ASSOCIATED MATERIALS INC - 10-K Annual Report

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K

(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED JANUARY 3, 2004.

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 000-24956
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ASSOCIATED MATERIALS INCORPORATED
(Exact name of Registrant as specified in its charter)
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DELAWARE 75-1872487
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

3773 STATE ROAD
CUYAHOGA FALLS, OHIO 44223
(Address of principal executive offices)

(330) 929-1811
(Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

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

The aggregate market value of the Common Stock held by non-affiliates of
the registrant at June 27, 2003: None

As of March 29, 2004, the Registrant had 100 shares of Common Stock
outstanding, all of which is held by an affiliate of the Registrant.

Documents incorporated by reference: None
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PART I

ITEM 1. BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

Associated Materials Incorporated (the "Company") 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. Vinyl
windows and vinyl siding together comprise approximately 60% of the Company's
total net sales. These products are generally marketed under the Alside(R),
Revere(R) and Gentek(R) 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 supply
centers. As of January 3, 2004, the Company had 124 supply centers in its
network. 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.

The Company believes that the strength of its products and distribution
network has developed strong brand loyalty and long-standing relationships with
local contractors and has enabled the Company to consistently gain market share
over the last five years. Approximately 70% of the Company's total net sales are
generated through the Company's network of supply centers with the remainder
sold to independent distributors and dealers.

On August 29, 2003, the Company acquired all of the issued and outstanding
shares of the capital stock of Gentek Holdings, Inc., the parent company of
Gentek Building Products, Inc. and Gentek Building Products Limited,
collectively referred to as "Gentek". Gentek manufactures and distributes vinyl
windows, vinyl siding, aluminum trim coil, and aluminum and steel siding and
accessories under the Revere(R) and Gentek(R) brand names. Gentek markets its
products to professional contractors on a wholesale basis through 13
company-owned distribution centers in the mid-Atlantic region of the United
States and 20 company-owned distribution centers in Canada, as well as
approximately 200 independent distributors in the United States. The acquisition
was completed to expand the Company's presence in the independent distributor
market channel, to capitalize on synergy opportunities related to the vertical
integration of the metals products manufactured by Gentek and sold in the
Company's Alside supply centers, and to benefit from raw material savings
resulting from increased purchasing leverage. The Company intends to maintain
distinct separation of the Revere(R) and Gentek(R) brands from the Company's
Alside(R) brand by continuing to offer differentiated product, sales and
marketing support.

FINANCIAL INFORMATION ABOUT SEGMENTS

Prior to the sale of AmerCable, as discussed below in "Acquisitions and
Dispositions," the Company had two reportable segments: building products and
electrical cable products. Subsequent to the sale of AmerCable, the Company is
in the single business of manufacturing and distributing exterior residential
building products. See Note 16 in the Notes to Consolidated Financial Statements
in Item 8. "Financial Statements and Supplementary Data."

INDUSTRY OVERVIEW

Demand for exterior residential building products is driven by a number of
factors, including consumer confidence, availability of credit, new housing
starts and general economic cycles. Historically, the demand for repair and
remodeling products, where the Company is primarily focused, has been less
sensitive and thus less

1

cyclical than demand for new home construction. Demand for repair and remodeling
is driven by the following:

- Favorable demographics. The segment of the population age 50 years and
above, which favors professionally installed, low maintenance home
improvements is growing. By 2010, this age segment will represent
approximately 40% of the United States population.

- Aging of the housing stock. The median home age increased from 23 years
in 1985 to 32 years in 2002, and approximately 60% of the current housing
stock was built prior to 1980.

- Increase in average home size. The average home size increased over 25%
from 1,785 square feet in 1985 to 2,320 square feet in 2002.

- Favorable mortgage interest rates. Mortgage interest rates over the past
few years have been at historically low levels.

As a result of these drivers, according to the U.S. Census Bureau, total
expenditures for residential improvements and repairs increased from $121.9
billion in 1993 to $173.3 billion in 2002.

Repair and remodeling projects tend to utilize a greater mix of premium
products with higher margins than those used in new construction projects.

Vinyl comprises the largest share of the residential window and siding
markets. Vinyl has greater durability, requires less maintenance and provides
greater energy efficiency than many competing siding and window products.
According to industry reports, based on unit sales, vinyl accounted for
approximately 44% of the exterior siding market and approximately 58% of the
residential window market in 2001. Vinyl windows have achieved increased
acceptance in the new construction market as a result of builders and home
buyers recognizing vinyl's favorable attributes, lifetime cost advantages, the
enactment of local legal or building code requirements that mandate more energy
efficient windows and the increased development and promotion of vinyl window
products by national window manufacturers. Vinyl siding has achieved increased
acceptance in the new construction market as builders and home buyers have
recognized vinyl's low maintenance, durability and price advantages. The Company
believes that vinyl windows and vinyl siding will continue to gain market share
in the new residential construction market while remaining the preferred product
of the remodeling marketplace.

Aluminum and steel building products complement vinyl window and siding
installations. Aluminum soffit, trim coil, and accessories are typically used in
vinyl installations to prepare surfaces and provide certain aesthetic features.
Aluminum siding is primarily geared toward niche markets in Canada and the
United States. Steel siding continues to be an important product for the "hail
belt" regions due to steel's superior resistance to impact damage.

Products. The Company's principal product offerings 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 net sales.

The Company manufactures and distributes windows in the premium, standard
and economy categories, primarily under the Alside(R), Revere(R), and Gentek(R)
brand names. Vinyl window quality and price vary across categories and are
generally based on a number of differentiating factors including method of
construction and materials used. Premium and standard windows are primarily
geared towards the repair and remodeling segment, while economy products are
typically used in new construction applications. The Company's vinyl windows are
available in a broad range of models, including fixed, double and single hung,
horizontal sliding, casement and decorative bay and bows, as well as patio
doors. All of the Company's windows are made to order and are custom-fitted to
existing window openings. Additional features include frames that do not require
painting, tilt-in sashes for easy cleaning, and high-energy efficiency glass
packages. Most models offer multiple finish and glazing options, and
substantially all are accompanied by a limited lifetime warranty. Key offerings
include Excalibur(R), a fusion-welded window featuring a slim design;
Performance Series(TM), a new construction product with superior strength and
stability; and UltraMaxx(R), an extra-thick premium window available in light
oak, dark oak and cherry woodgrain interior finishes.
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The Company manufactures and distributes vinyl siding and related
accessories in the premium, standard and economy categories, primarily under the
Alside(R), Revere(R) and Gentek(R) brand names. Vinyl siding quality and price
vary across categories and are generally based on rigidity, thickness,
resistance to deflection and ease of installation, as well as other factors.
Premium and standard siding products are primarily geared towards the repair and
remodeling segment, while economy products are typically used in new
construction applications. The Company's vinyl siding is textured to simulate
wood lap siding or shingles and is available in clapboard, Dutch lap and
board-and-batten styles. Products are available in a wide palette of colors to
satisfy individual aesthetic tastes. The Company also offers specialty siding
products such as shakes and scallops, beaded siding, extended length siding and
variegated siding. The Company's product line is complemented by a broad array
of color and style-matched accessories, including soffit, fascia and other
components, which enable easy installation and provide numerous appearance
options. All of the Company's siding products are accompanied by limited 50 year
to lifetime warranties. Key offerings include Charter Oak(R), a premium product
whose exclusive TriBeam(TM) design system provides superior rigidity;
Centerlock(R), an easy-to-install product designed for maximum visual appeal;
and Landscape(R), an economy product featuring a premium look.

The Company's metal offerings include aluminum trim coil and flatstock, as
well as aluminum and steel siding and accessories. These products are available
in a broad assortment of colors, styles and textures and are color-matched to
vinyl and other metal product lines.

The Company manufactures a broad range of painted and vinyl coated aluminum
trim coil and flatstock for application in siding projects. The Company's
innovative Color Clear Through(TM) program matches eleven core colors across its
vinyl, aluminum and steel product lines, as well as those of other siding
manufacturers. Trim coil and flatstock products are installed in most siding
projects, whether vinyl, brick, wood, stucco, or metal, and are used to seal
exterior corners, fenestration and other areas. These products are typically
formed on site to fit such surfaces. As a result, due to its superior
pliability, aluminum remains the preferred material for these products and is
rarely substituted for by other materials. Trim coil and flatstock represented a
majority of the Company's metal product sales since the date of the Gentek
acquisition.

The Company offers a wide range of metal siding and accessories, with
special features including multi-colored paint applications, which replicate the
light and dark tones of the grain in natural wood. Steel siding and accessories
are generally marketed in "hail belt" regions due to steel's superior resistance
to impact damage. The Company offers steel siding in a full complement of
profiles including 8", vertical and Dutch lap. The Company manufactures aluminum
siding and accessories in economy, standard and premium grades in a broad range
of profiles to appeal to various geographic and contractor preferences. While
aluminum siding sales are limited to niche markets, aluminum accessories enjoy
popularity in vinyl siding applications, particularly in Canada. All aluminum
soffit colors match or complement the Company's core vinyl siding colors, as
well as those of several of the Company's competitors.

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A summary of the Company's window and siding product offerings is presented
in the table below according to the Company's product line classification:

The Company produces vinyl fencing, decking and railing under the brand
name UltraGuard(R), consisting of both agricultural and residential vinyl
fencing. The Company primarily markets its fencing, decking and railing through
independent dealers. In 2003, the Company sold its assets related to vinyl
garage doors and discontinued this product line. Sales of garage doors were less
than 1% of total net sales in 2003.

To complete its line of exterior residential building products, the Company
also distributes building products manufactured by other companies. These
products include roofing materials, insulation, and installation equipment and
tools.

Marketing and Distribution. The Company markets exterior residential
building products to more than 50,000 professional home improvement and new
construction contractors primarily through a North American distribution network
of 124 supply centers. Traditionally, most windows and siding are sold to the
home remodeling marketplace through independent distributors. The Company
believes that it is one of only two major vinyl window and siding manufacturers
that markets its products primarily through company-owned distribution centers.
Approximately 70% of the Company's total net sales are made through its supply
centers.

The Company believes that distributing products through its supply centers
provides the Company with certain competitive advantages such as (a) building
long-standing customer relationships; (b) developing comprehensive, customized
marketing programs to assist the Company's customer contractors; (c) closely
monitoring developments in local customer preferences; and (d) ensuring product
availability through integrated logistics between the Company's manufacturing
and distribution facilities. The Company's customers look to their local supply
center to provide a broad range of specialty product offerings in order to
maximize their ability to attract remodeling and homebuilding customers. Many
have established long-standing relationships with their local supply center
based on individualized service and credit terms, quality products, timely
delivery, breadth of product offerings, strong sales and promotional programs
and competitive prices. The Company supports its contractor customer base with
marketing and promotional programs that

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include product sample cases, sales literature, product videos and other sales
and promotional materials. Professional contractors use these materials to sell
remodeling construction services to prospective customers. The customer
generally relies on the professional contractor to specify the brand of siding
or window to be purchased, subject to the customer's price, color and quality
requirements. The Company's daily contact with its contractor customers also
enables it to closely monitor activity in each of the remodeling and new
construction markets in which the Company competes. This direct presence in the
marketplace permits the Company to obtain current local market information,
providing it with the ability to recognize trends in the marketplace earlier and
adapt its product offerings on a location-by-location basis.

The Company believes that its supply centers provide "one-stop shopping" to
meet the specialized needs of its contractor customers by distributing more than
2,000 building and remodeling products, including a broad range of
Company-manufactured vinyl windows, vinyl siding, aluminum trim coil, aluminum
and steel siding and accessories, and vinyl fencing, decking and railing, as
well as products manufactured by third parties. The Company believes that its
ability to provide a broad range of products is a key competitive advantage
because it allows its contractor customers, who often install more than one
product type, to acquire multiple products from a single source. In addition,
the Company has historically achieved economies of scale in sales and marketing
by developing integrated multiple product programs on the national, regional and
local levels. For example, in 2000 the Company introduced Preservation as the
industry's first bundled premium window and siding marketing program.

Each of the Company's supply centers is evaluated as a separate profit
center, and compensation of supply center personnel is based in part on the
supply center's operating results. Decisions to open new supply centers, and to
close or relocate existing supply centers, are based on the Company's continuing
assessment of market conditions and individual location profitability. Over the
past five years, the Company has opened 26 Alside-owned supply centers. Through
the Company's recent acquisition of Gentek, the Company added 33 company-owned
supply centers to its existing distribution network. The Company has developed
formal training and recruiting programs for supply center personnel, which it
expects will improve its ability to staff new locations.

Through many of its supply centers, the Company provides full-service
product installation of its vinyl siding products, principally to new
homebuilders who value the importance of installation services. The Company also
provides installation services for vinyl replacement windows through several of
its supply centers.

The Company also sells the products it manufactures directly to dealers and
distributors, many of which operate in multiple locations. Independent
distributors comprise the industry's primary market channel for the types of
products that the Company manufactures and, as such, remain a key focus of the
Company's marketing activities. The Company provides these customers with
distinct brands and differentiated product, sales and marketing support. The
Company's distribution partners are carefully selected based on their ability to
drive sales of the Company's products, high customer service levels and other
performance factors. The Company believes that its strength in independent
distribution provides it with a high level of operational flexibility because it
allows it to penetrate key markets without deploying the necessary capital to
establish a company-owned supply center. Sales to independent distribution
account for approximately 30% of the Company's net sales. Despite their
aggregate lower percentage of total sales, the Company's largest individual
customers are its large direct dealers and independent distributors. No single
customer accounted for 5% or more of the Company's 2003 net sales.

Manufacturing. The Company fabricates vinyl windows at its facilities in
Cuyahoga Falls, Ohio, Bothell, Washington, Cedar Rapids, Iowa, Kinston, North
Carolina, Richmond, Virginia and London, Ontario. The Company manufactures its
vinyl siding products at its facilities in Ennis and Freeport, Texas and
Burlington, Ontario. The Company operates a vinyl extrusion facility in West
Salem, Ohio. The Company's window fabrication plants in Cuyahoga Falls, Ohio,
Kinston, North Carolina and Cedar Rapids, Iowa each use vinyl extrusions
manufactured by the West Salem, Ohio extrusion facility for a portion of their
production requirements and utilize high speed welding and cleaning equipment
for their welded window products. By internally producing a portion of its vinyl
extrusions, the Company believes it achieves significant cost savings

5

and higher product quality compared to purchasing these materials from
third-party suppliers. The Company's Alside Northwest facility produces its
glass inserts, but has a long-term contract to purchase its vinyl extrusions
from a third-party supplier. The Company also has two metals manufacturing
facilities located in Woodbridge, New Jersey and Pointe Claire, Quebec. The
Company believes that it has adequate capacity to meet its sales expectations
for the foreseeable future.

The Company's window plants generally operate on a single shift basis
utilizing both a second shift and increased numbers of leased production
personnel to meet higher seasonal needs. The Company's vinyl extrusion plants
generally operate on a three-shift basis to optimize equipment productivity and
utilize additional equipment to increase capacity to meet higher seasonal needs.

Raw Materials. The principal raw materials used by the Company are vinyl
resin, aluminum, steel, resin stabilizers and pigments, packaging materials,
window hardware, and glass, all of which are available from a number of
suppliers. The Company has a contract with its resin supplier to supply
substantially all of its vinyl resin requirements and believes that other
suppliers could also meet its requirements. This contract will expire in
December 2006. The price of vinyl resin has been, and will likely continue to
be, volatile. The Company generally has been able to pass through price
increases in raw materials to its customers. The price of vinyl resin increased
during 2003. The Company implemented price increases in 2003 to substantially
offset the increases in vinyl resin prices. The Company presently expects vinyl
resin prices to increase in 2004. While the Company expects that any future
significant resin cost increases will be offset by price increases to its
customers, there can be no assurances that the Company will be able to pass on
any future price increases.

Competition. Except for Owens Corning, the Company believes that no
company within the exterior residential building products industry competes with
it on both the manufacturing and distribution levels. There are, however,
numerous small and large manufacturers of exterior residential products, some of
which are larger in size and have greater financial resources than the Company.
The Company competes with Owens Corning and numerous large and small
distributors of building products in its capacity as a distributor of these
products. The Company believes that it has approximately 11% of the U.S. vinyl
siding market and approximately 22% of the Canadian vinyl siding market. The
Company believes that it is one of the largest manufacturers in the highly
fragmented North American market for vinyl windows. The Company believes that
the window fabrication industry will continue to experience consolidation due to
the increased capital requirements for manufacturing welded vinyl windows. The
trend towards welded windows, which require more expensive production equipment
as well as more sophisticated information systems, has driven these increased
capital requirements. The Company generally competes on price, product
performance, and sales and service support. The Company also faces competition
from alternative materials: wood and aluminum in the window market, and wood,
masonry and fiber cement in the siding market. An increase in competition from
other building product manufacturers and alternative building materials may
adversely impact the Company's business and financial performance.

Seasonality. 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 sales revenue 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.

BACKLOG

The Company does not have material long-term contracts. Vinyl window orders
are generally filled within 14 days of receipt. The Company's backlog is subject
to fluctuation due to various factors, including the size and timing of orders
for the Company's products and is not necessarily indicative of the level of
future sales.

ACQUISITIONS AND DIVESTITURES

On August 29, 2003, the Company acquired all of the issued and outstanding
shares of the capital stock of Gentek Holdings, Inc. For additional information
regarding this acquisition, see Item 1. "Business --

6

General Development of Business" and Item 8. "Financial Statements and
Supplementary Data -- Notes to Consolidated Financial Statements."

On March 16, 2002, the Company entered into a merger agreement with
Associated Materials Holdings Inc. ("Holdings") and its wholly owned subsidiary,
Simon Acquisition Corp. The merger agreement provided for the acquisition of all
shares of the Company's then outstanding common stock by Simon Acquisition Corp.
through a cash tender offer of $50.00 per share. The merger agreement also
required that the Company commence a tender offer to purchase all of its then
outstanding 9 1/4% senior subordinated notes (9 1/4% notes). On April 19, 2002,
the cash tender offer for the Company's then outstanding common stock and the
cash tender offer for approximately $74.0 million of the Company's then
outstanding 9 1/4% notes was completed. Simon Acquisition Corp. was then merged
with and into the Company with the Company continuing as a privately held,
wholly owned subsidiary of Holdings. The completion of the aforementioned
transactions constitute the April 2002 merger transaction. Holdings is
controlled by Harvest Partners, Inc. and its affiliates. The purchase
consideration, financing costs, tender offer of $74.0 million of 9 1/4% notes
and debt extinguishment costs of $7.6 million were financed through: (1) the
issuance of $165 million of 9 3/4% Senior Subordinated Notes due 2012, which the
Company refers to as the 9 3/4% notes, (2) $125 million from a new $165 million
credit facility, which the Company refers to as the credit facility, (3) $164.8
million cash contribution from Holdings and (4) cash of approximately $6.3
million, representing a portion of the Company's total cash of $6.8 million on
hand at the time of the acquisition.

On June 24, 2002, the Company completed the sale of its AmerCable division
to AmerCable Incorporated, a newly-formed entity controlled by members of
AmerCable's management and Wingate Partners III, L.P., for cash proceeds of
approximately $28.3 million and the assumption of certain liabilities pursuant
to an asset purchase agreement dated as of the same date. The Company used the
net proceeds to repay a portion of its credit facility. AmerCable is a leading
manufacturer of specialty electrical cable products primarily used in the
mining, marine and offshore drilling industries. In 2001, AmerCable accounted
for approximately 12% of the Company's total net sales.

TRADEMARKS, PATENTS AND OTHER INTANGIBLE ASSETS

The Company has registered and nonregistered trade names and trademarks
covering the principal brand names and product lines under which its products
are marketed. The allocation of purchase price from the April 2002 merger
transaction resulted in $98.7 million in trademarks and trade names of which
$24.0 million have remaining useful lives of 15 years and $74.7 million have
indefinite lives. The indefinite lived trademark and trade name consist of one
trademark and the Alside(R) trade name. The allocation of purchase price also
resulted in $6.8 million of patents with estimated useful lives of 10 years. The
Company has obtained patents on certain claims associated with its siding,
fencing, decking and railing products, which the Company believes distinguish
Alside's products from those of its competitors. The allocation of purchase
price from the acquisition of Gentek resulted in an allocation of $10.7 million
to trade names and trademarks of which $4.3 million have remaining lives of 15
years and $6.4 million have indefinite lives. The allocation of purchase price
also resulted in $4.5 million to customer lists and $1.1 million to Gentek's
order backlog. The customer lists are being amortized over 2 to 9 years and the
order backlog was fully amortized in 2003 as the backlog was fulfilled
subsequent to the date of the acquisition.

GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS

The Company is subject to various U.S. and Canadian environmental statutes
and regulations, including those addressing materials used in the manufacturing
of its products. In addition, the Company's operations are subject to various
U.S. and Canadian environmental statutes and regulations, including those
relating to materials used in the Company's products, discharge of pollutants
into the air, water and soil, treatment, transport, storage and disposal of
solid and hazardous wastes, and remediation of soil and groundwater
contamination. Such laws and regulations may also impact the availability of
materials used in manufacturing the Company's products. From time to time, the
Company's facilities are subject to investigation by governmental regulators.
The Company believes it is in material compliance with applicable environmental

7

requirements, and does not expect these requirements to result in material
expenditures in the foreseeable future.

