASSETS                  178,747               154,790
                                                                        
PROPERTY, PLANT AND EQUIPMENT - AT COST                                 
  NET OF ACCUMULATED DEPRECIATION AND                                   
  AMORTIZATION OF $66,113; $62,757 IN   
  1996                                      94,286                90,681
PATENTS AND TRADEMARKS, NET OF                                          
  ACCUMULATED AMORTIZATION OF 
  $10,053; $9,776 IN 1996                   13,523                13,793
OTHER INTANGIBLE ASSETS - NET               14,587                14,794
COST IN EXCESS OF NET ASSETS ACQUIRED -     
  NET                                       21,252                21,618
OTHER ASSETS                                17,549                17,771
                                          --------              --------
     TOTAL ASSETS                         $339,944              $313,447
                                          ========              ========
                                                                        
LIABILITIES AND STOCKHOLDERS' EQUITY                                    
----------------------------------------                                
ACCOUNTS PAYABLE AND ACCRUED EXPENSES     $ 64,215              $ 66,768
CURRENT MATURITIES OF LONG-TERM DEBT    
  AND CAPITAL LEASES                         1,404                 1,380
                                          --------              -------- 
     TOTAL CURRENT LIABILITIES              65,619                68,148
                                                                        
LONG-TERM DEBT                             104,241                73,166
CAPITAL LEASES                               8,910                 9,231
OTHER LIABILITIES                           17,325                17,119
                                                                        
STOCKHOLDERS' EQUITY:                                                   
  PREFERRED STOCK, $.01 PAR VALUE;                                      
    AUTHORIZED 5,000,000 SHARES; NONE 
    ISSUED                                      --                    --
  COMMON STOCK, $.25 PAR VALUE;                                         
    AUTHORIZED                               
    60,000,000 SHARES; ISSUED                                           
    17,685,211;                                                        
    17,676,450 IN 1996                       4,421                 4,419
  ADDITIONAL PAID-IN CAPITAL               149,600               149,226
  RETAINED EARNINGS                         60,519                61,993
  LESS: TREASURY STOCK-AT COST                                          
    (3,766,383 SHARES; 3,687,954 IN     
    1996)                                   65,009                63,936  
            UNAMORTIZED RESTRICTED      
              STOCK AND NOTE RECEIVABLE      5,682                 5,919 
                                          --------              --------    
            TOTAL STOCKHOLDERS' EQUITY     143,849               145,783    
                                          --------              --------    
     TOTAL LIABILITIES AND                
       STOCKHOLDERS' EQUITY               $339,944              $313,447     
</TABLE>                                  ========              ========      
                                         
              SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.

                                       2
                                                                        
<PAGE>
 
                   PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
                      (IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
 
                                              QUARTER ENDED
                                          ----------------------
                                          MARCH 31,   MARCH 31,
                                             1997        1996
                                          ----------  ----------
<S>                                       <C>         <C>
NET SALES                                  $162,812    $142,018
COST OF GOODS SOLD                          135,998     121,504
                                           --------    --------
     GROSS PROFIT                            26,814      20,514
SELLING, GENERAL AND ADMINISTRATIVE        
 EXPENSES                                    26,575      23,397
                                           --------    -------- 
     INCOME (LOSS) FROM OPERATIONS              239      (2,883)
INTEREST EXPENSE                             (1,668)     (1,824)

OTHER EXPENSE, NET                             (484)        (46)
                                           --------    --------
     LOSS BEFORE INCOME TAXES                (1,913)     (4,753)
INCOME TAX BENEFIT                             (861)     (2,115)
                                           --------    --------
     NET LOSS                              $ (1,052)   $ (2,638)
                                           ========    ========
LOSS PER SHARE:
     PRIMARY                               $   (.08)      $(.18)
     FULLY DILUTED                             (.08)        (18)
 
WEIGHTED AVERAGE NUMBER OF SHARES
 OUTSTANDING:
     PRIMARY                                 13,857      14,324
     FULLY DILUTED                           13,857      14,324
CASH DIVIDENDS PER SHARE                   $    .03        $.03
</TABLE>
                SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

