UNITED STATES SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

(Mark one)

OR

COMMISSION FILE NUMBER 333-115543

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

(800) 257-4335
(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 þ No o

      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. þ

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

      The aggregate market value of the Common Stock held by non-affiliates of the registrant at July 3, 2004: None

      As of March 28, 2005, the Registrant had outstanding 500,000 shares of voting convertible preferred stock, 1,614,019 shares of non-voting convertible preferred stock and 500,000 shares of voting class B common stock and 1,234,190 shares of non-voting class B common stock.

      Documents incorporated by reference: None

Table of Contents

PART I

ITEM 1. BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

      AMH Holdings, Inc. (“AMH”) was incorporated in Delaware on February 19, 2004. AMH has no material assets or operations other than its 100% ownership of Associated Materials Holdings, Inc. (“Holdings”), which in turn has no material assets or operations other than its 100% ownership of Associated Materials Incorporated (“AMI”). AMH, Holdings and AMI are collectively referred to as the “Company”.

      AMI was incorporated in Delaware in 1983 and is a leading, vertically integrated manufacturer and North American distributor of exterior residential building products. AMI is a wholly owned subsidiary of Holdings. 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®, Revere® and Gentek® brand names and sold on a wholesale basis to more than 50,000 professional contractors engaged in home remodeling and new home construction principally through the Company’s North American network of supply centers. As of January 1, 2005, the Company had 125 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.

RECAPITALIZATION TRANSACTIONS

      As part of a restructuring agreement dated as of March 4, 2004, stockholders and option holders of Holdings became stockholders and option holders of AMH and are no longer stockholders and option holders of Holdings. AMH has no material assets or operations other than its 100% ownership of Holdings, AMI’s direct parent company. On March 4, 2004, AMH completed an offering of $446 million aggregate principal at maturity of 11 1/4% senior discount notes (“11 1/4% notes”). The total gross proceeds were approximately $258.3 million. In connection with the note offering, certain options to acquire preferred and common shares were exercised and the proceeds from the note offering were used to redeem all of AMH’s preferred stock including accrued and unpaid dividends, pay a dividend to AMH’s common stockholders and pay a bonus to certain members of AMI’s senior management and a director. Through Holdings, AMH contributed $14.5 million to AMI to pay the bonus. The completion of the aforementioned transactions constitute the March 2004 dividend recapitalization.

      On December 22, 2004, AMH completed a recapitalization transaction in which the then outstanding capital stock of AMH was reclassified as a combination of voting and non-voting shares of Class B common stock and shares of voting and non-voting convertible preferred stock. All of the shares of the convertible preferred stock were immediately sold to affiliates of Investcorp S.A. (“Investcorp”) for an aggregate purchase price of $150 million, which was distributed by the Company to the existing shareholders. As a result of this transaction, affiliates of Investcorp acquired a 50% equity interest in AMH and the existing shareholders, led by Harvest Partners, Inc. (“Harvest Partners”), retained shares of Class B common stock representing a 50% equity interest in AMH, all on a fully diluted basis. Subsequent to the share purchase by Investcorp, each of Investcorp and Harvest Partners have, through their respective affiliates, a 50% voting interest in AMH. Immediately following these transactions, on December 22, 2004, the shareholders of AMH contributed their shares of the capital stock of AMH to AMH Holdings II, Inc. (“AMH II”), a Delaware corporation formed for the purpose of becoming the direct parent company of AMH, in exchange for shares of the capital stock of AMH II mirroring (in terms of type and class, voting rights, preferences and other rights) the shares of AMH capital stock contributed by such shareholders. In connection with this transaction, on December 22, 2004, the Company increased its senior credit facility by $42 million and AMH II issued $75 million of 13 5/8% senior notes due 2014 (“13 5/8% notes”). AMH II then declared and paid a dividend on shares of its Class B common stock in an aggregate amount of approximately $96.4 million, which included approximately $3.4 million in aggregate proceeds received by AMH II through AMH upon the exercise of options to purchase AMH common stock. Of this $96.4 million dividend, approximately $62.7 million was paid in cash and approximately

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$33.7 million was paid in the form of promissory notes issued by AMH II to each of its Class B common shareholders. In December of 2004, AMH made a payment to AMH II for the proceeds received upon exercise of the options. In the first quarter of 2005, AMI made an intercompany loan of $33.7 million to AMH II through its direct and indirect parent companies. Subsequently, AMI declared a dividend in forgiveness of the intercompany loan.

      On December 22, 2004, in connection with such transactions, AMI paid a bonus in the aggregate amount of approximately $22.3 million to certain members of AMI’s management and a director. Approximately $14.3 million of the bonus, including payroll taxes, was paid in cash on December 22, 2004, with promissory notes issued by AMI for the remaining $8.0 million. These promissory notes were settled in cash during the first quarter of fiscal year 2005. AMI incurred transaction related costs of $28.4 million, which includes $16.3 million paid for investment banking and legal expenses, which have been classified as recapitalization transaction costs in AMI’s statement of operations and $12.1 million for financing related costs, which have been recorded in other assets on the Company’s balance sheet. AMI also recognized stock compensation expense of $30.8 million, including payroll taxes, related to stock options exercised in the transaction. The completion of the aforementioned transactions constitute the December 2004 recapitalization transaction.

FINANCIAL INFORMATION ABOUT SEGMENTS

      Prior to the sale of AmerCable, as discussed below in “Acquisitions and Divestitures,” 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 20 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 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 generally 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 31 years in 2003, 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 2,330 square feet in 2003.
	•	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 $187.4 billion in 2003.

      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 40% of the exterior siding market and approximately 58% of the residential window market in 2003. 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.

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      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®, Revere®, and Gentek® 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®, a fusion-welded window featuring a slim design; Performance Series™, a new construction product with superior strength and stability; and UltraMaxx®, an extra-thick premium window available in light oak, dark oak and cherry woodgrain interior finishes.

      The Company manufactures and distributes vinyl siding and related accessories in the premium, standard and economy categories, primarily under the Alside®, Revere® and Gentek® 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®, a premium product whose exclusive TriBeam™ design system provides superior rigidity; Centerlock®, an easy-to-install product designed for maximum visual appeal; and Landscape®, 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® program matches twelve 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®, 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 125 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 include product sample cases, sales literature, product videos and other sales and promotional materials. Professional

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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 28 supply centers. Through the Company’s acquisition of Gentek, the Company added 33 company-owned supply centers to its existing distribution network. The Company intends to open five additional distribution centers in 2005 and consolidate two distribution centers.

