Associated Materials 10Q 2006 Q3 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period endedSeptember 30, 2006


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 000-24956

Associated Materials Incorporated

(Exact Name of Registrant as Specified in Its Charter)


Delaware		75-1872487

(State or Other Jurisdiction of Incorporation of Organization)		(I.R.S. Employer Identification No.)

3773 State Rd. Cuyahoga Falls, Ohio		44223

(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code(330) 929 -1811

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yesþ Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definitions of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filero Accelerated filero Non-accelerated filerþ

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yeso Noþ

As of November 14, 2006, the Registrant had 100 shares of common stock outstanding, all of which is held by an affiliate of the Registrant.

ASSOCIATED MATERIALS INCORPORATED
REPORT FOR THE QUARTER ENDED SEPTEMBER 30, 2006


	Page No.
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets		1
September 30, 2006 (Unaudited) and December 31, 2005

Consolidated Statements of Operations (Unaudited)		2
Quarters ended September 30, 2006 and October 1, 2005
Nine months ended September 30, 2006 and October 1, 2005

Consolidated Statements of Cash Flows (Unaudited)		3
Nine months ended September 30, 2006 and October 1, 2005

Notes to Consolidated Financial Statements (Unaudited)		4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		17

Item 3. Quantitative and Qualitative Disclosures About Market Risk		25

Item 4. Controls and Procedures		26

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		26

Item 1A. Risk Factors		26

Item 6. Exhibits		27

SIGNATURES		28
EX-3.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ASSOCIATED MATERIALS INCORPORATED

CONSOLIDATED BALANCE SHEETS

(In thousands)


	(Unaudited)
	September 30,		December 31,
	2006		2005
Assets
Current assets:
Cash and cash equivalents	$	12,515	$	12,300
Accounts receivable, net		177,811		147,664
Receivable from parent		3,908		3,908
Inventories		159,028		133,524
Deferred income taxes		26,629		26,629
Other current assets		7,916		10,220

Total current assets		387,807		334,245

Property, plant and equipment, net		140,371		143,588
Goodwill		230,666		230,691
Other intangible assets, net		107,535		109,867
Other assets		14,824		16,500

Total assets	$	881,203	$	834,891


Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	107,021	$	96,933
Accrued liabilities		71,376		57,711
Income taxes payable		17,816		7,771

Total current liabilities		196,213		162,415

Deferred income taxes		66,732		67,101
Other liabilities		42,057		43,874
Long-term debt		307,000		317,000
Stockholder’s equity		269,201		244,501

Total liabilities and stockholder’s equity	$	881,203	$	834,891

See accompanying notes.

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ASSOCIATED MATERIALS INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands)


	Quarter		Quarter		Nine Months			Nine Months
	Ended		Ended		Ended			Ended
	September 30,		October 1,		September 30,			October 1,
	2006		2005		2006			2005
Net sales	$	343,402	$	328,249	$	951,011		$	862,182
Cost of sales		258,307		253,514		719,571			666,213

Gross profit		85,095		74,735		231,440			195,969
Selling, general and administrative expense		50,692		48,580		154,159			150,160
Facility closure costs, net		—		541		(92	)		3,956

Income from operations		34,403		25,614		77,373			41,853
Interest expense, net		8,234		8,134		23,957			23,387
Foreign currency (gain) loss		99		267		(865	)		556

Income before income taxes		26,070		17,213		54,281			17,910
Income taxes		11,486		5,512		23,307			5,775

Net income	$	14,584	$	11,701	$	30,974		$	12,135

See accompanying notes.

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ASSOCIATED MATERIALS INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Nine Months			Nine Months
	Ended			Ended
	September 30,			October 1,
	2006			2005
Operating Activities
Net income	$	30,974		$	12,135
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		16,181			15,339
Deferred income taxes		(504	)		—
Amortization of deferred financing costs		2,470			2,267
Amortization of management fee		375			3,000
Stock compensation expense		27			319
Gain on sale of assets		(330	)		—
Receivable from parent		—			(418	)
Changes in operating assets and liabilities:
Accounts receivable, net		(29,256	)		(49,259	)
Inventories		(24,315	)		(29,387	)
Income taxes		10,012			9,244
Accounts payable and accrued liabilities		22,388			54,157
Other		(1,116	)		(2,396	)

Net cash provided by operating activities		26,906			15,001

Investing Activities
Additions to property, plant and equipment		(11,876	)		(18,961	)
Proceeds from disposal of property, plant and equipment		2,881			—

Net cash used in investing activities		(8,995	)		(18,961	)

Financing Activities
Repayments of term loan		(10,000	)		(437	)
Dividends		(7,735	)		(38,275	)
Settlement of promissory notes		—			(11,607	)
Financing costs		(128	)		—

Net cash used in financing activities		(17,863	)		(50,319	)

Effect of exchange rate changes on cash		167			36

Net increase (decrease) in cash		215			(54,243	)
Cash at beginning of period		12,300			58,054

Cash at end of period	$	12,515		$	3,811


Supplemental information:
Cash paid for interest	$	17,467		$	16,575

Cash paid (received) for income taxes	$	13,801		$	(3,551	)

See accompanying notes.

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ASSOCIATED MATERIALS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE QUARTER ENDED SEPTEMBER 30, 2006

(Unaudited)

Note 1 — Basis of Presentation

The unaudited financial statements of Associated Materials Incorporated (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles for interim financial reporting, the instructions to Form 10-Q, and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, these interim consolidated financial statements contain all of the normal recurring accruals and adjustments considered necessary for a fair presentation of the unaudited results for the three and nine month periods ended September 30, 2006 and October 1, 2005. These financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in its annual report on Form 10-K for the year ended December 31, 2005.

A detailed description of the Company’s significant accounting policies and management judgments is located in the audited financial statements for the year ended December 31, 2005, included in the Company’s Form 10-K filed with the Securities and Exchange Commission (“SEC”).

The Company is a wholly owned subsidiary of Associated Materials Holdings Inc. (“Holdings”), which is a wholly owned subsidiary of AMH Holdings, Inc. (“AMH”). AMH is a wholly owned subsidiary of AMH Holdings II, Inc. (“AMH II”) which is controlled by affiliates of Investcorp S.A. (“Investcorp”) and Harvest Partners, Inc. (“Harvest Partners”). Holdings, AMH and AMH II do not have material assets or operations other than a direct or indirect ownership of the common stock of the Company.

Recent Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109 (FIN 48), which clarifies the accounting for uncertainty in tax positions. This Interpretation requires that the Company recognize in its financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective as of the beginning of the Company’s 2007 fiscal year, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The Company is currently evaluating the impact of adopting FIN 48 on its financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standard No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — An Amendment of FASB Statements No. 87, 88, 106, and 132(R) (FAS 158). FAS 158 requires the Company to fully recognize in its financial statements its obligations associated with defined benefit pension plans, retiree healthcare plans, and other postretirement plans. Specifically, it requires recognition of a liability for a plan’s underfunded status within the balance sheet and recognition of changes in the funded status of a plan through comprehensive income in the year in which the changes occur. The provisions of FAS 158 are required to be adopted by the Company as of December 29, 2007. The Company is currently evaluating the impact of FAS 158 on its financial statements.

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Note 2 — Inventories

Inventories are valued at the lower of cost (first in, first out) or market. Inventories consist of the following (in thousands):


	September 30,		December 31,
	2006		2005
Raw materials	$	37,834	$	27,480
Work-in-process		14,206		10,709
Finished goods and purchased stock		106,988		95,335

	$	159,028	$	133,524

Note 3 — Goodwill and Other Intangible Assets

Goodwill represents the purchase price in excess of the fair value of the tangible and intangible net assets acquired in a business combination. Goodwill of $230.7 million as of both September 30, 2006 and December 31, 2005 consists of $194.2 million from the April 2002 merger transaction and $36.5 million from the acquisition of Gentek Holdings, Inc. (“Gentek”). None of the Company’s goodwill is deductible for income tax purposes. The Company’s other intangible assets consist of the following (in thousands):


	Average
	Amortization		September 30, 2006						December 31, 2005
	Period				Accumulated		Net Carrying				Accumulated		Net Carrying
	(in Years)		Cost		Amortization		Value		Cost		Amortization		Value
Trademarks and trade names		15	$	109,280	$	7,982	$	101,298	$	109,280	$	6,580	$	102,700
Patents		10		6,550		2,905		3,645		6,550		2,416		4,134
Customer base		7		4,905		2,313		2,592		4,824		1,791		3,033

Total other intangible assets			$	120,735	$	13,200	$	107,535	$	120,654	$	10,787	$	109,867

The Company has determined that trademarks and trade names totaling $81.1 million (included in the $109.3 million in the table above) consisting primarily of the Alside^®, Revere^® and Gentek^® trade names have indefinite useful lives. Amortization expense related to other intangible assets was approximately $0.8 million for each of the quarters ended September 30, 2006 and October 1, 2005 and $2.4 million for each of the nine month periods ended September 30, 2006 and October 1, 2005.