The Company entered into a consent order dated August 25, 1992 with the
United States Environmental Protection Agency pertaining to corrective action
requirements associated with the use of hazardous waste storage facilities at
its Cuyahoga Falls, Ohio site location. The effects of the past practices at
this facility are continuing to be investigated. The Company believes that USX
Corporation ("USX"), the former owner, bears responsibility for substantially
all of the direct costs of corrective action at these facilities under the
relevant purchase contract terms and under statutory and common law. To date,
USX has reimbursed the Company for substantially all of the direct costs of
corrective action at these facilities. The Company expects that it will continue
to be reimbursed by USX. Payments, however, may not continue to be made by USX
or USX may not have adequate financial resources to fully reimburse the Company
for these costs. The Company does not expect future costs related to this matter
to be significant.

For additional information regarding pending proceedings relating to
environmental matters, please see Item 3 -- "Legal Proceedings."

EMPLOYEES

The Company's employment needs vary seasonally with sales and production
levels. As of January 3, 2004, the Company had approximately 3,173 full-time
employees, including approximately 1,706 hourly workers. The following plants
are unionized manufacturing facilities: (1) the West Salem, Ohio plant,
employing approximately 125 covered workers; (2) the Woodbridge, New Jersey
plant, employing approximately 98 covered workers; and (3) the Pointe Claire,
Quebec, plant and London and Burlington, Ontario plants, covering approximately
295 hourly workers. Additionally, approximately 60 hourly workers in certain
U.S. supply center locations are covered by collective bargaining agreements.
Approximately 4% of the Company's employees are covered by collective bargaining
agreements that expire within one year. The Company considers its labor
relations to be good.

The Company utilizes leased employees to supplement its own workforce at
its vinyl window fabrication plants. The Company believes that the employee
leasing program provides it with scheduling flexibility for seasonal production
requirements. The aggregate number of leased employees in the window plants
ranges from approximately 300 to 650 people based on seasonality.

FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS

Prior to the acquisition of Gentek in August 2003, all of the Company's
business was conducted in the United States. Currently, all of its operations
are located in the United States and Canada. Revenue from external customers in
foreign countries was approximately $51 million in 2003 and was primarily
derived from customers in Canada. The Company's remaining revenue totaling $729
million was derived from U.S. customers. At January 3, 2004, long-lived assets
totaled approximately $36 million in Canada and $461 million in the U.S. The
Company is exposed to risks inherent in any foreign operation, including foreign
exchange rate fluctuations. For further information on foreign currency exchange
risk, see Item 7A. "Quantitative and Qualitative Disclosures About Market
Risk -- Foreign Currency Exchange Rate Risk."

RISK FACTORS

The following discussion of risks relating to the Company's business should
be read carefully in connection with evaluating the Company's business,
prospects and the forward-looking statements contained in this report on Form
10-K and oral statements made by representatives of the Company from time to
time. Any of the following risks could materially adversely affect the Company's
business, operating results, financial condition and the actual outcome of
matters as to which forward-looking statements are made. For additional
information regarding forward-looking statements, see Item 7. "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Certain Forward-Looking Statements."

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The Company's business is subject to a number of risks and uncertainties,
including those described below:

The Company's substantial level of indebtedness could adversely affect its
financial condition and prevent it from fulfilling its obligations on the notes.

The Company has a substantial amount of indebtedness, which will require
significant interest payments. As of January 3, 2004, the Company had
approximately $305.0 million of indebtedness and interest expense for the year
ended January 3, 2004 was approximately $27.4 million. Approximately $140.0
million of such debt is variable rate debt and the effect of a 1% increase or
decrease in interest rates would increase or decrease such total annual interest
expense by approximately $1.4 million.

The Company's substantial level of indebtedness could have important
consequences, including the following:

- the Company's ability to obtain additional financing for working capital,
capital expenditures, acquisitions or general corporate purposes may be
impaired;

- the Company must use a substantial portion of its cash flow from
operations to pay interest and principal on the notes and other
indebtedness, which will reduce the funds available to the Company for
other purposes such as potential acquisitions and capital expenditures;

- the Company is exposed to fluctuations in interest rates, because the
credit facility has a variable rate of interest;

- the Company has a higher level of indebtedness than some of its
competitors, which may put it at a competitive disadvantage and reduce
the Company's flexibility in planning for, or responding to, changing
industry conditions, including increased competition;

- the Company is more vulnerable to general economic downturns and adverse
developments in its business; and

- the Company's failure to comply with financial and other restrictive
covenants in the credit facility, in the indenture governing the 9 3/4%
notes and other debt obligations, some of which require the Company to
maintain specified financial ratios and limit the Company's ability to
incur additional debt and sell assets, could result in an event of
default that, if not cured or waived, could harm the Company's business
or prospects and could result in bankruptcy.

The Company expects to pay its expenses and to pay the principal and
interest on the 9 3/4% notes, credit facility and other debt from cash flows
from operations. The Company's ability to meet expenses depends on future
performance, which will be affected by financial, business, economic and other
factors. The Company will not be able to control many of these factors, such as
economic conditions in the markets in which it operates and pressure from
competitors. The Company cannot be certain that cash flow will be sufficient to
allow it to pay principal and interest on its debt, including the 9 3/4% notes,
and meet its other obligations. If the Company does not have enough money, it
may be required to refinance all or part of its existing debt, including the
9 3/4% notes, sell assets or borrow more money. The Company may not be able to
refinance on acceptable terms, if at all. In addition, the terms of existing or
future debt agreements, including the credit facility and the indenture
governing the 9 3/4% notes, may restrict the Company from pursuing any of these
alternatives. The failure to generate sufficient cash flow or to achieve such
alternative financing could significantly and adversely affect the value of the
9 3/4% notes.

The Company will be able to incur more indebtedness and the risks
associated with its substantial leverage, including its ability to service its
indebtedness, will increase.

The indenture relating to the 9 3/4% notes and the amended and restated
credit agreement governing the credit facility will permit the Company, subject
to specified conditions, to incur a significant amount of additional
indebtedness. In addition, the Company may incur an additional $65.2 million of
indebtedness under the revolving portion of its credit facility. If the Company
incurs additional debt, the risks associated with its substantial leverage,
including its ability to service its debt, would increase.
9

The right to receive payments on the 9 3/4% notes and guarantees is
subordinated to the Company's senior debt.

Payment on the notes and guarantees is subordinated in right of payment to
all of the Company's and its guarantors' senior debt. As of January 3, 2004, the
notes and the related guarantees were subordinated to approximately $140.0
million of senior debt. In addition, $65.2 million of senior debt was available
for borrowing under the revolving portion of its credit facility. As a result,
upon any distribution to creditors or the creditors of the guarantors in a
bankruptcy, liquidation, reorganization or similar proceeding relating to the
Company or its guarantors or its or their property, the holders of the senior
debt will be entitled to be paid in full in cash before any payment may be made
on the 9 3/4% notes or the guarantees thereof. In these cases, the Company and
its guarantors may not have sufficient funds to pay all of its creditors, and
holders of the 9 3/4% notes may receive less, ratably, than the holders of
senior debt. In addition, all payments on the 9 3/4% notes and the related
guarantees will be blocked in the event of a payment default on the designated
senior debt and may be blocked for up to 179 consecutive days in the event of
certain non-payment defaults on designated senior debt.

The indenture for the 9 3/4% notes and credit facility impose significant
operating and financial restrictions on the Company, which may prevent it from
capitalizing on business opportunities and taking some corporate actions.

The indenture for the 9 3/4% notes and credit facility impose, and the
terms of any future debt may impose, significant operating and financial
restrictions on the Company. These restrictions, among other things, limit the
Company's ability and that of its subsidiaries to:

- incur or guarantee additional indebtedness;

- pay dividends or make other distributions;

- repurchase stock;

- make investments;

- sell or otherwise dispose of assets including capital stock of
subsidiaries;

- create liens;

- enter into agreements restricting the Company's subsidiaries' ability to
pay dividends;

- enter into transactions with affiliates; and

- consolidate, merge or sell all of its assets.

These covenants may adversely affect the Company's ability to finance
future operations or capital needs to pursue available business opportunities.

In addition, the credit facility requires the Company to maintain specified
financial ratios. These covenants may adversely affect the Company's ability to
finance its future operations, meet its capital needs, pursue available business
opportunities, limit the ability to plan for or react to market conditions or
otherwise restrict activities or business plans. A breach of any of these
covenants or inability to maintain the required financial ratios could result in
a default in respect of the related indebtedness. If a default occurs, the
relevant lenders could elect to declare the indebtedness, together with accrued
interest and other fees, to be immediately due and payable and proceed against
any collateral securing that indebtedness.

The exterior building products industry is cyclical and downturns in the
industry or the economy could negatively affect business, operating results and
the value of the 9 3/4% notes.

The exterior building products industry is cyclical and is significantly
affected by changes in national and local economic and other conditions such as
employment levels, migration trends, availability of financing, interest rates
and consumer confidence. These factors can negatively affect the demand for and
pricing of the Company's products. If interest rates increase, the ability of
prospective buyers to finance purchases of home improvement products and invest
in new real estate will be adversely affected. A prolonged recession affecting
10

the residential construction industry could also adversely impact the Company's
financial performance. The occurrence or continuation of any of the above items,
many of which are outside the Company's control, and the items described below
could have a negative impact on business and adversely affect the value of the
9 3/4% notes.

The Company has substantial fixed costs and, as a result, operating income
is sensitive to changes in net sales.

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 would be
able to reduce its fixed costs proportionately 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 the Company's income from operations.

The Company could face potential product liability claims relating to
products it manufactures or distributes.

The Company faces a business risk of exposure to product liability claims
in the event that the use of its products is alleged to have resulted in injury
or other adverse effects. The Company currently maintains product liability
insurance coverage, but it may not be able to obtain such insurance on
acceptable terms in the future, if at all, or any such insurance may not provide
adequate coverage against potential claims. Product liability claims can be
expensive to defend and can divert management and other personnel for months or
years regardless of the ultimate outcome. An unsuccessful product liability
defense could have a material adverse effect on the Company's business,
financial condition, results of operations or business prospects or ability to
make payments on the 9 3/4% notes when due.

The Company remains subject to risks of realizing synergies from the Gentek
acquisition.

The scale of the Company's business has increased significantly through the
Gentek acquisition. Although the Company believes that the Gentek acquisition
will provide it with synergy opportunities of approximately $5 million to $10
million over the next two years, and the Company has already implemented many of
the actions necessary to drive these opportunities (with approximately half of
the benefits expected in 2004), the successful realization of operational
synergies will depend on a number of factors, many of which are beyond the
Company's control. The Company may be unable to realize synergies from the
Gentek acquisition and integrate its workforce, management, network and systems.
The Company may encounter other difficulties in realizing synergies of these
operations, such as the diversion of management's attention from daily
operations, which could result in a delay in the achievement of or a decrease in
the anticipated economies of scale and other operating benefits and, therefore,
future revenues and profitability. If the Company does not successfully
integrate its operations, this could have a material adverse effect on its
financial condition, results of operations and liquidity.

The Company has significant goodwill and other intangible assets.

The Company has accounted for the April 2002 merger transaction and the
acquisition of Gentek using the purchase method of accounting. The purchase
price has been allocated to assets and liabilities based on the fair values of
the assets acquired and the liabilities assumed. The excess of cost over fair
value of the new identifiable assets acquired has been recorded as goodwill.
These purchase price allocations have been made based upon valuations and other
studies. As a result of these transactions, and pending the results of the final
valuation of the assets and liabilities from the Gentek acquisition, the Company
has approximately $116.1 million of other intangible assets and $230.3 million
of goodwill. The Gentek purchase price allocation is preliminary, based on facts
currently known to the Company and is subject to adjustment as the final
valuation for the fair value of the warranty liability related to certain steel
siding has not been completed. As a result, the actual allocation is subject to
completion and therefore may differ from the amounts included herein and such
differences may be material. Given the significant amount of goodwill and other
intangible assets, any future impairment of the goodwill and other intangible
assets recorded could have an adverse effect on the Company's financial
condition and results of operations.
11

The Company is controlled by affiliates of Harvest Partners, Inc., whose
interests may be different than other investors.

By reason of Harvest Partners and its affiliates ownership of the Company
and the ability of Harvest Partners and its affiliates, pursuant to a
stockholders agreement among stockholders of Associated Materials Holdings Inc.,
to designate a majority of the members of the board of directors of Holdings,
Harvest Partners will control actions to be taken by the Company's stockholder
and/or board of directors, including amendments to the Company's certificate of
incorporation and by-laws and approval of significant corporate transactions,
including mergers and sales of substantially all of the Company's assets. The
interests of Harvest Partners and its affiliates interests may be materially
different than other investors in the Company. For example, Harvest Partners may
cause the Company to pursue a growth strategy, which could impact the Company's
ability to make payments under the indenture governing the 9 3/4% notes and the
credit facility or cause a change of control. In addition, to the extent
permitted by the indenture and the credit facility, Harvest Partners may cause
the Company to pay dividends rather than make capital expenditures.

The Company may have inadequate warranty reserves.

Consistent with industry practice, the Company provides to homeowners
limited warranties on certain products. Warranties are provided for varying
lengths of time, from the date of purchase up to and including lifetime.
Warranties cover product failures such as stress cracks and seal failure for
windows and fading and peeling for siding products, as well as manufacturing
defects. Liabilities for future warranty costs are provided for annually based
on management's estimates of such future costs, which are based on historical
trends and sales of products to which such costs relate. To the extent that the
Company's estimates are inaccurate and it does not have adequate warranty
reserves, the Company's liability for warranty payments could have a material
impact on its financial condition and results of operations.

The Company is subject to various environmental statutes and regulations,
which may result in significant costs.

The Company's operations are subject to various U.S. and Canadian
environmental statutes and regulations, including those relating to materials
used in its products, discharge of pollutants into the air, water and soil,
treatment, transport, storage and disposal of solid and hazardous wastes, and
remediation of soil and groundwater contamination. Such laws and regulations may
also impact the availability of materials used in manufacturing the Company's
products. From time to time, the Company's facilities are subject to
investigation by governmental regulators. The Company believes it is in material
compliance with applicable environmental requirements, and does not expect these
requirements to result in material expenditures in the foreseeable future.
However, future expenditures may increase as compliance standards and technology
change.

Certain environmental laws, including the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended, or
CERCLA, and comparable state laws, impose strict, and in certain circumstances
joint and several, liability for response costs and impose liability for damages
to natural resources upon specified responsible parties, which include certain
former owners and operators of sites designated for clean up by environmental
regulators. A facility initially owned by USX and subsequently owned by the
Company in Lumber City, Georgia, which is now owned by Amercord Inc.
("Amercord"), a company in which the Company currently holds a minority
interest, is undergoing soil and groundwater investigation, pursuant to a
Consent Order entered into by Amercord with the Georgia Department of Natural
Resources in 1994. The Company is not a party to these activities. The Company
also understands that soil and groundwater in certain areas of the site
(including in the area of two industrial waste landfills) are being investigated
under CERCLA by the United States Environmental Protection Agency to determine
whether remediation of those areas may be required and whether the site should
be listed on the state or federal list of priority sites requiring remediation.
Amercord, the current site owner, may not have adequate financial resources to
perform required remediation and if substantial remediation is required, claims
may be made against the Company, which could result in material expenditures.
See Item 7. "Management's discussion and analysis of financial condition and
results of operations" and Item 1. "Business -- Government Regulation and
Environmental Matters."
12

Also, the Company cannot be certain that it has identified all
environmental matters giving rise to potential liability. Its past use of
hazardous materials, releases of hazardous substances at or from currently or
formerly owned or operated properties, newly discovered contamination at any of
its current or formerly owned or operated properties, or more stringent future
environmental requirements (or stricter enforcement of existing requirements),
or its inability to enforce indemnification agreements, could result in
increased expenditures or liabilities which could have an adverse effect on its
business and financial condition. Any judgment in an environmental proceeding
entered against the Company or its subsidiary that is greater than $10.0 million
and is not discharged, paid, waived or stayed within 60 days after becoming
final and non-appealable would be an event of default in the indenture governing
the 9 3/4% notes. For details regarding environmental matters giving rise to
potential liability, see Item 1. "Business -- Government Regulation and
Environmental Matters" and Item 3. "Legal Proceedings."

AVAILABLE INFORMATION

The Company makes available its annual reports on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K, along with any related
amendments and supplements on its website as soon as reasonably practicable
after it electronically files or furnishes such materials with or to the SEC.
These reports are available, free of charge, at www.associatedmaterials.com. The
Company's website and the information contained in it and connected to it do not
constitute part of this annual report or any other report the Company files with
or furnishes to the SEC.

ITEM 2. PROPERTIES

The Company's operations include both owned and leased facilities as
described below:

- ---------------

(1) Leased facilities.

(2) The Company leases a portion of its warehouse space in this facility.

Management believes that the Company's facilities are generally in good
operating condition and are adequate to meet anticipated requirements in the
near future.

The Company also operates 124 supply centers in major metropolitan areas
throughout the United States and Canada. Except for one owned location in Akron,
Ohio, the Company leases its supply centers for terms generally ranging from
five to seven years with renewal options. The supply centers range in size from
6,000 square feet to 50,000 square feet depending on sales volume and the
breadth and type of products offered at each location.

13

The leases for Alside's window plants expire in 2011 for the Bothell
location and in 2005 for the Cedar Rapids and Kinston locations. Each lease is
renewable at the Company's option for an additional five-year period. The lease
for Gentek's former corporate headquarters expires in 2005. The lease for
Gentek's Burlington location expires in 2014. The lease for Gentek's Woodbridge
location expires in 2009 and is renewable for an additional five-year period.
The lease for Gentek's Richmond location expires in 2007.

ITEM 3. LEGAL PROCEEDINGS

The Company is involved from time to time in litigation arising in the
ordinary course of its 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.

Certain environmental laws, including the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended,
("CERCLA"), and comparable state laws, impose strict, and in certain
circumstances joint and several, liability upon specified responsible parties,
which include certain former owners and operators of waste sites designated for
clean up by environmental regulators. A facility initially owned by USX and
subsequently owned by the Company in Lumber City, Georgia, which is now owned by
Amercord, is subject to a Consent Order entered into by Amercord with the
Georgia Department of Natural Resources in 1994. The Company is not a party to
the Consent Order. The Company understands that soil and groundwater in certain
areas of the site (including in the area of two industrial waste landfills) are
being investigated under CERCLA by the United States Environmental Protection
Agency to determine whether remediation of those areas may be required and
whether the site should be listed on the state or federal list of priority sites
requiring remediation. Amercord, the current site owner, does not have adequate
financial resources to carry out additional remediation that may be required,
and if substantial remediation is required, claims may be made against the
Company, which could result in material expenditures. If costs related to the
remediation of this site are incurred, the Company and USX have agreed to share
in those costs; however, there can be no assurance that USX can or will make the
payments.

The Woodbridge, New Jersey facility is currently the subject of an
investigation and/or remediation before the New Jersey Department of
Environmental Protection, or NJDEP, for Gentek Building Products, Inc., or
Gentek U.S. (Woodbridge, Middlesex County, ISRA Case No. E20030110). The
facility is currently leased by Gentek U.S. Previous operations at the facility
resulted in soil and groundwater contamination in certain areas of the property.
In 1999, the property owner and Gentek U.S. signed a remediation agreement with
NJDEP, pursuant to which the property owner and Gentek U.S. agreed to continue
an investigation/remediation that had been commenced pursuant to a Memorandum of
Agreement with NJDEP. Under the remediation agreement, NJDEP required posting of
$250,000 in a remediation funding source, half of which was provided by Gentek
U.S. under a self-guaranty. Investigations at this facility are ongoing and the
Company cannot currently determine the amount of any cleanup costs that may be
associated with this facility.

The same Woodbridge, New Jersey facility was the subject of a prior
investigation and remediation before NJDEP, under ISRA Case No. 94359. On
February 1, 2000, NJDEP issued a no further action letter and covenant not to
sue, relying in part on the establishment of a 60-year duration Classification
Exception Area, or CEA and Wellhead Restriction Area, or WRA, for a discrete
area of the facility. By reason of this approval, Gentek U.S. has certain
responsibilities imposed by law and/or agreement to monitor the extent of
contamination at the facility in the area of, and for the duration of, the CEA
and WRA. The Company does not anticipate that those responsibilities will lead
to material expenditures in the future.

The Company handles other environmental 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.

14

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

No matters were submitted to a vote of the Company's sole security holder
during the fourth quarter of the year ended January 3, 2004.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

There is no established public trading market for the Company's common
equity securities.

HOLDERS

As of March 29, 2004, Holdings is the Company's sole record holder of its
common stock.

DIVIDENDS

Prior to the April 2002 merger transaction, the Company paid dividends of
$0.05 per share in the 108 days ended April 18, 2002. The Company did not pay
dividends in 2003 or for the 257 days ended December 31, 2002 and presently does
not intend to pay cash dividends. In addition, the Company's credit facility and
indenture governing the 9 3/4% notes restrict dividend payments by the Company.

EQUITY COMPENSATION PLANS

The Company has no outstanding equity compensation plans under which equity
securities of the Company are authorized for issuance.

15

ITEM 6. SELECTED FINANCIAL DATA

The selected financial data set forth below for the five-year period ended
January 3, 2004 was derived from the audited consolidated financial statements
of the Company. The Company's results of operations prior to the date of the
April 2002 merger transaction are presented as the results of the Predecessor.
The results of operations, including the April 2002 merger transaction and
results thereafter, are presented as the results of the Successor. In addition,
the Company completed the sale of its AmerCable division on June 24, 2002.
AmerCable's results through April 18, 2002 are included in the results of
continuing operations of the Predecessor. Subsequent to April 18, 2002,
AmerCable's results are presented as discontinued operations of the Successor as
it was the Successor's decision to divest this division. The Company's results
of operations also include the results of Gentek subsequent to its acquisition,
which was completed on August 29, 2003. The data should be read in conjunction
with Item 7. "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the consolidated financial statements, related notes
and other financial information included elsewhere in this report.