      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 2004 net sales.

      Manufacturing. The Company fabricates vinyl windows at its facilities in Cuyahoga Falls, Ohio, Bothell, Washington, Cedar Rapids, Iowa, Kinston, North Carolina, and London, Ontario. The Company manufactures its vinyl siding products at its facilities in Ennis, Texas and Burlington, Ontario. In November 2004, the Company announced a plan to close its vinyl siding manufacturing plant located in Freeport, Texas, which is expected to be completed in the second quarter of 2005 and move the volume to the Ennis, Texas vinyl siding plant. Since the Company opened the Freeport facility, extrusion technology has improved so that throughput on new extruders is approximately double that of older model extruders. The plant was closed to rationalize production capacity and reduce fixed costs. The Company believes it has sufficient capacity at its other facilities to meet anticipated sales of vinyl siding and accessories. Furthermore, the Company believes it can improve product quality and efficiency by upgrading equipment at its remaining facilities.

      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 and higher product quality compared to purchasing these materials from third-party suppliers. The Company’s Bothell, Washington 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 expects to complete construction in 2005 of a new window manufacturing facility in Yuma, Arizona. The Company believes that it has adequate capacity to meet its sales expectations for the foreseeable future.

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      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 significantly during 2004 and also increased during 2003. Prices for aluminum and steel also increased in 2004. The Company implemented two vinyl siding as well as two aluminum price increases in 2004 to partially offset the increases in vinyl resin, aluminum and steel prices. The Company also implemented price increases in 2003. The Company presently expects vinyl resin, aluminum and steel prices to continue to increase in 2005. While the Company is optimistic that any future significant cost increases will be offset by price increases to its customers, there can be no assurances that the Company will be able to achieve 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 25% 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, AMI 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® and Gentek® brand names. Gentek markets its products to professional contractors on a wholesale basis through 11 company-owned distribution centers in the mid-Atlantic region of the United States and 21 company-owned distribution centers in Canada, as well as approximately 180 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 continue to maintain distinct separation of the Revere® and Gentek® brands from the Company’s Alside® brand by continuing to offer differentiated product, sales and marketing support.

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      On March 16, 2002, AMI 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 AMI 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 AMI’s then outstanding common stock and the cash tender offer for approximately $74.0 million of AMI’s then outstanding 9 1/4% notes was completed. Simon Acquisition Corp. was then merged with and into AMI with the AMI continuing as a privately held, wholly owned subsidiary of Holdings. The completion of the aforementioned transactions constitute the April 2002 merger transaction. 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 had 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® 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 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.

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      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 1, 2005, the Company had approximately 3,137 full-time employees, including approximately 1,625 hourly workers. The following plants are unionized manufacturing facilities: (1) the West Salem, Ohio plant, employing approximately 108 covered workers; (2) the Woodbridge, New Jersey plant, employing approximately 112 covered workers; and (3) the Pointe Claire, Quebec, plant and London and Burlington, Ontario plants, covering approximately 326 hourly workers. Additionally, approximately 69 hourly workers in certain U.S. supply center locations are covered by collective bargaining agreements. Approximately 3% 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 $169 million in 2004 and was primarily derived from customers in Canada. The Company’s remaining revenue totaling $925 million was derived from U.S. customers. At January 1, 2005, long-lived assets totaled approximately $34 million in Canada and $472 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.”

      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 1, 2005, the Company had approximately $622.9 million of indebtedness and interest expense for the year ended January 1, 2005 was approximately $53.2 million, including $24.6 million of accreted interest. Approximately $175.0 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 $1.8 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;

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	•	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 indentures governing the 9 3/4% notes and the 11 1/4% 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, 11 1/4% 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 11 1/4% 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 and 11 1/4% 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 indentures governing the 9 3/4% notes and 11 1/4% 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 and 11 1/4% notes.

      The Company’s parent company also has significant indebtedness. At January 1, 2005, AMH II had $75.1 million of debt. Although the Company does not guarantee such indebtedness and has no legal obligation to make payments on such indebtedness, the parent company has no operations of its own and does have any source of funds to make payments in respect of its indebtedness except for funds distributed or loaned by the Company. In addition, the terms of the indenture governing AMI’s 9 3/4% notes and senior credit facility significantly restrict AMI and its subsidiaries from paying dividends and otherwise transferring assets to AMH or AMH II and the indenture governing AMH’s 11 1/4% notes further restricts AMH from making restricted payments. The amount available for AMH to make restricted payments is further reduced by the indenture governing the 11 1/4% 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 indentures relating to the 9 3/4% notes, 11 1/4% 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 $80.0 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.

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

      Payment on the 9 3/4% notes and guarantees is subordinated in right of payment to all of AMI’s and its guarantors’ senior debt. As of January 1, 2005, the 9 3/4% notes and the related guarantees were subordinated to approximately $175.0 million of senior debt. In addition, $74.0 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.

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      The indentures for the 9 3/4% notes and 11 1/4% 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 indentures for the 9 3/4% notes and 11 1/4% 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.

      AMH is the sole obligor under the 11 1/4% notes. Its subsidiaries, including AMI, do not guarantee AMH’s obligations under the 11 1/4% notes and do not have any obligation with respect to the 11 1/4% notes; the 11 1/4% notes are structurally subordinated to the debt and liabilities of AMH’s subsidiaries including AMI and are effectively subordinated to any of the Company’s existing and future secured debt to the extent of the value of the assets secured by such debt.

      AMH has no operations of its own and derives all of its revenues and cash flow from its subsidiaries. AMH’s subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay amounts due under the notes or to make any funds available to pay those amounts, whether by dividend, distribution, loan or other payments.

      The 11 1/4% notes are structurally subordinated to all debt and liabilities, including trade payables, of AMH’s subsidiaries, including AMI, and are effectively subordinated to any of the Company’s existing and future secured debt to the extent of the value of the assets secured by such debt. AMH’s subsidiaries may not have sufficient funds or assets to permit payments to AMH in amounts sufficient to permit AMH to pay all or any portion of its indebtedness and other obligations, including its obligations on the 11 1/4% notes.

      All of AMH’s assets are owned, and all net sales are generated, by its subsidiaries. The ability to repay the notes depends on the performance of its subsidiaries. AMH may not have access to the cash flow and other assets of its subsidiaries that may be needed to make payments on the notes.