Note 4 — Long-Term Debt

Long-term debt consists of the following (in thousands):


	September 30,		December 31,
	2006		2005
9 3/4% notes	$	165,000	$	165,000
Term loan under credit facility		142,000		152,000

Total debt	$	307,000	$	317,000

On February 1, 2006, the Company entered into an amendment to its credit facility that amended certain covenants that require the Company to achieve certain financial ratios relating to leverage, coverage of fixed charges and coverage of interest expense and increased the revolving credit facility from $80 million to $90 million in anticipation of potentially higher working capital requirements due to higher commodity costs. As a result, interest margins on each of the term loan facility and the revolving credit facility increased by 0.25%. Effective with this amendment, the term facility bears interest at London Interbank Offered Rates (“LIBOR”) plus 2.50% payable quarterly at the end of each calendar quarter and the revolving credit facility bears interest at LIBOR plus a margin of 2.50% to 3.25% based on the Company’s leverage ratio, as defined in the amended and restated credit facility.

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capital expenditures, sell its assets or declare dividends. In addition, under the credit facility the Company is required to achieve certain financial ratios relating to leverage, coverage of fixed charges and coverage of interest expense. If the Company is not in compliance with these certain financial ratio covenant requirements, and the non-compliance is not cured or waived, the Company would be in default and the credit facility lenders could cause repayment of the credit facility to be accelerated, in which case amounts outstanding under the credit facility would become immediately due and payable. In addition, the 9 3/4% notes would become due and payable upon an acceleration of the Company’s credit facility. The Company was in compliance with its covenants as of September 30, 2006.

In March 2004, AMH completed an offering of $446 million aggregate principal at maturity of 11 1/4% senior discount notes, which mature on March 1, 2014. The accreted value of the 11 1/4% notes as of September 30, 2006 was $342.4 million. In December 2004, AMH II completed an offering of 13 5/8% senior notes, which mature on December 1, 2014. The accreted value of the 13 5/8% notes as of September 30, 2006 was $79.9 million. Because AMH and AMH II are holding companies with no operations, they must receive distributions, payments or loans from subsidiaries to satisfy obligations on the 11 1/4% notes and the 13 5/8% notes. An acceleration of the Company’s credit facility and the 9 3/4% notes as a result of a future default would have a material adverse effect on the Company’s ability to make such distributions, payments or loans to its direct and indirect parent companies. The Company does not guarantee the 11 1/4% notes or the 13 5/8% notes and has no obligation to make any payments with respect thereto. Total AMH II debt, including that of its consolidated subsidiaries, was approximately $729.4 million as of September 30, 2006.

Note 5 — Stock Plans

In June 2002, Holdings adopted the Associated Materials Holdings Inc. 2002 Stock Option Plan (the “2002 Plan”). In conjunction with the March 2004 dividend recapitalization, AMH assumed the 2002 Plan and all outstanding options under the plan. Options under the 2002 Plan were converted from the right to purchase shares of Holdings common stock into a right to purchase shares of AMH common stock with each option providing for the same in number of shares and at the same exercise price as the original options. The board of directors of AMH administers the 2002 Plan and selects eligible executives, directors, employees and consultants of AMH and its affiliates, including the Company, to receive options. The board of directors of AMH also will determine the number and type of shares of stock covered by options granted under the plan, the terms under which options may be exercised, the exercise price of the options and other terms and conditions of the options in accordance with the provisions of the 2002 Plan. In 2002, the board of directors authorized 467,519 shares of common stock and 55,758 shares of preferred stock under this plan. An option holder may pay the exercise price of an option by any legal manner that the board of directors permits. Option holders generally may not transfer their options except in the event of death. If AMH undergoes a change in control, as defined in the 2002 Plan, all outstanding time-vesting options become immediately fully exercisable, while the performance-based options may become immediately exercisable upon achievement of certain specified criteria. The board of directors of AMH may adjust outstanding options by substituting stock or other securities of any successor or another party to the change in control transaction, or cash out such outstanding options, in any such case, generally based on the consideration received by its stockholders in the transaction. Subject to particular limitations specified in the 2002 Plan, the board of directors may amend or terminate the plan. The 2002 Plan will terminate no later than 10 years following its effective date; however, any options outstanding under the option plan will remain outstanding in accordance with their terms.

Options granted under the 2002 Plan were granted at fair market value on the grant date and are exercisable under varying terms for up to ten years. The options granted in 2002 through 2004, prior to the December 2004 recapitalization transaction, which were originally granted as options to purchase Holdings stock, include the following:

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

	•		Options to purchase shares of AMH common stock at the fair market value on the date of grant, which will vest 100% on the eighth anniversary from the date of grant provided that the option vesting may be accelerated upon the occurrence of a liquidity event, as defined in the 2002 Plan, and the achievement of a specified internal rate of return on the funds invested by Harvest Partners and minimum aggregate proceeds for the investment by Harvest Partners (“performance-based options”) and;

	•		Options to purchase shares of Holdings’ common stock and preferred stock as a unit, comprised of one share of preferred stock and a specified fraction of a share of common stock granted in exchange for a portion of the outstanding options to purchase shares of the predecessor company’s common stock, which became fully vested upon completion of the April 2002 merger transaction. These options were exercised for Holdings stock in connection with

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the March 2004 dividend recapitalization with shares being exchanged for AMH stock after exercise. The shares of AMH preferred stock were redeemed in connection with the March 2004 dividend recapitalization.

In connection with the December 2004 recapitalization transaction, AMH amended the 2002 Plan to provide that each option that remains outstanding under the 2002 Plan following the completion of the December 2004 recapitalization transaction will be exercisable for two shares of the Class B non-voting common stock of AMH, to adjust for the dilution effected pursuant to the December 2004 recapitalization transaction. In addition, each holder of such options entered into an agreement with AMH II whereby such option holders agreed, upon the exercise of any such options under the 2002 Plan, to automatically contribute to AMH II the AMH shares issued upon any such option exercise, in exchange for an equivalent number and class of shares of AMH II.

Also, in connection with the December 2004 recapitalization transaction, in December 2004 AMH II adopted the AMH Holdings II, Inc. 2004 Stock Option Plan (“2004 Plan”). The Compensation Committee of the board of directors of AMH II administers the AMH II Plan and selects executives, other employees, directors of and consultants of AMH II and its affiliates, including the Company, to receive options. The Committee will also determine what form the option will take, the numbers of shares, the exercise price (which shall not be less than fair market value), the periods for which the options will be outstanding, terms, conditions, performance criteria as well as certain other criteria. The total number of shares of common stock that may be delivered pursuant to options granted under the plan is 469,782 shares of AMH II common stock. Option holders generally may not transfer their options except in the event of their death. If AMH II undergoes a change in control, as defined in the 2004 Plan, the Committee in its discretion may provide that any outstanding option shall be accelerated and become immediately exercisable as to all or a portion of the shares of common stock. The board of directors of AMH II may adjust outstanding options by substituting stock or other securities of any successor or another party to the change in control transaction, or cash out such outstanding options, in any such case, generally based on the consideration received by its stockholders in the transaction. Subject to particular limitations specified in the 2004 Plan, the board of directors may amend or terminate the 2004 Plan. The 2004 Plan will terminate no later than 10 years following its effective date; however, any options outstanding under the option plan will remain outstanding in accordance with their terms.