                                       3
<PAGE>
 
                   PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                                (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                        QUARTER ENDED
                                          -----------------------------------------
                                               MARCH 31,             MARCH 31,
                                                  1997                 1996
                                          --------------------  -------------------
<S>                                       <C>        <C>        <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES
----------------------------------------
NET LOSS                                             $ (1,052)            $ (2,638)
ADJUSTMENTS TO RECONCILE NET  LOSS
 TO NET CASH USED IN OPERATING
  ACTIVITIES:
   DEPRECIATION AND AMORTIZATION          $  4,214              $ 3,835
   PROVISION FOR DOUBTFUL ACCOUNTS             587                  461
   CHANGES IN ASSETS AND LIABILITIES:
    ACCOUNTS RECEIVABLE                    (11,611)              (9,991)
    INVENTORIES                            (14,903)              (8,246)
    PREPAID AND DEFERRED INCOME TAXES         (667)              (1,866)
    OTHER CURRENT ASSETS                    (1,308)              (1,394)   
    ACCOUNTS PAYABLE AND ACCRUED           
     EXPENSES                               (2,238)                 372
    OTHER                                      106    (25,820)   (1,484)   (18,313)
                                          --------   --------   -------   --------
    NET CASH USED IN OPERATING                                                     
     ACTIVITIES                                       (26,872)             (20,951) 
                                                     --------             --------  
CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
  ADDITIONS TO PROPERTY, PLANT AND                                                  
   EQUIPMENT                                           (6,969)              (3,945) 
  OTHER                                                     -                  101
                                                     --------             --------
  NET CASH USED IN INVESTING ACTIVITIES                (6,969)              (3,844)
                                                     --------             --------
 
CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
  PURCHASE OF TREASURY SHARES                          (1,073)              (2,158)
  NET CHANGE IN REVOLVING NOTE
   BORROWINGS WITH ORIGINAL                                                        
   MATURITY OF 90 DAYS OR LESS                         31,160               26,367 
  CASH DIVIDENDS                                         (421)                (441)
  OTHER                                                   230                  547
                                                     --------             -------- 
  NET CASH PROVIDED BY FINANCING                                                    
   ACTIVITIES                                          29,896               24,315  
                                                     --------             --------  
  NET DECREASE IN CASH AND CASH     
   EQUIVALENTS                                         (3,945)                (480) 
  CASH AND CASH EQUIVALENTS AT                                                      
   BEGINNING OF PERIOD                                  9,924                8,107  
                                                     --------             --------  
  CASH AND CASH EQUIVALENTS AT END OF                                              
   PERIOD                                            $  5,979             $  7,627 
                                                     ========             ======== 
</TABLE> 
                SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
                

                                       4

<PAGE>
 
                   PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


  NOTE 1 - THE ACCOMPANYING FINANCIAL STATEMENTS HAVE BEEN PREPARED WITHOUT
  AUDIT, PURSUANT TO THE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE
  COMMISSION. CERTAIN INFORMATION AND FOOTNOTE DISCLOSURES NORMALLY INCLUDED IN
  FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING
  PRINCIPLES HAVE BEEN CONDENSED OR OMITTED PURSUANT TO SUCH RULES AND
  REGULATIONS.

       THESE STATEMENTS INCLUDE ALL ADJUSTMENTS, CONSISTING ONLY OF NORMAL
  RECURRING ACCRUALS, CONSIDERED NECESSARY FOR A FAIR PRESENTATION OF FINANCIAL
  POSITION AND RESULTS OF OPERATIONS.  THE FINANCIAL STATEMENTS INCLUDED HEREIN
  SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTES THERETO
  INCLUDED IN THE LATEST ANNUAL REPORT ON FORM 10-K.