108 DAYS 257 DAYS
YEAR ENDED DECEMBER 31, ENDED ENDED YEAR ENDED
------------------------------ APRIL 18, DECEMBER 31, JANUARY 3,
1999 2000 2001 2002 2002 2004
-------- -------- -------- --------- ------------ ----------
PREDECESSOR
(IN THOUSANDS)

INCOME STATEMENT DATA:
Net sales................... $455,268 $499,393 $595,819 $180,230 $449,324 $779,836
Cost of sales............... 317,596 353,994 425,366 130,351 317,077 561,525
-------- -------- -------- -------- -------- --------
Gross profit................ 137,672 145,399 170,453 49,879 132,247 218,311
Selling, general and
administrative expenses... 96,028 107,255 119,945 43,272 86,097 149,571
-------- -------- -------- -------- -------- --------
Income from operations...... 41,644 38,144 50,508 6,607 46,150 68,740
Interest expense(1)......... 6,779 6,046 6,795 2,068 16,850 27,369
Gain on the sale of
UltraCraft(2)............. -- 8,012 -- -- -- --
Foreign currency (gain)..... -- -- -- -- -- (548)
Merger transaction
costs(3).................. -- -- -- 9,319 -- --
Debt extinguishment
costs(4)(5)............... -- -- -- -- 7,579 --
Equity in loss of
Amercord.................. 1,337 -- -- -- -- --
Write-down of Amercord(6)... -- -- 2,393 -- -- --
-------- -------- -------- -------- -------- --------
Income (loss) before income
tax expense............... 33,528 40,110 41,320 (4,780) 21,721 41,919
Income tax expense.......... 13,038 16,555 15,908 977 9,016 17,388
-------- -------- -------- -------- -------- --------
Income (loss) from
continuing operations..... 20,490 23,555 25,412 (5,757) 12,705 24,531
Loss from discontinued
operations................ -- -- -- -- (521) --
-------- -------- -------- -------- -------- --------
Net income (loss)........... $ 20,490 $ 23,555 $ 25,412 $ (5,757) $ 12,184 $ 24,531
======== ======== ======== ======== ======== ========

- ---------------

(1) The year ended January 3, 2004 includes the write-off of $3.9 million of
debt issuance costs as a result of amending and restating the Company's
credit facility for the Gentek acquisition.

(2) The Company recorded an $8.0 million pre-tax gain on the sale of its
UltraCraft operation, a manufacturer of semi-custom cabinets, in June 2000.

(3) Merger transaction costs include investment banking and legal fees incurred
by the Predecessor in conjunction with the strategic review process and
subsequent April 2002 merger transaction.

(4) Debt extinguishments costs include $4.9 million for the extinguishment of
substantially all of the Successor's assumed 9 1/4% notes and $2.7 million
for the expense of financing fees related to an interim credit facility
utilized for the April 2002 merger transaction, which was repaid shortly
thereafter.

(5) In 2003, the Company adopted FASB Statement of Financial Accounting
Standards No. 145,-- "Rescission of FASB Statements No. 4, 44 and 64,
Amendment of FASB Statement No. 13, and Technical Corrections," which among
other provisions, required debt extinguishment costs incurred in prior
periods to be reclassified and no longer presented as extraordinary items.
As a result of adopting this standard, the Company reclassified debt
extinguishment costs recorded in the second quarter of 2002.

(6) The Company recorded a $2.4 million loss upon the write-off of its remaining
investment in Amercord due to the deterioration of Amercord's operations.

17

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

The Company 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(R), Revere(R) and
Gentek(R) 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 124 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's
products are used in the repair and remodeling, as well as the new construction,
sectors of the building industry.

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.

In 2003, the Company changed its fiscal year from a calendar year ending on
December 31st to a 52 / 53 week fiscal year that ends on the Saturday closest to
December 31st. The Company's 2003 fiscal year ended on January 3, 2004.

On August 29, 2003, the Company completed the acquisition of Gentek
Holdings, Inc. ("Gentek Holdings") and repaid all of the indebtedness and
accrued interest of Gentek Holdings and its subsidiaries for an aggregate
purchase price of approximately $114.3 million, which included $1.1 million of
cash acquired, a working capital adjustment and customary transaction fees.

Gentek Holdings, which was privately held, is the parent of Gentek Building
Products, Inc. and Gentek Building Products Limited (collectively, "Gentek").
Gentek manufactures and distributes vinyl windows, vinyl siding and accessories,
aluminum trim coil, and aluminum and steel siding and accessories under the
Revere(R) and Gentek(R) brand names. Gentek markets its products to professional
contractors on a wholesale basis through 13 company-owned distribution centers
in the mid-Atlantic region of the United States, 20 company-owned distribution
centers in Canada, and independent distributors in the United States.

The Gentek acquisition has provided the Company with a number of
significant cost savings and other operational opportunities, including
increased purchasing leverage, insourcing of distributed metal products and
operational best practices. The Company believes that the Gentek acquisition
will provide synergy opportunities of approximately $5 million to $10 million
over the next two years. The Company has implemented many of the actions
necessary to drive these opportunities and expects to realize approximately half
of the benefits in 2004 and the remainder by the end of 2005.

In connection with the acquisition, the Company amended its existing credit
facility by adding a term loan facility to borrow an additional $113.5 million
and expanding its revolving credit facility from $40 million to $70 million,
including a new Canadian subfacility of $15 million.

18

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 where the Company already has a supply center presence,
increasing sales through independent specialty distributor customers, realizing
synergies from the Gentek acquisition, developing innovative new products, and
driving operational excellence by reducing costs, increasing customer service
levels and reducing lead times.

RESULTS OF OPERATIONS

The Company's 2003 results of operations include the results of Gentek
subsequent to its acquisition on August 29, 2003. Gentek's results as compared
to Alside's results typically have a lower gross profit margin percentage as a
larger proportion of Gentek's net sales are to independent distributors versus
to contractors through company-owned distribution centers. As such, Gentek's
selling, general and administrative expense as a percentage of net sales is
typically lower than Alside's as Gentek does not have as large of a proportion
of fixed costs associated with operating company-owned distribution centers. The
Company anticipates that on a consolidated basis, its gross profit margin
percentage and its selling, general and administrative expense as a percentage
of net sales will decrease as compared to periods prior to the Gentek
acquisition.

The Company's results of operations prior to the date of the April 2002
merger transaction are presented as the results of the Predecessor. The results
of operations including the April 2002 merger transaction and results thereafter
are presented as the results of the Successor. In addition, the Company
completed the sale of its AmerCable division on June 24, 2002. AmerCable's
results through April 18, 2002 are included in the results of continuing
operations of the Predecessor. Subsequent to April 18, 2002, AmerCable's results
are presented as discontinued operations of the Successor as it was the
Successor's decision to divest this division.

Prior to the April 2002 merger transaction and the sale of AmerCable, the
Company consisted of two operating segments, Alside and AmerCable. Subsequent to
the April 2002 merger transaction, the Company is in the single business of
manufacturing and distributing exterior residential building products. The
results of Alside and Gentek represent the ongoing operations of the Company.

The Company believes that vinyl building products continue to gain market
share from metal and wood products due to vinyl's favorable attributes, which
include its durability, lower maintenance cost and lower cost. Although no
assurances can be given, the Company further believes that these increases in
market share, together with increased marketing efforts, will increase the
Company's sales of vinyl windows, vinyl siding, and other complementary building
products.

19

The following table sets forth for the periods indicated the results of the
Company's operations by segment (in thousands):

- ---------------

(1) EBITDA is calculated as net income (loss) plus interest, taxes, depreciation
and amortization. Adjusted EBITDA excludes certain items and AmerCable's
operating results. 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. The definition of EBITDA under the
Company's credit facility does not exclude the results of AmerCable. The
Company has, however, excluded the results of AmerCable when calculating
adjusted EBITDA as AmerCable is not included in the Company's continuing
operations. The definition of EBITDA under the indenture governing the
9 3/4% notes due 2012 also excludes certain items. Adjusted EBITDA has not
been prepared in accordance with accounting principles generally accepted in
the United States. Adjusted EBITDA as presented by the Company may not be
comparable to similarly titled measures reported by other companies. As
Adjusted EBITDA is not a measure determined in accordance with GAAP, it
should not be considered as an alternative to, or more meaningful than, net
income (loss) (as determined in accordance with GAAP), as a measure of the
Company's operating results or cash flows from

21

operations (as determined in accordance with GAAP). The reconciliation of net
income (loss) to EBITDA and adjusted EBITDA is as follows:

(i) Debt extinguishment costs include $4.9 million for the
extinguishment of substantially all of the Successor's assumed
9 1/4% notes and $2.7 million for the expense of financing fees
related to an interim credit facility utilized for the April 2002
merger transaction, which was repaid shortly thereafter.

(ii) AmerCable's EBITDA is calculated as its net income plus interest,
taxes, depreciation and amortization. A reconciliation of
AmerCable's net income (loss) to EBITDA is as follows:

(iii) In 2001, the Company recorded a $2.4 million loss upon the
write-off of its remaining investment in Amercord due to the
deterioration of Amercord's operations.

(iv) Merger transaction costs include investment banking and legal fees
incurred by the Predecessor in conjunction with the strategic
review process and subsequent April 2002 merger transaction.

22

(v) The cost of sales adjustment is the expense related to inventory
fair value adjustments recorded at the time of the April 2002
merger transaction totaling $1.9 million and at the time of the
Gentek acquisition totaling $1.4 million.

(2) The 2003 results of operations include the results of Gentek subsequent to
its acquisition on August 29, 2003. A reconciliation of Gentek's Adjusted
EBITDA for the year ended January 3, 2004 is as follows:

(3) Includes corporate expenses of $1.3 million and $5.0 million for the years
ended December 31, 2002 and 2001, respectively associated with the Company's
Dallas, Texas corporate office, which was relocated to Cuyahoga Falls, Ohio
after the April 2002 merger transaction.

YEAR ENDED JANUARY 3, 2004 COMPARED TO YEAR ENDED DECEMBER 31, 2002 (COMBINED
SUCCESSOR AND PREDECESSOR RESULTS OF THE BUILDING PRODUCTS SEGMENT

Prior to the sale of AmerCable, the Company consisted of two operating
divisions, Alside and AmerCable, which were presented as building products and
electrical cable products segments, respectively. Subsequent to the sale of
AmerCable, the Company is in the single business of manufacturing and
distributing exterior residential building products. Therefore, management's
discussion and analysis of the Company's results of operations focuses on the
building products segment.

Net sales increased 27.6% to $779.8 million for the year ended January 3,
2004 compared to $611.3 million for the same period in 2002, primarily driven by
increased window sales at the Alside division along with $103.4 million of net
sales contributed from Gentek since the date of its acquisition. Additionally,
the Company believes its sales were driven by strong industry dynamics, as
indicated by the strength of several key metrics that the Company believes are
indicators of strength in the industry. These metrics include existing home
sales, single-family housing starts and mortgage interest rates. Gross profit
increased to $218.3 million, or 28.0% of net sales, for the year ended January
3, 2004 compared to $179.3 million, or 29.3% of net sales, for the same period
in 2002. The decrease in gross profit margin percentage was a result of window
sales, which have a lower gross profit margin percentage, comprising a larger
proportion of total net sales in 2003. Additionally, the decrease in gross
profit margin percentage was a result of the impact of Gentek, which has a lower
gross profit margin percentage than the Alside division. Selling, general and
administrative expense increased to $149.6 million, or 19.2% of net sales, for
the year ended January 3, 2004 compared to $127.2 million, or 20.8% of net
sales, for the same period in 2002. The increase in selling, general and
administrative expense is primarily a result of the three new supply centers
added in 2003 along with the seven new supply centers added in 2002, which had a
full year of expense in 2003, along with the acquisition of Gentek. Income from
operations was $68.7 million, or 8.8% of net sales, for the year ended January
3, 2004 compared to $52.2 million, or 8.5% of net sales, for the same period in
2002.

Net income increased to $24.5 million for the year ended January 3, 2004
compared to $6.4 million for the year ended December 31, 2002. The increase in
net income is a result of the increased income from operations, net of the
impact of non-operating items discussed below.

23

Interest expense of $27.4 million for the year ended January 3, 2004
consisted primarily of interest expense on the 9 3/4% notes, term loan and
revolving loans under the credit facility, amortization of deferred financing
fees and the write-off of $3.9 million of debt issuance costs as a result of
amending and restating the credit facility for the acquisition of Gentek. This
compares to interest expense of $18.9 million for the year ended December 31,
2002, which consisted primarily of interest in the Successor period on the
9 3/4% notes, term loan and revolving loans under the credit facility, interest
on an interim credit facility temporarily utilized for the April 2002 merger
transaction, amortization of deferred financing fees, and interest in the
Predecessor period on the Company's then outstanding 9 1/4% notes. Income tax
expense increased to $17.4 million for the year ended January 3, 2004 compared
to $10.0 million for the year ended December 31, 2002. The 2003 provision
reflects an effective income tax rate of 41.5%, while the 2002 provision
reflects an effective rate of 59.0%. The 2002 provision reflects an effective
income tax rate of 41.5% for the Successor period, 38.5% for the Predecessor
period, as well as an estimate for $7.3 million of merger transaction costs that
were considered to be non-deductible for income tax purposes. As a result of
relocating the Company's corporate office from Texas to Ohio, the Company's
state and local income tax rate increased, raising the Company's total effective
tax rate to 41.5% from 38.5%. The results for the year ended December 31, 2002
include $7.6 million of debt extinguishment costs for a portion of the premium
paid to extinguish $74.0 million of the Successor's assumed 9 1/4% notes and
financing fees related to an interim credit facility utilized for the April 2002
merger transaction, which was repaid shortly thereafter. Additionally, results
for the year ended December 31, 2002 include $9.3 million of transaction costs
consisting of investment banking and legal fees in conjunction with the
strategic review process and subsequent April 2002 merger transaction. Finally,
the results for the year ended December 31, 2002 include a loss from
discontinued operations $0.5 million, net of tax, for the Successor period from
the Company's AmerCable division.

Adjusted EBITDA for the year ended January 3, 2004 increased to $86.8
million compared to $64.6 million for the year ended December 31, 2002. Adjusted
EBITDA for the year ended January 3, 2004 includes $10.3 million of Adjusted
EBITDA contributed by Gentek. As compared to EBITDA, Adjusted EBITDA for the
year ended January 3, 2004 excludes a cost of sales expense of $1.4 million
relating to an inventory fair value adjustment recorded at the time of the
acquisition of Gentek. As compared to EBITDA, Adjusted EBITDA for the year ended
December 31, 2002 excludes $1.9 million of EBITDA relating to the AmerCable
division, merger transaction costs of $9.3 million, debt extinguishment costs of
$7.6 million and a cost of sales expense of $1.9 million relating to an
inventory fair value adjustment recorded at the time of the April 2002 merger
transaction. The increase in Adjusted EBITDA is primarily a result of the
increased sales of vinyl windows as well as the acquisition of Gentek.

YEAR ENDED DECEMBER 31, 2002 (COMBINED SUCCESSOR AND PREDECESSOR RESULTS OF THE
BUILDING PRODUCTS SEGMENT) COMPARED TO YEAR ENDED DECEMBER 31, 2001

Net sales increased 16.5% to $611.3 million for the year ended December 31,
2002 compared to $524.5 million for the same period in 2001 due to increased
sales of vinyl windows and vinyl siding. The increase in sales is the result of
the Company's marketing investments and continued expansion of its nationwide
distribution network of supply centers. The Company also believes that the
increased sales can be attributed to consumers' demand for professional
remodeling services including vinyl replacement windows and vinyl siding as a
means to enhance home values during a time of historically low interest rates.
Gross profit increased to $179.3 million, or 29.3% of net sales, for the year
ended December 31, 2002 compared to $156.6 million, or 29.9% of net sales, for
the same period in 2001. The decrease in gross profit margin percentage was a
result of window sales, which have a lower gross margin percentage, comprising a
larger proportion of total sales in 2002 compared to 2001. Selling, general and
administrative expenses increased to $127.2 million, or 20.8% of net sales, for
the year ended December 31, 2002 versus $112.8 million, or 21.5% of net sales,
in the same period in 2001. Selling, general and administrative expenses
increased as a result of seven new supply centers added during 2002, personnel
added to support sales growth at existing supply centers, additional marketing
investments to drive higher sales and increased commission expense resulting
from the higher sales. Income from operations increased to $52.2 million, or
8.5% of net sales, for the year ended December 31, 2002 compared to $43.9
million, or 8.4% of net sales, for the same period in 2001.

24

EBITDA for the year ended December 31, 2002 was $47.6 million compared to
$59.0 million for the same period in 2001. EBITDA for the year ended December
31, 2002 includes $1.9 million of EBITDA relating to the Company's AmerCable
division, merger transaction costs of $9.3 million, debt extinguishments costs
of $7.6 million and a cost of sales expense of $1.9 million relating to an
inventory fair value adjustment recorded at the time of the April 2002 merger
transaction. Adjusted EBITDA, excluding the amounts discussed above, was $64.6
million for the year ended December 31, 2002. EBITDA for the year ended December
31, 2001 includes EBITDA of $8.4 million relating to the Company's AmerCable
division and a charge of $2.4 million for the write-down of the Company's
investment in Amercord Inc. Adjusted EBITDA for the year ended December 31,
2001, excluding the amounts discussed above, was $53.1 million. The increase in
Adjusted EBITDA is primarily a result of the Company's increased sales volume
and related profits.

Successor and Predecessor Results

The Successor had net sales and net income of $449.3 million and $12.2
million, respectively, for the period from April 19, 2002 to December 31, 2002.
Interest expense during this period was $16.9 million and consisted primarily of
interest on the 9 3/4% notes, term loan and revolving loans under the credit
facility, and an interim credit facility temporarily utilized for the April 2002
merger transaction and amortization of deferred financing costs. As a result of
relocating the Company's corporate office from Texas to Ohio, the Successor's
state and local income tax rate increased, raising the Company's total effective
tax rate to 41.5% from 38.5%. The Successor's results include debt
extinguishment costs of $7.6 million for a portion of the premium paid to
extinguish $74.0 million of the Successor's assumed 9 1/4% notes and financing
fees related to an interim credit facility utilized for the April 2002 merger
transaction which was repaid shortly thereafter and a loss from discontinued
operations of $0.5 million, net of tax, from the Company's AmerCable division.

The Predecessor had net sales and a net loss of $180.2 million and $5.8
million for the period from January 1, 2002 to April 18, 2002. Interest expense
was $2.1 million and consisted primarily of interest on the Company's then
outstanding 9 1/4% notes for the time period from January 1, 2002 to April 18,
2002. The Predecessor's results include $9.3 million of transaction costs
consisting of investment banking and legal fees in conjunction with the
strategic review process and subsequent April 2002 merger transaction. The
Predecessor's results of operations for the year ended December 31, 2001 include
a $2.4 million charge for the write-down of its investment in Amercord Inc. In
addition to recording income taxes at an effective rate of 38.5%, the
Predecessor's tax provision for 2002 includes an estimate for $7.3 million of
merger transaction costs that the Company considers to be non-deductible for
income tax purposes.

QUARTERLY FINANCIAL DATA

Because most of the Company's building products are intended for exterior
use, sales and operating profits tend to be lower during periods of inclement
weather. Weather conditions in the first quarter of each calendar year
historically result in that quarter producing significantly less sales revenue
and operating results than in any other period of the year. As a result, the
Company has historically had small profits or losses in the first quarter and
reduced profits in the fourth quarter of each calendar year.

Results subsequent to the April 2002 merger transaction include interest
expense on the Company's 9 3/4% notes and credit facility, net of related tax
benefits. Additionally, subsequent to the April 2002 merger transaction the
Company relocated its corporate office from Texas to Ohio, which increased the
Company's state and local income tax rate, raising the Company's total effective
tax rate to 41.5% from 38.5%.

25

Quarterly sales and operating profit data for the Company in 2003 and 2002
are shown in the tables below:

THREE THREE
MONTHS 18 73 THREE MONTHS MONTHS
ENDED MARCH DAYS ENDED DAYS ENDED ENDED ENDED
31(2) APRIL 18(2) JUNE 30(3) SEPTEMBER 30 DECEMBER 31
----------- ----------- ---------- ------------ -----------
PREDECESSOR SUCCESSOR
(IN THOUSANDS)

2002
Net sales -- Building products..... $111,062 $50,897 $113,960 $176,673 $158,691
Net sales -- AmerCable............. 12,136 6,135 -- -- --
-------- ------- -------- -------- --------
Total net sales............... 123,198 57,032 113,960 176,673 158,691
Gross profit....................... 32,420 17,459 34,669 53,893 43,685
Income from operations............. 1,201 5,406 13,002 19,336 13,812
Net income (loss).................. (1,519) (4,238) (262) 7,799 4,647

- ---------------

(1) The quarterly results for the quarters ended September 27, 2003 and January
3, 2004 include the results of Gentek subsequent to its acquisition on
August 29, 2003. Additionally, the results for the quarter ended September
27, 2003 include a $1.4 million cost of sales expense related to an
inventory fair value adjustment recorded at the time of the Gentek
acquisition. The results for the quarter ended September 27, 2003 also
include the write-off of $3.9 million of debt issuance costs as a result of
amending and restating the Company's credit facility for the Gentek
acquisition.