Options granted in 2005 and 2004 under the 2004 Plan were granted at fair market value on the date of grant. Options to purchase shares of AMH II common stock will vest 100% on the eighth anniversary from the date of grant provided that the option vesting may be accelerated upon the occurrence of a liquidity event, as defined in the Plan, and the achievement of a specified internal rate of return on the funds invested by Investcorp.

On January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123 (Revised 2004), (“SFAS 123 (Revised)”), Share-Based Payment, which requires the Company to measure all employee stock-based compensation awards using a fair value method and record the related expense in the financial statements. SFAS No. 123 (Revised) requires companies that used the minimum value method for pro forma disclosure purposes in accordance with SFAS No. 123 to adopt the new standard prospectively. As a result, the Company will continue to account for stock options granted prior to January 1, 2006 using the APB Opinion No. 25 intrinsic value method, unless such options are subsequently modified, repurchased or cancelled after January 1, 2006. For stock options granted after January 1, 2006, the Company recognizes compensation expense over the requisite service period, in accordance with SFAS No. 123 (Revised).

The adoption of SFAS 123 (Revised) reduced income before taxes for the nine months ended September 30, 2006 by less than $0.1 million. This expense is included in selling, general and administrative expenses in the accompanying consolidated statements of operations. The implementation of SFAS No. 123 (Revised) did not have any impact on cash flows during the first nine months of 2006.

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Transactions during the nine months ended September 30, 2006 under these plans are summarized below:


				Weighted		Remaining
				Average		Contractual
	Shares			Exercise Price		Term (years)
Options outstanding December 31, 2005		728,853		$	41.33
Granted under 2004 Plan		25,117			5.00
Exercised		—			—
Expired or canceled		(241,558	)		53.16

Options outstanding September 30, 2006		512,412		$	33.97		7.0

Options exercisable September 30, 2006		233,474		$	6.79		5.7

The total fair value of options vested was approximately $0.1 million for each of the nine month periods ended September 30, 2006 and October 1, 2005.

The weighted average fair value at date of grant for options granted during the nine month periods ended September 30, 2006 and October 1, 2005 was $1.07 and $19.43, respectively. The fair value of the options was estimated at the date of the grant using the Black-Scholes method with the following assumptions for 2006: dividend yield of 0.0%, a weighted-average risk free interest rate of 4.71%, an expected life of the option of 8 years, and expected volatility of 43.3%. The fair value of the options was estimated at the date of the grant using the minimum value method with the following assumptions for 2005: dividend yield of 0.0%, a weighted-average risk free interest rate of 4.00% and an expected life of the option of 8 years. The expected lives of the awards are based on historical exercise patterns and the terms of the options. The risk-free interest rate is based on zero coupon treasury bond rates corresponding to the expected life of the awards. Due to the fact that the Company’s shares are not publicly traded, the expected volatility assumption was derived by referring to changes in the common stock prices of several peer companies (with respect to industry, size and leverage) over the same timeframe as the expected life of the awards. The expected dividend yield of common stock is based on the Company’s historical and expected future dividend policy.

As of September 30, 2006, there was no remaining unrecognized compensation cost related to options outstanding.

Note 6 — Comprehensive Income

Comprehensive income differs from net income due to foreign currency translation adjustments as follows (in thousands):


	Quarter			Quarter		Nine Months		Nine Months
	Ended			Ended		Ended		Ended
	September 30,			October 1,		September 30,		October 1,
	2006			2005		2006		2005
Net income as reported	$	14,584		$	11,701	$	30,974	$	12,135
Foreign currency translation adjustments		(60	)		4,359		1,433		2,353

Comprehensive income	$	14,524		$	16,060	$	32,407	$	14,488

Note 7 — Retirement Plans

The Company’s Alside division sponsors a defined benefit pension plan which covers hourly workers at its plant in West Salem, Ohio and a defined benefit retirement plan covering salaried employees, which was frozen in 1998 and subsequently replaced with a defined contribution plan. The Company’s Gentek subsidiary sponsors a defined benefit pension plan for the hourly union employees at its Woodbridge, New Jersey plant (together with the Alside sponsored defined benefit plans, the “Domestic Plans”) as well as a defined benefit pension plan covering Gentek Canadian salaried employees and hourly union employees at the Lambeth, Ontario Canada plant, a defined benefit pension plan for the hourly union employees at its Burlington, Ontario Canada plant and a defined benefit pension plan for the hourly union employees at its Pointe Claire, Quebec Canada plant (the “Foreign Plans”). Accrued pension liabilities are included in other liabilities in the accompanying balance sheets. The actuarial valuation measurement date for the defined benefit pension plans is December 31. Components of defined benefit pension plan costs are as follows (in thousands):

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	Quarter						Quarter
	Ended						Ended
	September 30,						October 1,
	2006						2005
	Domestic			Foreign			Domestic			Foreign
	Plans			Plans			Plans			Plans
Net periodic pension cost
Service cost	$	127		$	508		$	123		$	344
Interest cost		714			608			718			522
Expected return on assets		(774	)		(671	)		(759	)		(554	)
Amortization of prior service costs		8			7			—			—
Amortization of unrecognized net loss		182			10			143			—

Net periodic pension cost	$	257		$	462		$	225		$	312


	Nine Months						Nine Months
	Ended						Ended
	September 30,						October 1,
	2006						2005
	Domestic			Foreign			Domestic			Foreign
	Plans			Plans			Plans			Plans
Net periodic pension cost
Service cost	$	382		$	1,513		$	370		$	1,003
Interest cost		2,089			1,812			2,058			1,524
Expected return on assets		(2,238	)		(2,001	)		(2,276	)		(1,615	)
Amortization of prior service costs		8			21			—			—
Amortization of unrecognized net loss		638			30			428			1

Net periodic pension cost	$	879		$	1,375		$	580		$	913

Note 8 — Business Segments

The following table sets forth for the periods presented a summary of net sales by principal product offering (in thousands):


	Quarter		Quarter		Nine Months		Nine Months
	Ended		Ended		Ended		Ended
	September 30,		October 1,		September 30,		October 1,
	2006		2005		2006		2005
Vinyl windows	$	112,215	$	101,606	$	305,805	$	267,340
Vinyl siding products		89,843		91,982		256,591		243,529
Metal products		62,301		59,524		172,233		155,238
Third party manufactured products		53,951		49,786		145,837		130,791
Other products and services		25,092		25,351		70,545		65,284

	$	343,402	$	328,249	$	951,011	$	862,182

Note 9 — 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. 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. Certain metal coating suppliers provide warranties on materials sold to the Company that mitigate the costs incurred by the Company. Reserves for future warranty costs are provided based on management’s estimates of such future costs using historical trends of claims experience, sales history of products to which such costs relate, and other factors. An independent actuary assists the Company in determining reserve amounts related to significant product failures.

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A reconciliation of warranty reserve activity is as follows for the nine months ended September 30, 2006 and October 1, 2005 (in thousands):


	Nine Months			Nine Months
	Ended			Ended
	September 30,			October 1,
	2006			2005
Balance at the beginning of the period	$	21,740		$	21,579
Provision for warranties issued		7,261			5,912
Claims paid		(6,009	)		(5,939	)

Balance at the end of the period	$	22,992		$	21,552

Note 10 — Subsidiary Guarantors

The Company’s payment obligations under the 9 3/4% notes are fully and unconditionally guaranteed, jointly and severally (collectively, the “Subsidiary Guarantees”) on a senior subordinated basis, by its domestic wholly owned subsidiaries: Gentek, Gentek Building Products Inc. and Alside, Inc. (“Guarantor Subsidiaries”). Alside, Inc. is a wholly owned subsidiary having no assets, liabilities or operations. Gentek Building Products Limited (“Non-Guarantor Subsidiary”) is a Canadian company and does not guarantee the Company’s 9 3/4% notes. In the opinion of management, separate financial statements of the respective Guarantor Subsidiaries would not provide additional material information which would be useful in assessing the financial composition of the Guarantor Subsidiaries. None of the Guarantor Subsidiaries has any significant legal restrictions on the ability of investors or creditors to obtain access to its assets in the event of default on the Subsidiary Guarantees other than its subordination to senior indebtedness.