  NOTE 2 - THE MAJOR CLASSES OF INVENTORIES WERE AS FOLLOWS:

<TABLE>
<CAPTION>
                            (IN THOUSANDS)

                   MARCH 31, 1997  DECEMBER 31, 1996
                   --------------  -----------------
<S>                <C>             <C>
Finished goods        $ 61,908         $53,833
Work in process         12,000           9,724
Raw materials           33,978          29,426
                      --------         -------
                      $107,886         $92,983
                      ========         =======
</TABLE>

  NOTE 3 - Loss per share of common stock are based on the weighted average
  number of shares outstanding during each of the periods.  Common stock
  equivalents were not used because the results would be anti-dilutive.

       In February 1997, the Financial Accounting Standards Board has issued
  Statement of Financial Accounting Standards No. 128, "Earnings Per Share",
  which is effective for financial statements for both interim and annual
  periods ending after December 15, 1997.  Early adoption of the new standard is
  not permitted.  The new standard eliminates primary and fully diluted earnings
  per share and requires presentation of basic and diluted earnings per share
  together with disclosure of how the per share amounts were computed.  The new
  standard would have had no effect on the Company's first quarter loss per 
  share.

                                       5

<PAGE>
 
                   PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


  NOTE 4 - Supplemental cash flow information for the quarterly periods are as
  follows:

<TABLE>
<CAPTION>
                             (In Thousands)
                     March 31, 1997  March 31, 1996
                     --------------  --------------
<S>                    <C>             <C>      
Interest paid            $1,484          $1,412    
Income taxes paid           830             154     
 
</TABLE>

  NOTE 5 - The accumulated amortization of cost in excess of net assets acquired
  and other intangible assets are $22,930,000 at March 31, 1997 and $22,357,000
  at December 31, 1996.

  NOTE 6 - The Company's loan agreements with its banks require the Company to
  maintain a specified leverage ratio, fixed charge ratio and tangible net worth
  levels and maintain certain financial ratios, among its provisions.  Under the
  most restrictive of these covenants, at March 31, 1997 approximately
  $2,500,000 of retained earnings was available for the payment of dividends in
  1997.

  NOTE 7 - Hoover Treated Wood Products, Inc. ("Hoover"), a wholly-owned
  subsidiary of Ply Gem Industries, Inc. ("Ply Gem"), is a defendant in a number
  of lawsuits alleging damage caused by alleged defects in certain pressure
  treated interior wood products.  Hoover has not manufactured or sold these
  products since August, 1988. The number of lawsuits pending has declined
  significantly from earlier periods.  Most of the suits have been resolved by
  dismissal or settlement with settlements being paid out of insurance proceeds
  or other third party recoveries.  Hoover and Ply Gem are vigorously defending
  the suits which remain pending and defense and indemnity costs are being paid
  out of insurance proceeds and proceeds from a settlement by Hoover with
  suppliers of material used in the production of interior treated wood
  products.

       Hoover and Ply Gem have engaged in coverage litigation with their
  insurers and have settled their coverage claims with a majority of the
  insurers.  Ply Gem believes that the remaining coverage disputes will be
  resolved on a satisfactory basis and a substantial amount of additional
  coverage will be available to Hoover.  In reaching this belief, it has
  analyzed Hoover's insurance coverage and the status of the coverage
  litigation, considered its history of settlements with primary and excess
  insurers and consulted with counsel.

       Hoover has recorded a receivable at March 31, 1997 for approximately $8.5
  million for the estimated proceeds and recoveries related to insurance matters
  discussed above and recorded an accrual for the same amount for its estimated
  cost to resolve those matters not presently covered by existing settlements
  with insurance carriers and suppliers.

                                       6

<PAGE>
 
                   PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


 NOTE 7 - CONTINUED

       In evaluating the effect of the lawsuits, a number of factors have been
 considered, including, the litigation history, the significant decline in the
 number of cases, the availability of various legal defenses and the likely
 availability of proceeds from additional insurance.  Based on its evaluation,
 the Company believes that the ultimate resolution of the lawsuits and the
 insurance claims will not have a material effect upon the financial position of
 the Company.