(2) Results for three months ended March 31, 2002 and the 18 days ended April
18, 2002 include $2.0 million and $7.3 million of merger transaction costs,
respectively, which include investment banking and legal fees incurred by
the Predecessor in conjunction with the strategic review process and
subsequent April 2002 merger transaction. In addition, the results include
an increase in the tax provision for an estimate of $7.3 million of merger
transaction costs that the Company considers to be non-deductible for income
tax purposes.

(3) Results for the 73 days ended June 30, 2002 include $7.6 million of debt
extinguishment costs, which include $4.9 million for the extinguishment of
substantially all of the Successor's assumed 9 1/4% notes and $2.7 million
for the expense of financing fees related to an interim credit facility
utilized for the April 2002 merger transaction, which was repaid shortly
thereafter. Additionally, the results include a $1.9 million cost of sales
expense related to an inventory fair value adjustment recorded at the time
of the April 2002 merger transaction.

26

LIQUIDITY AND CAPITAL RESOURCES

The following sets forth a summary of the Company's cash flows for 2003,
2002 and 2001 (in thousands):

CASH FLOWS

At January 3, 2004, the Company had cash and cash equivalents of $4.3
million and available borrowing capacity of approximately $65.2 million under
the revolving portion of its amended and restated credit facility. Outstanding
letters of credit as of January 3, 2004 totaled $4.8 million securing various
insurance letters of credit.

CASH FLOWS FROM OPERATING ACTIVITIES

For the year ended January 3, 2004, cash provided by operations was $56.0
million. As compared to the year ended 2002 (Predecessor and Successor
combined), cash flows from operations increased $31.6 million reflecting the
increased operating results for the period and the decrease in Gentek's working
capital over the last four months of the year as Gentek was acquired at the time
Gentek's working capital was at a seasonally high level. This was partially
offset by increased interest payments made under the Company's credit facility
and 9 3/4% notes, as well as increased income tax payments made throughout the
year.

For the 257 days ended December 31, 2002, cash provided by operations was
$42.6 million, reflecting the improved results of the building products
operations of the Company. This time period includes the majority of the second
quarter and the entire third quarter, the periods during which the Company
historically produces the strongest operating results due to favorable weather
conditions. Offsetting the favorable operations are the increased interest
payments the Company has made under the 9 3/4% notes and credit facility since
the April 2002 merger transaction.

For the 108 days ended April 18, 2002 net cash used in operations was $18.3
million. Cash used in this period reflects an increase in inventory due to the
seven new supply centers opened in 2002 and payments of certain customer
incentives and employee commissions accrued during the previous year. In
addition, cash used in this period includes merger transaction costs incurred by
the Predecessor of $9.3 million. These uses of cash were partially offset by the
improved operating results of the building products operations of the Company.
This time period primarily includes the first quarter, the period during which
the Company historically produces lower operating results due to the unfavorable
weather conditions. Cash flows from operations of the Predecessor include the
working capital needs of AmerCable for the period from January 1, 2002 to April
18, 2002.

The combined cash flows from operations for the Predecessor and Successor
periods in 2002 totaled $24.3 million. This compares to cash provided by
operations of $44.0 million in 2001. Cash flows from operations decreased $19.7
million in 2002 compared to 2001 due to merger transaction costs paid in
connection with the April 2002 merger transaction.

CASH FLOWS FROM INVESTING ACTIVITIES

For the year ended January 3, 2004, capital expenditures totaled $12.7
million, which includes $0.9 million of capital expenditures for Gentek since
the date of its acquisition. This compares to combined

27

capital expenditures for 2002 of the Predecessor and the Successor totaling
$11.0 million, which excludes the capital expenditures for AmerCable. Capital
expenditures in 2003 were primarily to replace vinyl siding extrusion and
handling equipment at the Company's Ennis, Texas manufacturing location and
expenditures for additional window manufacturing capacity. Cash flows used in
investing activities also include $113.3 million of cash for the acquisition of
Gentek as well as cash received from the sale of assets of approximately $2.1
million, including the sale of the assets related to the Company's former vinyl
garage door product line.

For the 257 days ended December 31, 2002, capital expenditures of the
Successor totaled $8.9 million. The combined capital expenditures of the
Predecessor and the Successor totaled $12.8 million, which includes $1.8 million
of capital expenditures for AmerCable for the year ended December 31, 2002. This
compares to capital expenditures of $15.0 million, which includes $3.3 million
of AmerCable's capital expenditures for the same period in 2001. Capital
expenditures in the 2002 period were primarily for production equipment to
enhance capacity and reduce costs.

The Company believes that capital expenditures ranging from $10.0 million
to $12.0 million represent a base level of spending needed to maintain its
manufacturing facilities as well as provide for modest increases in capacity and
further automation. Estimated capital expenditures for 2004 are $17.0 million.
The 2004 budget includes expenditures to expand window lineal extrusion capacity
at the Company's West Salem, Ohio manufacturing location and to create
additional window manufacturing capacity at certain of the Company's
manufacturing locations.

Cash flows used in investing activities for the 257 days ended December 31,
2002 also include the April 2002 merger transaction for $366.5 million and net
proceeds from the sale of AmerCable totaling $28.3 million.

CASH FLOWS FROM FINANCING ACTIVITIES

Cash flows from financing activities for the year ended January 3, 2004
include net borrowings under term loans under the Company's amended and restated
credit facility of $190.0 million used for the acquisition of Gentek, as well as
to repay the Company's then outstanding term loans of $76.5 million and pay
related financing fees of $3.9 million. Subsequent to the Gentek acquisition,
the Company permanently reduced borrowings under the term loan facility by $50.0
million using operating cash flows. Additionally, cash flows from financing
activities include the redemption of the remaining outstanding 9 1/4% notes of
$0.9 million. The $0.9 million of 9 1/4% notes were redeemed at 104.625% of the
principal amount of such notes plus accrued and unpaid interest through the date
of redemption.

Cash flows from financing activities for the 257 days ended December 31,
2002 include: (1) the issuance of $165 million of 9 3/4% notes due 2012, (2)
$125 million from a new $165 million credit facility and (3) $164.8 million cash
contribution from Holdings to finance the April 2002 merger transaction,
financing costs, tender offer of the 9 1/4% notes of $74.0 million and debt
extinguishment costs of $7.6 million. Additionally, the Company paid $13.0
million for financing costs related to the April 2002 merger transaction. Upon
completion of the April 2002 merger transaction, the Company was then obligated
to make a change of control offer for the approximate $1.0 million of remaining
outstanding 9 1/4% notes at a price of 101% of the principal amount thereof,
plus accrued and unpaid interest. The change of control offer was completed on
June 21, 2002 with approximately $0.1 million of additional 9 1/4% notes being
tendered. The Company permanently reduced borrowings under the term loan by
$48.5 million using net proceeds from the sale of AmerCable of approximately
$28.3 million and 2002 operating cash flows of approximately $20.2 million.

DESCRIPTION OF THE COMPANY'S OUTSTANDING INDEBTEDNESS

The Company's 9 3/4% notes pay interest semi-annually in April and October.
The Company's amended and restated credit facility as of January 3, 2004
includes $140.0 million of outstanding term loans due through 2010 that bear
interest at the London Interbank Offered Rate (LIBOR) plus 2.75%, payable
quarterly, and up to $70 million of available borrowings provided by revolving
loans (including a new Canadian subfacility of $15 million), which expire in
2007 and bears interest at LIBOR plus 3.00%. The Company's payment obligations
under the 9 3/4% notes are fully and unconditionally guaranteed, jointly and
severally on a senior
28

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 is a Canadian company and does not guarantee the Company's
9 3/4% notes.

The credit facility and the indenture governing the 9 3/4% notes contain
restrictive covenants that, among other things, limit the Company'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 amended and restated credit facility the Company is
required to achieve certain financial ratios relating to leverage, coverage of
fixed charges and coverage of interest expense. The Company was in compliance
with these covenants as of January 3, 2004. On an annual basis, the Company is
required to make principal payments on the term loan under its amended and
restated credit facility based on a percentage of excess cash flows as defined
in the credit facility. The payments on the term loan in 2003 and 2002 were
sufficient such that no additional principal payments were required under the
excess cash flow provision. The Company records as a current liability those
principal payments that are estimated to be due within twelve months under the
excess cash flow provision of the credit facility when the likelihood of those
payments becomes probable.

The Company guaranteed $3.0 million of a secured note in connection with
the sale of a portion of its ownership interest in Amercord. Ivaco, Inc.,
pursuant to the terms of the note, agreed to indemnify the Company for 50% of
any loss under the guarantee. The guarantee was exercised by Amercord's lender
and the Company paid approximately $1.2 million in 2003 for its portion of the
liability related to this guarantee. The Company has no further obligations
under this guarantee. The Company retains a right to any collateral proceeds
that secure the note; however, the Company believes that the value of such
collateral is not sufficient to cover any significant portion of the Company's
liability.

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 flow 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 anticipates borrowing under the revolving loan portion
of its amended and restated credit facility. The Company believes that for the
foreseeable future cash flows from operations and its borrowing capacity under
its amended and restated 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 and available under the amended and restated credit
facility will be sufficient for these purposes.

RECENT DEVELOPMENTS

On February 19, 2004 AMH Holdings, Inc. ("AMH") was incorporated. AMH has
no material assets or operations other than its 100% ownership of Holdings, the
Company's parent company. Stockholders and option holders of Holdings became
stockholders and option holders of AMH on March 4, 2004 and are no longer
stockholders and option holders of Holdings. On March 4, 2004, AMH completed an
offering of $446 million aggregate principal at maturity of 11 1/4% senior
discount notes (the "11 1/4% notes"). The total gross proceeds were
approximately $258.3 million. In connection with the note offering, all of the
roll-over options held by senior management 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 senior management. 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 in
each year, commencing on September 1, 2009. The notes mature on March 1, 2014.
The 11 1/4% notes are structurally subordinated to all existing and future debt
and other liabilities of AMH's existing and future subsidiaries, including the
Company, and Holdings. For additional information on AMH, please see
29

Item 13 "Certain Relationships and Related Party Transactions." For additional
information on the roll-over options, please see Item 11 "Executive
Compensation" and Note 15 to the consolidated financial statements attached
hereto.

In connection with the offering of the 11 1/4% notes, as described above,
on March 18, 2004, the Company amended its credit facility. The amendment to the
credit facility provides, among other things, for the guaranty by AMH of the
obligations of the Company and Gentek Building Products Limited under the credit
facility and the pledge of the stock of Holdings to secure and guaranty the
credit facility.

In March 2004, AMH, Holdings and Holdings' stockholders entered into a
restructuring agreement pursuant to which all of the stockholders of Holdings
contributed their capital stock of Holdings to AMH in exchange for equivalent
capital stock in AMH. Subsequently, AMH contributed all of the capital stock of
Holdings, which was contributed to it by the stockholders back to Holdings, in
exchange for 1,000 shares of class A common stock of Holdings. Following this
exchange, all of the former stockholders of Holdings became the stockholders of
AMH, and AMH became the sole stockholder of Holdings. Holdings continues to be
the sole stockholder of the Company.

CONTRACTUAL OBLIGATIONS

The Company has commitments for maturities of long-term debt and future
minimum lease payments under noncancelable operating leases, principally for
manufacturing and distribution facilities and certain equipment. The following
summarizes certain of the Company's scheduled maturities of long-term debt,
scheduled interest payments on the 9 3/4% notes, and obligations for future
minimum lease payments under non-cancelable operating leases at January 3, 2004
and the effect such obligations are expected to have on the Company's liquidity
and cash flow in future periods (in thousands):

- ---------------

(1) Represents principal amounts, but not interest. See Note 11 to the
consolidated financial statements.

(2) The Company's long-term debt consists of the amended and restated credit
facility and the 9 3/4% notes.

(3) For additional information on the Company's operating leases, please see
Note 12 to the consolidated financial statements.

There can be no assurance that the Company's cash flow from operations,
combined with additional borrowings under the Company's credit facility, will be
available in an amount sufficient to enable the Company to repay its
indebtedness or to fund its other liquidity needs or planned capital
expenditures. The Company may need to refinance all or a portion of its
indebtedness on or before their respective maturities. There can be no assurance
that the Company will be able to refinance any of its indebtedness on
commercially reasonable terms or at all.

RELATED PARTY TRANSACTIONS

The Company entered into a management agreement with Harvest Partners, Inc.
Under the management agreement, Harvest Partners received a one-time fee of $5.0
million in connection with structuring and implementing the acquisition of the
Company. In addition, Harvest Partners provides the Company with financial
advisory and strategic planning services. For these services, Harvest Partners
receives an annual fee of approximately $0.8 million, payable on a quarterly
basis in advance. The fee will be adjusted on a yearly basis in accordance with
the U.S. Consumer Price Index. The Company incurred approximately $0.8 million
and $0.6 million of management fees paid to Harvest Partners for the year ended
January 3, 2004 and the 257 days ended December 31, 2002, respectively. The
agreement also provides that Harvest Partners will receive transaction fees in
connection with financings, acquisitions and divestitures of the Company. Such
fees

30

will be a percentage of the applicable transaction. In 2003, the Company paid
Harvest Partners $1.1 million in connection with the Company's acquisition of
Gentek. The Company also reimburses Harvest Partners for all out-of-pocket
expenses. The management agreement has a term of five years from its date of
execution and will automatically be renewed on a yearly basis, beginning in
2004, unless otherwise specified by Harvest Partners.

On June 24, 2002, the Company completed the sale of its AmerCable division
to AmerCable Incorporated, a newly-formed entity controlled by members of
AmerCable management and Wingate Partners III, L.P., for net proceeds of
approximately $28.3 million in cash and the assumption of certain liabilities
pursuant to an asset purchase agreement dated as of the same date. Robert F.
Hogan, Jr., president and chief executive officer of the AmerCable division and
vice president of the Company prior to the sale, is the president and chief
executive officer and chairman of the board of AmerCable Incorporated.

RETIREMENT PLANS

Defined benefit pension plans are subject to additional minimum pension
liability requirements under Statement of Financial Accounting Standards
("SFAS") No. 87 -- "Employers' Accounting for Pensions". The Company reduced its
minimum pension liability by approximately $0.7 million, net of tax and recorded
an additional minimum pension liability totaling approximately $4.3 million, net
of tax, for its defined benefit pension plans at January 3, 2004 and December
31, 2002, respectively. The adjustments were recorded to stockholder's equity as
a component of accumulated other comprehensive income.

EFFECTS OF INFLATION

The Company believes that the effects of inflation have not been material
to its operating results for each of the past three years, including interim
periods. The Company's principal raw materials, vinyl resin, aluminum, and steel
have historically been subject to price changes. Although historically the
Company has been able to pass on significant cost increases to its customers,
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 of the Company's products. However, over longer periods of time, the
impact of the cost increases of the Company's raw materials has historically not
been material.

FINANCIAL ACCOUNTING STANDARDS

On January 1, 2003, the Company adopted the provisions of FASB SFAS No.
145,-- "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB
Statement No. 13, and Technical Corrections" ("SFAS No. 145"). The provisions of
SFAS No. 145 related to the rescission of SFAS No. 4 require that any gain or
loss on extinguishment of debt that was classified as an extraordinary item in
prior periods be reclassified and no longer be presented as an extraordinary
item. As a result of adopting this standard, the Company reclassified debt
extinguishment costs recorded in the second quarter of 2002. The debt
extinguishment costs include $4.9 million for the premium paid to extinguish
substantially all of the Successor's assumed 9 1/4% notes and $2.7 million for
the financing fees related to an interim credit facility utilized for the merger
transaction with Harvest Partners, which was repaid shortly thereafter.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity"
("SFAS No. 150"). SFAS No. 150 requires that certain financial instruments,
which under previous guidance were accounted for as equity, must now be
accounted for as liabilities. The financial instruments affected include
mandatorily redeemable preferred stock, certain financial instruments that
require or may require the issuer to buy back some of its shares in exchange for
cash or other assets and certain obligations that can be settled with shares of
stock. SFAS No. 150 is effective for

31

all financial instruments entered into or modified after May 31, 2003 and must
be applied to the Company's existing financial instruments effective July 1,
2003. On October 29, 2003, the FASB deferred the provisions of paragraphs 9 and
10 and related guidance in the appendices of this pronouncement as they apply to
mandatorily redeemable noncontrolling interests. Adoption of the effective or
deferred provisions of SFAS No. 150 did not and are expected not to have a
material effect on the Company's financial position, results of operations or
cash flows.

In January 2003, the FASB issued FASB Interpretation No. 46, ("FIN
46") -- "Consolidation of Variable Interest Entities." Companies were required
to adopt the provisions of this interpretation immediately for all new variable
interest entities and at the end of the interim period beginning after December
15, 2003 for all variable interest entities in which an enterprise acquired an
interest in that entity before February 1, 2003. As the Company does not have an
interest in any variable interest entities, the adoption of this interpretation
did not have a material effect on the Company's financial position, results of
operations or cash flows.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

General. The Company's discussion and analysis of its financial condition
and results of operations are based upon the Company's consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these consolidated
financial statements requires the Company to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses. On an
ongoing basis, the Company evaluates its estimates, including those related to
customer programs and incentives, bad debts, inventories, warranties and
pensions and benefits. The Company bases its estimates on historical experience
and on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.

The Company believes the following critical accounting policies affect its
more significant judgments and estimates used in the preparation of its
consolidated financial statements.

Revenue Recognition. The Company primarily sells and distributes its
products through two channels: direct sales from its manufacturing facilities to
independent distributors and dealers and sales to contractors through its
company-owned supply centers. Direct sales revenue is recognized when the
Company's manufacturing facility ships the product. Sales to contractors are
recognized either when the contractor receives product directly from the supply
centers or when the supply centers deliver the product to the contractor's job
site. A substantial portion of the Company's sales is in the repair and
replacement segment of the building products industry. Therefore, vinyl windows
are manufactured to specific measurement requirements received from the
Company's customers. Revenues are recorded net of estimated returns, customer
incentive programs and other incentive offerings including special pricing
agreements, promotions and other volume-based incentives. Revisions to these
estimates are charged to income in the period in which the facts that give rise
to the revision become known. On contracts involving installation, revenue is
recognized when the installation is complete.

Bad Debt. The Company maintains an allowance for doubtful accounts for
estimated losses resulting from the inability of its customers to make required
payments. The allowance for doubtful accounts is based on review of the overall
condition of accounts receivable balances and review of significant past due
accounts. If the financial condition of the Company's customers were to
deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required.

Inventories. The Company values its inventories at the lower of cost
(first-in, first-out) or market. The Company writes down its inventory for
estimated obsolescence or unmarketable inventory equal to the difference between
the cost of inventory and the estimated market value based upon assumptions
about future demand and market conditions. If actual market conditions are less
favorable than those projected by management, additional inventory write-downs
may be required.

32

Goodwill and Other Intangible Assets. The Company has accounted for the
April 2002 merger transaction and acquisition of Gentek using the purchase
method of accounting. The purchase price has been allocated to assets and
liabilities based on the fair values of the assets acquired and the liabilities
assumed. The excess of cost over fair value of the new identifiable assets has
been recorded as goodwill. These allocations have been made based upon
valuations and other studies. The Gentek purchase price allocation is
preliminary, based on facts currently known to the Company and is subject to
adjustment as the final valuation for the fair value of the warranty liability
related to certain steel siding has not been completed. Therefore, the actual
allocation of purchase price may differ from the amounts included herein.

Under the provisions of SFAS No. 142 -- "Goodwill and Other Intangible
Assets," goodwill and intangible assets with indefinite useful lives must be
reviewed annually for impairment using a fair-value based approach. As the
Company does not have a market for its equity, management performs the annual
impairment analysis utilizing a discounted cash flow model, which considers
forecasted operating results discounted at an estimated weighted average cost of
capital. Given the significant amount of goodwill and other intangible assets as
a result of the April 2002 merger transaction and the acquisition of Gentek, any
future impairment of the goodwill and other intangible assets could have an
adverse effect on the Company's results of operations and financial position.
Although management does not anticipate any significant impairment of these
assets, the extent of any such future impairment cannot be predicted at this
time and is dependent on future operating results.

Pensions. The Company's pension costs are developed from actuarial
valuations. Inherent in these valuations are key assumptions including discount
rates and expected return on plan assets. In selecting these assumptions,
management considers current market conditions, including changes in interest
rates and market returns on plan assets. Changes in the related pension benefit
costs may occur in the future due to changes in assumptions.

Product Warranty Costs and Service Returns. Consistent with industry
practice, the Company provides to homeowners limited warranties on certain
products, primarily related to window and siding product categories. Warranties
are of varying lengths of time from the date of purchase up to and including
lifetime. Warranties cover product failures such as stress cracks and seal
failure for windows and fading and peeling for siding products, as well as
manufacturing defects.

The Company has various options for remedying product warranty claims
including repair, refinishing or replacement and directly incurs the cost of
these remedies. Warranties also become reduced under certain conditions of time
and change in ownership. Liabilities for future warranty costs are provided
annually based on management's estimates of such future costs using historical
trends and sales of products to which such costs relate. Certain metal coating
suppliers provide material warranties to the Company that mitigate the costs
incurred by the Company. Warranty reserves are based on past claims experiences,
sales history and other factors. An independent actuary assists the Company in
determining reserve amounts related to significant product failures.