-10-

ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 2006
(In thousands)
(Unaudited)


			Guarantor		Non-Guarantor		Reclassification/
	Parent		Subsidiaries		Subsidiary		Eliminations			Consolidated

Assets
Current assets:
Cash and cash equivalents	$	7,386	$	1,373	$	3,756	$	—		$	12,515
Accounts receivable, net		115,389		27,752		34,670		—			177,811
Intercompany receivables		—		24,135		18,760		(42,895	)		—
Receivable from parent		3,908		—		—		—			3,908
Inventories		97,009		22,883		39,136		—			159,028
Income taxes receivable		—		224		—		(224	)		—
Deferred income taxes		17,560		9,069		—		—			26,629
Other current assets		5,099		1,317		1,500		—			7,916

Total current assets		246,351		86,753		97,822		(43,119	)		387,807
Property, plant and equipment, net		103,339		3,395		33,637		—			140,371
Goodwill		194,174		36,492		—		—			230,666
Other intangible assets, net		95,128		11,345		1,062		—			107,535
Investment in subsidiaries		149,386		57,343		—		(206,729	)		—
Other assets		14,364		—		460		—			14,824

Total assets	$	802,742	$	195,328	$	132,981	$	(249,848	)	$	881,203


Liabilities And Stockholder’s Equity
Current liabilities:
Accounts payable	$	54,662	$	19,054	$	33,305	$	—		$	107,021
Intercompany payables		25,366		—		17,529		(42,895	)		—
Accrued liabilities		54,018		8,278		9,080		—			71,376
Income taxes payable		14,648		—		3,392		(224	)		17,816

Total current liabilities		148,694		27,332		63,306		(43,119	)		196,213
Deferred income taxes		61,869		1,796		3,067		—			66,732
Other liabilities		15,978		16,814		9,265		—			42,057
Long-term debt		307,000		—		—		—			307,000
Stockholder’s equity		269,201		149,386		57,343		(206,729	)		269,201

Total liabilities and stockholder’s equity	$	802,742	$	195,328	$	132,981	$	(249,848	)	$	881,203

-11-

ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Quarter Ended September 30, 2006
(In thousands)
(Unaudited)


			Guarantor			Non-Guarantor			Reclassification/
	Parent		Subsidiaries			Subsidiary			Eliminations			Consolidated
Net sales	$	241,211	$	60,685		$	84,026		$	(42,520	)	$	343,402
Cost of sales		177,561		58,913			64,353			(42,520	)		258,307

Gross profit		63,650		1,772			19,673			—			85,095
Selling, general and administrative expense		38,749		4,673			7,270			—			50,692
Facility closure costs, net		—		—			—			—			—

Income (loss) from operations		24,901		(2,901	)		12,403			—			34,403
Interest expense, net		7,975		—			259			—			8,234
Foreign currency (gain) loss		—		—			99			—			99

Income (loss) before income taxes		16,926		(2,901	)		12,045	��		—			26,070
Income taxes		4,698		3,347			3,441			—			11,486

Income (loss) before equity income from subsidiaries		12,228		(6,248	)		8,604			—			14,584
Equity income from subsidiaries		2,356		8,604			—			(10,960	)		—

Net income	$	14,584	$	2,356		$	8,604		$	(10,960	)	$	14,584

ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2006
(In thousands)
(Unaudited)


				Guarantor			Non-Guarantor			Reclassification/
	Parent			Subsidiaries			Subsidiary			Eliminations			Consolidated
Net sales	$	665,234		$	187,507		$	231,159		$	(132,889	)	$	951,011
Cost of sales		492,905			178,183			181,372			(132,889	)		719,571

Gross profit		172,329			9,324			49,787			—			231,440
Selling, general and administrative expense		118,102			14,528			21,529			—			154,159
Facility closure costs, net		(92	)		—			—			—			(92	)

Income (loss) from operations		54,319			(5,204	)		28,258			—			77,373
Interest expense, net		23,132			—			825			—			23,957
Foreign currency (gain) loss		—			—			(865	)		—			(865	)

Income (loss) before income taxes		31,187			(5,204	)		28,298			—			54,281
Income taxes		10,686			3,736			8,885			—			23,307

Income (loss) before equity income from subsidiaries		20,501			(8,940	)		19,413			—			30,974
Equity income from subsidiaries		10,473			19,413			—			(29,886	)		—

Net income	$	30,974		$	10,473		$	19,413		$	(29,886	)	$	30,974

-12-

ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 2006
(In thousands)
(Unaudited)


				Guarantor			Non-Guarantor
	Parent			Subsidiaries			Subsidiary			Consolidated
Net cash provided by (used in) operating activities	$	29,335		$	(10,549	)	$	8,120		$	26,906

Investing Activities
Additions to property, plant and equipment		(9,923	)		(96	)		(1,857	)		(11,876	)
Proceeds from disposal of property, plant and equipment		2,772			41			68			2,881

Net cash used in investing activities		(7,151	)		(55	)		(1,789	)		(8,995	)

Financing Activities
Repayments of term loan		(10,000	)		—			—			(10,000	)
Dividends		(7,735	)		—			—			(7,735	)
Financing costs		(128	)		—			—			(128	)
Intercompany transactions		(3,945	)		10,931			(6,986	)		—

Net cash provided by (used in) financing activities		(21,808	)		10,931			(6,986	)		(17,863	)

Effect of exchange rate changes on cash		—			—			167			167

Net increase (decrease) in cash		376			327			(488	)		215
Cash at beginning of period		7,010			1,046			4,244			12,300

Cash at end of period	$	7,386		$	1,373		$	3,756		$	12,515

-13-

ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2005
(In thousands)


			Guarantor		Non-Guarantor		Reclassification/
	Parent		Subsidiaries		Subsidiary		Eliminations			Consolidated

Assets
Current assets:
Cash and cash equivalents	$	7,010	$	1,046	$	4,244	$	—		$	12,300
Accounts receivable, net		100,679		26,506		20,479		—			147,664
Intercompany receivables		—		34,843		18,787		(53,630	)		—
Receivable from parent		3,908		—		—		—			3,908
Inventories		90,773		14,672		28,079		—			133,524
Income taxes receivable		—		2,860		—		(2,860	)		—
Deferred income taxes		17,560		9,069		—		—			26,629
Other current assets		7,987		1,062		1,171		—			10,220

Total current assets		227,917		90,058		72,760		(56,490	)		334,245
Property, plant and equipment, net		106,887		4,167		32,534		—			143,588
Goodwill		194,174		36,517		—		—			230,691
Other intangible assets, net		96,803		11,819		1,245		—			109,867
Investment in subsidiaries		137,480		36,497		—		(173,977	)		—
Other assets		15,999		—		501		—			16,500

Total assets	$	779,260	$	179,058	$	107,040	$	(230,467	)	$	834,891


Liabilities And Stockholder’s Equity
Current liabilities:
Accounts payable	$	57,820	$	13,073	$	26,040	$	—		$	96,933
Intercompany payables		29,311		—		24,319		(53,630	)		—
Accrued liabilities		41,568		9,162		6,981		—			57,711
Income taxes payable		10,263		—		368		(2,860	)		7,771

Total current liabilities		138,962		22,235		57,708		(56,490	)		162,415
Deferred income taxes		62,208		1,549		3,344		—			67,101
Other liabilities		16,589		17,794		9,491		—			43,874
Long-term debt		317,000		—		—		—			317,000
Stockholder’s equity		244,501		137,480		36,497		(173,977	)		244,501

Total liabilities and stockholder’s equity	$	779,260	$	179,058	$	107,040	$	(230,467	)	$	834,891

-14-

ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Quarter Ended October 1, 2005
(In thousands)
(Unaudited)


			Guarantor			Non-Guarantor		Reclassification/
	Parent		Subsidiaries			Subsidiary		Eliminations			Consolidated
Net sales	$	227,844	$	66,084		$	81,235	$	(46,914	)	$	328,249
Cost of sales		171,059		63,566			65,803		(46,914	)		253,514

Gross profit		56,785		2,518			15,432		—			74,735
Selling, general and administrative expense		37,279		4,605			6,696		—			48,580
Facility closure costs		541		—			—		—			541

Income (loss) from operations		18,965		(2,087	)		8,736		—			25,614
Interest expense, net		7,959		—			175		—			8,134
Foreign currency loss		—		—			267		—			267

Income (loss) before income taxes		11,006		(2,087	)		8,294		—			17,213
Income taxes (benefit)		3,258		(1,017	)		3,271		—			5,512