                                       7
<PAGE>
 
                   PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                          QUARTER ENDED MARCH 31, 1997


       When used  in this discussion, the words "believes", "anticipates",
 "expects" and similar expressions are intended to identify forward-looking
 statements.  Such statements are subject to certain risks and uncertainties
 which could cause actual results to differ materially from those projected.
 Readers are cautioned not to place undue reliance on these forward-looking
 statements which speak only as of the date hereof.  The Company undertakes no
 obligation to republish revised forward-looking statements to reflect events or
 circumstances after the date hereof or to reflect the occurrence of
 unanticipated events.  Readers are also urged to carefully review and consider
 the various disclosures made by the Company, in this report, as well as the
 Company's periodic reports on Forms 10-K, 10-Q and 8-K filed with the
 Securities and Exchange Commission.


 Results of Operations
 ---------------------

       Net sales for first quarter of 1997 were $162.8 million, an increase of
 approximately 15% over 1996 first quarter sales of $142.0 million.  The sales
 growth was driven by strong demand for the Company's products, particularly in
 its Windows, Doors and Siding and Specialty Woods businesses.  Approximately
 three-quarters of the consolidated sales growth was attributed to unit volume
 increases and the remainder to increases in average selling prices.  Sales for
 the first quarter of 1996 were impacted by a harsh winter.

       Gross margins increased to 16.5% in 1997 from 14.4% in 1996 for the
 quarterly comparison periods.  Gross profit for the first quarter of 1997
 increased 31% to $26.8 million, as compared to prior year's gross profit of
 $20.5 million.  Substantially all of the Company's businesses reported higher
 gross profit for the quarterly comparison periods.  The significant improvement
 resulted primarily from improved productivity, lower unit freight costs and
 product mix.

       Selling, general and administrative expenses, as a percentage of net
 sales, were 16.3% for the first three months of 1997, approximately even with
 the comparison quarter.

       The Company recorded first quarter 1997 income from operations of
 $239,000 compared with an operating loss of $2.9 million reported in the first
 quarter of 1996.  The significant improvement in income from operations in 1997
 resulted primarily from revenue growth and improved operating results in the
 Company's businesses.

                                       8
<PAGE>
 
                   PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                          QUARTER ENDED MARCH 31, 1997


 Liquidity and Capital Resources
 -------------------------------

       The Company used $26.9 million in cash from operations during the first
 quarter of 1997 compared to $21.0 million in the corresponding 1996 period.
 The usage of cash was due to a planned inventory increase at one of the
 Company's subsidiaries in anticipation of strong demand for its products in the
 second and third quarters of 1997.

       Significant investing activities in the first quarter of 1997 include
 capital expenditures of $7.0 million primarily for expanded capacity in one of
 the Company's Windows, Doors and Siding subsidiaries. Significant first quarter
 1997 financing activities related to the net increase in revolving credit
 borrowings of $31.2 million used principally to finance the seasonal working
 capital requirements and capital expenditures of the Company.

       The Company's current ratio improved to 2.7 to 1 at March 31, 1997
 compared to 2.3 to 1 at December 31, 1996.

       The Company has a revolving credit facility with a syndicate of eleven
 banks which provides financing through February 1999.  Availability under this
 facility was approximately $54 million at March 31, 1997.

       The Company anticipates that internally generated funds from operations,
 existing cash balances and the Company's existing credit facility should be
 sufficient to satisfy its cash requirements over the next twelve months.

                                       9
<PAGE>
 
                   PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES
                                 March 31, 1996
                          PART II - OTHER INFORMATION


 All items are inapplicable except:

 Item 1.     Legal Proceedings.

        See Note 7 to the consolidated financial statements.

 
 Item 6.     Exhibits and Reports on Form 8-K.

     (a)   Exhibits:  Exhibit 27 - Financial Data Schedule

     (b)   Reports:  None

                                       10
<PAGE>
 
                   PLY GEM INDUSTRIES, INC. AND SUBSIDIARIES

                                   FORM 10-Q

                                March 31, 1997


                              S I G N A T U R E S



       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.



                                     Ply Gem Industries, Inc.
                                     ------------------------
                                     (Registrant)



Date:  May 14, 1997                   /s/ Herbert P. Dooskin
       ---------------------------    -----------------------
                                      Executive Vice President
                                      Principal Financial Officer

                                       11