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:

- changes in home building industry, economic conditions, interest rates,
foreign currency exchange rates and other conditions;

- changes in availability of consumer credit, employment trends, levels of
consumer confidence and consumer preferences;

33

- changes in raw material costs and availability;

- 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;

- increases in the Company's indebtedness;

- increases in costs of environmental compliance;

- potential conflict between existing Alside and new 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" 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.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

The Company has outstanding borrowings under the term loan portion of its
amended and restated 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 January 3, 2004, the
Company had borrowings of $140.0 million under the term loan. The effect of a
1/8% increase or decrease in interest rates would increase or decrease total
interest expense for the year ended January 3, 2004 by approximately $0.2
million.

The Company 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 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. The fair value of the 9 3/4%
notes at January 3, 2004 was $180.7 million based upon their quoted market
price.

FOREIGN CURRENCY EXCHANGE RATE RISK

The Company's revenues are primarily from domestic customers and are
realized in U.S. dollars. However, since the acquisition of Gentek, the Company
now realizes 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 rate risk
is not material. At January 3, 2004 the Company had no currency hedges in place.

COMMODITY PRICE RISK

See Item 7. "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.

34

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ASSOCIATED MATERIALS INCORPORATED

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

35

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholder
Associated Materials Incorporated

We have audited the accompanying consolidated balance sheets of Associated
Materials Incorporated as of January 3, 2004 and December 31, 2002 and the
related consolidated statements of operations, stockholders' equity and
comprehensive income, and cash flows for the year ended January 3, 2004, the two
hundred fifty-seven day period ended December 31, 2002, the one hundred eight
day period ended April 18, 2002 and the year ended December 31, 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Associated Materials Incorporated at January 3, 2004 and December 31, 2002, and
the consolidated results of its operations and its cash flows for the year ended
January 3, 2004, the two hundred fifty-seven day period ended December 31, 2002,
the one hundred eight day period ended April 18, 2002 and the year ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States.

ERNST & YOUNG LLP

Dallas, Texas
February 16, 2004,
except for Note 20
as to which the date is
March 4, 2004

36

ASSOCIATED MATERIALS INCORPORATED

CONSOLIDATED BALANCE SHEETS

See accompanying notes.
37

ASSOCIATED MATERIALS INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

See accompanying notes.
38

ASSOCIATED MATERIALS INCORPORATED

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME

See accompanying notes.
39

ASSOCIATED MATERIALS INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes

40

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES

NATURE OF OPERATIONS

Associated Materials Incorporated (the "Company") 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.

BASIS OF PRESENTATION

The Company's 2003 results of operations include the results of Gentek
Holdings, Inc. subsequent to its acquisition on August 29, 2003 (see Note 2).
The Company's results of operations prior to the date of the April 2002 merger
transaction (see Note 2) are presented as the results of the Predecessor. The
Company is a wholly owned subsidiary of Associated Materials Holdings Inc.
("Holdings"). As discussed in Note 2, the Company completed the sale of its
AmerCable division on June 24, 2002. AmerCable's results through April 18, 2002
are included in the results of continuing operations of the Predecessor.
Subsequent to April 18, 2002, AmerCable's results are presented as discontinued
operations of the Successor as it was the Successor's decision to divest this
division.

In 2003, the Company changed its fiscal year from a calendar year ending on
December 31st to a 52/53 week fiscal year that ends on the Saturday closest to
December 31st. The Company's 2003 fiscal year ended on January 3, 2004.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All significant intercompany transactions and
balances are eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions regarding the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

REVENUE RECOGNITION

The Company primarily sells and distributes its products through two
channels: direct sales from its manufacturing facilities to independent
distributors and dealers and sales to contractors through its Company owned
supply centers. Direct sales revenue is recognized when the Company's
manufacturing facility ships the product. Sales to contractors are recognized
either when the contractor receives product directly from the supply centers or
when the supply centers deliver the product to the contractor's job site. A
substantial portion of the Company's sales is in the repair and replacement
segment of the building products industry. Therefore, vinyl windows are
manufactured to specific measurement requirements received from the Company's
customers. Revenues are recorded net of estimated returns, customer incentive
programs and other incentive offerings including special pricing agreements,
promotions and other volume-based incentives. Revisions to these estimates are
charged to income in the period in which the facts that give rise to the
revision become known. On contracts involving installation, revenue is
recognized when the installation is complete.

41

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.

INVENTORIES

Inventories are valued at the lower of cost (first-in, first-out) or
market. The Company writes down its inventory for estimated obsolescence or
unmarketable inventory equal to the difference between the cost of inventory and
the estimated market value based upon assumptions about future demand and market
conditions. If actual market conditions are less favorable than those projected
by management, additional inventory write-downs may be required.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost. The cost of maintenance
and repairs of property, plant and equipment is charged to operations in the
period incurred. Depreciation is provided by the straight-line method over the
estimated useful lives of the assets, which are as follows:

Building and improvements................................... 7 to 40 years
Computer equipment.......................................... 3 years
Machinery and equipment..................................... 3 to 15 years

LONG-LIVED ASSETS WITH DEPRECIABLE OR AMORTIZABLE LIVES

The Company reviews long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of the asset to undiscounted future net cash
flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets. Depreciation
on assets held for sale is discontinued and such assets are reported at the
lower of the carrying amount or fair value less costs to sell.

GOODWILL AND OTHER INTANGIBLE ASSETS WITH INDEFINITE LIVES

The Company reviews goodwill and other intangible assets with indefinite
lives for impairment on an annual basis or more frequently if events or
circumstances change that would impact the value of these assets in accordance
with Financial Accounting Standards Board ("FASB") Statement of Financial
Accounting Standards ("SFAS") No. 142 -- "Goodwill and Other Intangible Assets."
The impairment test is conducted using a fair-value based approach. As the
Company does not have a market for its equity, management performs the annual
impairment analysis utilizing a discounted cash flow model, which considers
forecasted operating results discounted at an estimated weighted average cost of
capital. The Company conducted its impairment test as of October 1, 2003 noting
no impairment to its goodwill or other intangible assets with indefinite lives.

PENSIONS

The Company's pension costs are developed from actuarial valuations.
Inherent in these valuations are key assumptions including discount rates and
expected return on plan assets. In selecting these assumptions, management
considers current market conditions, including changes in interest rates and
market returns on plan assets. Changes in the related pension benefit costs may
occur in the future due to changes in assumptions.

42

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PRODUCT WARRANTY COSTS AND SERVICE RETURNS

Consistent with industry practice, the Company provides to homeowners
limited warranties on certain products, primarily related to window and siding
product categories. Warranties are of varying lengths of time from the date of
purchase up to and including lifetime. Warranties cover product failures such as
stress cracks and seal failure for windows and fading and peeling for siding
products, as well as manufacturing defects.

The Company has various options for remedying product warranty claims
including repair, refinishing or replacement and directly incurs the cost of
these remedies. Warranties also become reduced under certain conditions of time
and change in ownership. Liabilities for future warranty costs are provided
annually based on management's estimates of such future costs using historical
trends and sales of products to which such costs relate. Certain metal coating
suppliers provide warranties on materials sold to the Company that mitigate the
costs incurred by the Company. Warranty reserves are based on past claims
experience, sales history and other factors. An independent actuary assists the
Company in determining reserve amounts related to significant product failures.

A reconciliation of warranty reserve activity is as follows for the year
ended January 3, 2004:

Balance at the beginning of the year........................ $ 1,854
Provision for warranties issued............................. 3,135
Gentek warranties assumed................................... 13,611
Claims paid................................................. (2,621)
-------
Balance at the end of the year.............................. $15,979
=======

Activity in the Company's warranty reserve accounts in previous years was
not significant.

INCOME TAXES

The Company accounts for income taxes in accordance with SFAS No.
109 -- "Accounting for Income Taxes," which requires that deferred tax assets
and liabilities be recognized for the effect of temporary differences between
the book and tax bases of recorded assets and liabilities. SFAS No. 109 also
requires that deferred tax assets be reduced by a valuation allowance if it is
more likely than not that some portion or all of the deferred tax asset will not
be realized. The Company reviews the recoverability of any tax assets recorded
on the balance sheet and provides any necessary allowances as required.

STOCK PLANS

The Company measures stock-based compensation using the intrinsic value in
accordance with Accounting Principles Board Opinion No. 25 -- "Accounting for
Stock Issued to Employees." The Company follows the disclosure provisions
required under 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

43

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

value approach for companies with private equity. The pro forma effect on net
income would have been (in thousands):

257 DAYS 108 DAYS YEAR
YEAR ENDED ENDED ENDED ENDED
JANUARY 3, DECEMBER 31, APRIL 18, DECEMBER 31,
2004 2002 2002 2001
---------- ------------ --------- ------------
PREDECESSOR

Net income (loss) as reported........... $24,531 $12,184 $(5,757) $25,412
Pro forma stock based employee
compensation cost, net of tax......... (132) (212) (65) (344)
------- ------- ------- -------
Pro forma net income (loss)............. $24,399 $11,972 $(5,822) $25,068
======= ======= ======= =======

MARKETING AND ADVERTISING

The Company expenses marketing and advertising costs as incurred. Marketing
and advertising expense was $9.7 million for the year ended January 3, 2004,
$7.2 million for the 257 days ended December 31, 2002, $3.8 million for the 108
days ended April 18, 2002 and $9.9 million in 2001.

RECLASSIFICATIONS

Certain prior period amounts have been reclassified to conform with the
current period presentation.

NEW ACCOUNTING PRONOUNCEMENTS

On January 1, 2003, the Company adopted the provisions of FASB SFAS No.
145,-- "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB
Statement No. 13, and Technical Corrections." The provisions of SFAS No. 145
related to the rescission of SFAS No. 4 require that any gain or loss on
extinguishment of debt that was classified as an extraordinary item in prior
periods be reclassified and no longer be presented as an extraordinary item. As
a result of adopting this standard, the Company reclassified debt extinguishment
costs recorded in the second quarter of 2002. The debt extinguishment costs
include $4.9 million for the premium paid to extinguish substantially all of the
Successor's assumed 9 1/4% notes and $2.7 million for the financing fees related
to an interim credit facility utilized for the April 2002 merger transaction
(see Note 2), which was repaid shortly thereafter.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." SFAS
No. 150 requires that certain financial instruments, which under previous
guidance were accounted for as equity, must now be accounted for as liabilities.
The financial instruments affected include mandatorily redeemable preferred
stock, certain financial instruments that require or may require the issuer to
buy back some of its shares in exchange for cash or other assets and certain
obligations that can be settled with shares of stock. SFAS No. 150 is effective
for all financial instruments entered into or modified after May 31, 2003 and
must be applied to the Company's existing financial instruments effective July
1, 2003. On October 29, 2003, the FASB deferred the provisions of paragraphs 9
and 10 and related guidance in the appendices of this pronouncement as they
apply to mandatorily redeemable noncontrolling interests. Adoption of the
effective or deferred provisions of SFAS No. 150 did not and are expected not to
have a material effect on the Company's financial position, results of
operations or cash flows.

In January 2003, the FASB issued FASB Interpretation No. 46, ("FIN
46") -- "Consolidation of Variable Interest Entities." Companies were required
to adopt the provisions of this interpretation immediately for all new variable
interest entities and at the end of the interim period beginning after December
15, 2003 for all variable interest entities in which an enterprise acquired an
interest in that entity before

44

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

February 1, 2003. As the Company does not have an interest in any variable
interest entities, the adoption of this interpretation did not have a material
effect on the Company's financial position, results of operations or cash flows.

2. ACQUISITIONS AND DIVESTITURES

On August 29, 2003, the Company acquired all of the issued and outstanding
shares of the capital stock of Gentek Holdings, Inc., the parent Company of
Gentek Building Products, Inc. and Gentek Building Products Limited,
collectively referred to as "Gentek". Gentek manufactures and distributes vinyl
windows, vinyl siding, aluminum trim coil, and aluminum and steel siding and
accessories under the Revere(R) and Gentek(R) brand names. Gentek markets its
products to professional contractors on a wholesale basis through 13
company-owned distribution centers in the mid-Atlantic region of the United
States and 20 company-owned distribution centers in Canada, as well as
approximately 200 independent distributors in the United States. The acquisition
was completed to expand the Company's presence in the independent distributor
market channel, to capitalize on synergy opportunities related to the vertical
integration of the metals products manufactured by Gentek and sold in the
Company's Alside supply centers, and to benefit from raw material savings
resulting from increased purchasing leverage.

In connection with the Gentek acquisition, the Company amended and restated
its existing credit facility by adding a term loan facility to borrow an
additional $113.5 million and expanding the revolving credit facility from $40
million to $70 million, including a new Canadian subfacility of $15 million.

The acquisition has been accounted for using the purchase method of
accounting. The total purchase price has been allocated to the tangible and
intangible assets and liabilities acquired based upon their estimated fair
values as follows (in thousands):

Cash........................................................ $ 1,088
Accounts receivable......................................... 43,290
Inventory................................................... 38,020
Other current assets........................................ 3,947
Deferred income taxes....................................... 1,871
--------
Total current assets................................... 88,216
Property, plant and equipment............................... 39,883
Goodwill.................................................... 30,298
Other intangible assets..................................... 16,320
Deferred income taxes....................................... 6,765
Other assets................................................ 350
--------
Total assets........................................... $181,832
========
Accounts payable............................................ $ 26,197
Accrued liabilities......................................... 15,577
Income taxes payable........................................ 1,434
--------
Total current liabilities.............................. 43,208
Other liabilities........................................... 24,281
Long-term debt.............................................. 7,500
Stockholder's equity........................................ 106,843
--------
Total liabilities and stockholder's equity............. $181,832
========

45

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The allocation of purchase price resulted in $30.3 million in goodwill and
$16.3 million in other intangible assets, including $4.5 million of customer
base intangibles with estimated useful lives ranging from 2 to 9 years, $1.1
million of order backlog, which was fully amortized in 2003 as the orders were
fulfilled and $10.7 million assigned to trademarks of which $4.3 million have
remaining useful lives of 15 years and $6.4 million have indefinite lives (See
Note 4).

The purchase price allocation is preliminary, based on facts currently
known to the Company and is subject to adjustment as the final valuation for the
fair value of the warranty liability related to certain steel siding has not
been completed. As a result, the actual allocation is subject to completion and
therefore may differ. The purchase consideration of $113.3 million was financed
through additional term loans under the amended and restated credit facility.
From the total purchase consideration paid to the sellers, $7.0 million was
retained in an escrow account for certain items that were indemnified by the
seller to the Company.

On March 16, 2002, the Company entered into a merger agreement ("Merger
Agreement") with Associated Materials Holdings, Inc. ("Holdings") and its wholly
owned subsidiary, Simon Acquisition Corp. The Merger Agreement provided for the
acquisition of all shares of the Company's then outstanding common stock through
a cash tender offer for $50.00 per share. The Merger Agreement also required
that the Company commence a tender offer to purchase all of its then outstanding
9 1/4% senior subordinated notes due March 1, 2008 ("9 1/4% notes").

On April 19, 2002, the cash tender offer for the Company's then outstanding
common stock and the cash tender offer for approximately $74.0 million of the
Company's then outstanding 9 1/4% notes was completed. Simon Acquisition Corp.
was then merged with and into the Company with the Company continuing as a
privately held, wholly owned subsidiary of Holdings (which is controlled by
affiliates of Harvest Partners, Inc.). The completion of the aforementioned
transactions constitute the merger transaction ("April 2002 merger
transaction"). Following the completion of the April 2002 merger transaction,
the Company's then outstanding shares of common stock were delisted from NASDAQ.

The April 2002 merger transaction has been accounted for using the purchase
method of accounting. The total purchase consideration has been allocated to
tangible and intangible assets acquired and liabilities assumed based on
respective fair values at the date of acquisition, which are based on valuation
estimates and certain assumptions. The allocation of purchase price resulted in
$197.5 million in goodwill and $105.5 million in other intangibles, including
$6.8 million of patents with estimated useful lives of 10 years and $98.7
million assigned to trademarks of which $24.0 million have remaining useful
lives of 15 years and $74.7 million have indefinite lives (See Note 4). The
purchase consideration, financing costs, tender offer of the $74.0 million of
9 1/4% notes, and debt extinguishment costs of $7.6 million were financed
through: (1) the issuance of $165 million of 9 3/4% senior subordinated notes
due 2012 ("9 3/4% notes"), (2) $125 million from a new $165 million credit
facility ("credit facility"), (3) $164.8 million cash contribution from Holdings
and (4) cash of approximately $6.3 million, representing a portion of the
Company's total cash of $6.8 million on hand at the time of the acquisition.

In connection with the April 2002 merger transaction, the Predecessor
incurred merger related costs, including legal and investment banking fees,
which have been classified as merger transaction costs in the Predecessor's
accompanying statements of operations.

On June 24, 2002, the Company completed the sale of its AmerCable division
to AmerCable Incorporated, a newly formed entity controlled by Wingate Partners
III, L.P. and members of AmerCable's management for net proceeds of
approximately $28.3 million and the assumption of certain liabilities pursuant
to an asset purchase agreement. The Company used the net proceeds to repay a
portion of its credit facility. No gain or loss on the sale of AmerCable was
recorded in the statements of operations, as the fair value assigned to
AmerCable's net assets acquired in the April 2002 merger transaction
approximated the net

46

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

proceeds received from the subsequent sale of AmerCable. Operating results of
discontinued operations for the period from April 19, 2002 to June 24, 2002 were
as follows (in thousands):

Interest allocated to discontinued operations includes the interest on
$28.3 million of borrowings under the term loan for the period from April 19,
2002 to June 24, 2002 plus interest expense related to the accelerated
amortization of deferred financing fees of the Company's credit facility related
to the proceeds from the sale of AmerCable used to reduce the term loan.

3. RELATED PARTIES

The Company entered into a management agreement with Harvest Partners, Inc.
Under the management agreement, Harvest Partners received a one-time fee of $5.0
million in connection with structuring and implementing the acquisition of the
Company. In addition, Harvest Partners provides the Company with financial
advisory and strategic planning services. For these services, Harvest Partners,
Inc. receives an annual fee of approximately $0.8 million, payable on a
quarterly basis in advance, beginning on the date of execution of this
agreement. The fee is adjusted on a yearly basis in accordance with the U.S.
Consumer Price Index. The Company incurred approximately $0.8 million and $0.6
million of management fees paid to Harvest Partners for the year ended January
3, 2004 and the 257 days ended December 31, 2002, respectively, which are
included in selling, general and administrative expenses in the statement of
operations. The agreement also provides that Harvest Partners will receive
transaction fees in connection with financings, acquisitions and divestitures of
the Company. Such fees will be a percentage of the applicable transaction. In
2003, the Company paid Harvest Partners $1.1 million in connection with the
Company's acquisition of Gentek. The Company reimburses Harvest Partners for all
out-of-pocket expenses. The management agreement has a term of five years from
its date of execution and will automatically be renewed on a yearly basis,
beginning in 2004, unless otherwise specified by Harvest Partners.

As discussed in Note 2, the Company sold its AmerCable division to a
newly-formed entity that is controlled in part by former members of the
Company's management.

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 $230.3 million
including $197.5 million from the purchase price for the April 2002 merger
transaction and $32.8 million from the acquisition of Gentek. None of the
Company's goodwill is deductible for income tax purposes. The Company's other
intangible assets consist of the following (in thousands):

47

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company has determined that trademarks and trade names totaling $81.1
million consisting primarily of the Alside(R), Revere(R)and Gentek(R) trade
names have indefinite useful lives. Additionally, the Company determined the
value of Gentek's order backlog at August 29, 2003 was approximately $1.1
million. The backlog was fully amortized in 2003 as the orders were fulfilled.
Amortization expense related to other intangible assets was approximately $3.8
million and $1.8 million, for year ended January 3, 2004 and the 257 days ended
December 31, 2002, respectively. Amortization expense for fiscal years 2004,
2005, 2006, 2007 and 2008 is estimated to be approximately $3.2 million, $3.2
million, $3.1 million, $3.1 million and $3.1 million, respectively.

5. PRO FORMA INFORMATION

The following pro forma information for the years ended January 3, 2004 and
December 31, 2002 was prepared as if the acquisition of Gentek occurred as of
the beginning of each period presented and the April 2002 merger transaction and
sale of AmerCable occurred as of the beginning of 2002. On a pro forma basis,
the Company would have reported (in thousands):

The pro forma information is not necessarily indicative of the results that
would have occurred had the acquisition of Gentek, the April 2002 merger
transaction and sale of AmerCable occurred at the beginning of the periods
presented, nor is it necessarily indicative of future results. The pro forma
results of operations include $1.4 million and $3.3 million of expenses related
to inventory fair value adjustments for the years ended January 3, 2004 and
December 31, 2002, respectively.

6. INVESTMENT IN AMERCORD

The Company owns a 9.9% interest in Amercord Inc. ("Amercord"), which
manufactured and marketed steel cord and bead wire to the tire manufacturing
industry. During 2001, Amercord ceased operations, and the Company wrote-off its
remaining $2.4 million investment.

The Company guaranteed $3.0 million of a secured note in connection with
the sale of a portion of the ownership interest in Amercord. Ivaco, Inc.,
pursuant to the terms of the note, agreed to indemnify the Company for 50% of
any loss under the guarantee. The guarantee was exercised by Amercord's lender
and the Company paid approximately $1.2 million in 2003 for its portion of the
liability related to this guarantee. The Company has no further obligations
under this guarantee. The Company retains a right to any collateral proceeds
that secure the note; however, the Company has determined that the value of such
collateral is not sufficient to cover any significant portion of the Company's
liability.