Income (loss) before equity income from subsidiaries		7,748		(1,070	)		5,023		—			11,701
Equity income from subsidiaries		3,953		5,023			—		(8,976	)		—

Net income	$	11,701	$	3,953		$	5,023	$	(8,976	)	$	11,701

ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Nine Months Ended October 1, 2005
(In thousands)
(Unaudited)


			Guarantor			Non-Guarantor		Reclassification/
	Parent		Subsidiaries			Subsidiary		Eliminations			Consolidated
Net sales	$	605,284	$	176,729		$	200,475	$	(120,306	)	$	862,182
Cost of sales		455,362		165,719			165,438		(120,306	)		666,213

Gross profit		149,922		11,010			35,037		—			195,969
Selling, general and administrative expense		115,175		15,847			19,138		—			150,160
Facility closure costs		3,956		—			—		—			3,956

Income (loss) from operations		30,791		(4,837	)		15,899		—			41,853
Interest expense, net		22,878		—			509		—			23,387
Foreign currency loss		—		—			556		—			556

Income (loss) before income taxes		7,913		(4,837	)		14,834		—			17,910
Income taxes (benefit)		2,499		(2,186	)		5,462		—			5,775

Income (loss) before equity income from subsidiaries		5,414		(2,651	)		9,372		—			12,135
Equity income from subsidiaries		6,721		9,372			—		(16,093	)		—

Net income	$	12,135	$	6,721		$	9,372	$	(16,093	)	$	12,135

-15-

ASSOCIATED MATERIALS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Nine Months Ended October 1, 2005
(In thousands)
(Unaudited)


				Guarantor			Non-Guarantor
	Parent			Subsidiaries			Subsidiary			Consolidated
Net cash provided by (used in) operating activities	$	14,868		$	(10,158	)	$	10,291		$	15,001

Investing Activities
Additions to property, plant and equipment		(17,681	)		(444	)		(836	)		(18,961	)

Net cash used in investing activities		(17,681	)		(444	)		(836	)		(18,961	)

Financing Activities
Repayments of term loan		(437	)		—			—			(437	)
Dividends		(38,275	)		—			—			(38,275	)
Settlement of promissory notes		(11,607	)		—			—			(11,607	)
Intercompany transactions		9,510			3,971			(13,481	)		—

Net cash provided by (used in) financing activities		(40,809	)		3,971			(13,481	)		(50,319	)

Effect of exchange rate changes on cash		—			—			36			36

Net decrease in cash		(43,622	)		(6,631	)		(3,990	)		(54,243	)
Cash at beginning of period		43,693			6,883			7,478			58,054

Cash at end of period	$	71		$	252		$	3,488		$	3,811

-16-

Item 2. 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 and railing. Vinyl windows and vinyl siding together comprise approximately 60% of the Company’s total net sales, while aluminum and steel products comprise approximately 18%. 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 repair and remodeling and new home construction principally through the Company’s North American network of 127 supply centers. Approximately 60% of the Company’s products are sold to contractors engaged in the home repair and remodeling market with 40% 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. Overall, the Company believes the fundamentals for the building products industry remain strong as the population continues to age, homes continue to get older, household formation continues to be strong and vinyl remains the optimal material for exterior cladding and window solutions, all of which bodes well for the demand for the Company’s products in the future. In the short term, however, there are a number of factors which indicate that the strength in the housing market is weakening. Sales of existing single-family homes has continued to decline throughout 2006 compared to prior year levels, the inventory of homes available for sale has continued to increase, and housing appreciation has slowed. In addition, the pace of new home construction has slowed, as evidenced by declines throughout 2006 in single-family housing starts and announcements from home builders of significant decreases in orders and a rise in order cancellations. Lastly, mortgage interest rates have increased over the levels experienced in recent years; however, rates remain well below long-term historical averages. These factors increase the variability of demand for building products in the short-term.

Due to the high price of oil and natural gas and strong overall consumption of raw materials, the Company, along with the entire building products industry, experienced significant inflation during 2004 and 2005 in key raw material commodity costs — particularly for vinyl resin, aluminum and steel, as well as in other raw materials such as microingredients used in the Company’s vinyl siding products. This includes significant increases in the cost of vinyl resin in the fourth quarter of 2005 as a result of the impact of Hurricanes Katrina and Rita, which caused a significant increase in energy costs. In addition, London Metal Exchange pricing for aluminum began to increase during the second half of 2005, reaching record levels in 2006. To offset the inflation of raw materials, the Company announced price increases on certain of its product offerings in 2004 as well as in 2005. In addition, due to the overall higher cost of aluminum in 2006, the Company announced further price increases on its aluminum products in the first and second quarters of 2006. The Company’s ability to maintain gross margin levels on its products during periods of rising raw material costs depends on the Company’s ability to obtain selling price increases. Further, the results of operations for individual quarters can and have been negatively impacted by a delay between the timing of raw material cost increases and price increases on the Company’s products. There can be no assurance that the Company will be able to maintain the selling price increases already implemented or achieve the announced price increases.

The Company operates with significant operating and financial leverage. Significant portions of the Company’s manufacturing, selling, general and administrative expenses are fixed costs that neither increase nor decrease proportionately with sales. In addition, a significant portion of the Company’s interest expense is fixed. There can be no assurance that the Company will be able to reduce its fixed costs in response to a decline in its net sales. As a result, a decline in the Company’s net sales could result in a higher percentage decline in its income from operations. Also, the Company’s gross margins and gross margin percentages may not be comparable to other companies as some companies include all of the costs of their distribution network in cost of sales whereas the Company includes the operating costs of its supply centers in selling, general and administrative expenses.

Because most of the Company’s building products are intended for exterior use, sales tend to be lower during periods of inclement weather. Weather conditions in the first quarter of each calendar year usually result in that quarter producing significantly less net sales and net cash flows from operations than in any other period of the year. Consequently, the Company has historically had small profits or losses in the first quarter and reduced profits from operations in the fourth quarter of each calendar year. To meet seasonal cash flow needs, during the periods of reduced sales and net cash flows from operations the Company typically makes borrowings under the revolving loan portion of its credit facility and repays such borrowings in periods of higher cash flow. The Company typically generates the majority of its cash flow in the third and fourth quarters.

-17-

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, selectively expanding its supply center network, increasing sales through independent specialty distributor customers, developing innovative new products, expanding sales of third party manufactured products through its supply center network, and driving operational excellence by reducing costs and increasing customer service levels. While the Company continues to analyze new and existing markets for the selection of new supply center locations, the Company does not currently intend to open any new supply center locations in fiscal 2006.

Results of Operations

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


	Quarter		Quarter		Nine Months			Nine Months
	Ended		Ended		Ended			Ended
	September 30,		October 1,		September 30,			October 1,
	2006		2005		2006			2005
Net sales	$	343,402	$	328,249	$	951,011		$	862,182
Cost of sales		258,307		253,514		719,571			666,213

Gross profit		85,095		74,735		231,440			195,969
Selling, general and administrative expense		50,692		48,580		154,159			150,160
Facility closure costs, net		—		541		(92	)		3,956

Income from operations		34,403		25,614		77,373			41,853
Interest expense, net		8,234		8,134		23,957			23,387
Foreign currency (gain) loss		99		267		(865	)		556

Income before income taxes		26,070		17,213		54,281			17,910
Income taxes		11,486		5,512		23,307			5,775

Net income	$	14,584	$	11,701	$	30,974		$	12,135


Other Data:
EBITDA(a)	$	39,729	$	30,609	$	94,419		$	56,636
Adjusted EBITDA(a)		39,953		32,417		95,949			64,467

-18-

The following table sets forth for the periods presented a summary of net sales by principal product offering (in thousands):


	Quarter		Quarter		Nine Months		Nine Months
	Ended		Ended		Ended		Ended
	September 30,		October 1,		September 30,		October 1,
	2006		2005		2006		2005
Vinyl windows	$	112,215	$	101,606	$	305,805	$	267,340
Vinyl siding products		89,843		91,982		256,591		243,529
Metal products		62,301		59,524		172,233		155,238
Third party manufactured products		53,951		49,786		145,837		130,791
Other products and services		25,092		25,351		70,545		65,284