      AMH’s operations are conducted through its subsidiaries and its ability to make payment on the 11 1/4% notes is dependent on the earnings and the distribution of funds from its subsidiaries. However, none of its subsidiaries is obligated to make funds available to

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AMH for payment on the 11 1/4% notes. In addition, the terms of the indenture governing AMI’s 9 3/4% notes and the credit facility significantly restrict AMI and its subsidiaries from paying dividends and otherwise transferring assets to AMH. After March 1, 2009, cash interest on the 11 1/4% notes will accrue at the rate of 11 1/4% per annum, and will be payable semi-annually. AMH’s subsidiaries are permitted under the terms of the AMI credit facility and other indebtedness (including under the indenture governing the 9 3/4% notes) to incur additional indebtedness that may severely restrict or prohibit the making of distributions, the payment of dividends or the making of loans by such subsidiaries to AMH.

      AMH’s subsidiaries may not be able to maintain a level of cash flow from operating activities sufficient to permit them and AMH to pay the principal, premium, if any, and interest on their and AMH’s indebtedness, including the 11 1/4% notes. The agreements governing the current and future indebtedness of AMH’s subsidiaries may not permit AMH’s subsidiaries to provide AMH with sufficient dividends, distributions or loans to fund scheduled interest and principal payments on the 11 1/4% notes when due.

      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 and 11 1/4% 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 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 and 11 1/4% 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.

      Changes in raw materials costs and availability can adversely affect our profit margins.

      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 have historically been subject to price changes. Through price increases to its customers, the Company has historically been able to pass on significant raw material cost increases. The results of operations for individual quarters can and have been negatively impacted by a delay between the time of raw material cost increases and price increases on our products. While the Company expects that any significant cost increases in raw materials will be offset by price increases to its customers, the Company may not be able to pass on any future increases. Additionally, the Company relies on its suppliers for deliveries of raw materials. If any of the Company’s suppliers were unable to deliver raw materials to the Company for an extended period of time, the Company may not be able to meet the its raw material requirements through other raw material suppliers without incurring a material adverse impact on the its 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.

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      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 $6 million during 2005, and the Company has already implemented many of the actions necessary to drive these opportunities, 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 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, the Company has approximately $113.0 million of other intangible assets and $234.8 million of goodwill. 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.

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

      By reason of their ownership of the Company’s indirect parent company, affiliates of Investcorp and Harvest Partners have the ability to designate a majority of the members of the board of directors of the Company and its parent company, with each having the right to designate three of the seven members, with the seventh board seat being occupied by the chief executive officer of the Company. Investcorp and 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 Investcorp and Harvest Partners and their affiliates interests may be materially different than other investors in the Company. For example, Investcorp and Harvest Partners may cause the Company to pursue a growth strategy, which could impact the Company’s ability to make payments under the indentures governing the 9 3/4% notes and 11 1/4% notes and the credit facility or cause a change of control. In addition, to the extent permitted by the indentures and the credit facility, Investcorp and 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 failures 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.

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      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, no longer has operations and 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.”

      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 indentures governing the 9 3/4% notes and 11 1/4% 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

AMH files annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other information with the SEC. Information filed with the SEC may be read and copied by the public at the Public Reference Room of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding the issuers that file electronically with the SEC.

ITEM 2. PROPERTIES

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

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      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 125 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.

      The leases for Alside’s window plants expire in 2011 for the Bothell location, in 2013 for the Cedar Rapids location and in 2010 for Kinston location. The lease at the Bothell location is renewable at the Company’s option for two additional five-year periods. 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 Inc., is subject to a Consent Order entered into by Amercord Inc. 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 Inc., 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, $100,000 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.

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      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.

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

      By written consent in lieu of a meeting of the stockholders of AMH, dated December 22, 2004, the stockholders of AMH, pursuant to the requirements of Section 280G of the Internal Revenue Code of 1986, as amended, approved certain bonus payments, benefits and other payments to certain employees of the Company in connection with the December 2004 recapitalization transaction. These payments are more particularly described in Item 7 below under “Recapitalization Transactions”.

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PART II

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

MARKET INFORMATION

      There is no established public trading market for AMH’s common equity securities.

HOLDERS

      As of March 28, 2005, AMH II is the sole record holder of AMH’s common stock.

DIVIDENDS

      Prior to the April 2002 merger transaction, AMI paid dividends of $0.05 per share in the 108 days ended April 18, 2002. In 2004 AMH paid dividends of $57.7 million to its then existing shareholders related to the March 2004 dividend recapitalization. The Company did not pay dividends in 2003 or for the 257 days ended December 31, 2002. In addition, the Company’s credit facility and indentures governing the 9 3/4% notes and 11 1/4% notes restrict dividend payments by AMI and AMH. In the first quarter of 2005, AMI made an intercompany loan of $33.7 million to AMH II through its direct and indirect parent companies. Subsequently, a dividend was declared by AMI and its direct and indirect parent companies in forgiveness of the intercompany loan. The Company presently does not plan to pay other future cash dividends other than to allow AMH II to make interest payments on its debt obligations. AMH II has no operations of its own. AMI is a separate and distinct legal entity and has no obligation, contingent or otherwise, to pay amounts due under the 11 1/4% notes and the 13 5/8% notes or make any funds available to pay those amounts, whether by dividend, distribution, loan or other payments.

PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

     None.

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ITEM 6. SELECTED FINANCIAL DATA

      The selected financial data set forth below for the five-year period ended January 1, 2005 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.

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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®, Revere® and Gentek® brand names and sold on a wholesale basis to more than 50,000 professional contractors engaged in home remodeling and new home construction principally through the Company’s North American network of 125 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 industry’s dynamics remained strong in the fourth quarter of 2004, with strong levels of existing home sales and single family home starts, as well as continued low levels of mortgage interest rates and increases in consumer confidence. During 2004, short-term interest rates increased, but mortgage interest rates remained consistent with 2003. The Company believes it can sustain moderate short-term interest rate and mortgage rate increases without a significant negative impact on its net sales. Additionally, the Company believes increasing consumer confidence may offset any significant negative impact of interest rate increases. Overall, the Company believes the fundamentals for the building products industry remain strong.

      Due to the high price of oil and natural gas, as well as expected continued strong demand, the Company, along with the entire building products industry, has experienced significant inflation in key raw material commodity costs. These costs are expected to continue to increase in 2005. To offset these increases, the Company announced prices increases on certain of its product offerings in 2004 as well as the first quarter of 2005. The results of operations for the individual quarters can and have been negatively impacted by a delay between the time of raw material cost increases and price increases on our products. The Company’s ability to maintain gross margin levels on its products depends on the Company’s ability to obtain its announced selling price increases.