48

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. ALLOWANCE FOR DOUBTFUL ACCOUNTS

Changes in the allowance for doubtful accounts on accounts receivable
consist of (in thousands):

257 DAYS 108 DAYS
YEAR ENDED ENDED ENDED YEAR ENDED
JANUARY 3, DECEMBER 31, APRIL 18, DECEMBER 31,
2004 2002 2002 2001
---------- ------------ --------- ------------
PREDECESSOR

Balance at beginning of period......... $5,552 $5,486 $5,117 $6,168
Provision for losses................... 2,029 1,240 649 1,468
Losses sustained (net of recoveries)... (1,375) (653) (280) (2,519)
Allowance for Gentek receivables
acquired............................. 1,736 -- -- --
Allowance for AmerCable receivables
sold................................. -- (521) -- --
------ ------ ------ ------
Balance at end of period............... $7,942 $5,552 $5,486 $5,117
====== ====== ====== ======

The Company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. The
allowance for doubtful accounts is based on a review of the overall condition of
accounts receivable balances and a review of significant past due accounts. If
the financial condition of the Company's customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances may be required.

8. INVENTORIES

Inventories consist of (in thousands):

9. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of (in thousands):

Depreciation expense was approximately $12.3 million in 2003, $5.4 million
for the 257 days ended December 31, 2002, $3.9 million for the 108 days ended
April 18, 2002 and $10.6 million in 2001.

49

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. ACCRUED AND OTHER LIABILITIES

Accrued liabilities consist of (in thousands):

Other liabilities consist of (in thousands):

11. LONG-TERM DEBT

Long-term debt consists of (in thousands):

In connection with the April 2002 merger transaction, on April 23, 2002 the
Company issued $165 million of 9 3/4% notes due in 2012 that pay interest
semi-annually on April 15 and October 15. The 9 3/4% notes are general unsecured
obligations of the Company subordinated in right of payment to senior
indebtedness and senior in right of payment to any current or future
subordinated indebtedness of the Company. The Company'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.

In conjunction with the April 2002 merger transaction, the Company entered
into a $165 million credit facility, which included $125 million of term loans
due through 2009 that bear interest at the London Interbank Offered Rate (LIBOR)
plus 3.50%, payable quarterly, and up to $40 million of available borrowings
provided by revolving loans, which expire in 2007. In connection with the
acquisition of Gentek, the Company amended its credit facility by adding a term
loan facility to borrow $190 million, which was utilized for the Gentek
acquisition and repayment of the Company's existing $76.5 million of term loans
outstanding at that time and expanded its revolving facility from $40 million to
$70 million, including a new Canadian subfacility

50

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of $15 million. The term loans are due in August 2010 with minimum principal
amortization of 1% per year with quarterly payments of the unamortized principal
in the final year of the loan and bears interest at LIBOR plus 2.75% payable
quarterly at the end of each calendar quarter. The revolving credit facility
expires in 2007 and bears interest at LIBOR plus 3.00% payable quarterly at the
end of each calendar quarter. The credit facility is secured by a pledge of the
capital stock of the Company and a perfected lien and security interest in all
of the tangible and intangible assets of the Company.

The term loan under the Company's amended credit facility was considered to
be "substantially different" as defined by FASB Emerging Issues Task Force
("EITF") 96-19, "Debtor's Accounting for a Modification or Exchange of Debt
Instruments" as a result of the amendment. The Company wrote-off previously
capitalized deferred financing fees and certain financing costs paid in
conjunction with the amendment to the credit facility totaling $3.9 million,
which is included in interest expense.

Excluding the $76.5 million repayment of term loans in connection with the
Gentek acquisition, the term loan has been permanently reduced by $50.0 million,
which resulted in approximately $0.3 million of accelerated amortization of
deferred financing costs. At January 3, 2004, the Company had available
borrowing capacity of approximately $65.2 million under the revolving portion of
its credit facility. The facility requires the Company to pay a commitment fee
of 0.5% per annum on any unused amounts under the revolving portion of the
facility. Outstanding letters of credit at January 3, 2004 totaled approximately
$4.8 million securing various insurance letters of credit.

None of the Company's long-term debt matures within five years; however, on
an annual basis the Company is required to make principal payments on the term
loan under its credit facility based on a percentage of excess cash flows as
defined in the credit facility. The payments under the term loan in 2003 were
sufficient such that no additional principal payments were required under the
excess cash flow provision.

The credit facility and the indenture governing the 9 3/4% notes contain
restrictive covenants that, among other things, limit the Company'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 the Company is required to achieve
certain financial ratios relating to leverage, coverage of fixed charges and
coverage of interest expense. The Company was in compliance with its covenants
as of January 3, 2004.

In connection with the April 2002 merger transaction, on April 19, 2002 the
Company completed a cash tender offer for approximately $74.0 million of the
Company's 9 1/4% notes. The tender offer premium paid for the 9 1/4% notes was
approximately $7.3 million, of which $4.9 million is included as debt
extinguishment costs representing the portion of the premium in excess of the
fair market value of the 9 1/4% notes. The Company was then obligated to make a
change of control offer for the approximate $1.0 million of remaining
outstanding 9 1/4% notes at a price of 101% of the principal amount thereof,
plus accrued and unpaid interest. The change of control offer was completed on
June 21, 2002 with approximately $0.1 million of 9 1/4% notes being tendered. In
2003, the Company redeemed all the remaining approximate $0.9 million of 9 1/4%
notes at 104.625% of the principal amount of such notes plus accrued and unpaid
interest through the date of redemption.

The weighted average interest rate for borrowings under the credit facility
was 5.9% for the year ended January 3, 2004 and for the 257 days ended December
31, 2002.

The fair value of the 9 3/4% notes at January 3, 2004 was $180.7 million
based upon their quoted market price.

51

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. COMMITMENTS

Commitments for future minimum lease payments under noncancelable operating
leases, principally for manufacturing and distribution facilities and certain
equipment, are as follows (in thousands):

2004........................................................ $22,324
2005........................................................ 17,352
2006........................................................ 11,844
2007........................................................ 8,767
2008........................................................ 5,713
Thereafter.................................................. 7,682
-------
Total future minimum lease payments......................... $73,682
=======

Lease expense was approximately $21.5 million for the year ended January 3,
2004, $12.4 million for the 257 days ended December 31, 2002, $6.0 million for
the 108 days ended April 18, 2002 and $17.9 million in 2001. The Company's lease
agreements typically contain renewal options.

As of January 3, 2004, approximately 18% of the Company's employees are
covered by collective bargaining agreements. Approximately 4% of the Company's
employee's are covered by collective bargaining agreements that expire within
one year.

13. INCOME TAXES

Income tax expense for the periods presented consists of (in thousands):

Income before taxes from the Company's U.S. entities and Canadian
subsidiary totaled $37.8 million and $4.1 million, respectively for the year
ended January 3, 2004.

52

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred income taxes are as follows (in thousands):

At January 3, 2004, the Company had unused federal and state net operating
loss carryforwards, the tax benefit of which would be $6.6 million at the
current statutory rate. The federal net operating loss carryforward benefits of
$5.6 million begin to expire in 2017, however the Company anticipates utilizing
these over the next five years. The state net operating loss carryforward
benefits are $1.0 million.

The reconciliation of the statutory rate to the Company's effective income
tax rate for the periods presented is as follows:

As a result of relocating the Company's corporate office from Texas to
Ohio, the Company's state and local income tax rate increased, raising the
Company's total effective tax rate to 41.5% from 38.5%. In addition, the
Predecessor's tax provision includes an estimate for $7.3 million of merger
transaction costs that the Company considers to be non-deductible for income tax
purposes. Income tax expense for the 257 days

53

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ended December 31, 2002 consists of a $9.0 million provision for continuing
operations, net of a $0.4 million benefit from discontinued operations.

14. STOCKHOLDER'S EQUITY

As discussed in Note 2, the Company is a wholly owned subsidiary of
Holdings. The Company has the authority to issue 1,000 shares of $0.01 par value
common stock, of which 100 shares are issued and outstanding at January 3, 2004.
The Company's contributed capital consists of $164.9 million of cash
contributions and non-cash financing of approximately $5.0 million representing
the fair value of stock options of the Predecessor held by certain employees
that were converted into options of Holdings.

The Company reports comprehensive income in its consolidated statement of
stockholders' equity and comprehensive income. Comprehensive income includes net
income and all other non-owner changes in equity during the period.
Comprehensive income for the year ended January 3, 2004 includes a minimum
pension liability adjustment of approximately $0.7 million, net of a related tax
benefit of approximately $0.5 million as well as foreign currency translation
adjustments of approximately $3.0 million. Comprehensive income for the 257 days
ended December 31, 2002 includes a minimum pension liability adjustment of
approximately $4.3 million, net of a related tax benefit of approximately $3.1
million. The Company had no non-owner changes impacting equity for the 108 days
ended April 18, 2002 or the year ended December 31, 2001. The components of
accumulated other comprehensive income are as follows (in thousands):

15. STOCK PLANS

In June 2002, Holdings adopted the Associated Materials Holdings Inc. 2002
Stock Option Plan (the "Plan"). The board of directors of Holdings administers
the Plan and selects eligible executives, directors, employees and consultants
of Holdings and its affiliates, including the Company, to receive options. The
board of directors of Holdings also will determine the number and type of shares
of stock covered by options granted under the Plan, the terms under which
options may be exercised, the exercise price of the options and other terms and
conditions of the options in accordance with the provisions of the Plan. In
2002, the board of directors authorized 467,519 shares of Holdings' common stock
and 55,758 shares of Holdings' preferred stock under this Plan. An option holder
may pay the exercise price of an option by any legal manner that the board of
directors of Holdings permits. Option holders generally may not transfer their
options except in the event of death. If Holdings undergoes a change in control,
as defined in the Plan, all outstanding time-vesting options become immediately
fully exercisable, while the performance-based options may become immediately
exercisable upon achievement of certain specified criteria. The board of
directors of Holdings may adjust outstanding options by substituting stock or
other securities of any successor or another party to the change in control
transaction, or cash out such outstanding options, in any such case, generally
based on the consideration received by its stockholders in the transaction.
Subject to particular limitations specified in the Plan, the board of directors
may amend or terminate the Plan. The Plan will terminate no later than 10 years
following its effective date; however, any options outstanding under the option
plan will remain outstanding in accordance with their terms.

54

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Options were granted at fair market value on the grant date and are
exercisable under varying terms for up to ten years. The options granted in 2002
include the following:

- Options to purchase shares of Holdings' common stock at the fair market
value on the date of grant, which will vest over time;

- Options to purchase shares of Holdings' common stock at the fair market
value on the date of grant, which will vest 100% on the eighth
anniversary from the date of grant provided that the option vesting may
be accelerated upon the occurrence of a liquidity event, as defined in
the Plan, and the achievement of a specified internal rate of return on
the funds invested by Harvest Partners, Inc. and minimum aggregate
proceeds for the investment by Harvest Partners (performance-based
options) and;

- Options to purchase shares of Holdings' common stock and preferred stock
as a unit, comprised of one share of preferred stock and a specified
fraction of a share of common stock granted in exchange for a portion of
the outstanding options to purchase shares of the Predecessor's common
stock, which became fully vested upon completion of the April 2002 merger
transaction ("Roll-Over Options").

Transactions during the year ended January 3, 2004 and 257 days ended
December 31, 2002 under this plan are summarized below:

Options to purchase 141,187 shares of Holdings' common stock and 55,758
shares of Holdings' preferred stock were exercisable at January 3, 2004. As the
Roll-Over Options are required to be exercised as a unit (as described above),
the weighted average exercise price of the Roll-Over Options has been allocated
among the options for preferred and common stock.

The weighted average fair value at date of grant for options granted during
2003 and 2002 using the minimum value method was $4.41 and $3.57 per option,
respectively. The fair value of the options was estimated at the date of the
grant using the minimum value method with the following assumptions for 2003:
dividend yield of 0.0% for options for common shares, a weighted-average risk
free interest rate of 3.45% and an expected life of the option of 8 years.
Assumptions for options granted in 2002 were: dividend yield of 0.0% for options
for common shares and 8.00% for options for preferred shares, a weighted-average
risk free interest rate of 5.02% and an expected life of the option of 8 years.
Stock based compensation would have reduced net income by approximately $0.1
million and $0.2 million for the year ended January 3, 2004 and the 257 days
ended December 31, 2002, respectively if the fair values of the options granted
had been recognized as compensation expense on a straight-line basis over the
vesting period of the grants.

16. BUSINESS SEGMENTS

Subsequent to the April 2002 merger transaction and sale of AmerCable, the
Company is in the single business of manufacturing and distributing exterior
residential building products. The Company operates principally in the United
States and Canada. Revenue from external customers in foreign countries was
approximately $51 million in 2003 and was primarily derived from customers in
Canada. The Company's remaining 2003 revenue totaling $729 million was derived
from U.S. customers. At January 3, 2004, long-lived

55

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

assets totaled approximately $36 million in Canada and $461 million in the U.S.
Neither aggregate export sales nor sales to a single customer have accounted for
10% or more of consolidated net sales in any of the years presented.

PREDECESSOR

Prior to the April 2002 merger transaction and sale of AmerCable, the
Company had two reportable segments: building products and electrical cable
products. The principal business activities of the building products segment are
the manufacture of vinyl windows, vinyl siding, aluminum trim coil, aluminum and
steel siding and accessories, and vinyl fencing, decking and railing and the
wholesale distribution of these and other complementary building products
principally to professional home remodeling and new construction contractors.
The principal business activity of the electrical cable segment was the
manufacture and sale of jacketed electrical cable.

The Company had evaluated performance and allocated resources based on
operating profit, which is comprised of net sales less operating costs and
expenses.

Comparative financial data by reportable segment for the 108 days ended
April 18, 2002 and the year ended December 31, 2001 are as follows (in
thousands):

56

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Identifiable assets by segment are those used in the Company's operations
in each segment. Corporate assets are principally the Company's cash and cash
equivalents and short-term investments.

17. 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 several plans
for Canadian non-union hourly and salary employees (the "Foreign Plans").
Accrued pension liabilities are included in other liabilities in the
accompanying balance sheets. Gentek plan information is presented subsequent to
the date of the acquisition. The actuarial valuation measurement date for the
defined benefit pension plans is December 31. Information regarding the
Company's defined benefit plans is as follows (in thousands):

57

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In 2003 and 2002, the Company recognized in the statement of comprehensive
income a reduction of the minimum pension liability of approximately $1.2
million ($0.7 million net of tax) and an additional minimum pension liability of
$7.4 million ($4.3 million net of tax), respectively. The additional liability
is included in other liabilities in the balance sheet as of January 3, 2004 and
December 31, 2002.

Plan assets by category for the Domestic Plans as of December 31, 2003 and
2002 are as follows:

Plan asset investment policies are based on target allocations. The target
allocations for the domestic plans are 60% to 65% equities and 35% to 40% debt
securities. The portfolio is periodically rebalanced when significant
differences occur from target.

58

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The net periodic pension cost for the years ended January 3, 2004 and
December 31, 2002, which includes net periodic pension costs for Gentek
subsequent to the date of acquisition, and the related weighted average
assumptions used to determine such amounts are as follows (in thousands):

In determining the expected long-term rate of return on assets, the Company
considers the historical market and portfolio rates of return, asset allocations
and expectations on future rates of return.

The Company expects to make $0.4 million of contributions to the Domestic
Plans in 2004.

The Company sponsors defined contribution plans, which are qualified as
tax-exempt plans under the Internal Revenue Code. The plans cover all full-time,
non-union employees with matching contributions up to 6% of eligible
compensation in the United States and up to 4% in Canada, depending on length of
service and levels of contributions. The Company's pre-tax contributions to this
plan were approximately $2.5 million for the year ended January 3, 2004, $1.8
million for the 257 days ended December 31, 2002, $1.0 million for the 108 days
ended April 18, 2002 and $2.1 million for the year ended December 31, 2001.

18. SUBSIDIARY GUARANTORS

The Company'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. The
operations and cash flows of Gentek Holdings, Inc., Gentek Building Products,
Inc. and Gentek Building Products Limited are presented since the date of their
acquisition on August 29, 2003. As such, no consolidating statements of
operations or cash flows are presented for any period prior to the acquisition,
as the Company's only guaranteeing subsidiary for those periods did not have any
assets, liabilities or operations. The balance sheet information includes all
subsidiaries as of January 3, 2004. No consolidating balance sheet is presented
as of December 31, 2002 as the Company's only guaranteeing subsidiary as of that
date did not have any assets or liabilities. 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.

59

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARES
CONDENSED CONSOLIDATING BALANCE SHEET
JANUARY 3, 2004
(IN THOUSANDS)

60

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 3, 2004
(IN THOUSANDS)

61

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JANUARY 3, 2004
(IN THOUSANDS)

19. CONTINGENCIES

In the ordinary course of business, the Company is involved in various
legal proceedings. The Company is of the opinion that the ultimate resolution of
these matters will not have a material adverse effect on the results of
operations or the financial position of the Company.

20. SUBSEQUENT EVENT

On February 19, 2004 AMH Holdings, Inc. ("AMH") was incorporated. AMH has
no material assets or operations other than its 100% ownership of Holdings, the
Company's parent company. Stockholders and option holders of Holdings became
stockholders and option holders of AMH on March 4, 2004 and are no longer
stockholders and option holders of Holdings. On March 4, 2004, AMH completed an
offering of

62

ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$446 million aggregate principal at maturity of 11 1/4% senior discount notes.
The total gross proceeds were approximately $258.3 million. In connection with
the note offering, all of the Roll-Over Options (see Note 15) 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 management bonus. 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. The notes mature on March 1, 2014. The notes
are structurally subordinated to all existing and future debt and other
liabilities of AMH's existing and future subsidiaries, including the Company,
and Holdings.

63

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

ITEM 9A. 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 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 has been no change to the Company's internal control over financial
reporting during the last fiscal quarter that has materially affected, or is
reasonably likely to materially affect, its internal control over financial
reporting.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth information about the board of directors and
executive officers for the Company.

Set forth below is a brief description of the business experience of each
of the Company's directors and executive officers as of March 22, 2004.

IRA D. KLEINMAN, AGE 47. Mr. Kleinman has been a director since 2002.
Since March 2004, Mr. Kleinman has been chairman of the board of directors and a
director of AMH, which is the indirect parent company of the Company that was
incorporated in February 2004, and he has been a director of Holdings since
2002. Mr. Kleinman has been a General Partner of Harvest Partners for more than
five years. Mr. Kleinman is also a director for Global Power Equipment Inc.

MICHAEL CAPORALE, JR., AGE 52. Mr. Caporale has been the President and
Chief Executive Officer of the Company and a director since 2002. Mr. Caporale
has been President, Chief Executive Officer and a director of AMH since March
2004 and he has been President, Chief Executive Officer and a director of
Holdings since 2002. Mr. Caporale was named Chief Executive Officer of the
Alside division and became a director in 2001. Mr. Caporale joined the Company
in 2000 as President of the Alside Window Company, became President and Chief
Operating Officer of the Alside division in 2000 and was named a Vice President
of the Company in 2000. Prior to joining the Company, Mr. Caporale was the
President of Great Lakes Window, Inc., a subsidiary of Nortek, Inc., where he
had been employed since 1995.
64

D. KEITH LAVANWAY, AGE 39. Mr. LaVanway has been Vice President-Chief
Financial Officer, Treasurer and Secretary of the Company since 2002. He has
been the Vice President-Finance, Chief Financial Officer, Assistant Treasurer
and Assistant Secretary of AMH since March 2004 and he has been Vice
President-Finance of Holdings since 2002. Mr. LaVanway joined the Company in
February 2001 as Vice President -- Chief Financial Officer of Alside and was
also named a Vice President of the Company. Prior to joining the Company, Mr.
LaVanway was employed by Nortek, Inc. from 1995 to 2001, where he served in
various financial positions.

KENNETH L. BLOOM, AGE 41. Mr. Bloom joined the Company in 2000 as Alside's
Vice President of Window Manufacturing. In 2001, Mr. Bloom was named President
of Alside Window Company. Mr. Bloom was named President of Alside Siding &
Window Company in 2002. Prior to joining the Company, Mr. Bloom was Corporate
Vice President of Field Container Co., L.P., where he had been employed since
1996.

ROBERT M. FRANCO, AGE 50. Mr. Franco joined the Company in 2002 as
President of Alside Supply Centers. Prior to joining the Company, Mr. Franco was
most recently Vice President of the Exterior Systems Business of Owens-Corning,
Inc., where he had worked in a variety of key management positions for over
twenty years.

JOHN F. HAUMESSER, AGE 39. Mr. Haumesser joined the Company in 2001 as
Vice President, Human Resources. Prior to joining the Company, Mr. Haumesser was
most recently Director, Human Resources at Pilkington Libbey-Owens-Ford, where
he had been employed since 1997.

THOMAS W. ARENZ, AGE 46. Mr. Arenz has been a director of the Company
since 2002. Mr. Arenz has been Treasurer, Assistant Secretary and a director of
Holdings since 2002 and has been the Treasurer, Secretary and a director of AMH
since March 2004. Mr. Arenz joined Harvest Partners, Inc. in 1996 and became a
Principal in 1997. Mr. Arenz is also a director of five entities associated with
Harvest Partners. Mr. Arenz has over 16 years of private equity investment and
corporate finance experience.

KEVIN M. HAYES, AGE 35. Mr. Hayes has been a director of the Company since
2002. Mr. Hayes has also been a director of Holdings since 2002 and a director
of AMH since March 2004. He is a General Partner of Weston Presidio and has
served in this position since 1998. From 1996 to 1998, he was a Principal at
Weston Presidio.

JEFFREY F. MOY, AGE 41. Mr. Moy has been a director of the Company since
2003. Mr. Moy has also been a director of Holdings since 2003 and a director of
AMH since March 2004. He is a Managing Director in the Investments Department of
Liberty Mutual Insurance Group, where he has worked since 1994.

DENNIS W. VOLLMERSHAUSEN, AGE 60. Mr. Vollmershausen has been a director
of the Company since 2002. Mr. Vollmershausen has also been a director of
Holdings since 2002 and a director of AMH since March 2004. He is the President,
Chief Executive Officer and director of Lund International Holdings, Inc., a
manufacturer, marketer and distributor of aftermarket accessories for the
automotive market, which he joined at the end of 1997. He has also been a
director of Digital Technologies Group, Inc. since 2002 and a director of
Wesruth Investments Limited since 1990. From 1996 through the end of 1997, Mr.
Vollmershausen worked at Champion Road Machinery, Ltd., a manufacturer of
construction equipment, as President and Chief Executive Officer. Mr.
Vollmershausen is the Chairman of the Board of London Machinery, Inc.

The following individual was a director during fiscal year 2003 but has
since resigned:

All of the Company's directors are elected on an annual basis with terms
expiring as of the annual meeting of stockholders. All of the officers serve at
the discretion of the board of directors.

AUDIT COMMITTEE

The members of the audit committee are appointed by the Company's board of
directors. The Company's audit committee currently consists of Dennis
Vollmershausen and Kevin Hayes (Chairman). Neither one of

65

the audit committee members meets the requirements for a financial expert under
the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and the rules of the
SEC, and neither director is independent, as that term is defined under either
the New York Stock Exchange or The NASDAQ National Market listing requirements.
The Company is not an issuer as defined under the Sarbanes-Oxley Act and it does
not have a class of securities listed on any national securities exchange.
Nevertheless, the Company believes the experience and education of the directors
qualifies them to monitor the integrity of its financial statements, with legal
and regulatory requirements, the public accountant's qualifications and
independence, the Company's internal controls and procedures for financial
reporting, and the Company's compliance with the Sarbanes-Oxley Act and the
rules and regulations thereunder. In addition, the audit committee has the
ability on its own to retain independent accountants, financial advisors or
other consultants, advisors and experts whenever it deems appropriate. The
Company believes the qualification and experience of the members of the audit
committee, and the ability to utilize outside advisors and experts as they
consider appropriate, affords them sufficient background and expertise to
fulfill their obligations without the necessity of including a financial expert
at the present time.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Not applicable

CODE OF ETHICS

The Company has adopted a code of ethics that applies to its principal
executive officer, principal financial officer, principal accounting officer or
controller, and other persons performing similar functions. This code of ethics
is posted on the Company's website at http://www.associatedmaterials.com. Any
waiver or amendment to this code of ethics will be timely disclosed on the
Company's website.

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth the annual compensation paid by the Company
for services rendered in 2003, 2002, and 2001 by the chief executive officer and
each of the other executive officers of the Company.

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- ---------------

(1) Perquisites and other personal benefits received by the Company's other
executive officers are not included in the Summary Compensation Table
because the aggregate amount of this compensation, if any, did not meet
disclosure thresholds established under current SEC regulations.

(2) Options granted in 2002 were granted in accordance with the Associated
Materials Holdings Inc. 2002 Stock Option Plan. The option grants include
the following:

- Options to purchase shares of Holdings common stock at the fair
market value on the date of grant, which will vest over time
("Time-Based Options"). All Time-Based Options granted to executives
during September 2002 were immediately vested 16% on the date of
grant, representing 10% vesting upon grant plus four months of
vesting from May 2002 through August 2002, with remaining vesting of
1.5% per month over 56 months;

- Options to purchase shares of Holdings common stock at the fair
market value on the date of grant, which will vest 100% on the
eighth anniversary from the date of grant, provided that the option
vesting may be accelerated upon the occurrence of a liquidity event
and the achievement of a specified internal rate of return ("IRR")
on the investment by Harvest Partners, Inc. in Holdings ("IRR
Options"). A liquidity event is defined as the occurrence of (a) a
transaction or series of transactions which results in the sale or
transfer of (i) more than a majority of the assets of Holdings and
its subsidiaries or (ii) a majority of the capital stock of Holdings
or a widely distributed sale of the common stock of Holdings in an
underwritten public offering which yields a minimum required amount
of net proceeds to Holdings and (b) the funds of Harvest Partners,
Inc. receive a minimum required aggregate net cash proceeds for its
investment in Holdings ("Liquidity Event");

- Options to purchase shares of Holdings common stock and preferred
stock as a unit, comprised of one share of preferred stock and a
specified fraction of a share of common stock ("Roll-Over Options").
These options were granted in exchange for the outstanding options
to purchase Associated Materials Incorporated common stock
("Predecessor Company Options"). Roll-Over Options were granted at
an exercise price, which preserves the intrinsic value of the
Predecessor Company Options. Each Roll-Over Option grant was 100%
vested as of the date of grant.

(3) Mr. LaVanway joined the Company in February 2001.

(4) Mr. Franco joined the Company in August 2002.

(5) Mr. Haumesser joined the Company in February 2001.

(6) In September 2002, Mr. Caporale was granted an option to purchase 205,892
shares of Holdings common stock and 46,415 shares of Holdings' preferred
stock as follows:

- Time-Based Options granted with the option to purchase 106,280
shares of common stock at $10 per share;

- IRR Options granted with the option to purchase 63,768 shares of
common stock at $10 per share;

- Roll-Over Options granted with an option to purchase 23,221 shares
of preferred stock and 17,781 shares of common stock. Each option
must be exercised as a unit, with each unit comprising one share of
preferred stock and 0.7657 shares of common stock, at a unit
exercise price of $31.09;

- Roll-Over Options granted with an option to purchase 23,194 shares
of preferred stock and 18,063 shares of common stock. Each option
must be exercised as a unit, with each unit comprising one share of
preferred stock and 0.7788 shares of common stock, at a unit
exercise price of $29.91.

In January 2000, Mr. Caporale was granted Predecessor Company Options to
purchase 50,000 shares of Company common stock at $14.4375 per share,
the fair market value on the grant date. In March 2000, Mr. Caporale was
granted Predecessor Company Options to purchase an additional 50,000
shares of Company common stock at $13.875 per share, the fair market
value on the grant date. The Predecessor Company Options granted for
Company common stock vested 50% on the date of grant and 50% on the
second anniversary of the grant date. Both option grants became 100%

67

vested upon consummation of the April 2002 merger transaction and were
converted into the Roll-Over Options described herein.

(7) In September 2002, Mr. LaVanway was granted an option to purchase 66,981
shares of Holdings common stock and 4,678 shares of Holdings' preferred
stock as follows:

- Time-Based Options granted with the option to purchase 39,855 shares
of common stock at $10 per share;

- IRR Options granted with the option to purchase 23,913 shares of
common stock at $10 per share;

- Roll-Over Options granted with an option to purchase 4,678 shares of
preferred stock and 3,213 shares of common stock. Each option must
be exercised as a unit, with each unit comprising one share of
preferred stock and 0.686832 shares of common stock, at a unit
exercise price of $38.21.

In February 2001, Mr. LaVanway was granted Predecessor Company Options
to purchase 10,000 shares of Associated Materials Incorporated common
stock at $17.875 per share, the fair market value on the grant date. The
Predecessor Company Options granted for Company common stock vested 20%
on the date of grant and 20% on each anniversary of the grant date
thereafter. This option grant became 100% vested upon consummation of
the April 2002 merger transaction and was converted into the Roll-Over
Options described herein.

(8) The options shown, which are Predecessor Company Options, were issued
pursuant to a plan that is no longer in existence and have been rolled over
into new options of Holdings. These options were the basis for the
Roll-Over Options, described herein.

(9) In September 2002, Mr. Bloom was granted an option to purchase 56,483
shares of Holdings common stock and 4,665 shares of Holdings' preferred
stock as follows:

- Time-Based Options granted with the option to purchase 33,212 shares
of common stock at $10 per share;

- IRR Options granted with the option to purchase 19,927 shares of
common stock at $10 per share;

- Roll-Over Options granted with an option to purchase 4,665 shares of
preferred stock and 3,344 shares of common stock. Each option must
be exercised as a unit, with each unit comprising one share of
preferred stock and 0.716827 shares of common stock, at a unit
exercise price of $35.50.

In August 2000, Mr. Bloom was granted Predecessor Company Options to
purchase 10,000 shares of Associated Materials Incorporated common stock
at $16.5625 per share, the fair market value on the grant date. The
Predecessor Company Options granted for Company common stock vested 20%
on the date of grant and 20% on each anniversary of the grant date
thereafter. This option grant became 100% vested upon consummation of
the April 2002 merger transaction and was converted into the Roll-Over
Options described herein.

(10) In September 2002, Mr. Franco was granted an option to purchase 21,256
shares of Holdings common stock as follows:

- Time-Based Options granted with the option to purchase 13,285 shares
of common stock at $10 per share;

- IRR Options granted with the option to purchase 7,971 shares of
common stock at $10 per share.

(11) In September 2002, Mr. Haumesser was granted an option to purchase 10,627
shares of Holdings common stock as follows:

- Time-Based Options granted with the option to purchase 6,642 shares
of common stock at $10 per share;

- IRR Options granted with the option to purchase 3,985 shares of
common stock at $10 per share.

(12) Includes a bonus paid in lieu of an annual salary increase of $100,000 and
amounts accrued or allocated under a defined contribution plan of $8,000.

68

(13) Includes a bonus paid in lieu of an annual salary increase of $25,000 and
amounts accrued or allocated under a defined contribution plan of $8,000.

(14) Includes amounts accrued or allocated under a defined contribution plan.

(15) Includes relocation expenses of $47,083 and the income taxes related to
relocation expenses of $28,739, both incurred by Mr. Franco and paid by the
Company under the terms of his employment agreement, and amounts accrued or
allocated under a defined contribution plan of $8,000.

(16) Includes amounts accrued or allocated under a defined contribution plan.

(17) Includes amounts accrued or allocated under a defined contribution plan of
$6,828 and the payment of income taxes of $1,375 related to certain
expenses included in 2001.

(18) Includes a sign-on bonus of $15,000 and relocation expenses of $51,541 and
the income taxes related to relocation expenses of $29,140, both incurred
by Mr. Haumesser and paid by the Company under the terms of his former
employment agreement.

COMPENSATION AND INCENTIVE PROGRAMS

INCENTIVE BONUS PLAN

The Company maintains an Incentive Bonus Plan providing for annual bonus
awards to certain key employees, including each of the executive officers of the
Company. Bonus amounts are based on growth in the estimated equity value of
Holdings utilizing a calculation based on Adjusted EBITDA. This plan is
administered by the Company's board of directors. Mr. Caporale, a member of the
board of directors for the Company, is eligible for a bonus award under this
plan. Bonus payments under the Incentive Bonus Plan are not guaranteed. Cash
bonuses accrued in 2003, 2002 and 2001 to each of the Company's executive
officers are set forth in the Summary Compensation Table.

EMPLOYMENT AGREEMENTS

Mr. Caporale entered into an employment agreement with the Company
effective as of April 19, 2002. Under the terms of his employment agreement, Mr.
Caporale serves as the Company's President, Chief Executive Officer and a member
of the board of directors. Mr. Caporale's employment agreement provides for an
initial base salary of $500,000, an annual incentive bonus based on growth in
the estimated equity value of Holdings, certain perquisites and participation in
employee benefit programs made available to other senior executives. The initial
term of the employment agreement is three years. The terms of the employment
agreement provide that on the first anniversary of the equity tender offer
completion date and each successive anniversary thereof, the term of the
employment agreement will automatically extend by one year unless the Company
delivers to Mr. Caporale a notice not to extend the employment term. The terms
of the employment agreement provide that if Mr. Caporale's employment is
involuntarily terminated by the Company without cause or if Mr. Caporale resigns
for good reason, he will be entitled to severance equal to $1,000,000 per year,
together with continued health and dental benefits, for two years, plus a pro
rata incentive bonus for the year of termination.

Mr. LaVanway entered into an employment agreement with the Company
effective as of April 19, 2002. Under the terms of his employment agreement, Mr.
LaVanway serves as the Company's Vice President -- Chief Financial Officer. Mr.
LaVanway's employment agreement provides for an initial base salary of $275,000
and an annual incentive bonus based on growth in the estimated equity value of
Holdings. The initial term of the employment agreement is two years. The terms
of the employment agreement provide that on the first anniversary of the equity
tender offer completion date and each successive anniversary thereof, the term
of the employment agreement will automatically extend by one year unless the
Company gives to Mr. LaVanway a notice not to extend the employment term. The
employment agreement provides that if Mr. LaVanway's employment is involuntarily
terminated by the Company without cause within two years following the equity
tender offer completion date, Mr. LaVanway is entitled to the following
severance compensation and benefits: (1) two times Mr. Lavanway's base pay at
the highest rate in effect for any period prior to his termination, (2) two
times his cash bonus (equal to the highest applicable cash bonus earned during
the three years immediately preceding the calendar year 2002), (3) if the
termination of employment occurs after June 30 in any year, a prorated bonus for
that calendar year, (4) for a period of twenty-four months, health, life
insurance

69

and other employee welfare benefits substantially similar to those provided
prior to his termination, subject to reduction to the extent comparable benefits
are actually received by Mr. LaVanway from another employer during this period,
and (5) certain outplacement services. If Mr. LaVanway's employment is
involuntarily terminated by the Company without cause after the two-year period
following the equity tender offer completion date, he will be entitled to
severance equal to his annual base salary for twelve months or the remaining
employment term, whichever is longer, plus a pro rata bonus for the year of
termination.

Mr. Bloom entered into an employment agreement with the Company effective
as of April 19, 2002. Under the terms of his employment agreement, Mr. Bloom
serves as the President of Alside Siding and Window Company. Mr. Bloom's
employment agreement provides for an initial base salary of $220,000 and an
annual incentive bonus pursuant to a plan established by the Company. The
initial term of the employment agreement is two years. The terms of the
employment agreement provide that on the first anniversary of the equity tender
offer completion date and each successive anniversary thereof, the term of the
employment agreement will automatically extend by one year unless the Company
gives Mr. Bloom a notice not to extend the employment term. The employment
agreement provides that if Mr. Bloom's employment is involuntarily terminated by
the Company without cause, he will be entitled to severance equal to his annual
base salary for twelve months or the remaining employment term, whichever is
longer, plus a pro rata bonus for the year of termination.

Mr. Franco entered into an employment agreement with the Company effective
as of August 21, 2002. Under the terms of his employment agreement, Mr. Franco
serves as the President of Alside Supply Centers. Mr. Franco's employment
agreement provides for an initial base salary of $250,000 and an annual
incentive bonus based on growth in the estimated equity value of Holdings. The
initial term of the employment agreement is two years. The terms of the
employment agreement provide that on the first anniversary of the equity tender
offer completion date and each successive anniversary thereof, the term of the
employment agreement will automatically extend by one year unless the Company
gives Mr. Franco a notice not to extend the employment term. The employment
agreement provides that if Mr. Franco's employment is involuntarily terminated
by the Company without cause, he will be entitled to severance equal to his
annual base salary for twelve months or the remaining employment term, whichever
is longer, plus a pro rata bonus for the year of termination.

Mr. Haumesser entered into an employment agreement with the Company
effective as of April 19, 2002. Under the terms of his employment agreement, Mr.
Haumesser serves as Vice President, Human Resources. Mr. Haumesser's employment
agreement provides for an initial base salary of $160,000 and an annual
incentive bonus based on growth in the estimated equity value of Holdings. The
initial term of the employment agreement is two years. The terms of the
employment agreement provide that on the first anniversary of the equity tender
offer completion date and each successive anniversary thereof, the term of the
employment agreement will automatically extend by one year unless the Company
gives Mr. Haumesser a notice not to extend the employment term. The employment
agreement provides that if Mr. Haumesser's employment is involuntarily
terminated by the Company without cause within two years following the equity
tender offer completion date, Mr. Haumesser is entitled to the following
severance compensation and benefits: (1) two times Mr. Haumesser's base pay at
the highest rate in effect for any period prior to his termination, (2) two
times his cash bonus (equal to the highest applicable cash bonus earned during
the three years immediately preceding the calendar year 2002), (3) if the
termination of employment occurs after June 30 in any year, a prorated bonus for
that calendar year, (4) for a period of twenty-four months, health, life
insurance and other employee welfare benefits substantially similar to those
provided prior to his termination, subject to reduction to the extent comparable
benefits are actually received by Mr. Haumesser from another employer during
this period, and (5) certain outplacement services. The employment agreement
provides that if Mr. Haumesser's employment is involuntarily terminated by the
Company without cause, after the two-year period following the equity tender
offer completion date, he will be entitled to severance equal to his annual base
salary for twelve months plus a pro rata bonus for the year of termination.

Each of the executive officers' employment agreements includes
non-competition, non-solicitation, confidentiality and other restrictive
covenants.

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ASSOCIATED MATERIALS HOLDINGS INC. 2002 STOCK OPTION PLAN

In June 2002, Holdings adopted the Associated Materials Holdings Inc. 2002
Stock Option Plan (the "Plan"). The board of directors of Holdings administers
the Plan and selects eligible executives, directors, employees and consultants
of Holdings and its affiliates, including the Company, to receive options. The
board of directors of Holdings also will determine the number and type of shares
of stock covered by options granted under the Plan, the terms under which
options may be exercised, the exercise price of the options and other terms and
conditions of the options in accordance with the provisions of the Plan. An
option holder may pay the exercise price of an option by any legal manner that
the board of directors of Holdings permits. Option holders generally may not
transfer their options except in the event of death. If Holdings undergoes a
change in control, as defined in the Plan, all outstanding Time-Based Options
become immediately fully exercisable, while the IRR Options may become
immediately exercisable upon achievement of certain specified criteria. The
board of directors of Holdings may adjust outstanding options by substituting
stock or other securities of any successor or another party to the change in
control transaction, or cash out such outstanding options, in any such case,
generally based on the consideration received by its stockholders in the
transaction. Subject to particular limitations specified in the Plan, the board
of directors may amend or terminate the Plan. The Plan will terminate no later
than 10 years following its effective date; however, any options outstanding
under the option plan will remain outstanding in accordance with their terms.

Certain employees of the Company who held options immediately prior to the
April 2002 merger transaction to purchase shares of the Predecessor's common
stock have converted such options into options to purchase shares of Holdings'
common stock, preferred stock or both. Certain employees of the Company may also
receive new options to purchase shares of common stock of Holdings. Mr. Caporale
may require Holdings to repurchase shares of stock of Holdings that have been
purchased through the exercise of certain options granted to him upon the
occurrence of specified events.

COMPENSATION COMMITTEE

The Company's compensation committee consists of Ira Kleinman, Dennis
Vollmershausen and Kevin Hayes. The compensation committee determines the
Company's compensation policies and forms of compensation provided to its
directors and officers. The compensation committee also reviews and determines
bonuses for the Company's officers and other employees. As described in
"Incentive Bonus Plan" above, the Company maintains an Incentive Bonus Plan
providing for annual bonus awards to certain key employees, including each of
the executive officers of the Company. Bonus amounts are based on growth in the
estimated equity value of Holdings. In addition, the compensation committee
reviews and determines stock based compensation for the Company's directors,
officers, employees and consultants and administrators of Holdings' stock
incentive plan.

CHIEF EXECUTIVE OFFICER COMPENSATION

Mr. Caporale's compensation in 2003 was governed by his employment
agreement and his future compensation will be determined in accordance with the
conditions of his employment agreement. The terms of Mr. Caporale's employment
agreement are set forth in the section "-- Employment Agreements" above. Mr.
Caporale was also awarded an annual bonus award in 2003 of $1,000,000 under the
Incentive Bonus Plan, as described above. Amounts paid and granted to Mr.
Caporale in 2003 are disclosed in the "Summary Compensation Table."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of the members of the Company's compensation committee are current or
former executive officers or employees of the Company or any of its
subsidiaries.

DIRECTOR COMPENSATION

The Company currently reimburses its non-employee directors for all out of
pocket expenses incurred in the performance of their duties as directors. In
addition the Company pays one of its directors, Dennis
71

Vollmershausen, $5,000 for his participation in each meeting of the board of
directors or committees. None of the Company's other directors currently receive
any compensation for their services on the board of directors or committee of
the board of directors.

OPTION/SAR GRANTS IN 2003

There were no stock options granted to the Company's executive officers
during 2003.

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AGGREGATED OPTION/SAR EXERCISES IN 2003
AND JANUARY 3, 2004 OPTION/SAR VALUES

The following table provides information regarding the exercise of
Holdings' options during 2003 and unexercised options held as of January 3, 2004
for each of the Company's executive officers.

- ---------------

(1) The Company has not granted stock appreciation rights.

(2) The per share common equity value on January 3, 2004 was $94 per share,
which was based on a calculation of common equity value prepared by an
outside valuation consulting firm utilizing an approach, which considered
both market multiple and discounted cash flow methodologies. The value of
unexercised common options was calculated by multiplying the per share
common stock value by the number of shares of common stock issuable upon
exercise of these options, less exercise price. Preferred share value was
based on a $100 per share value, plus accumulated preferred stock dividends
of 8% since the closing of the April 2002 merger transaction, less the
exercise price of these options.

(3) All options were granted in 2002 in accordance with the Associated Materials
Holdings, Inc. 2002 Stock Option Plan. The option grants include the
following:

- Options to purchase shares of Holdings common stock at the fair market
value on the date of grant, which will vest over time ("Time-Based
Options"). All Time-Based Options granted to executives during
September 2002 were immediately vested 16% on the date of grant,
representing 10% vesting upon grant plus four months of vesting from
May 2002 through August 2002, with remaining vesting of 1.5% per month
over 56 months;

- Options to purchase shares of Holdings common stock at the fair market
value on the date of grant, which will vest 100% on the eighth
anniversary from the date of grant, provided that the option vesting
may be accelerated upon the occurrence of a liquidity event and the
achievement of a specified internal rate of return ("IRR") on the
investment by Harvest Partners, Inc. in Holdings ("IRR Options"). A
liquidity event is defined as the occurrence of (a) a transaction or
series of transactions which results in the sale or transfer of (i)
more than a majority of the assets of Holdings and its subsidiaries or
(ii) a majority of the capital stock of Holdings or a widely
distributed sale of the common stock of Holdings in an underwritten
public offering which yields a

73

minimum required amount of net proceeds to Holdings and (b) the funds
of Harvest Partners, Inc. receive a minimum required aggregate net
cash proceeds for its investment in Holdings ("Liquidity Event");

- Options to purchase shares of Holdings common stock and preferred
stock as a unit, comprised of one share of preferred stock and a
specified fraction of a share of common stock ("Roll-Over Options").
These options were granted in exchange for the outstanding options to
purchase Associated Materials Incorporated common stock ("Predecessor
Company Options"). Roll-Over Options were granted at an exercise
price, which preserves the intrinsic value of the Predecessor Company
Options. Each Roll-Over Option grant was 100% vested as of the date of
grant.

(4) In September 2002, Mr. Caporale was granted an option to purchase 205,892
shares of Holdings common stock and 46,415 shares of Holdings' preferred
stock as follows:

- Time-Based Options granted with the option to purchase 106,280 shares
of common stock at $10 per share;

- IRR Options granted with the option to purchase 63,768 shares of
common stock at $10 per share;

- Roll-Over Options granted with an option to purchase 23,221 shares of
preferred stock and 17,781 shares of common stock. Each option must be
exercised as a unit, with each unit comprising one share of preferred
stock and 0.7657 shares of common stock, at a unit exercise price of
$31.09.

- Roll-Over Options granted with an option to purchase 23,194 shares of
preferred stock and 18,063 shares of common stock. Each option must be
exercised as a unit, with each unit comprising one share of preferred
stock and 0.7788 shares of common stock, at a unit exercise price of
$29.91.

(5) In September 2002, Mr. LaVanway was granted an option to purchase 66,981
shares of Holdings common stock and 4,678 shares of Holdings' preferred
stock as follows:

- Time-Based Options granted with the option to purchase 39,855 shares
of common stock at $10 per share;

- IRR Options granted with the option to purchase 23,913 shares of
common stock at $10 per share;

- Roll-Over Options granted with an option to purchase 4,678 shares of
preferred stock and 3,213 shares of common stock. Each option must be
exercised as a unit, with each unit comprising one share of preferred
stock and 0.686832 shares of common stock, at a unit exercise price of
$38.21.

(6) In September 2002, Mr. Bloom was granted an option to purchase 56,483 shares
of Holdings common stock and 4,665 shares of Holdings' preferred stock as
follows:

- Time-Based Options granted with the option to purchase 33,212 shares
of common stock at $10 per share;

- IRR Options granted with the option to purchase 19,927 shares of
common stock at $10 per share;

- Roll-Over Options granted with an option to purchase 4,665 shares of
preferred stock and 3,344 shares of common stock. Each option must be
exercised as a unit, with each unit comprising one share of preferred
stock and 0.716827 shares of common stock, at a unit exercise price of
$35.50.

(7) In September 2002, Mr. Franco was granted an option to purchase 21,256
shares of Holdings common stock as follows:

- Time-Based Options granted with the option to purchase 13,285 shares
of common stock at $10 per share;

- IRR Options granted with the option to purchase 7,971 shares of common
stock at $10 per share.

(8) In September 2002, Mr. Haumesser was granted an option to purchase 10,627
shares of Holdings common stock as follows:

- Time-Based Options granted with the option to purchase 6,642 shares of
common stock at $10 per share;

- IRR Options granted with the option to purchase 3,985 shares of common
stock at $10 per share.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

On February 19, 2004, AMH was created to be the direct parent company of
Holdings, the Company's direct parent. AMH has no material assets or operations
other than its 100% ownership of Holdings. Stockholders and option holders of
Holdings became stockholders and option holders of AMH on March 4, 2004.

The Company is a wholly owned subsidiary of Holdings and, on February 19,
2004, became an indirect wholly-owned subsidiary of AMH. AMH's principal asset
is 100% of the capital stock of Holdings and Holdings' principal asset is 100%
of the Company's common stock. The capital stock of AMH consists of class A
common stock, par value $0.01 per share (the "Class A common stock") and class B
non-voting common stock, par value $0.01 per share ("Class B common stock" and
collectively with the Class A common stock, the "common stock"). Harvest Funds
(as defined by footnote 3 below) owns approximately 29.9% of the voting stock of
AMH and is party to an amended and restated stockholders agreement dated as of
March 4, 2004, regarding the ownership and voting of the common stock of AMH. By
virtue of such stock ownership and stockholders agreement, Harvest Funds will
have the ability to designate a majority of the board of directors of AMH and to
control actions to be taken by the Company's stockholder and/or board of
directors, including amendments to the Company's certificate of incorporation
and by-laws and approval of significant corporate transactions, including
mergers and sales of substantially all of the Company's assets.

The following table sets forth certain information as of March 15, 2004
regarding the beneficial ownership of AMH:

- each person known by the Company to own beneficially 5% or more of the
outstanding common stock of AMH;

- the directors and named executive officers of the Company; and

- all directors and named executive officers of the Company as a group.

The Company determined beneficial ownership in accordance with the rules of
the Commission, which generally require inclusion of shares over which a person
has voting or investment power. Share ownership in each case includes shares
that may be acquired within sixty days through the exercise of any options.
Except as otherwise indicated, the address for each of the named individuals is
c/o Associated Materials Incorporated, 280 Park Avenue, New York, New York
10017.

- ---------------

* less than 1%

(1) AMH is controlled by Harvest Funds, by reason of their collective right to
designate a majority of the members of the board of directors of AMH.
Harvest Funds are Harvest Partners III, L.P., Harvest Partners III
Beteilingungsgesellschaft Burgerlichen Rechts (mit Haftungsbeschrankung)
("Harvest Partners III, GbR"), Harvest Partners IV, L.P. and Harvest
Partners IV GmbH & Co. KG ("Harvest Partners IV KG"). Harvest Associates
III, L.L.C., which has six members, is the general partner of Harvest
Partners III, L.P. and Harvest Partners III, GbR. Harvest Associates IV,
L.L.C., which has six members, is the general partner of Harvest Partners
IV, L.P. and Harvest Partners IV KG. Harvest Partners, Inc. provides
management services for Harvest Associates III, L.L.C. in connection with
Harvest Partners III, L.P. and Harvest Partners III, GbR and for Harvest
Associates IV, L.L.C. in connection with Harvest Partners IV, L.P. and
Harvest Partners IV KG.

(2) Includes 131,978 shares of Class A common stock owned by Harvest Partners
III, L.P. and 18,022 shares of Class A common stock owned by Harvest
Partners III, GbR for each of which Harvest Associates III, L.L.C. is the
general partner. Harvest Associates III, L.L.C. has six members, each of
whom has equal voting rights and who may be deemed to share beneficial
ownership of the shares of common stock of AMH. The six members are Ira
Kleinman, Harvey Mallement, Stephen Eisenstein, Harvey Wertheim, William
Kane and Thomas Arenz. Mr. Kleinman and Mr. Arenz are on the Company's
board of directors. Each of Messrs. Kleinman, Mallement, Eisenstein,
Wertheim, Kane and Arenz disclaims beneficial ownership of the shares of
Class A common stock owned by Harvest Partners III, L.P. and Harvest
Partners III GbR.

(3) Includes 273,000 shares of Class A common stock owned by Harvest Partners
IV, L.P. and 77,000 shares of Class A common stock owned by Harvest
Partners IV KG, for each of which Harvest Associates IV, L.L.C. is the
general partner. Harvest Associates IV, L.L.C. has six members, each of
whom has equal voting rights and who may be deemed to share beneficial
ownership of the shares of Class A common stock of AMH beneficially owned
by it. The six members are Ira Kleinman, Harvey Mallement, Stephen
Eisenstein, Harvey Wertheim, William Kane and Thomas Arenz. Mr. Kleinman
and Mr. Arenz are on the Company's board of directors. Each of Messrs.
Kleinman, Mallement, Eisenstein, Wertheim, Kane and Arenz disclaims
beneficial ownership of the shares of Class A common stock owned by Harvest
Partners IV, L.P., Harvest Partners IV KG. Harvest Partners III, L.P.,
Harvest Partners III GbR, Harvest Partners IV, L.P. and Harvest Partners IV
KG are collectively referred to as the "Harvest Funds." The address of the
named entities is 280 Park Avenue, 33rd Floor, New York, New York 10017.

(4) Includes 65,992 shares of Class A common stock held by Weston Presidio
Capital III, L.P., 156,986 shares of Class A common stock held by Weston
Presidio Capital IV, L.P., 3,256 Class A common

76

stock held by WPC Entrepreneur Fund, L.P. and 2,485 Class A common stock
held by WPC Entrepreneur Fund II, L.P. The Weston Funds are affiliated
entities and hold an aggregate of 228,719 of Class A common stock. The
address of the Weston Funds is 200 Clarendon Street, 50th Floor, Boston,
Massachusetts 02116.

(5) The address of The Texas Growth Fund II -- 1998 Trust is c/o TGF Management
Corp., 111 Congress Avenue, Suite 2900, Austin, Texas 78701-4098.

(6) Includes 1,372 shares of Class A common stock held by Old Hickory Fund I
LLC and 181,603 shares of Class A common stock held by PPM America Private
Equity Fund LP. PPM America Private Equity Fund LP and Old Hickory I LLC
are affiliates of PPM America, Inc. The address of PPM America, Inc. is 225
West Wacker Drive, Suite 1200, Chicago, Illinois 60606.

(7) The address of Liberty Mutual Insurance Company is 175 Berkeley Street,
Boston, Massachusetts 02116-0140.

(8) The address of New York Life Capital Partners is 51 Madison Avenue, Suite
3009, New York, New York 10010.

(9) Includes 72,370 shares of Class A common stock held by BancBoston Capital
Inc. and 18,298 shares of Class A common stock held by Private Equity
Portfolio Fund II, LLC. The manager of Private Equity Portfolio Fund II,
LLC is Fleet National Bank, which is a subsidiary of Fleet Boston Financial
Corporation, which is the indirect owner of 100% of BancBoston Capital Inc.
The address of BancBoston Capital Inc. is 175 Federal Street, Boston,
Massachusetts 02110. Bank Boston Capital Inc. also owns 19,118 shares of
Class B non-voting common stock.

(10) Includes shares of Class A common stock owned by Harvest Partners III, L.P.
and shares of Class A common stock owned by Harvest Partners III GbR, for
each of which Harvest Associates III, L.L.C. is the general partner. Also
includes shares of Class A common stock owned by Harvest Partners IV, L.P.
and Harvest Partners IV KG, for each of which Harvest Partners IV, L.L.C.
is the general partner. Mr. Kleinman is a member of Harvest Associates,
III, L.L.C. and Harvest Partners IV, L.L.C. and may be deemed to share
beneficial ownership of the shares of common stock of AMH beneficially
owned by them. Mr. Kleinman disclaims beneficial ownership of common shares
owned by Harvest Partners III, L.P., Harvest Partners III GbR, Harvest
Partners IV, L.P. and Harvest Partners IV KG.

(11) Includes 35,844 shares of Class A common stock owned by Mr. Caporale and
options to purchase 47,295 shares of Class A common stock.

(12) Includes 3,213 shares of Class A common stock owned by Mr. LaVanway and
options to purchase 17,735 shares of Class A common stock.

(13) Includes 3,344 shares of Class A common stock owned by Mr. Bloom and
options to purchase 14,779 shares of Class A common stock.

(14) Includes options to purchase 5,912 shares of Class A common stock.

(15) Includes options to purchase 3,819 shares of Class A common stock.

(16) Includes shares of Class A common stock owned by Harvest Partners III, L.P.
and shares of Class A common stock owned by Harvest Partners III GbR, for
each of which Harvest Associates III, L.L.C. is the general partner. Also
includes shares of Class A common stock owned by Harvest Partners IV, L.P.
and Harvest Partners IV KG, for each of which Harvest Partners IV, L.L.C.
is the general partner. Mr. Arenz is a member of Harvest Associates, III,
L.L.C. and Harvest Partners IV, L.L.C. and may be deemed to share
beneficial ownership of the shares of common stock of AMH beneficially
owned by them. Mr. Arenz disclaims beneficial ownership of common shares
owned by Harvest Partners III, L.P., Harvest Partners III GbR, Harvest
Partners IV, L.P. and Harvest Partners IV KG.

(17) Mr. Hayes is a director for AMH and Holdings, representing four of Holdings
stockholders, Weston Presidio Capital III, L.P., Weston Presidio Capital
IV, L.P., WPC Entrepreneur Fund, L.P. and WPC Entrepreneur Fund II, L.P.,
which are collectively referred to as the "Weston Funds." Mr. Hayes'
election as a director is prescribed by the stockholders agreement. See
Item 13. "Certain Relationships and Related Transactions -- The
Stockholders Agreement." The shares included in the table above

77

includes shares held by the Weston Funds as follows: Weston Presidio Capital
III, L.P. holds 65,992 shares of Class A common stock; Weston Presidio Capital
IV holds 156,986 shares of Class A common stock; WPC Entrepreneur Fund, L.P.
holds 3,256 shares of Class A common stock; and WPC Entrepreneur Fund II,
L.P. holds 2,485 shares of Class A common stock.

Mr. Hayes is a member or partner, as the case may be, of the general partner of
the Weston Funds. Mr. Hayes disclaims beneficial ownership of the shares held by
the Weston Funds, except to the extent of his pecuniary interest therein.

(18) Includes 137,232 shares of Class A common stock owned by Liberty Mutual
Insurance Company. Mr. Moy is a Managing Director of Liberty Mutual
Insurance Group, which is an affiliate of Liberty Mutual Insurance Company,
and may be deemed to share beneficial ownership of the shares of Class A
common stock of Holdings. Mr. Moy disclaims beneficial ownership of Class A
common stock owned by Liberty Mutual Insurance Company.

(19) Includes 1,000 shares of common stock owned through a personal holding
company in the name of 3755428 Canada Inc., a Canadian corporation. Mr.
Vollmershausen is the sole shareholder of this corporation. Mr.
Vollmershausen was also granted options to purchase 1,419 shares of Class A
common stock.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

THE STOCKHOLDERS AGREEMENT

In March 2004, the stockholders of AMH entered into a stockholders
agreement, which governs certain relationships among, and contains certain
rights and obligations of, such stockholders. The stockholders agreement, among
other things, (1) limits the ability of the stockholders to transfer their
shares in AMH except in certain permitted transfers as defined therein; (2)
provides for certain tag-along obligations and certain bring-along rights; (3)
provides for certain registration rights; and (4) provides for certain
preemptive rights.

The AMH stockholders agreement is substantially the same as the prior
Holdings stockholders agreement, dated April 19, 2002, which governed the
relationships among, and contained certain rights and obligations of, the
Holdings stockholders. As a result of the restructuring, the stockholders agreed
to terminate the Holdings stockholders agreement and enter into the AMH
stockholders agreement.

The stockholders agreement provides that the parties thereto must vote
their shares to elect a board of directors consisting of at least four persons
designated by the stockholders who are affiliates of Harvest Partners, Inc., the
Company's chief executive officer, a person designated by PPM America Private
Equity Fund, LP and a person designated by Weston Presidio Service Company, LLC.
Pursuant to the stockholders agreement, Harvest Partners, Inc. will have the
power to control the amendment of the certificate of incorporation of AMH,
excluding changes that would disproportionately and adversely affect the rights
of any stockholder (other than stockholders who are affiliates of Harvest
Partners, Inc.). In addition, all stockholders of AMH have granted the Harvest
Funds the right, in certain circumstances, to require such stockholders to sell
their shares in AMH in, or to vote their shares to effect, a sale of all or
substantially all of the assets or a majority of the common stock of Holdings,
AMH or the Company, as the case may be, to a party other than an affiliate of
Harvest Partners, Inc.

Pursuant to the stockholders agreement, the stockholders (other than
stockholders that are affiliates of Harvest Partners, Inc.) are granted
"tag-along" rights under which such stockholders have the option of
participating in certain sales of capital stock of AMH by the stockholders who
are affiliates of Harvest Partners, Inc. at the same price and other terms as
such affiliates.

Pursuant to the stockholders agreement, the stockholders are entitled to
certain rights with respect to registration under the Securities Act of certain
shares held by them including, in the case of affiliates of Harvest Partners,
Inc., certain demand registration rights. The stockholders agreement also
provides for certain preemptive rights. Subject to certain conditions, the
preemptive rights grant the right to purchase shares in a share issuance of AMH.
78

The stockholders agreement provides that it shall terminate, except with
respect to the registration rights of the stockholders, upon the closing of an
underwritten registered public offering of common stock of AMH.

MANAGEMENT AGREEMENT

See Item 7. "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Related Party Transactions" for a discussion of the
Company's management agreement with Harvest Partners. Under the management
agreement, Harvest Partners, Inc. received $1.1 million for financial advisory
services in connection with the acquisition of Gentek and received $1.3 million
in financial advisory services in connection with the completion of the offering
of AMH's 11 1/4% notes and the related transactions.

MANAGEMENT BONUS

Upon the completion of the offer by AMH of its 11 1/4% notes in March 2004,
AMH paid 20 members of its and the Company's senior management a bonus of $14.6
million, of which approximately $12.3 million was paid to five executive
officers, in recognition of their effort with respect to the acquisition of
Gentek, the Company's performance since the April 2002 merger transaction, as
well as the completion of the offering of AMH's 11 1/4% notes.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table sets forth the aggregate fees billed to the Company by
the independent accountants, Ernst & Young LLP, for services rendered during
fiscal years 2003 and 2002 (in thousands):

The Company's audit committee adopted a policy in April 2003 to pre-approve
all audit and non-audit services provided by its independent public accountants
prior to the engagement of its independent public accountants with respect to
such services. Under such policy, the audit committee may delegate one or more
members who are independent directors of the board of directors to pre-approve
the engagement of the independent public accountants. Such member must report
all such pre-approvals to its entire audit committee at the next committee
meeting.

AUDIT FEES

Audit Fees principally constitute fees billed for professional services
rendered by Ernst & Young LLP for the audit of the Company's consolidated
financial statements for each of the fiscal years 2003 and 2002 and the reviews
of the consolidated financial statements included in the Company's quarterly
reports on Form 10-Q filed during fiscal years 2003 and 2002.

AUDIT-RELATED FEES

Audit-related fees constitute fees billed for assurance and related
services by Ernst & Young LLP that are reasonably related to the performance of
the audit or review of the Company's consolidated financial statements, other
than the services reported above under "Audit Fees," in each of the fiscal years
2003 and 2002. In fiscal year 2003, audit-related fees principally consisted of
fees for acquisition due diligence and the

79

audit of benefit plans. The Audit Committee pre-approved 100% of the
audit-related fees subsequent to its formation in 2003.

TAX FEES

Tax fees constitute fees billed for professional services rendered by Ernst
& Young LLP for tax compliance, tax advice and tax planning in each of the
fiscal years 2002 and 2003. In fiscal year 2003 and 2002, tax fees principally
consisted of fees for tax compliance and review of transaction related fees. The
Audit Committee pre-approved 100% of the tax fees subsequent to its formation in
2003.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

The following documents are included in this report.

(A)(1) FINANCIAL STATEMENTS

See Index to Financial Statements at Item 8 on Page 35 of this report.

(A)(2) FINANCIAL STATEMENT SCHEDULES

All financial statement schedules have been omitted due to the absence of
conditions under which they are required or because the information required is
included in the consolidated financial statements or the notes thereto.

(B) REPORTS ON FORM 8-K

October 3, 2003..... The Company furnished a current report on Form 8-K to
furnish a copy of a slide presentation, the Company had made
at an investor presentation on October 2, 2003 (Item 9).
November 3, 2003.... The Company furnished a current report on Form 8-K to report
its financial results for the third quarter ended September
27, 2003 (Items 7, 9 and 12).
November 7, 2003.... The Company filed a current report on Form 8-K/A to amend
the Form 8-K filed on September 12, 2003 to report the
completion of the acquisition of Gentek Holdings, Inc.,
which occurred on August 29, 2003 (Items 2 and 7).

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

ASSOCIATED MATERIALS INCORPORATED

By: /s/ MICHAEL CAPORALE, JR.
------------------------------------
Michael Caporale, Jr.
President, Chief Executive Officer
and Director
(Principal Executive Officer)

By: /s/ D. KEITH LAVANWAY
------------------------------------
D. Keith LaVanway
Vice President-Chief Financial
Officer,
Treasurer and Secretary
(Principal Financial Officer and
Principal
Accounting Officer)

Date: April 2, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

83

EXHIBIT INDEX