	$	343,402	$	328,249	$	951,011	$	862,182


(a)		EBITDA is calculated as net income plus interest, taxes, depreciation and amortization. Adjusted EBITDA excludes certain items. The Company considers adjusted EBITDA to be an important indicator of its operational strength and performance of its business. The Company has included adjusted EBITDA because it is a key financial measure used by management to (i) assess the Company’s ability to service its debt and / or incur debt and meet the Company’s capital expenditure requirements; (ii) internally measure the Company’s operating performance; and (iii) determine the Company’s incentive compensation programs. In addition, the Company’s credit facility has certain covenants that use ratios utilizing this measure of adjusted EBITDA. EBITDA and adjusted EBITDA have not been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Adjusted EBITDA as presented by the Company may not be comparable to similarly titled measures reported by other companies. EBITDA and adjusted EBITDA are not measures determined in accordance with GAAP and should not be considered as alternatives to, or more meaningful than, net income (as determined in accordance with GAAP) as a measure of the Company’s operating results or cash flows from operations (as determined in accordance with GAAP) as a measure of the Company’s liquidity. The reconciliation of the Company’s net income to EBITDA and adjusted EBITDA is as follows (in thousands):


	Quarter		Quarter		Nine Months			Nine Months
	Ended		Ended		Ended			Ended
	September 30,		October 1,		September 30,			October 1,
	2006		2005		2006			2005
Net income	$	14,584	$	11,701	$	30,974		$	12,135
Interest expense, net		8,234		8,134		23,957			23,387
Income taxes		11,486		5,512		23,307			5,775
Depreciation and amortization		5,425		5,262		16,181			15,339

EBITDA		39,729		30,609		94,419			56,636
Foreign currency (gain) loss		99		267		(865	)		556
Separation costs(b)		—		—		2,085			—
Amortization of management fee(c)		125		1,000		375			3,000
Stock compensation expense		—		—		27			319
Facility closure costs, net(d)		—		541		(92	)		3,956

Adjusted EBITDA	$	39,953	$	32,417	$	95,949		$	64,467


(b)		Represents separation costs, including payroll taxes and benefits, related to the resignation of Mr. Caporale, former Chairman, President and Chief Executive Officer of the Company by mutual agreement with the Company’s Board of Directors.

(c)		Represents amortization of a prepaid management fee of $6 million paid to Investcorp International Inc. in connection with the December 2004 recapitalization transaction. The Company is expensing the prepaid management fee based on the services provided over the life of the agreement, as defined in the Management Advisory Agreement with Investcorp International Inc. In accordance with the Management Advisory Agreement, the Company recorded $4 million as expense for the year ended December 31, 2005, with the remaining unamortized amount to be expensed equally over the remaining four-year term of the agreement.

(d)		Amounts recorded during 2005 represent costs associated with the closure of the Freeport, Texas manufacturing facility during 2005 consisting primarily of equipment relocation expenses. Amounts recorded during 2006 include the gain realized upon the final sale of the facility, partially offset by other non-recurring expenses associated with the closure of the manufacturing facility.

Quarter Ended September 30, 2006 Compared to Quarter Ended October 1, 2005

Net sales increased 4.6%, or $15.2 million, during the third quarter of 2006 compared to the same period in 2005 primarily driven by the continued realization of selling price increases implemented in late 2005 and early 2006, continued unit volume growth in the Company’s vinyl window operations, as well as the benefit from the stronger Canadian dollar, partially offset by decreased unit volumes in the Company’s vinyl siding operations. During the third quarter of 2006 compared to the same period in 2005, window unit volume increased by 8%, while vinyl siding unit volume decreased by 10%. Overall, the Company has experienced sales weakness in certain key markets, particularly the Western region of the U.S., which it believes is due in part to slowing in the new construction market, and the Midwest region of the U.S., which is due in part to weakness in that region’s overall economy.

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Gross profit in the third quarter of 2006 was $85.1 million, or 24.8% of net sales, compared to gross profit of $74.7 million, or 22.8% of net sales, for the same period in 2005. The increase in gross profit as a percentage of net sales was primarily a result of the realization of selling price increases. During the third quarter of 2006, compared to the same period in 2005, the Company’s manufacturing costs at the Ennis vinyl siding facility improved; however, manufacturing costs continue to be in excess of costs incurred prior to the consolidation of its Freeport, Texas vinyl siding facility. The Company has prepared an improvement plan for the Ennis facility and continues to focus on its implementation.

Selling, general and administrative expense increased to $50.7 million, or 14.8% of net sales, for the third quarter of 2006 versus $48.6 million, or 14.8% of net sales, for the same period in 2005. Selling, general and administrative expense includes $0.1 million and $1.0 million of amortization of prepaid management fees for the third quarters of 2006 and 2005, respectively. Excluding the amortization of prepaid management fees, selling, general and administrative expense for the third quarter of 2006 increased $3.0 million compared to the same period in 2005. The increase in selling, general and administrative expense was due primarily to increased expenses in the Company’s supply center network, including increased payroll costs and building and truck lease expenses, as well as increases in EBITDA-based incentive compensation programs and marketing expenses. During the third quarter of 2005, the Company incurred facility closure costs of approximately $0.5 million relating to the closing of its Freeport, Texas manufacturing plant. Income from operations was $34.4 million for the third quarter of 2006 compared to $25.6 million for the same period in 2005.

Interest expense increased $0.1 million for the third quarter of 2006 compared to the same period in 2005. The increase in interest expense was due to higher interest rates on floating rate debt and additional margin on borrowings under the Company’s credit facility subsequent to an amendment to the credit facility completed during the first quarter of 2006. These increases were partially offset by lower overall borrowings on both the term and revolving loans under the credit facility.

The income tax provision for the third quarter of 2006 reflects an effective income tax rate of 44.1%, compared to an effective income tax rate of 32.0% for the same period in 2005. The increase in the effective income tax rate in 2006 was due to the Company’s intent to remit future earnings of its Canadian subsidiary to the U.S. parent and the limitations on the Company’s ability to take full advantage of foreign tax credits related to Canadian earnings.

Net income increased to $14.6 million for the quarter ended September 30, 2006 compared to $11.7 million for the same period in 2005.

EBITDA for the third quarter of 2006 was $39.7 million. This compares to EBITDA of $30.6 million for the same period in 2005. Adjusted EBITDA for the third quarter of 2006 was $40.0 million compared to adjusted EBITDA of $32.4 million for the same period in 2005. Adjusted EBITDA for the third quarter of 2006 excludes $0.1 million of amortization related to prepaid management fees and $0.1 million of foreign currency losses. Adjusted EBITDA for the same period in 2005 excludes $1.0 million of amortization related to prepaid management fees, $0.3 million of foreign currency losses, and one-time costs of $0.5 million associated with the closure of the Company’s Freeport, Texas manufacturing facility.

Nine Months Ended September 30, 2006 Compared to Nine Months Ended October 1, 2005

Net sales increased by 10.3%, or $88.8 million, for the nine months ended September 30, 2006 compared to the same period in 2005 driven primarily by the continued realization of selling price increases implemented in late 2005 and early 2006, continued unit volume growth in the Company’s vinyl window operations, as well as the benefit from the stronger Canadian dollar. During the nine months ended September 30, 2006 compared to the same period in 2005, window unit volume increased by 12%, while vinyl siding unit volume decreased by 3%. Gross profit for the nine months ended September 30, 2006 was $231.4 million, or 24.3% of net sales, compared to gross profit of $196.0 million, or 22.7% of net sales, for the same period in 2005. The increase in gross profit as a percentage of net sales was primarily a result of the realization of selling price increases.