      The Company 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.

      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 2004 and 2003 fiscal years ended on January 1, 2005 and January 3, 2004, respectively.

      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

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aluminum and steel siding and accessories under the Revere® and Gentek® brand names. Gentek markets its products to professional contractors on a wholesale basis through 11 company-owned distribution centers in the mid-Atlantic region of the United States, 21 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 recognized approximately $5 million of synergies during 2004. The Company believes that the Gentek acquisition will provide synergy opportunities of approximately $6 million during 2005 resulting from moving the Alside metals business to Gentek’s Woodbridge plant as well as the realization of a full year of savings from closing its Richmond facility.

      The Company seeks to distinguish itself from other suppliers of residential building products and to sustain its profitability through a business strategy focused on increasing sales at existing supply centers, expanding its supply center network, increasing sales through independent specialty distributor customers, realizing synergies from the Gentek acquisition, developing innovative new products, and driving operational excellence by reducing costs, increasing customer service levels and reducing lead times.

RESULTS OF OPERATIONS

      The Company is a wholly owned subsidiary of AMH Holdings II, Inc. (“AMH II”) which is controlled by affiliates of Investcorp S.A. (“Investcorp”) and Harvest Partners, Inc. (“Harvest Partners”). AMH and AMH II were incorporated in connection with the recapitalization transactions described below. AMH and AMH II do not have material assets or operations other than a direct or indirect ownership of the common stock of AMI. The Company’s 2004 and 2003 results of operations include the results of Gentek subsequent to its acquisition on August 29, 2003. 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 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.

      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.

      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.

RECAPITALIZATION TRANSACTIONS

      AMH was incorporated in Delaware on February 19, 2004. As part of a restructuring agreement dated as of March 4, 2004, stockholders and option holders of Holdings became stockholders and option holders of AMH and are no longer stockholders and option holders of Holdings. AMH has no material assets or operations other than its 100% ownership of Holdings, its direct subsidiary. On March 4, 2004, AMH completed an offering of $446 million aggregate principal at maturity of 11 1/4% notes. The total gross proceeds were approximately $258.3 million. In connection with the note offering, certain options to acquire preferred and common shares were exercised and the proceeds from the note offering were used to redeem all of AMH’s preferred stock including accrued and unpaid dividends, pay a dividend to AMH’s common stockholders and pay a bonus to certain members of the Company’s senior management and a director. Through Holdings, AMH contributed $14.5 million to AMI to pay the bonus. The completion of the aforementioned transactions constitute the March 2004 dividend recapitalization.

      On December 22, 2004, AMH completed a recapitalization transaction in which the then outstanding capital stock of AMH was reclassified as a combination of voting and non-voting shares of Class B common stock and shares of voting and non-voting convertible preferred stock. All of the shares of the convertible preferred stock were immediately sold to affiliates of Investcorp for an aggregate purchase price of $150 million, which was distributed by the Company to existing shareholders. As a result of this transaction, affiliates of Investcorp acquired a 50% equity interest in AMH and the existing shareholders, led by Harvest Partners, retained shares of Class B common stock representing a 50% equity interest in AMH, all on a fully diluted basis. Subsequent to the share purchase by Investcorp, each of Investcorp and Harvest Partners, through their respective affiliates, have a

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50% voting interest in AMH. Immediately following these transactions, on December 22, 2004, the shareholders of AMH contributed their shares of the capital stock of AMH to AMH II, a Delaware corporation formed for the purpose of becoming the direct parent company of AMH, in exchange for shares of the capital stock of AMH II mirroring (in terms of type and class, voting rights, preferences and other rights) the shares of AMH capital stock contributed by such shareholders. In connection with this transaction, on December 22, 2004, the Company increased its senior credit facility by $42 million and AMH II issued $75 million of 13 5/8% notes. AMH II then declared and paid a dividend on shares of its Class B common stock in an aggregate amount of approximately $96.4 million, which included approximately $3.4 million in aggregate proceeds received by AMH II through AMH upon the exercise of options to purchase AMH common stock. Of this $96.4 million dividend, approximately $62.7 million was paid in cash and approximately $33.7 million was paid in the form of promissory notes issued by AMH II to each of its Class B common shareholders. In December of 2004, AMH made a payment to AMH II for the proceeds received upon exercise of the options. In the first quarter of 2005, AMI made an intercompany loan of $33.7 million to AMH II through its direct and indirect parent companies. Subsequently, AMI and its direct and indirect parent companies declared a dividend in forgiveness of the intercompany loan.

      On December 22, 2004, in connection with such transactions, AMI paid a bonus in the aggregate amount of approximately $22.3 million to certain members of AMI’s management and a director. Approximately $14.3 million of the bonus, including payroll taxes, was paid in cash on December 22, 2004, with promissory notes issued by AMI for the remaining $8.0 million. These promissory notes were settled in cash during the first quarter of fiscal year 2005. AMI incurred transaction related costs of $28.4 million, which includes $16.3 million paid for investment banking and legal expenses, which have been classified as recapitalization transaction costs in the Company’s statement of operations and $12.1 million for financing related costs, which have been recorded in other assets on the Company’s balance sheet. AMI also recognized stock compensation expense of $30.8 million, including payroll taxes, related to stock options exercised in the transaction. The completion of the aforementioned transactions constitute the December 2004 recapitalization transaction.

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      The following table sets forth for the periods indicated the results of the Company’s operations by segment:

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	(i)	Represents bonuses paid to certain members of management and one director in conjunction with the March 2004 dividend recapitalization and the December 2004 recapitalization transaction of $14.5 million and $22.3 million, respectively.
	(ii)	Represents stock option compensation expense recognized in connection with the December 2004 recapitalization transaction resulting from the exercise and redemption of certain stock options.
	(iii)	Recapitalization transaction costs include $16.3 million of investment banking, legal and other expenses incurred as a result of the December 2004 recapitalization transaction.
	(iv)	Represents one-time costs associated with the closure of the Freeport, Texas manufacturing facility consisting primarily of asset write-downs of $3.6 million, equipment relocation costs of $0.4 million, severance benefits of $0.3 million and contract termination costs of $0.2 million.
	(v)	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.
	(vi)	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:

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	(vii)	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.
	(viii)	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 results of operations for the full year ended January 1, 2005 include the results of Gentek. The results of operations for the year ended January 3, 2004 only includes the results of Gentek for the period subsequent to its acquisition on August 29, 2003. As the periods presented are not comparable, a reconciliation of Gentek’s net income to EBITDA and adjusted EBITDA for the years ended January 1, 2005 and January 3, 2004 is provided below (in thousands):