Selling, general and administrative expense increased to $154.2 million, or 16.2% of net sales, for the nine months ended September 30, 2006 versus $150.2 million, or 17.4% of net sales, for the same period in 2005. Selling, general and administrative expense for the nine months ended September 30, 2006 includes $2.1 million of separation costs related to the resignation of the Company’s former Chief Executive Officer, amortization of prepaid management fees of $0.4 million, and non-cash stock compensation expense of less than $0.1 million. Selling, general and administrative expense for the same period in 2005 includes $3.0 million of amortization of prepaid management fees and non-cash stock compensation expense of $0.3 million. Excluding CEO separation costs, amortization of prepaid management fees and non-cash stock compensation expense, selling, general and administrative expense for the nine months ended September 30, 2006 increased $4.8 million compared to the same period in 2005. The increase in selling, general and administrative expense was due primarily to increased expenses in the Company’s

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supply center network and the full year impact of expenses relating to new supply centers opened during 2005, as well as increases in EBITDA-based incentive compensation programs and the impact of the stronger Canadian dollar, partially offset by lower marketing expenses and the benefit of headcount reductions made in the prior year. During the nine months ended October 1, 2005, the Company incurred facility closure costs of approximately $4.0 million relating to the closing of its Freeport, Texas manufacturing plant. Income from operations was $77.4 million for the nine months ended September 30, 2006 compared to $41.9 million for the same period in 2005.

Interest expense increased $0.6 million for the nine months ended September 30, 2006 compared to the same period in 2005. The increase in interest expense was due to higher interest rates on floating rate debt and additional margin on borrowings under the Company’s credit facility subsequent to an amendment to the credit facility completed during the first quarter of 2006. These increases were partially offset by lower overall borrowings on both the term and revolving loans under the credit facility.

The income tax provision for the nine months ended September 30, 2006 reflects an effective income tax rate of 42.9%, compared to an effective income tax rate of 32.2% for the same period in 2005. The increase in the effective income tax rate in 2006 was due to the Company’s intent to remit future earnings of its Canadian subsidiary to the U.S. parent and the limitations on the Company’s ability to take full advantage of foreign tax credits related to Canadian earnings.

Net income increased to $31.0 million for the nine months ended September 30, 2006 compared to $12.1 million for the same period in 2005.

EBITDA was $94.4 million for the nine months ended September 30, 2006 compared to EBITDA of $56.6 million for the same period in 2005. For the nine months ended September 30, 2006, adjusted EBITDA was $95.9 million compared to adjusted EBITDA of $64.5 million for the same period in 2005. Adjusted EBITDA for the nine months ended September 30, 2006 excludes separation costs of $2.1 million related to the resignation of the Company’s former Chief Executive Officer, $0.4 million of amortization related to prepaid management fees, $0.9 million of foreign currency gains, non-cash stock compensation expense of less than $0.1 million, and a gain of $0.1 million associated with the sale of the Company’s Freeport, Texas manufacturing facility. Adjusted EBITDA for the same period in 2005 excludes $3.0 million of amortization related to prepaid management fees, $0.6 million of foreign currency losses, $0.3 million of non-cash stock compensation expense, and one-time costs of $4.0 million associated with the closure of the Company’s Freeport, Texas manufacturing facility.

Recent Accounting Pronouncements

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Liquidity and Capital Resources

The following sets forth a summary of the Company’s cash flows for the nine months ended September 30, 2006 and October 1, 2005 (in thousands):


	Nine Months			Nine Months
	Ended			Ended
	September 30,			October 1,
	2006			2005
Cash provided by operating activities	$	26,906		$	15,001
Cash used in investing activities		(8,995	)		(18,961	)
Cash used in financing activities		(17,863	)		(50,319	)

Cash Flows

At September 30, 2006, the Company had cash and cash equivalents of $12.5 million and available borrowing capacity of approximately $80.0 million under the revolving portion of its credit facility. Outstanding letters of credit as of September 30, 2006 totaled $10.0 million securing various insurance letters of credit.

Cash Flows from Operating Activities

Net cash provided by operating activities was $26.9 million for the nine months ended September 30, 2006 compared to net cash provided by operating activities of $15.0 million for the same period in 2005. The factors typically impacting cash flows from operating activities during the first nine months of the year include the Company’s operating results, the seasonal increase of inventory levels and growth in accounts payable related to inventory purchases, and use of cash related to payments for accrued liabilities including payments of profit sharing and customer sales incentives. Inventories increased $24.3 million during the nine months ended September 30, 2006 compared to $29.4 million during the same period in 2005. The inventory growth for the nine months ended September 30, 2006 was less than the same period in 2005 due to higher inventory levels at the end of the fourth quarter of 2005, primarily in vinyl siding, to improve service levels in 2006. Accounts payable and accrued liabilities were a source of cash of $22.4 million for the nine months ended September 30, 2006 compared to $54.2 million for the same period in 2005, resulting in a net decrease in cash flows of $31.8 million, which is primarily due to the one-time increase in accounts payable during 2005 as a result of obtaining improved payment terms with certain of the Company’s raw materials suppliers and the temporary cessation of taking cash discounts during 2005. Cash flows provided by operating activities for the nine months ended September 30, 2006 includes income tax payments of $13.8 million, while net cash provided by operating activities for the same period in 2005 reflects $3.6 million of income tax refunds, net of income tax payments, received in 2005 related to deductions associated with the December 2004 recapitalization transaction.

Cash Flows from Investing Activities

Net cash used in investing activities included capital expenditures that totaled $11.9 million and $19.0 million for the nine months ended September 30, 2006 and October 1, 2005, respectively. Capital expenditures in 2006 were primarily to increase capacity and capabilities in the Company’s vinyl windows manufacturing operations. Capital expenditures in 2005 were primarily to increase capacity at the Company’s Ennis, Texas vinyl siding facility and to purchase land and equipment for the new vinyl window plant in Yuma, Arizona. The Company received proceeds of $2.7 million from the sale of property and equipment at its Freeport, Texas facility for the nine months ended September 30, 2006. The Company estimates total capital expenditures for 2006 to be in the range of $16 million to $18 million.

Cash Flows from Financing Activities

Net cash used in financing activities for the nine months ended September 30, 2006 includes repayments of $10.0 million on the Company’s term debt, dividend payments of $7.7 million and payments for financing fees of $0.1 million. The dividends of $7.7 million were paid to AMI’s direct and indirect parent companies to fund AMH II’s scheduled interest payments on its 13 5/8% notes. Net cash used in financing activities for the same period in 2005 includes dividend payments of $38.3 million, payments on promissory notes of $11.6 million and repayments on the term loan of $0.4 million. The dividend payments during 2005 consist of a $33.7 million dividend paid in the first quarter of 2005 to forgive an intercompany loan made in connection with the December 2004 recapitalization transaction and a $4.6 million dividend paid in the third quarter of 2005 to fund AMH II’s scheduled interest payment on its 13 5/8% notes.

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Description of the Company’s Outstanding Indebtedness

The Company’s term loan facility is due in August 2010 and the revolving credit facility expires in April 2009. On an annual basis, the Company is required to make principal payments on the term loan based on a percentage of excess cash flows as defined in the amended and restated credit facility. The Company will be required to make quarterly payments of the unamortized principal in the final year of the loan beginning in the fourth quarter of 2009. The Company will record 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.

On February 1, 2006, the Company entered into an amendment to the credit facility that amended certain covenants that require the Company to achieve certain financial ratios relating to leverage, coverage of fixed charges and coverage of interest expense and increased the revolving credit facility from $80 million to $90 million in anticipation of potentially higher working capital requirements due to higher commodity costs. As a result, interest margins on each of the term loan facility and the revolving credit facility increased by 0.25%. Effective with this amendment, the term facility bears interest at London Interbank Offered Rates (“LIBOR”) plus 2.50% payable quarterly at the end of each calendar quarter and the revolving credit facility bears interest at LIBOR plus a margin of 2.50% to 3.25% based on the Company’s leverage ratio, as defined in the amended and restated credit facility.

The Company’s 9 3/4% notes due in 2012 pay interest semi-annually in April and October. The 9 3/4% notes are general unsecured obligations of the Company subordinated in right of payment to senior indebtedness and senior in right of payment to any current or future subordinated indebtedness of the Company. The Company’s payment obligations under the 9 3/4% notes are fully and unconditionally guaranteed, jointly and severally 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 the Company’s ability to incur additional indebtedness, make loans or advances to subsidiaries and other entities, invest in capital expenditures, sell its assets or declare dividends. In addition, under the credit facility the Company is required to achieve certain financial ratios relating to leverage, coverage of fixed charges and coverage of interest expense. If the Company is not in compliance with these certain financial ratio covenant requirements, and the non-compliance is not cured or waived, the Company would be in default and the credit facility lenders could cause repayment of the credit facility to be accelerated, in which case amounts outstanding under the credit facility would become immediately due and payable. In addition, the 9 3/4% notes would become due and payable upon an acceleration of the Company’s credit facility. The Company was in compliance with its covenants as of September 30, 2006.