(3)	Includes corporate expenses of $1.3 million for the year ended December 31, 2002 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 1, 2005 COMPARED TO YEAR ENDED JANUARY 3, 2004

      Net sales increased 40.3% to $1,094.0 million for the year ended January 1, 2005 compared to $779.8 million for the same period in 2003, primarily driven by increased vinyl window, vinyl siding and third party manufactured product sales along with a full year of net sales from Gentek. Gentek contributed net sales of $327.9 million for the full year ended January 1, 2005 and $103.4 million for the year ended January 3, 2004 subsequent to the date of acquisition. The Company believes its sales were also 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 $289.0 million, or 26.4% of net sales, for the year ended January 1, 2005 compared to $218.3 million, or 28.0% of net sales, for the same period in 2003. The decrease in gross profit margin percentage was a result of the full year impact of results contributed by Gentek as Gentek’s gross margin percentage is typically lower than Alside’s as a larger proportion of Gentek’s net sales are to independent distributors versus contractors through company-owned distribution centers. Additionally, the decrease in margin percentage resulted from the impact of significantly increased costs of vinyl resin, aluminum and steel, which were partially offset by the impact of price increases. Selling, general and administrative expense increased to $184.5 million, or 16.9% of net sales, for the year ended January 1, 2005 compared to $149.6 million, or 19.2% of net sales, for the same period in 2003. The increase in selling, general and administrative expense is primarily a result of the full year impact of the acquisition of Gentek, as well as the impact of adding three new Alside and one new Gentek supply centers in 2004 along with three new supply centers added in 2003, which had a full year of expense in 2004. During 2004, the Company incurred costs related to the March 2004 dividend recapitalization and the December 2004 recapitalization transaction totaling $67.6 million, consisting of management and director bonuses and stock option compensation expense. In addition, the Company recognized facility closure costs of $4.5 million related to the closing of its Freeport, Texas manufacturing facility. As a result, income from operations was $32.3 million for the year ended January 1, 2005 compared to $68.7 million for the same period in 2003.

      The $4.5 million charge for the closure of the Freeport, Texas manufacturing facility consisted of asset write-downs of approximately $3.6 million, relocation costs for certain employees and facility shut down costs of approximately $0.4 million, contract termination costs of approximately $0.2 million and employee severance costs of approximately $0.3 million, of which approximately

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$0.5 million for contract termination costs and employee severance costs were included in accrued liabilities as of January 1, 2005. The Company anticipates the entire charge to be $7.5 million and that the closure and the remainder of the charge will be recorded in the first half of 2005. The plant shut down affected 92 employees. The plant was closed to rationalize production capacity and reduce fixed costs. The Company believes it has sufficient capacity at its other facilities to meet anticipated sales of vinyl siding and accessories. Furthermore, the Company believes it can improve product quality and efficiency by upgrading equipment at its remaining facilities.

      The Company incurred a net loss of $27.2 million for the year ended January 1, 2005 compared to net income of $24.5 million for the year ended January 3, 2004. The decrease in net income is a result of the costs incurred related to the March 2004 dividend recapitalization and the December 2004 recapitalization transaction totaling $67.6 million, consisting of management and director bonuses and stock compensation expense and $16.3 million of recapitalization transaction costs, including investment banking, legal and other expenses. In addition, the Company recognized facility closure costs of $4.5 million.

      Interest expense of $53.2 million, for the year ended January 1, 2005 consisted primarily of accretion of $24.6 million on the 11 1/4% notes, interest expense on the 9 3/4% notes, 11 1/4% notes, term loan and revolving loans under the credit facility, amortization of deferred financing fees and the write-off of $2.8 million of debt issuance costs as a result of amending and restating the credit facility for the December 2004 recapitalization transaction. This compares to interest expense of $27.4 million for the year ended January 3, 2004, which 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. The 2004 tax provision reflects an effective income tax rate of 27.6%, while the 2003 provision reflects an effective income tax rate of 41.5%. The 2004 effective income tax rate was impacted by $10.9 million of recapitalization transaction costs which the Company believes to be non-deductible for income tax purposes.

      Adjusted EBITDA for the year ended January 1, 2005 was $125.4 million compared to adjusted EBITDA of $86.3 million for the same period in 2003. Gentek contributed $29.6 million and $9.7 million of adjusted EBITDA for the years ended January 1, 2005 and January 3, 2004, respectively. As compared to EBITDA, adjusted EBITDA for the year ended January 1, 2005 excludes transaction related costs, one-time facility closure costs of $4.5 million, and foreign currency losses of $0.4 million. Transaction costs for the year ended January 1, 2005 include bonuses paid to management and a director of $14.5 million related to the March 2004 dividend recapitalization and December 2004 recapitalization transaction costs including bonuses paid to management and a director of $22.3 million, stock option compensation expense of $30.8 million and investment banking and legal expenses of $16.3 million. 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 and foreign currency gains of $0.5 million.

     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, which 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.

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      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.

      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 $86.3 million compared to $64.6 million for the year ended December 31, 2002. Adjusted EBITDA for the year ended January 3, 2004 includes $9.7 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 and foreign currency gains of $0.5 million. 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 in the Company’s core business as well as the acquisition of Gentek.

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.

      Quarterly sales and operating profit data for the Company in 2004 and 2003 are shown in the tables below:

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LIQUIDITY AND CAPITAL RESOURCES

      The following sets forth a summary of the Company’s cash flows for 2004, 2003 and 2002 (in thousands):

     CASH FLOWS

      At January 1, 2005, the Company had cash and cash equivalents of $58.1 million and available borrowing capacity of approximately $74.0 million under the revolving loan portion of its second amended and restated credit facility. Outstanding letters of credit as of January 1, 2005 totaled $6.0 million securing various insurance letters of credit.

      Cash balances as of January 1, 2005 include $46.0 million of cash on hand to be used to fund remaining payments related to the December 2004 recapitalization transaction, of which (i) $33.7 million was distributed in January 2005 as a loan from AMI, through its direct and indirect parent companies, to AMH II for which a dividend was then declared by AMI and its direct and indirect parent companies in forgiveness of the intercompany loan, (ii) $8.0 million was used to satisfy promissory notes issued by AMI for management and a director bonus related to the transaction and (iii) $4.3 million was used for transaction related fees.

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     CASH FLOWS FROM OPERATING ACTIVITIES

      For the year ended January 1, 2005, cash provided by operations was $21.0 million. As compared to the year ended January 3, 2004, cash flows from operations declined $35.0 million reflecting the use of cash for the period due to transaction related costs, higher working capital requirements in 2004 and the reduction in Gentek’s working capital during the last four months of 2003, as Gentek was acquired at the time Gentek’s working capital was at a seasonal high.

      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.

     CASH FLOWS FROM INVESTING ACTIVITIES

      For the year ended January 1, 2005, capital expenditures totaled $18.7 million. This compares to capital expenditures for fiscal 2003 totaling $12.7 million. Capital expenditures for Gentek were $2.3 million and $0.9 million in the 2004 and 2003 periods, respectively. Capital expenditures in 2004 were primarily to increase extrusion capacity at the Company’s West Salem, Ohio manufacturing location and to increase capacity at two of the Company’s window manufacturing facilities to support the Company’s continued growth in the Company’s vinyl window product offering. 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.

      For the year ended January 3, 2004 cash flows from investing activities also included $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 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. 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 $18.0 million to $20.0 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 2005 are approximately $27 million, which includes approximately $6 million of equipment at a new window manufacturing facility to be leased in Yuma, Arizona.

     CASH FLOWS FROM FINANCING ACTIVITIES

      Cash flows from financing activities for the year ended January 1, 2005 include $7.0 million of term loan repayments and activities related to the 2004 transactions including (i) $258.3 million for the issuance of the senior discount notes, (ii) $150.0 million from the December 2004 recapitalization transaction, which was immediately paid to AMH’s shareholders as consideration for the sale of convertible preferred stock to affiliates of Investcorp, (iii) $42.0 million of incremental borrowings, which includes repayment of the Company’s remaining $133.0 million term loan and borrowings under the second amended and restated credit facility of $175.0 million (iv) capital contributions from the Company’s parent of $14.0 million offset by (i) financing costs of $22.5 million and (ii) $57.7 million of common stock dividends and $177.8 million for the redemption of preferred stock, both related to the March 2004 dividend recapitalization. The capital contributions were used by AMI to pay $14.5 million of bonuses to management and a director in connection with the March 2004 dividend recapitalization. In addition, the capital contributions were used to fund $30.8 million of cash payments made upon the exercise of certain stock options (net of proceeds from option exercise) and $14.0 million of the $14.3 million of bonuses paid to management and a director in connection with the December 2004 recapitalization transaction. In connection with the December 2004 recapitalization transaction, the Company increased its borrowing availability under the revolving loan portion of its credit facility by $10.0 million to $80.0 million.

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      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.

DESCRIPTION OF THE COMPANY’S OUTSTANDING INDEBTEDNESS

      On March 4, 2004, AMH issued 11 1/4% senior discount notes in connection with the March 2004 dividend recapitalization. AMH’s $446 million aggregate principal at maturity 11 1/4% senior discount notes are due in 2014. AMH received total gross proceeds of $258.3 million in connection with the issuance. 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 11 1/4% notes are structurally subordinated to all existing and future debt and other liabilities of AMH’s existing and future subsidiaries, including AMI and Holdings. The indenture governing the 11 1/4% notes contains restrictive covenants that, among other things, limit AMH’s ability, and the ability of its subsidiaries, to incur additional indebtedness, make certain restricted payments, pay dividends or make other distributions or repurchase or redeem AMH’s stock, make investments, sell assets, incur liens (except with respect to its subsidiaries), issue capital stock of restricted subsidiaries, enter into agreements restricting its subsidiaries’ ability to pay dividends, enter into sale/leaseback transactions, enter into transactions with affiliates, and consolidate, merge or sell all or substantially all of its assets.

      AMI’s 9 3/4% notes due in 2012 pay interest semi-annually in April and October. In conjunction with the December 2004 recapitalization transaction AMI entered into a second amended and restated credit facility dated December 22, 2004 in which AMI increased its borrowings under the term loan facility to $175 million and expanded its revolving facility from $70 million to $80 million of available borrowings including a $20 million Canadian subfacility. AMI used the borrowings to repay the AMI’s then outstanding term loans of $133 million and to partially fund the December 2004 recapitalization transaction. The term loan facility is due through August 2010 with minimum principal amortization of 1% per year beginning September 30, 2005 with quarterly payments of the unamortized principal in the final year of the loan. The term facility bears interest at London Interbank Offered Rates (“LIBOR”) plus 2.25% payable quarterly at the end of each calendar quarter. The revolving credit facility was extended to April 2009 and bears interest at LIBOR plus a margin of 3.00%, which can decline to as low as 2.25% based on the Company’s leverage ratio, as defined in the amended and restated credit facility. The 9 3/4% notes are general unsecured obligations of AMI subordinated in right of payment to senior indebtedness and senior in right of payment to any current or future subordinated indebtedness of AMI. AMI’s payment obligations under the 9 3/4% notes are fully and unconditionally guaranteed, jointly and severally 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 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 AMI’s ability to incur additional indebtedness, make loans or advances to subsidiaries and other entities, invest in capital expenditures, sell its assets or declare dividends. In addition, under the credit facility AMI is required to achieve certain financial ratios relating to leverage, coverage of fixed charges and coverage of interest expense. AMI was in compliance with its covenants as of January 1, 2005. On an annual basis, beginning with the year ended December 31, 2005, AMI is required to make principal payments on the term loan under its second amended and restated credit facility based on a percentage of excess cash flows as defined in the credit facility. As of January 1, 2005, no principal payments were required to be made under the excess cash flow provision. AMI 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. AMI intends to repay the term loan with cash from its operations.

      All obligations of AMI and Gentek under the credit facility are jointly and severally guaranteed by AMH, Holdings and all of the AMI’s direct and indirect wholly owned domestic subsidiaries. In addition, all obligations of Gentek under the credit facility also are jointly and severally guaranteed by Gentek’s wholly owned Canadian subsidiaries. All obligations of AMI and Gentek under the

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credit facility are secured by a pledge of AMI’s capital stock, the capital stock of Holdings and the capital stock of AMI’s domestic subsidiaries (and up to 66-2/3% of the voting stock of “first tier” foreign subsidiaries), and a security interest in substantially all of AMI’s owned real and personal assets (tangible and intangible) and the owned real and personal assets (tangible and intangible) of the domestic guarantors under the credit facility. In addition, all obligations of Gentek under the credit facility are secured by the capital stock and owned real and personal assets (tangible and intangible) owned by Gentek and its Canadian subsidiaries.