All obligations of the Company under the credit facility are jointly and severally guaranteed by AMH, Holdings and all of the Company’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 subsidiary. All obligations of the Company under the credit facility are secured by a pledge of the Company’s capital stock, the capital stock of Holdings and the capital stock of the Company’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 the Company’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 subsidiary.

In March 2004, the Company’s indirect parent company, AMH, issued 11 1/4% senior discount notes in connection with the March 2004 dividend recapitalization. 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 mature on March 1, 2014. The notes are structurally subordinated to all existing and future debt and other liabilities of AMH’s existing and future subsidiaries, including the Company and Holdings. The accreted value of the 11 1/4% notes as of September 30, 2006 was $342.4 million.

In December 2004, the Company’s indirect parent company, AMH II, issued senior notes in connection with the December 2004 recapitalization transaction, which had an accreted value of $79.9 million on September 30, 2006. The notes accrue interest at 13 5/8% payable semi-annually on January 30 and July 30. Through January 30, 2010, AMH II must pay a

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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. The 13 5/8% notes mature on December 1, 2014.

Because AMH and AMH II are holding companies with no operations, they must receive distributions, payments or loans from subsidiaries to satisfy obligations under the 11 1/4% notes and the 13 5/8% notes. The Company does not guarantee the 11 1/4% notes or the 13 5/8% notes and has no obligation to make any payments with respect thereto. Furthermore, the terms of the indenture governing the Company’s 9 3/4% notes and senior credit facility significantly restrict the Company 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. Delaware law may also restrict the Company’s ability to make certain distributions. In the first nine months of 2006, the Company and its direct and indirect parent companies declared dividends of approximately $7.7 million to AMH II. The dividends were used to fund AMH II’s scheduled interest payments on its 13 5/8% notes. If the Company is unable to distribute sufficient funds to its parent companies to allow them to make required payments on their indebtedness, AMH or AMH II may be required to refinance all or a part of their indebtedness or borrow additional funds. AMH or AMH II may not be able to refinance their indebtedness or borrow funds on acceptable terms. If a default occurs under the 13 5/8% notes, the holders of such notes could elect to declare such indebtedness due and payable and exercise their remedies under the indenture governing the 13 5/8% notes, which could have a material adverse effect on the Company. No cash distributions from the Company will be required to satisfy AMH’s interest payment obligations under the 11 1/4% notes until September 2009. Total AMH II debt, including that of its consolidated subsidiaries, was approximately $729.4 million as of September 30, 2006.

The Company believes its cash flows from operations, its borrowing capacity under its amended and restated credit facility or its ability to obtain alternative financing would 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 or that the Company would be able to refinance its indebtedness on acceptable terms.

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 in fiscal year 2005 as a result of strong overall consumption and higher energy costs related to Hurricanes Katrina and Rita. The Company believes that due to the high price of oil and natural gas, costs for vinyl resin will continue to be at elevated levels during the remainder of 2006. The Company announced price increases on all vinyl siding products and a surcharge on vinyl windows that became effective during the fourth quarter of 2005. London Metal Exchange pricing for aluminum began to increase during the second half of 2005, reaching record levels in 2006. In response to higher aluminum costs, the Company announced price increases on its aluminum products in the fourth quarter of 2005 and the first and second quarters of 2006. There can be no assurance that the Company will be able to maintain the selling price increases already implemented, or achieve any announced price increases or future price increases. In addition, there may be a delay from quarter to quarter between the timing of raw material cost increases and price increases on the Company’s products. At September 30, 2006, the Company had no raw material hedge contracts in place.

Certain Forward-Looking Statements

All statements other than statements of historical facts included in this report regarding the prospects of the industry and the Company’s prospects, plans, financial position and business strategy may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “predict,” “potential” or “continue” or the negatives of these terms or variations of them or similar terminology. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it does not assure that these expectations will prove to be correct. Such statements reflect the current views of the Company’s management with respect to its operations, results of operations and future financial performance. 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;

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	•		changes in raw material costs and availability;

	•		market acceptance of price increases;

	•		changes in national and regional trends in new housing starts and home remodeling;

	•		changes in weather conditions;

	•		the Company’s ability to comply with certain financial covenants in the credit facility and indenture governing its indebtedness;

	•		the Company’s ability to make distributions, payments or loans to its parent companies to allow them to make required payments on their debt;

	•		increases in competition from other manufacturers of vinyl and metal exterior residential building products as well as alternative building products;

	•		shifts in market demand;

	•		increases in the Company’s indebtedness;

	•		increases in costs of environmental compliance;

	•		increases in capital expenditure requirements;

	•		potential conflict between existing Alside and Gentek distribution channels;

	•		the other factors discussed under the heading “Risk Factors” in the Company’s annual report on Form 10-K for the year ended December 31, 2005 and elsewhere in this report.

All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements included in this report. These forward-looking statements speak only as of the date of this report. The Company does not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, unless the securities laws require it to do so.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

The Company has outstanding borrowings under the term loan portion of its credit facility and may borrow under the revolving credit facility from time to time for general corporate purposes, including working capital and capital expenditures. Interest under the credit facility is based on LIBOR. At September 30, 2006, the Company had borrowings of $142.0 million under the term loan. The effect of a 1/4% increase or decrease in interest rates would increase or decrease total interest expense for the quarter ended September 30, 2006 by approximately $0.1 million.

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

Foreign Currency Exchange Risk

The Company’s revenues are primarily from domestic customers and are realized in U.S. dollars. However, the Company does realize revenues from sales made through Gentek’s Canadian distribution centers in Canadian dollars. The Company’s Canadian manufacturing facilities acquire raw materials and supplies from U.S. vendors, which results in foreign currency transactional gains and losses. Payment terms among Canadian manufacturing facilities and these vendors are short-term in nature.

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The Company may, from time to time, enter into forward exchange contracts to reduce its exposure to fluctuations in the Canadian dollar. At September 30, 2006, the Company had no currency hedges in place.

Commodity Price Risk

See Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Effects of Inflation” for a discussion of the market risk related to the Company’s principal raw materials — vinyl resin, aluminum and steel.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

During the fiscal period covered by this report, the Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, completed an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Based upon this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the fiscal period covered by this report, the disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

There have been no changes to the Company’s internal control over financial reporting during the quarter ended September 30, 2006 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

In addition to the legal proceedings disclosed in Company’s annual report on Form 10-K for the year ended December 31, 2005, the Company is involved from time to time in routine legal proceedings arising in the ordinary course of its business, including proceedings and potential proceedings relating to environmental and product liability matters. The Company handles these claims in the ordinary course of business and maintains product liability insurance covering certain types of claims. Legal proceedings are inherently subject to a number of uncertainties and although it is difficult to estimate the Company’s potential exposure to the ongoing routine legal proceedings arising in the ordinary course of its business, 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 1A. Risk Factors

There have been no material changes from the risk factors disclosed under Item 1A. “Risk Factors” of the Company’s annual report on Form 10-K for the year ended December 31, 2005.

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Item 6. Exhibits

a) Exhibits


Exhibit
Number		Description
	3.1	Second Amended and Restated Certificate of Incorporation of Associated Materials Incorporated.

	10.1	Employment Agreement, dated as of August 21, 2006, by and between Associated Materials Incorporated and Thomas N. Chieffe (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 23, 2006).

	31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14 of the Exchange Act, as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14 of the Exchange Act, as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

	32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*


*		This document is being furnished in accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	ASSOCIATED MATERIALS INCORPORATED (Registrant)
Date: November 14, 2006	By:	/s/ Thomas N. Chieffe
		Thomas N. Chieffe
		President and Chief Executive Officer (Principal Executive Officer)



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

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EXHIBIT INDEX


Exhibit
Number		Description
	3.1	Second Amended and Restated Certificate of Incorporation of Associated Materials Incorporated.

	10.1	Employment Agreement, dated as of August 21, 2006, by and between Associated Materials Incorporated and Thomas N. Chieffe (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 23, 2006).

	31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14 of the Exchange Act, as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14 of the Exchange Act, as adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. junior Avg

Associated Materials Inactive 10-Q2006 Q3 Quarterly report

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