      The Company’s parent company, AMH II, issued senior notes in connection with the December 2004 recapitalization transaction, which had an accreted value of $75.1 million on January 1, 2005. The notes accrue interest at 13 5/8% payable semi-annually on July 30 and January 30. Through January 30, 2010, AMH II must pay a minimum of 10% interest on each semi-annual payment date in cash, allowing the remaining 3 5/8% to accrue to the value of the note. On January 31, 2010, AMH II is required to redeem a principal amount of notes that is equal to at least such principal amount as is required to be paid in order to prevent the notes from being treated as having “significant original issue discount” within the meaning of section 163(i)(2) of the Internal Revenue Code (“IRC”).

      As of January 1, 2005 AMH and AMH II had $282.8 million and $75.1 million, respectively, of debt outstanding. AMI does not guarantee the 11 1/4% notes nor the 13 5/8% notes and has no obligation to make any payments with respect thereto. As AMH and its parent company are holding companies with no operations, they must receive distributions, payments or loans from AMI to satisfy their debt obligations. AMI, may not have sufficient funds or assets to permit payments to AMH (and AMH may not have sufficient funds to permit payments to AMH II) in amounts sufficient to permit AMH or AMH II, as the case may be, to pay all or any portion of their respective indebtedness. Furthermore, the terms of the indenture governing AMI’s 9 3/4% notes and senior credit facility significantly restrict AMI and its subsidiaries from paying dividends and otherwise transferring assets to AMH and the indenture governing AMH’s 11 1/4% notes further restricts AMH from making restricted payments. The 11 1/4% notes and the 13 5/8% notes also contain restrictive covenants.

      The Company expects that it will be able to make sufficient distributions, payments or loans to its parent companies to allow them to make required payments on their debt for the foreseeable future.

      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.

      In the first quarter of 2005, AMI made an intercompany loan of $33.7 million to AMH II through its direct and indirect parent companies. Subsequently, AMI declared a dividend in forgiveness of the intercompany loan.

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 11 1/4% notes, and obligations for future minimum lease payments under non-cancelable operating leases at January 1, 2005 and the effect such obligations are expected to have on the Company’s liquidity and cash flow in future periods (in thousands):

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      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

      In connection with the December 2004 recapitalization transaction, AMI entered into a management advisory agreement with Investcorp International Inc. (“III”) for management advisory, strategic planning and consulting services for which AMI paid III the total due under the agreement of $6 million on December 22, 2004. As described in the Management Advisory Agreement with III, $4 million of this management fee relates to services to be provided during the first year of the agreement, with $0.5 million related to services to be provided each year of the remaining four year term of the agreement. Beginning in 2005, AMI will expense the prepaid management fee in accordance with the services provided over the life of the agreement.

      In connection with the December 2004 recapitalization transaction, on December 5, 2004, AMI entered into an agreement for financing advisory services with III (the “Investcorp Financing Advisory Agreement”). Under the Investcorp Financing Advisory Agreement III, these affiliates will provide AMI with financial advisory services relating to the arrangement of borrowing facilities in connection with the December 2004 recapitalization transaction. For these services, AMI paid a one-time fee of $7.5 million to III on December 22, 2004. The term of the Investcorp Financing Advisory Agreement ended on December 23, 2004.

      AMI also entered into a merger and acquisitions advisory services agreement with III (the “Investcorp M&A Advisory Agreement”). Under the Investcorp M&A Advisory Agreement, III will provide the Company with advisory and strategic planning services. For these services, AMI paid a one-time fee of $1.5 million to these affiliates on December 22, 2004. The Investcorp M&A Advisory Agreement terminated on December 23, 2004.

      Total fees paid in connection with the Investcorp Financing Advisory Agreement, the Investcorp M&A Advisory Agreement and III’s out-of-pocket expenses were $9.1 million, of which $6.4 million was paid in cash on December 22, 2004 and $2.7 million was paid in the form of a promissory note issued by AMI. AMI settled the promissory note in the first quarter of 2005.

      In connection with the December 2004 recapitalization transaction, AMI entered into an amended and restated management agreement with Harvest Partners. Pursuant to the amended agreement, AMI paid a fee of $4.9 million to Harvest Partners in connection with the transaction, of which $4.0 million was paid in cash on December 22, 2004 and $0.9 million was paid in the form of a promissory note issued by AMI. AMI settled the promissory note in cash in February 2005. The amended agreement is substantially identical, in all material respects, to the original agreement, which provided for Harvest Partners to receive a one-time fee of $5.0 million in connection with structuring and implementing the April 2002 merger transaction. In addition, Harvest Partners provides AMI 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, beginning on the date of execution of the original 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 of management fees paid to Harvest Partners for each of the years ended January 1, 2005 and January 3, 2004 and $0.6 million for the 257 days ended December 31, 2002 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 and in 2004, $1.3 million for financial advisory services

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in connection with the completion of the offering of the 11 1/4% notes and the related transactions. In connection with the December 2004 recapitalization transaction, Harvest Partners and III entered into an agreement pursuant to which they agreed that any transaction fee that becomes payable under the amended management agreement after December 22, 2004 will be shared equally by Harvest Partners and III.

      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.

      In connection with the March 2004 dividend recapitalization, AMI paid bonuses in the aggregate amount of $14.5 million to certain members of management.

      In connection with the December 2004 recapitalization transaction, on December 22, 2004 the Company paid bonuses in the aggregate amount of approximately $22.3 million to certain members of management and a director of the Company. Approximately $14.3 million of the bonus was paid in cash on December 22, 2004, with promissory notes issued by the Company for the remaining $8.0 million. The promissory notes were settled in cash during the first quarter of fiscal year 2005.

      In connection with the March 2004 dividend recapitalization and the December 2004 recapitalization transaction, Mr. Vollmershausen, a director received bonuses of $125,000 and $175,000, respectively.

      In connection with the recapitalization transactions, the Company recorded receivables from its parent related to certain payments for fees made on behalf of AMI’s indirect parent companies totaling $1.2 million.

      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.

      For additional information on related party transactions, please see Item 13. “Certain Relationships and Related Party Transactions” and Note 4 to the consolidated financial statements attached hereto.

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 recorded an additional minimum pension liability totaling approximately $2.3 million, net of tax and reduced its minimum pension liability by approximately $0.7 million, net of tax, for its defined benefit pension plans at January 1, 2005 and January 3, 2004, respectively. The adjustments were recorded to stockholder’s equity as a component of accumulated other comprehensive income.

EFFECTS OF INFLATION

      The Company’s principal raw materials, vinyl resin, aluminum, and steel have historically been subject to significant price changes. Raw material pricing on the Company’s key commodities increased significantly for the year ended January 1, 2005, with a majority of the impact in the fourth quarter. All of the Company’s key raw material commodities, vinyl resin, aluminum and steel, are at their highest levels in several years and continue to increase. The Company announced two vinyl siding and two aluminum price increases in 2004, which partially offset the raw material inflation. Historically vinyl resin costs decrease in the fourth quarter of the year as a result of reduced seasonal demand in the resin market; however, in the fourth quarter of 2004, resin prices increased. The Company believes that due to the high price of oil and natural gas, as well as expected continued strong demand, costs for vinyl resin, aluminum and steel will continue to increase in 2005. The Company announced price increases on certain product offerings in 2004, as well as announced price increases in the first quarter of 2005, which it believes will partially offset the impact of the raw material inflation. While the Company is optimistic that any additional significant raw material price increases in 2005 will be offset by price increases to its customers, there can be no assurances that the Company will be able to achieve any future price increases including the announced price increases. In addition there may be a delay from quarter to quarter. At January 1, 2005, the Company had no raw material hedge contracts in place.

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FINANCIAL ACCOUNTING STANDARDS

      On January 1, 2003, the Company adopted the provisions of Financial Accounting Standards Board (“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 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 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 December 2003, the FASB issued SFAS No. 132 (Revised), “Employers’ Disclosures about Pensions and other Postretirement Benefits.” SFAS No. 132 (Revised) was developed in response to concerns expressed by users of financial statements about their need for more information about pension plans. This standard retains the disclosures required by the original SFAS No. 132 and requires additional disclosures describing plan assets, investment strategy, measurement date, plan obligations, cash flows and components of net periodic benefit cost recognized during interim periods. The Company adopted this standard effective for its fiscal year 2004.

      In November 2004, the FASB issued SFAS No. 151, “Inventory Costs, and amendment of ARB 43, Chapter 4.” SFAS No. 151 requires certain inventory costs to be recognized as current period expenses. This standard also provides guidance for the allocation of fixed production overhead costs. This standard is effective for inventory costs incurred during the fiscal years beginning after June 15, 2005. The Company will adopt this standard in fiscal 2006. The Company has not yet determined the impact, if any, this standard will have on the financial statements of the Company.

      In December 2004, the FASB issued SFAS No. 123 (Revised), “Share-Based Payment.” This standard revises SFAS No. 123, APB Opinion No. 25 and related accounting interpretations, and eliminates the use of the intrinsic value method. The Company currently uses the intrinsic value method of APB Opinion No. 25 to value stock options and accordingly, no compensation expense has been recorded for stock options, except for compensation expense of $30.8 million recorded in connection with the exercise of stock options in December 2004 (see Note 2 to the consolidated financial statements). SFAS No. 123 (Revised) requires the expensing of all stock-based compensation, including stock options, using a fair value based method. The Company will adopt this standard effective July 1, 2005, expensing stock options using the modified prospective transition method prescribed in SFAS No. 123 (Revised). The Company is in the process of determining the impact this standard will have on its financial statements.

      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.

      In October 2004, the American Jobs Creation Act of 2004 (“Jobs Act”) was signed into law. The Jobs Act contains numerous corporate tax changes, including eliminating a tax benefit relating to U.S. product exports, a lower U.S. tax rate on non-U.S. dividends and a new deduction relating to domestic manufacturing. The Company is in the process of evaluating this legislation. However, the Jobs Act is not anticipated to materially affect the Company’s results of operations or financial position.

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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.

      Accounts Receivable. The Company records accounts receivable at selling prices which are fixed based a purchase orders or contractual arrangements. 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.

      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.

      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 failures for windows and fading and peeling for siding products, as well as manufacturing defects.

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      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 constitute forward-looking statements that are based on the belief of the Company’s management, including but not limited to statements regarding the prospects of the industry and the Company’s prospects, plans, financial position and business strategy. 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,” “project,” “potential” or “continue” or the negatives of these terms or variations of them or similar terminology. By their nature, these statements are subject to risk and uncertainty. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it does not assure that these expectations will prove to be correct. The following factors are among those that may cause actual results to differ materially from the forward-looking statements:

	•	the Company’s operations and results of operations;
	•	changes in home building industry, economic conditions, interest rates, foreign currency exchange rates and other conditions;
	•	changes in availability of consumer credit, employment trends, levels of consumer confidence and consumer preferences;
	•	changes in raw material costs and availability;
	•	market acceptance of price increases;
	•	changes in national and regional trends in new housing starts;
	•	changes in weather conditions;
	•	the Company’s ability to comply with certain financial covenants in the loan documents governing its indebtedness;
	•	increases in competition from other manufacturers of vinyl and metal exterior residential building products as well as alternative building products;
	•	increases in capital expenditure requirements;
	•	shifts in market demand;
	•	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.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

      AMI has outstanding borrowings under the term loan portion of its second 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 1, 2005, AMI had borrowings of $175.0 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 1, 2005 by approximately $0.2 million.

      AMH has $282.8 million of senior discount notes due 2014 that bear a fixed interest rate of 11 1/4%.

      AMI has $165.0 million of senior subordinated notes due 2012 that bear a fixed interest rate of 9 3/4%. The fair value of the AMI’s 9 3/4% notes is sensitive to changes in interest rates. In addition, the fair value is affected by AMI’s overall credit rating, which could be impacted by changes in AMI’s future operating results. The fair value of the 9 3/4% notes at January 1, 2005 was $184.4 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 1, 2005 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.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

AMH HOLDINGS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

The Board of Directors and Stockholder
AMH Holdings, Inc.

      We have audited the accompanying consolidated balance sheets of AMH Holdings, Inc. and subsidiaries as of January 1, 2005 and January 3, 2004, and the related consolidated statements of operations, stockholder’s equity and comprehensive income, and cash flows for the year ended January 1, 2005, the year ended January 3, 2004, the two hundred fifty-seven day period ended December 31, 2002 and the one hundred eight day period ended April 18, 2002. 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 the standards of the Public Company Accounting Oversight Board (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. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and 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 AMH Holdings, Inc. and subsidiaries at January 1, 2005 and January 3, 2004, and the consolidated results of their operations and their cash flows for three years then ended in conformity with accounting principles generally accepted in the United States.

ERNST & YOUNG LLP

Akron, Ohio
February 24, 2005

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AMH HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

See accompanying notes.

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AMH HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS