10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended June 30, 2008

Commission file number 1-14982

HUTTIG BUILDING PRODUCTS, INC.

(Exact name of registrant as specified in its charter)

Delaware	43-0334550
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
555 Maryville University Drive
Suite 400
St. Louis, Missouri	63141
(Address of principal executive offices)	(Zip code)

(314) 216-2600
(Registrant’s telephone number, including area code)

     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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filler” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ Non-accelerated filer o Smaller reporting company o

     (Do not check if smaller reporting company)

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     The number of shares of Common Stock outstanding on June 30, 2008 was 21,566,630 shares.

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Operations for the three and six months ended June 30, 2008 and 2007 (unaudited)		3
	Consolidated Balance Sheets as of June 30, 2008 (unaudited), December 31, 2007 and June 30, 2007 (unaudited)		4
	Consolidated Statement of Shareholders’ Equity for the six months ended June 30, 2008 (unaudited)		6
	Consolidated Statements of Cash Flows for the three and six months ended June 30, 2008 and 2007 (unaudited)		7
	Notes to Consolidated Financial Statements (unaudited)		8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		17
Item 4.	Controls and Procedures		17
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		18
Item 4.	Submission of Matters to a Vote of Security Holders		18
Item 5.	Other Information		18
Item 6.	Exhibits		19
Signatures			20
Exhibit Index			21
Exhibit 10.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

(In Millions, Except Share and Per Share Data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
Net sales	$	195.4		$	239.5		$	362.2		$	461.9
Cost of sales		158.7			193.8			293.4			374.4
Gross margin		36.7			45.7			68.8			87.5
Operating expenses		39.6			43.8			78.0			89.9
Goodwill impairment		—			—			7.0			—
Gain on disposal of capital assets		(0.1	)		(1.0	)		(0.1	)		(1.5	)
Operating income (loss)		(2.8	)		2.9			(16.1	)		(0.9	)
Interest expense, net		0.7			1.2			1.4			2.3
Income (loss) from continuing operations before income taxes		(3.5	)		1.7			(17.5	)		(3.2	)
Provision (benefit) for income taxes		(1.1	)		0.6			(5.3	)		(1.1	)
Income (loss) from continuing operations		(2.4	)		1.1			(12.2	)		(2.1	)
Loss from discontinued operations, net of taxes		(0.1	)		—			(0.1	)		(0.2	)
Net income (loss)	$	(2.5	)	$	1.1		$	(12.3	)	$	(2.3	)
Net income (loss) from continuing operations per share — basic and diluted	$	(0.11	)	$	0.05		$	(0.58	)	$	(0.10	)
Net loss from discontinued operations per share — basic and diluted		(0.01	)		—			(0.01	)		(0.01	)
Net income (loss) loss per share — basic and diluted	$	(0.12	)	$	0.05		$	(0.59	)	$	(0.11	)
Basic shares outstanding		20,907,718			20,517,897			20,863,568			20,456,155
Diluted shares outstanding		20,907,718			20,785,902			20,863,568			20,456,155

See notes to unaudited consolidated financial statements

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Millions, Except Share and Per Share Data)

	June 30,		December 31,		June, 30
	2008		2007		2007
	(unaudited)				(unaudited)
ASSETS
CURRENT ASSETS:
Cash and equivalents	$	6.2	$	1.8	$	7.1
Trade accounts receivable, net		70.3		56.1		89.5
Inventories, net		77.8		88.7		102.1
Other current assets		5.6		13.6		7.8
Total current assets		159.9		160.2		206.5
PROPERTY, PLANT AND EQUIPMENT
Land		5.6		5.6		5.7
Building and improvements		30.3		30.2		30.7
Machinery and equipment		29.5		30.0		31.7
Gross property, plant and equipment		65.4		65.8		68.1
Less accumulated depreciation		40.2		39.2		40.1
Property, plant and equipment, net		25.2		26.6		28.0
OTHER ASSETS:
Goodwill, net		11.2		18.3		18.9
Other		4.2		5.1		5.6
Deferred income taxes		7.9		2.5		2.3
Total other assets		23.3		25.9		26.8
TOTAL ASSETS	$	208.4	$	212.7	$	261.3

See notes to unaudited consolidated financial statements

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Millions, Except Share and Per Share Data)

	June 30,		December 31,			June 30,
	2008		2007			2007
	(unaudited)					(unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	0.2	$	1.2		$	1.4
Trade accounts payable		54.6		50.1			80.6
Deferred income taxes		5.5		5.3			4.7
Accrued compensation		5.0		6.3			4.9
Other accrued liabilities		13.3		15.9			12.7
Total current liabilities		78.6		78.8			104.3
NON-CURRENT LIABILITIES:
Long-term debt, less current maturities		33.5		25.4			43.8
Other non-current liabilities		3.4		4.2			3.7
Total non-current liabilities		36.9		29.6			47.5
SHAREHOLDERS’ EQUITY
Preferred shares; $.01 par (5,000,000 shares authorized)		—		—			—
Common shares; $.01 par (50,000,000 shares authorized:
21,566,630, 20,968,445 and 20,968,445 shares issued at June 30, 2008, December 31, 2007 and June 30, 2007, respectively)		0.2		0.2			0.2
Additional paid-in capital		36.8		36.1			35.2
Retained earnings		55.9		68.2			74.1
Less: Treasury shares, at cost (0, 32,219 and 6,636 shares at June 30, 2008, December 31, 2007 and June 30, 2007, respectively)		—		(0.2	)		—
Total shareholders’ equity		92.9		104.3			109.5
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	208.4	$	212.7		$	261.3

See notes to unaudited consolidated financial statements

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

UNAUDITED

(In Millions)

	Common Shares		Additional						Treasury			Total
	Outstanding,		Paid-In			Retained			Shares,			Shareholders’
	at Par Value		Capital			Earnings			at Cost			Equity
Balance at January 1, 2008	$	0.2	$	36.1		$	68.2		$	(0.2	)	$	104.3
Net loss							(12.3	)					(12.3	)
Comprehensive loss													(12.3	)
Restricted stock issued, net of forfeitures				(0.2	)					0.2			—
Stock options exercised, net				0.1									0.1
Stock compensation				0.8									0.8
Balance at June 30, 2008	$	0.2	$	36.8		$	55.9		$	—		$	92.9

See notes to unaudited consolidated financial statements

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

(In Millions)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
Cash Flows From Operating Activities:
Net income (loss)	$	(2.5	)	$	1.1		$	(12.3	)	$	(2.3	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Net loss from discontinued operations		0.1			—			0.1			0.2
Depreciation and amortization		1.1			1.4			2.2			2.7
Stock compensation		0.4			0.4			0.8			0.9
Goodwill impairment		—			—			7.0			—
Other adjustments		(1.3	)		(1.1	)		(5.6	)		(1.4	)
Changes in operating assets and liabilities:
Trade accounts receivable		(0.4	)		2.0			(14.2	)		(15.4	)
Inventories		14.3			1.5			10.9			(4.8	)
Trade accounts payable		3.2			8.6			4.5			18.5
Other		5.5			6.9			3.4			1.2
Total net cash provided by (used in) operating activities		20.4			20.8			(3.2	)		(0.4	)
Cash Flows From Investing Activities:
Capital expenditures		(0.4	)		(0.4	)		(0.8	)		(2.0	)
Proceeds from disposition of capital assets		0.4			1.9			0.5			2.9
Total cash provided by (used in) investing activities		—			1.5			(0.3	)		0.9
Cash Flows From Financing Activities:
Borrowings and payments of debt, net		(17.0	)		(20.6	)		7.1			(0.4	)
Exercise of stock options		0.1			0.9			0.8			0.9
Total cash provided by (used in) financing activities		(16.9	)		(19.7	)		7.9			0.5
Net increase in cash and equivalents		3.5			2.6			4.4			1.0
Cash and equivalents, beginning of period		2.7			4.5			1.8			6.1
Cash and equivalents, end of period	$	6.2		$	7.1		$	6.2		$	7.1
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	0.6		$	1.2		$	1.2		$	2.3
Income taxes refunded		4.2			4.0			5.2			4.0
Cash received from exercise of stock options		—			0.6			0.4			0.6

See notes to unaudited consolidated financial statements

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. BASIS OF PRESENTATION

The unaudited interim consolidated financial statements of Huttig Building Products, Inc. (the “Company” or “Huttig”) were prepared in accordance with U.S. generally accepted accounting principles and reflect all adjustments (including normal recurring accruals) which, in the opinion of management, are considered necessary for the fair presentation of the results for the periods presented. These statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

The consolidated results of operations and resulting cash flows for the interim periods presented are not necessarily indicative of the results that might be expected for the full year. Due to the seasonal nature of Huttig’s business, operating profitability is usually lower in the Company’s first and fourth quarters than in the second and third quarters.

2. STOCK-BASED EMPLOYEE COMPENSATION

The Company recognized $0.8 million and $0.9 million in non-cash stock-based compensation in the six months ended June 30, 2008 and 2007, respectively. During the first six months of 2008, the Company granted an aggregate of 452,750 shares of restricted stock at a combined weighted average fair market value of $3.95 under its 2005 Executive Incentive Compensation Plan. The restricted shares vest in three equal installments on the first, second and third anniversaries of the respective grant dates. During the first six months of 2008, the Company granted an aggregate of 27,648 restricted stock units at a weighted average fair market value of $2.39 under its 2005 Non-Employee Directors Restricted Stock Plan. The restricted stock units vest on the first anniversary of the respective grant dates. The unearned compensation expense is being amortized into expense on a straight-line basis over the requisite service period for the entire award. As of June 30, 2008 and 2007, the total compensation expense not yet recognized related to all outstanding restricted stock/unit awards and non-vested options was approximately $2.5 million and $0.1 million, respectively.

3. DEBT

Debt consisted of the following (in millions):

	June 30,		December 31,		June 30,
	2008		2007		2007
Revolving credit facility	$	32.9	$	24.8	$	42.9
Other obligations		0.8		1.8		2.3
Total debt		33.7		26.6		45.2
Less current portion		0.2		1.2		1.4
Long-term debt	$	33.5	$	25.4	$	43.8

Credit Agreement — The Company has a five-year $160.0 million asset based senior secured revolving credit facility (“credit facility”). Borrowing availability under the credit facility is based on eligible accounts receivable and inventory. The Company has the right to add a real estate component to increase borrowing availability, but not in excess of the $160.0 million commitment. In July 2008, the Company added the real estate component to the borrowing base. The inclusion of the real estate component will initially provide approximately $25 million of additional borrowing capacity under the credit facility. The real estate component of the borrowing base amortizes monthly over ten years on a straight-line basis. Additionally, the credit facility includes an option to request an increase in the size of the facility by up to an additional $40.0 million, subject to certain conditions and approvals. The Company must also pay a fee in the range of 0.25% to 0.32% per annum on the average daily-unused amount of the revolving credit commitment. The entire unpaid balance under the credit facility is due and payable on October 20, 2011, the maturity date of the credit facility.

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At June 30, 2008, under the credit facility the Company had revolving credit borrowings of $32.9 million outstanding at a weighted average interest rate of 3.85%, letters of credit outstanding totaling $5.2 million, primarily for health and workers’ compensation insurance, and $62.8 million of additional borrowing capacity. In addition, the Company had $0.8 million of other obligations outstanding at June 30, 2008.

The borrowings under the credit facility are collateralized by substantially all of the Company’s assets and are subject to certain operating limitations commonly applicable to a loan of this type, which, among other things, place limitations on indebtedness, liens, investments, mergers and acquisitions, dispositions of assets, cash dividends, stock repurchases and transactions with affiliates. The financial covenant in the credit facility is limited to a fixed charge coverage ratio to be tested only when excess borrowing availability, as defined in the credit facility, is less than $25.0 million, on a pro forma basis prior to consummation of certain significant business transactions outside the ordinary course of business and prior to increasing the size of the facility.

4. CONTINGENCIES

The Company is involved in a number of legal proceedings incidental to the conduct of its business, relating to such matters as product liability, environmental liability and vehicular accidents. The Company carries insurance policies on insurable risks with coverage and other terms that it believes to be appropriate. The Company generally has self-insured retention limits and has obtained fully insured layers of coverage above such self-insured retention limits. Accruals for self-insurance losses are made based on claims experience. Liabilities for existing and unreported claims are accrued when it is probable that future costs will be incurred and such future costs can be reasonably estimated.

The Company is subject to federal, state and local environmental protection laws and regulations. The Company’s management believes the Company is in compliance, or is taking action aimed at assuring compliance, with applicable environmental protection laws and regulations. However, there can be no assurance that future environmental liabilities will not have a material adverse effect on the Company’s consolidated financial condition or results of operations.

Huttig has been identified as a potentially responsible party in connection with the clean up of contamination at a formerly owned property in Montana that was used for the manufacture of wood windows and at a currently-owned facility in Prineville, Oregon, in connection with the clean up of petroleum hydrocarbons and PCP discovered in soil and groundwater at the facility. As of June 30, 2008, the Company had accrued approximately $0.8 million for future costs of remediating these sites. However, until a final remedy is selected by the respective state departments of environmental quality, management cannot estimate the top of the range of loss or cost to Huttig of the final remediation order.

In addition, some of the Company’s current and former distribution centers are located in areas of current or former industrial activity where environmental contamination may have occurred, and for which the Company, among others, could be held responsible. The Company currently believes that there are no material environmental liabilities at any of its distribution center locations.

The Company accrues expenses for contingencies when it is probable that an asset has been impaired or a liability has been incurred and management can reasonably estimate the expense. Contingencies for which the Company has recorded accruals include environmental, product liability and other legal matters. Based on management’s assessment of the most recent information available, management currently does not expect any of these contingencies to have a material adverse effect on the Company’s financial position or cash flow. It is possible, however, that future results of operations for any particular quarter or annual period and our financial condition could be materially affected by changes in assumptions or other circumstances related to these matters.

5. BASIC AND DILUTED SHARES

For the six months ended June 30, 2008 and 2007 and for the three months ended June 30, 2008, all outstanding stock options and all non-vested restricted shares/units were anti-dilutive and, therefore, were not included in the computations of diluted income per share amounts. For the three months ended June 30, 2007, stock options to purchase 278,000 shares were anti-dilutive. At June 30, 2008, the Company had 522,812 stock options and an aggregate of 685,609 shares of restricted stock and restricted stock units outstanding.

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6. BRANCH CLOSURES AND OTHER SEVERANCE

In the first half of 2008, the Company recorded $0.3 million in net inventory losses related to branch closures in “Cost of sales” and $1.0 million of expense in “Operating expenses” related to branch closures. In the first half of 2007, the Company recorded $1.0 million in net inventory losses in “Cost of sales” and $2.7 million of expense in “Operating expenses” related to closed branches.

At June 30, 2008, the Company had $1.4 million in accruals related to severance and the remaining building lease rentals for closed branches that will be paid out over the terms of the various leases through 2015.

Branch Closure Reserve and Other Accrued Severance (in millions):

				Operating
	Inventory			Expenses			Total
Balance December 31, 2007	$	—		$	1.8		$	1.8
Branch closures and other severance		0.3			1.0			1.3
Amount paid/utilized		(0.3	)		(1.4	)		(1.7	)
Balance June 30, 2008	$	—		$	1.4		$	1.4

7. ASSET IMPAIRMENT

During the first half of 2008, the Company determined that, based on a further decline in actual and forecasted operating results at certain of its reporting units, an interim test for goodwill impairment was necessary for the impacted units. In determining if there was impairment, the Company first compared the fair value of the reporting unit (calculated by discounting projected cash flows and earnings multiples) to the carrying value. Because the carrying value of certain reporting units exceeded the fair value, the Company allocated the fair value to the assets and liabilities of the units and determined that the fair value of the implied goodwill was lower than what was recorded. Accordingly, goodwill impairment charges of $7.0 million were recorded for these reporting units in the Consolidated Statements of Operations. At June 30, 2008, Huttig had $11.2 million remaining in goodwill. A prolonged continuation of the current downturn and any future unanticipated downturns in the markets the Company serves could result in further goodwill impairment charges in future periods.

8. INCOME TAXES

The Company had long-term net deferred tax assets of $7.9 million at June 30, 2008. Management believes it is more likely than not that with its projections of future taxable income, including available tax planning strategies, and after consideration of the valuation allowance, the Company will generate sufficient taxable income to realize the benefits of the net deferred tax assets existing at June 30, 2008. In order to realize the net deferred tax assets existing at June 30, 2008, the Company will need to generate future taxable income of approximately $33.1 million. There can be no assurance, however, that the Company will generate sufficient taxable income to realize the full benefit of the existing net deferred tax assets. In addition, the Company believes it is likely that a valuation allowance will need to be established for additional deferred tax assets generated in conjunction with losses incurred in future periods.

9. SUBSEQUENT EVENT

On August 5, 2008, the Company announced the closing of its Springfield, Missouri branch. This branch is relatively small and operates in a difficult housing market. The Company expects to incur between $1.6 and $1.8 million in operating charges related to this branch closure during the third and fourth quarters of 2008, comprised of between $1.3 and $1.5 million for asset write-offs and transfer costs, approximately $0.1 million for building lease rentals and approximately $0.2 million for employee severance payments. The Company expects approximately $0.4 million of these charges to be cash payments, including the building lease rentals being paid out over the remaining term of the lease in 2008 and 2009.

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ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Huttig is a distributor of building materials used principally in new residential construction and in home improvement, remodeling and repair work. We distribute our products through 32 distribution centers serving 41 states and sell primarily to building materials dealers, national buying groups, home centers and industrial users, including makers of manufactured homes.

The following table sets forth our sales from continuing operations, by product classification as a percentage of total sales:

	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
Millwork(1)		43	%		49	%		46	%		50	%
General Building Products(2)		45	%		37	%		43	%		36	%
Wood Products(3)		12	%		14	%		11	%		14	%
Total Net Product Sales		100	%		100	%		100	%		100	%

(1)	Millwork includes exterior and interior doors, pre-hung door units, windows, patio doors, mouldings, frames, stair parts and columns.
(2)	General building products include composite decking, connectors, fasteners, housewrap, roofing products, insulation and other miscellaneous building products.
(3)	Wood products include engineered wood products and other wood products, such as lumber and panels.

Industry Conditions

Various factors historically have caused our results of operations to fluctuate from period to period. These factors include levels of construction, home improvement and remodeling activity, weather, prices of commodity wood, steel and petroleum-based products, fuel costs, interest rates, competitive pressures, availability of credit and other local, regional and national economic conditions. Many of these factors are cyclical or seasonal in nature. During the past two years, our results of operations have been adversely affected by the severe downturn in new housing activity in the United States. We expect the severe downturn in new housing activity to continue to adversely affect our operating results for at least the next twelve months. We anticipate that further fluctuations in operating results from period to period will continue in the future. Our first quarter and fourth quarter are generally adversely affected by winter weather patterns in the Midwest and Northeast, which typically result in seasonal decreases in levels of construction activity in these areas. Because much of our overhead and expenses remain relatively fixed throughout the year, our operating profits tend to be lower during the first and fourth quarters.

We believe we have the product offerings, warehouse and support facilities, personnel, systems infrastructure and financial and competitive resources necessary for continued business success. Our future revenues, costs and profitability, however, are all likely to be influenced by a number of risks and uncertainties, including those discussed under “Cautionary Statement” below.

Critical Accounting Policies

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require management to make estimates and assumptions. Management bases these estimates and assumptions on historical results and known trends as well as management forecasts. Actual results could differ from these estimates and assumptions. See our Annual Report on Form 10-K for the year ended December 31, 2007 in Part II, Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies.”

Results of Operations

Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007

Net sales from continuing operations for the second quarter of 2008 were $195.4 million, which were $44.1 million, or approximately 18%, lower than the second quarter of 2007. Second quarter 2008 results were impacted by a 30% drop in

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housing starts to an average annualized rate of approximately 1.02 million, compared to approximately 1.46 million in the second quarter of 2007. We continue to anticipate decreased housing starts for the balance of 2008 versus 2007 based on the current level of housing activity and industry forecasts. As a result, we are continuing to examine our cost structure, looking for opportunities to reduce expenses and increase efficiencies.

Sales decreased in all product categories, except building products. General building products were relatively flat with the prior year at $88.4 million. Millwork sales decreased 28% to $84.0 million. Other wood products, mostly commodity products, decreased 27% to $16.8 million and engineered wood sales were down 40% to $6.2 million.

Gross margin decreased 20% to $36.7 million, or 18.8% of sales, as compared to $45.7 million, or 19.1% of sales, in the prior year period. Second quarter 2008 and 2007 results reflect the liquidation and write down of inventory at closed branches of $0.5 and $0.1 million, respectively. These items negatively impacted 2008 gross margin percentage by approximately 0.3%. In addition, second quarter 2008 gross margin percentage was negatively affected by a less favorable mix of millwork sales, a slightly higher mix of lower margin direct sales and lower vendor rebates earned. However, these factors were almost entirely offset by higher selling margins across all product categories.

Operating expenses decreased 10% to $39.6 million, or 20.3% of sales, in the 2008 second quarter, compared to $43.8 million, or 18.3% of sales, in the 2007 second quarter. Second quarter 2008 and 2007 results included $0.5 and $0.3 million in charges related to the cost reduction actions, respectively. Excluding these 2008 and 2007 second quarter charges, operating expenses decreased by $4.4 million primarily due to lower employee headcount and lower infrastructure levels as a result of the prior restructuring actions, partially offset by higher fuel and contract hauling costs and increased bad debt expense.

In the second quarter of 2007, we recognized a gain of $1.0 million on the sale of our Spokane, Washington facility.

Net interest expense decreased to $0.7 million in the 2008 second quarter from $1.2 million in the prior year second quarter due to lower interest rates and decreased borrowing levels.

Income taxes as a percentage of pre-tax loss for the three months ended June 30, 2008 and 2007 were approximately 31% and 35%, respectively. We had long-term net deferred tax assets of $7.9 million at June 30, 2008. We believe it is more likely than not that, considering our projections of future taxable income, including available tax planning strategies, and after consideration of the valuation allowance, we will generate sufficient taxable income to realize the benefits of the net deferred tax assets existing at June 30, 2008. In order to realize the net deferred tax assets existing at June 30, 2008, we will need to generate future taxable income of approximately $33.1 million. There can be no assurance we will generate sufficient taxable income to realize the full benefit of the existing net deferred tax assets. In addition, we believe it is likely that a valuation allowance will need to be established for any additional deferred tax assets generated in conjunction with losses incurred in future periods.

As a result of the foregoing factors, operating loss from continuing operations was $2.8 million in the 2008 second quarter, as compared to an operating profit of $2.9 million from continuing operations in the 2007 second quarter. Net loss from continuing operations was $2.4 million, or $0.11 per diluted share, in the 2008 second quarter, as compared to net profit from continuing operations of $1.1 million, or $0.05 per diluted share, in the 2007 second quarter.

Discontinued Operations

We recorded a $0.1 million after-tax loss from discontinued operations for environmental and litigation expenses associated with previously reported discontinued operations in the three months ended June 30, 2008.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007

Net sales from continuing operations for the six months ended June 30, 2008 were $362.2 million, which were $99.7 million, or approximately 22%, lower than in the first six months of 2007. The results for the six months ended June 30, 2008 were impacted by a 29% drop in housing starts to an average annualized rate of approximately 1.03 million, compared to approximately 1.46 million in the first six months of 2007. We continue to anticipate decreased housing starts for the balance of 2008 versus 2007 based on the current level of housing activity and industry forecasts.

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Sales decreased in all product categories. Millwork sales decreased 29% to $165.9 million. General building products sales decreased 7% to $154.4 million. Other wood products, mostly commodity products, decreased 31% to $30.6 million and engineered wood sales were down 41% to $11.3 million.

Gross margin decreased 21% to $68.8 million, or 19.0% of sales, as compared to $87.5 million, or 18.9% of sales, in the prior year period. The results for first six months of 2008 and 2007 reflect the liquidation and net write down of inventory at closed branches of $0.3 and $1.0 million, respectively. These items negatively impacted 2008 and 2007 gross margin percentage by approximately 0.1% and 0.2%, respectively. In addition, the gross margin percentage in the first six months of 2008 was negatively impacted by a less favorable mix of millwork sales, offset by higher building products margins and more favorable inventory variances.

Operating expenses decreased 13% to $78.0 million, or 21.5% of sales, in the first six months of 2008, compared to $89.9 million, or 19.5% of sales, in the first six months of 2007. Results for the first six months of 2008 and 2007 included $1.0 and $2.7 million in charges related to the cost reduction actions, respectively. Excluding these charges, the first six months of 2008 operating expenses decreased by $10.2 million primarily due to lower employee headcount and lower infrastructure levels as a result of the prior restructuring actions, partially offset by higher fuel and contract hauling costs and increased bad debt expense.

During the first half of 2008, we determined that, based on a further decline in actual and forecasted operating results at certain of our reporting units, an interim test for goodwill impairment was necessary for the impacted units. In determining if there was impairment, we first compared the fair value of the reporting unit (calculated by discounting projected cash flows and earnings multiples) to the carrying value. Because the carrying value of certain reporting units exceeded the fair value, we allocated the fair value to the assets and liabilities of the units and determined that the fair value of the implied goodwill was lower than what was recorded. Accordingly, we recorded goodwill impairment charges of $7.0 million for these reporting units in the Consolidated Statements of Operations. At June 30, 2008, we had $11.2 million remaining in goodwill. A prolonged continuation of the current downturn and any future unanticipated downturns in the markets we serve could result in further goodwill impairment charges in future periods.

Net interest expense decreased to $1.4 million in the six months ended June 30, 2008 from $2.3 million in the prior year first six months due to lower interest rates and decreased borrowing levels.

Income taxes as a percentage of pre-tax loss for the six months ended June 30, 2008 and 2007 were approximately 30% and 34%, respectively.

As a result of the foregoing factors, operating loss from continuing operations was $16.1 million in the first six months of 2008, as compared to an operating loss of $0.9 million from continuing operations in the first six months of 2007. Net loss from continuing operations was $12.2 million, or $0.58 per diluted share, in the first six months of 2008, as compared to a net loss from continuing operations of $2.1 million, or $0.10 per diluted share, in the first six months of 2007.

Discontinued Operations

We recorded a $0.1 million and $0.2 million after-tax loss from discontinued operations for environmental and litigation expenses associated with previously reported discontinued operations in the six months ended June 30, 2008 and 2007, respectively.

Subsequent Event

On August 5, 2008, we announced the closing of our Springfield, Missouri branch. This branch is relatively small and operates in a difficult housing market. We expect to incur between $1.6 and $1.8 million in operating charges related to this branch closure during the third and fourth quarters of 2008, comprised of between $1.3 and $1.5 million for asset write-offs and transfer costs, approximately $0.1 million for building lease rentals and approximately $0.2 million for employee severance payments. We expect approximately $0.4 million of these charges to be cash payments, including the building lease rentals being paid out over the remaining term of the lease in 2008 and 2009.

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Liquidity and Capital Resources

We depend on cash flow from operations and funds available under our revolving credit facility to finance seasonal working capital needs, capital expenditures and any acquisitions that we may undertake. Our working capital requirements are generally greatest in the second and third quarters, which reflect the seasonal nature of our business. The second and third quarters are also typically our strongest operating quarters, largely due to increased construction activities from more favorable weather throughout many of our markets compared to the first and fourth quarters. We typically generate cash from working capital reductions in the fourth quarter of the year and build working capital during the first quarter in preparation for our second and third quarters. We also maintain significant inventories to meet rapid delivery requirements of our customers and to enable us to obtain favorable pricing, delivery and service terms with our suppliers. At June 30, 2008, December 31, 2007 and June 30, 2007, inventories constituted approximately 37%, 42% and 39% of our total assets, respectively. We also closely monitor operating expenses and inventory levels during seasonally affected periods and, to the extent possible, manage variable operating costs to minimize seasonal effects on our profitability.

Operations. Cash used in operating activities increased $2.8 million to $3.2 million for the six months ended June 30, 2008 from cash used in operating activities of $0.4 million for the first six months of 2007. Accounts receivable increased by $14.2 million in the first six months of 2008, compared to an increase of $15.4 million in the first six months of 2007. Days sales outstanding decreased to 32.8 days at June 30, 2008, compared to 34.1 days at June 30, 2007, based on annualized sales for the respective immediately preceding quarter. Inventory decreased by $10.9 million in the 2008 first six months, compared to an increase of $4.8 million in the 2007 first six months. Annualized inventory turns, calculated as the ratio of annualized cost of goods sold for each three-month period ended June 30 divided by the average of the beginning and ending inventory balances for each such three-month period, were 7.5 turns at both June 30, 2008 and 2007. Accounts payable increased by $4.5 million and $18.5 million in the six-month periods ended June 30, 2008 and 2007, respectively.

Investing. In the six-month period ended June 30, 2008, net cash used in investing activities was $0.3 million, as compared to $0.9 million of net cash provided by investing activities in the six-month period ended June 30, 2007. We expended $0.8 million in the first half of 2008 primarily to purchase machinery and equipment at multiple branches compared to $2.0 million in the first half of 2007 related primarily to the purchase of computer software necessary to upgrade our enterprise resource planning system and to purchase machinery and equipment at multiple branch locations. In the 2007 first half, we received proceeds of $2.9 million and recorded gains on disposal of capital assets of $1.5 million as a result of our sales of the Grand Rapids, MI and Spokane, WA facilities.

Financing. Cash provided by financing activities for the first six months of 2008 primarily reflects a $7.1 million increase in net borrowings and $0.8 million received from stock options. Cash provided from financing activities for the first six months of 2007 primarily reflects $0.9 million received from stock options and a $0.4 million decrease in net borrowings.

Credit Agreement. We have a five-year $160.0 million asset based senior secured revolving credit facility (“credit facility”). Borrowing availability under the credit facility is based on eligible accounts receivable and inventory. We have the right to add a real estate component to increase borrowing availability, but not in excess of the $160.0 million commitment. In July 2008, the Company added the real estate component to the borrowing base. The inclusion of the real estate component will initially provide approximately $25 million of additional borrowing capacity under the credit facility. The real estate component of the borrowing base amortizes monthly over ten years on a straight-line basis. Additionally, the credit facility includes an option to request an increase in the size of the facility by up to an additional $40.0 million, subject to certain conditions and approvals. We must also pay a fee in the range of 0.25% to 0.32% per annum on the average daily-unused amount of the revolving credit commitment. The entire unpaid balance under the credit facility is due and payable on October 20, 2011, the maturity date of the credit facility.

At June 30, 2008, under the credit facility we had revolving credit borrowings of $32.9 million outstanding at a weighted average interest rate of 3.85%, letters of credit outstanding totaling $5.2 million, primarily for health and workers’ compensation insurance, and $62.8 million of additional borrowing capacity. Had the real estate component been included at June 30, 2008, the Company would have had approximately $88 million of total additional borrowing capacity under the credit facility. In addition, we had $0.8 of other obligations outstanding at June 30, 2008.

The borrowings under the credit facility are collateralized by substantially all of the our assets and are subject to certain operating limitations commonly applicable to a loan of this type, which, among other things, place limitations on indebtedness, liens, investments, mergers and acquisitions dispositions of assets, cash dividends, stock repurchases and transactions with affiliates. The financial covenant in the credit facility is limited to a fixed charge coverage ratio to be tested only when excess borrowing availability, as defined, is less than $25.0 million, on a pro forma basis prior to consummation

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of certain significant business transactions outside the ordinary course of business and prior to increasing the size of the facility.

We believe that cash generated from our operations and funds available under our credit facility will provide sufficient funds to meet our currently anticipated short-term and long-term liquidity and capital expenditure requirements.

Off-Balance Sheet Arrangements

In addition to funds available from operating cash flows and our credit facility as described above, we use operating leases as a principal off-balance sheet financing technique. Operating leases are employed as an alternative to purchasing certain property, plant and equipment. See our Annual Report on Form 10-K for the year ended December 31, 2007 in Part II, Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Commitments and Contingencies.”

Contingencies

We are involved in a number of legal proceedings incidental to the conduct of our business, relating to such matters as product liability, environmental liability and vehicular accidents. We carry insurance policies on insurable risks with coverage and other terms that we believe to be appropriate. We generally have self-insured retention limits and have obtained fully insured layers of coverage above such self-insured retention limits. Accruals for self-insurance losses are made based on claims experience. Liabilities for existing and unreported claims are accrued when it is probable that future costs will be incurred and such future costs can be reasonably estimated.

We are subject to federal, state and local environmental protection laws and regulations. Our management believes we are in compliance, or are taking action aimed at assuring compliance, with applicable environmental protection laws and regulations. However, there can be no assurance that future environmental liabilities will not have a material adverse effect on our consolidated financial condition or results of operations.

We have been identified as a potentially responsible party in connection with the clean up of contamination at a formerly owned property in Montana that was used for the manufacture of wood windows and at a currently-owned facility in Prineville, Oregon, in connection with the clean up of petroleum hydrocarbons and PCP discovered in soil and groundwater at the facility. As of June 30, 2008, we have accrued approximately $0.8 million for future costs of remediating these sites. However, until a final remedy is selected by the respective state departments of environmental quality, management cannot estimate the top of the range of loss or cost to us of the final remediation order.

In addition, some of our current and former distribution centers are located in areas of current or former industrial activity where environmental contamination may have occurred, and for which we, among others, could be held responsible. We currently believe that there are no material environmental liabilities at any of our distribution center locations.

We accrue expenses for contingencies when it is probable that an asset has been impaired or a liability has been incurred and management can reasonably estimate the expense. Contingencies for which we have made accruals include environmental, product liability and other legal matters. Based on management’s assessment of the most recent information available, management currently does not expect any of these contingencies to have a material adverse effect on our financial position or cash flow. It is possible, however, that future results of operations for any particular quarter or annual period and our financial condition could be materially affected by changes in assumptions or other circumstances related to these matters.

Cautionary Statement

Certain statements in this Quarterly Report on Form 10-Q contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding:

• our expectation that known contingencies, including risks relating to environmental, product liability and other legal matters, will not have a material adverse effect on our financial position or cash flow;

• our belief that there are no material environmental liabilities at any of our current or former distribution center locations;

• our anticipation of decreased housing starts for the balance of 2008 as compared to 2007;

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• our belief that cash from operations and funds under our credit facility will be sufficient to meet our future liquidity and capital expenditure requirements;

• our belief that it is more likely than not we will generate sufficient taxable income to realize the benefits of the net deferred tax assets existing at June 30, 2008;

• our belief that it is likely that a valuation allowance will need to be established for any additional deferred tax assets generated in conjunction with losses incurred in future periods;

• our expectation that the severe downturn in new housing activity will continue to adversely affect our operating results for at least the next twelve months;

• our expectation regarding the amount we will incur in operating charges related to the Springfield, Missouri branch closure during the third and fourth quarters of 2008, including the amount of these charges that will be cash payments;

• our belief that we have the product offerings, warehouse and support facilities, personnel, systems infrastructure and financial and competitive resources necessary for continued business success;

• our liquidity and exposure to market risk; and

• cyclical and seasonal trends.

The words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project” or similar expressions identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements present management’s expectations, beliefs, plans and objectives regarding our future business and financial performance. These forward-looking statements are based on current projections, estimates, assumptions and judgments, and involve known and unknown risks and uncertainties. There are a number of factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements. These factors include, but are not limited to, the following:

• the strength of the national and local new residential construction and home improvement and remodeling markets, which in turn depend on factors such as:

• interest rates;

• immigration patterns;

• job and household formation;

• household prices;

• tax policy;

• regional demographics;

• employment levels;

• availability of credit;

• inventory levels of new and existing homes for sale;

• prices of wood and steel-based products;

• fuel costs; and

• consumer confidence;

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• the level of competition in our industry;

• our relationships with suppliers of the products we distribute;

• our ability to comply with availability requirements and the financial covenant under our revolving credit facility;

• the financial condition and credit worthiness of our customers;

• fluctuation in prices of wood and steel-based products;

• cyclical and seasonal trends;

• costs of complying with environmental laws and regulations,;

• our exposure to product liability claims;

• our ability to attract and retain key personnel;

• risk of losses associated with accidents;

• costs of complying with federal and state transportation regulations, as well as fluctuations in the cost of fuel;

• accuracy of our assumptions underlying our projections of future taxable income, including available tax planning strategies; and

• accuracy of our assumptions regarding the timing and amount of charges that we expect to incur in connection with the closing of our Springfield, Missouri branch.

Additional information concerning these and other factors that could materially affect our results of operations and financial condition are included in our most recent Annual Report on Form 10-K and our filings made with the SEC subsequent to that Annual Report on Form 10-K. We disclaim any obligation to publicly update or revise any of these forward-looking statements.

ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have exposure to market risk as it relates to effects of changes in interest rates. We had debt outstanding at June 30, 2008 under our credit facility of $32.9 million.

All of our debt under our revolving credit facility accrues interest at a floating rate basis. If market interest rates for LIBOR had been different by an average of 1% for the six months ended June 30, 2008, our interest expense and income before taxes would have changed by $0.2 million. These amounts are determined by considering the impact of the hypothetical interest rates on our borrowing cost. This analysis does not consider the effects of any change in the overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, management may take actions to further mitigate its exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in our financial structure.

We are subject to periodic fluctuations in the price of wood, steel commodities, petrochemical-based products and fuel. Profitability is influenced by these changes as prices change between the time we buy and sell the wood, steel or petrochemical-based products. Profitability also is influenced by changes in prices in fuel. In addition, to the extent changes in interest rates affect the housing and remodeling market, we would be affected by such changes.

ITEM 4 — CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures — The Company, under the supervision and with the participation of our Disclosure Committee and management, including our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934). Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective as of June 30, 2008 in all material

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respects in (a) causing information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 to be recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (b) causing such information to be accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control of Financial Reporting — There have been no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2008, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS

See Note 4 — Contingencies of the Notes to Consolidated Financial Statements in Item 1 for information on legal proceedings in which the Company is involved. See also Part I, Item 3-“Legal Proceedings” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

ITEM 4 — SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

We held our Annual Meeting of Shareholders on April 21, 2008. At the Annual Meeting, shareholders elected the following directors for terms of office expiring in 2011:

Director	Votes For		Votes Withheld
R.S. Evans		18,272,103		112,884
J. Keith Matheney		18,281,408		103,579
Steven A. Wise		15,094,066		3,290,921

As described on the proxy card in the Proxy Statement for the Annual Meeting, proxies received were voted, unless authority was withheld, in favor of the election of the three directors named above.

After the Annual Meeting, the term of office as director of the Company of each of the following directors continued: Michael A. Lupo, Delbert H. Tanner, Donald L. Glass, E. Thayer Bigelow, Richard S. Forté and Jon P. Vrabely.

A proposal to ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2008 was approved, receiving 18,309,719 votes FOR and 47,953 votes AGAINST, with 27,317 ABSTENTIONS.

ITEM 5 — OTHER INFORMATION

Branch Closure

On August 5, 2008, the Company informed its employees of its decision to close its Springfield, Missouri branch. This action is being taken as part of the Company’s effort to appropriately adjust the size of its infrastructure in light of the continuing decline in housing starts. The Springfield branch is relatively small and operates in a difficult housing market. The Company expects this action to be completed in 2008.

The Company expects to incur between $1.6 and $1.8 million in operating charges related to this action during the third and fourth quarters of 2008, comprised of between $1.3 and $1.5 million for asset write-offs and transfer costs, approximately $0.1 million for building lease rentals and approximately $0.2 million for employee severance costs. The Company expects approximately $0.4 million of these charges to be cash payments, including the building lease rentals to be paid out over the remaining term of the lease in 2008 and 2009.

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Additional Borrowing Capacity Under Credit Facility

In July 2008, the Company increased its borrowing capacity under its revolving credit facility by adding real estate to the pool of assets upon which borrowing capacity is based (the borrowing base). The inclusion of the real estate component will initially provide approximately $25 million of additional borrowing capacity. The real estate portion of the borrowing base amortizes monthly on a ten-year, straight-line basis. At June 30, 2008, prior to adding the real estate component, the Company’s additional borrowing capacity was $62.8 million.

ITEM 6 — EXHIBITS

Exhibit
Number	Description
3.1	Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 to the Form 10 filed with the Securities and Exchange Commission on September 21, 1999.)
3.2	Amended and Restated Bylaws of the Company (as of September 26, 2007) (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the Securities and Exchange Commission on September 28, 2007.)
*10.1	Amended and Restated Executive Agreement between Huttig Building Products, Inc. and Jon Vrabely effective as of June 24, 2008.
31.1	Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.

* Management plan or compensatory plan or arrangement.

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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.

	HUTTIG BUILDING PRODUCTS, INC.
	/s/ Jon P. Vrabely
Date: August 8, 2008	Jon P. Vrabely
	President, Chief Executive Officer
	(Principal Executive Officer)
	/s/ David L. Fleisher
Date: August 8, 2008	David L. Fleisher
	Vice President, Chief Financial Officer (Principal Financial and Accounting Officer)

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EXHIBIT INDEX

Exhibit
Number	Description
*10.1	Amended and Restated Executive Agreement between Huttig Building Products, Inc. and Jon Vrabely effective as of June 24, 2008.
31.1	Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.

* Management plan or compensatory plan or arrangement.

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EX-10.1

Exhibit 10.1

AMENDED AND RESTATED EXECUTIVE AGREEMENT

     This Amended and Restated Executive Agreement (“Agreement”) between Huttig Building Products, Inc., a Delaware corporation, with its principal office located at 555 Maryville University Drive, Suite 400, St. Louis, Missouri 63141, (the “Company”) and Jon Vrabely (“Executive”) is effective as of the 24th day of June, 2008.

     WHEREAS, the Company and Executive originally entered into an Executive Agreement effective as of the 4^th day of December, 2006 (the “Original Agreement”) that set for the terms of Executive’s employment as the Company’s President and Chief Executive Officer;

     WHEREAS, the Company and Executive wish to amend the Original Agreement to change the provisions by which the Term of the Agreement may be renewed;

     NOW, THEREFORE, in consideration of the mutual covenants set forth in this Agreement, the parties hereto agree that the Original Agreement is amended and restated as follows effective as of the date first above written:

     1. Employment. Effective January 1, 2007, the Company shall employ Executive as its President and Chief Executive Officer (“CEO”), and, Executive agrees to be employed by the Company in such capacity, subject to the terms and conditions of this Agreement. In Executive’s capacity as President and CEO, he shall render such services as are consistent with such position and shall report directly to the Company’s Board of Directors (the “Board”). During the Term (as defined below), Executive shall devote all of his working time and efforts to the business and affairs of the Company and its subsidiaries and shall not engage in activities that interfere in any way with such performance.

     2. Term of Employment. If not earlier terminated in accordance with the terms of this Agreement, this Agreement and Executive’s employment shall begin on January 1, 2007 (the “Commencement Date”) and shall continue through December 31, 2008 (the “Original Term”). Beginning January 1, 2009, the Original Term shall be automatically extended for one additional year as of each annual anniversary of the Commencement Date (each such one-year extension a “Renewal Term”) unless either the Company or Executive provides written notice to the other of non-renewal not later than ninety (90) days prior to any such anniversary date. The Original Term and any Renewal Term(s) are collectively referred to herein as the “Term.” Notwithstanding the foregoing, the Term shall be extended and this Agreement shall remain in effect during the Protected Period (as defined in Paragraph 4(d)(i) below).

     3. Compensation and Benefits.

          (a) Base Compensation.

          (i) In general, for all services rendered by Executive under this Agreement on behalf of the Company, the Company shall pay to Executive a base salary of Four Hundred Thousand and No/100 Dollars ($400,000.00) per year, as such salary may be increased from time to time by the Board, payable in accordance with the Company’s normal payroll practices.

          (ii) In no way limiting the foregoing, at all times during the Protected Period, Executive’s annual base salary shall be at least equal to twelve times the highest monthly base salary paid or payable to Executive by the Company during the twelve-month period immediately preceding the month in which the Protected Period Effective Date occurs.

          (iii) In this Agreement, “Base Salary” shall be as determined in accordance with Paragraph 3(a)(i) or 3(a)(ii), as applicable.

          (b) Restricted Stock. On the Commencement Date, Executive shall be granted 75,000 shares of restricted stock of the Company, granted under and subject to the terms of the 2005 Executive Incentive Compensation Plan. The restricted stock shall be also granted pursuant to a restricted stock agreement which shall provide, among other things, that the Company’s right of forfeiture shall lapse 1/3^rd on each of the first, second and third anniversaries of the Commencement Date, subject to the terms of this Agreement and the restricted stock agreement.

          (c) EVA Plan. Executive shall be entitled to continue to participate, as of the Commencement Date, in the Company’s EVA Incentive Compensation Plan (“EVA Plan”) and to be eligible to earn up to 30% of the EVA bonus pool each year during the Term, subject to and in accordance with its terms, as it may be amended from time to time. Such bonus referred to herein as the “Annual Bonus.”

          (d) Vacation and Other Benefit Plans and Arrangements. Executive shall be entitled to participate in such other vacation and benefit plans and arrangements as may be offered by the Company to similarly situated executive officers of the Company; provided that, nothing contained herein shall or shall be deemed to require the Company to develop or continue to maintain any particular plan or arrangement.

          (e) Automobile. During the Term, the Company shall lease on Executive’s behalf an automobile, in accordance with the Company’s standard practices and procedures.

     4. Termination.

          (a) Termination, In General. This Agreement may terminate prior to the end of the Term specified in Paragraph 2 above for any reason, including upon Executive’s death or Disability (as defined in Paragraph 4(d)(v)). The provisions of this Paragraph 4(a) shall apply prior to the Protected Period Effective Date (defined below), and payments and benefits provided under this Paragraph 4(a) shall be in lieu of any payment or benefit provided under Paragraph 4(b). In the event of a termination for any reason, the Company shall pay to Executive (or his estate, in the event of his death) upon the last date of employment (the “Termination Date”) all amounts of accrued and owing compensation, including Base Salary through the Termination

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Date, accrued but unpaid or unused vacation as may be required under applicable law, and any other amounts of compensation or timely submitted reimbursements accrued and owing as of the Termination Date (the “Accrued Obligations”).

          (i) Termination by the Company Without Cause. If the Company terminates Executive’s employment without Cause, or fails to renew Executive’s employment at the end of the Original Term or any Renewal Term for reasons that do not constitute Cause, in exchange for a release of all claims Executive may have against the Company, its affiliates, and its or their officers, directors, employees and agents, Executive shall receive an amount equal to two times his then current Base Salary plus two times the Average Annual Bonus (“Severance Payment”). The “Average Annual Bonus” shall be the average bonus paid or payable to Executive by the Company and its affiliated companies in respect of the three fiscal years immediately preceding the fiscal year in which the termination occurs.

          (ii) The Severance Payment shall be paid to Executive in 24 equal monthly installments, beginning with the first month following the month in which employment terminates. Payments made pursuant to this Paragraph 4(a) shall be in lieu of, and non-duplicative of, payments under any other agreement between Executive and the Company. The right to payments contemplated in this Paragraph 4(a) shall cease if Executive breaches any material provision of any agreement between Executive and the Company, including without limitation Paragraph 5 or any other material term of this Agreement. This paragraph shall survive termination of this Agreement.

          (iii) Definition of Cause. For purposes of this Agreement, Cause shall constitute either (i) personal dishonesty or breach of fiduciary duty involving personal profit at the expense of the Company; (ii) repeated failure of Executive to perform his duties hereunder which are demonstrably willful and deliberate on his part and which are not remedied in a reasonable period of time after receipt of written notice from the Company; (iii) the commission of a criminal act related to the performance of duties, or the furnishing of proprietary confidential information about the Company to a competitor, or potential competitor, or third party whose interests are adverse to those of the Company; (iv) intoxication by alcohol or drugs during work hours; (v) conviction of a felony; or (vi) any breach of any material Company policy or any material term of this Agreement or any other agreement by and between Executive and the Company.

          (b) Termination During the Protected Period. The provisions of this Paragraph 4(b) shall apply on and after the Protected Period Effective Date (defined below) and shall remain in effect during the Protected Period, and payments and benefits provided under this Paragraph 4(b) shall be in lieu of any payment or benefit provided under Paragraph 4(a). If Executive’s employment terminates after the Protected Period Effective Date, the following shall apply:

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          (i) Cause; Other Than for Good Reason. If Executive’s employment shall be terminated for Cause during the Protected Period, this Agreement shall terminate without further obligations to Executive other than the obligation to pay to Executive his Base Salary through the Date of Termination plus the amount of any compensation previously deferred by Executive (together with accrued interest thereon, if any). If Executive terminates employment other than for Good Reason during the Protected Period, this Agreement shall terminate without further obligations to Executive, other than those obligations accrued or earned and vested (if applicable) by Executive through the Date of Termination, including for this purpose, all Accrued Obligations. All such payments hereunder shall be paid to Executive in a lump sum in cash within 30 days of the Date of Termination.

          (ii) Death or Disability. If Executive’s employment is terminated by reason of Executive’s death or Disability during the Protected Period, Executive or his beneficiary or estate (as the case may be) shall be paid (A) Executive’s full annual Base Salary through the Date of Termination at the rate in effect on the Date of Termination or, if higher, at the highest annual rate in effect at any time from the 90-day period preceding the Protected Period Effective Date through the Date of Termination (the “Highest Base Salary”), (B) the product of the Annual Bonus paid to Executive for the last full fiscal year and a fraction, the numerator of which is the number of days in the then current fiscal year through the Date of Termination, and the denominator of which is 365 and (C) any compensation previously deferred by Executive (together with accrued interest thereon, if any) and not yet paid by the Company and any accrued vacation pay not yet paid by the Company (such amounts specified in clauses (A), (B) and (C) are hereinafter referred to as “Protected Period Accrued Obligations”).

          (1) All such Protected Period Accrued Obligations shall be paid to Executive or his estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination.

          (2) Anything in this Agreement to the contrary notwithstanding, Executive or his estate or beneficiary, as applicable, shall be entitled to receive death or disability benefits at least equal to the most favorable benefits provided by the Company and any of its subsidiaries to surviving families of employees (in the case of death) of the Company and such subsidiaries, or, in the case of Disability, to disabled employees and/or their families, under such plans, programs, practices and policies relating to disability or family death benefits, if any, in accordance with the most favorable plans, programs, practices and policies of the Company and its subsidiaries in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to Executive and/or Executive’s family, as in effect on the date of Executive’s death or Disability with respect to other key employees of the Company and its subsidiaries and their families.

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          (iii) Without Cause or for Good Reason. If Executive terminates his employment for Good Reason or his employment is terminated by the Company without Cause during the Protected Period, Executive shall receive:

          (1) To the extent not theretofore paid, Executive’s Highest Base Salary through the Date of Termination; and

          (2) The product of (x) the greater of the Annual Bonus paid or payable (annualized for any fiscal year consisting of less than twelve full months or for which Executive has been employed for less than twelve full months) to Executive for the most recently completed fiscal year during the Employment Period, if any, or the Average Annual Bonus, such greater amount being hereafter referred to as the “Highest Annual Bonus,” and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365;

          (3) The product of (x) two and (y) the sum of (i) the Highest Base Salary and (ii) the Average Annual Bonus; and

          (4) In the case of compensation previously deferred by Executive, all amounts previously deferred (together with accrued interest thereon, if any) and not yet paid by the Company, and any accrued vacation pay not yet paid by the Company; and

          (5) For two years after the Date of Termination, or such longer period as any plan, program, practice or policy may provide, the Company shall continue benefits to Executive and/or Executive’s family at least equal to those which would have been provided to them as if Executive’s employment had not been terminated, in accordance with the most favorable employee welfare benefit plans (as such term is defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended) of the Company and its subsidiaries (including health insurance and life insurance) during the 90-day period immediately preceding the Effective Date or, if more favorable to Executive, as in effect at any time thereafter with respect to other key employees and their families, and for purposes of eligibility for retiree benefits pursuant to such employee welfare benefit plans, Executive shall be considered to have remained employed for such two-year period and to have retired on the last day of such period.

          (6) All such payments under this Paragraph 4(b)(iii) shall be paid to Executive in a lump sum in cash within 30 days of the Date of Termination.

          (c) Notwithstanding any other provision to the contrary, with respect to the timing of payments under Paragraph 4(a) or 4(b), if, at the time of Executive’s termination,

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Executive is deemed to be a “specified employee” (within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and any successor statute, regulation and guidance thereto) of the Company, then only to the extent necessary to comply with the requirements of Code Section 409A, any payments to which Executive may become entitled under Paragraph 4(b) which are subject to Code Section 409A (and not otherwise exempt from its application) will be withheld until the first business day of the seventh month following the termination of Executive’s employment, at which time Executive shall be paid an aggregate amount of payments otherwise due to the Executive under the terms of Paragraph 4(a) or 4(b) for the preceding 6-month period, as applicable.

          (d) Definitions.

          (i) Protected Period, Protected Period Effective Date. The “Protected Period” shall begin on the closing date of a transaction constituting a Change of Control (defined below) (the “Protected Period Effective Date”) and ending upon the first to occur of the date that is 36 months from the Protected Period Effective Date and the first day of the month next following Executive’s normal retirement date (“Normal Retirement Date”) under the Huttig Building Products, Inc. Savings & Investment Plan, or any successor retirement plan (the “Retirement Plan”); provided that, if Executive’s employment with the Company is terminated prior to the date on which a Change of Control occurs, and it is reasonably demonstrated that such termination (A) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (B) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement, and specifically without limitation, the “Protected Period Effective Date” shall mean the date immediately prior to the date of Executive’s termination.

          (ii) Cause. Cause during the Protected Period shall have the same meaning as set forth in Paragraph 4(a)(iii) above.

          (iii) Good Reason. “Good Reason” means Executive’s good faith determination that any of the following has occurred:

          (1) Executive’s Base Salary is (A) less than twelve times the highest monthly base salary paid or payable to him by the Company during the twelve-month period immediately preceding the month in which the Protected Period Effective Date occurs, (B) not reviewed at least annually or has not been increased at any time and from time to time in a manner substantially consistent with increases in base salary awarded in the ordinary course of business to other key employees of the Company and its subsidiaries, or (C) is reduced after any such increase;

          (2) Executive is not eligible to receive, an annual bonus (either pursuant to any incentive compensation plan maintained by the Company or otherwise) in cash on the same basis as in the fiscal year

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immediately preceding the fiscal year in which the Protected Period Effective Date occurs or, if more favorable to Executive, on the same basis as awarded at any time thereafter to other key employees of the Company and its subsidiaries;

          (3) The Company fails to offer to Executive (and his eligible spouse and dependents, as applicable) incentive, savings and retirement plans, practices, policies and programs as may be applicable to other key employees of the Company and its subsidiaries and welfare benefit plans and policies (including without limitation including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs), which shall provide Executive (and his eligible spouse and dependents) with compensation, benefits and reward opportunities, and welfare benefits, as applicable, at least as favorable in the aggregate as the most favorable of such compensation, benefits and reward opportunities and welfare benefits as provided by the Company for Executive (and his spouse and dependents, as applicable) under such plans, practices, policies and programs as in effect at any time during the 90-day period immediately preceding the Protected Period Effective Date or, if more favorable to Executive, as provided at any time thereafter with respect to other key employees of the Company and its subsidiaries;

          (4) The Company does not provide (A) prompt reimbursement for reasonable expenses, (B) paid vacation, (C) fringe benefits, including use of an automobile and payment of related expenses, or (D) provide an office or offices of a size and with furnishings and other appointments, and to secretarial an other assistance, at least equal in all cases to the most favorable of the foregoing provided under any policies or practices, or provided to Executive by the Company and its subsidiaries at any time during the 90-day period immediately preceding the Protected Period Effective Date or, if more favorable to Executive, as provided at any time thereafter with respect to other key employees of the Company and its subsidiaries;

          (5) The assignment of Executive of any duties inconsistent in any respect with Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as they were constituted at any time during the 90-day period immediately preceding the Protected Period Effective Date, or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities;

          (6) The Company requires Executive to perform his services at a location other than where he was employed immediately preceding the Protected Period Effective Date or any office or location

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more than thirty-five (35) miles from such location, except for travel reasonably required in the performance of Executive’s responsibilities;

          (7) Any purported termination by the Company of Executive’s employment otherwise than as expressly permitted by this Agreement; or

          (8) Any failure by the Company to comply with and satisfy Paragraph 10 of this Agreement.

     Notwithstanding the foregoing, for purposes of items (1) — (5) above there shall be excluded from the definition of “Good Reason” any isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by Executive. Any good faith determination of “Good Reason” made by Executive shall be conclusive.

          (iv) Change of Control. “Change of Control” shall mean:

          (1) The acquisition, other than from the Company, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of either the then outstanding shares of common stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors, but excluding, for this purpose, any such acquisition by the Company or any of its subsidiaries, by The Rugby Group Ltd. or any direct transferee from The Rugby Group Ltd., or any employee benefit plan (or related trust) of the Company or its subsidiaries, or any corporation with respect to which, following such acquisition, more than 50% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by substantially the same individuals and entities who were the beneficial owners, respectively, of the common stock and voting securities of the Company immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition, of the then outstanding shares of common stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors, as the case may be; or

          (2) A majority of members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election.; or

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          (3) Approval by the stockholders of the Company of a reorganization, merger or consolidation, in each case, with respect to which substantially the same individuals and entities who were the respective beneficial owners of the common stock and voting securities of the Company immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, at least 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation, or a complete liquidation or dissolution of the Company or of the sale or other disposition of all or substantially all of the assets of the Company.

     For purposes of this Agreement, in all respects, the definition of “Change of Control” hereunder shall be interpreted, and limited to the extent necessary, to comply with Code Section 409A, and the provisions of Treasury Notice 2005-1, Proposed Treasury Regulation Section 1.409A and any successor statute, regulation and guidance thereto.

          (v) Disability. “Disability” means

          (1) Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

          (2) Executive is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Company.

          (vi) Date of Termination. “Date of Termination” means the date of receipt of the Notice of Termination (as defined in Paragraph 4(f) below)

          (vii) or any later date specified therein, as the case may be; provided, however, that (i) if Executive’s employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies Executive of such termination and (ii) if Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of Executive or the date the Disability is determined, as the case may be.

          (e) Certain Limitations on Payments by the Company. Notwithstanding any other provision of this Agreement to the contrary, if tax counsel selected by the Company and

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reasonably acceptable to Executive determines that any portion of any payment under this Agreement would constitute an “excess parachute payment” under Section 280G of the Code, then the payments to be made to Executive under this Agreement shall be reduced (but not below zero) such that the value of the aggregate payments that Executive is entitled to receive under this Agreement and any other agreement or plan or program of the Company shall be one dollar ($1) less than the maximum amount of payments which Executive may receive without becoming subject to the tax imposed by Section 4999 of the Code.

          (f) Notice of Termination. Any termination by the Company for Cause or by Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with Paragraph 8 of this Agreement. If Executive terminates this Agreement for any reason or the Company terminates this Agreement without Cause, he or it shall provide to the other not less than thirty (30) days prior written notice. The Company shall not be required to provide any advance notice in the event of a termination for Cause, except as may be specifically provided herein as a result of a “cure” provision, nor shall the thirty (30) day notice requirement apply to either party for a termination as a result of non-renewal of employment at the end of the Original Term or any Renewal Term. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than sixty (60) days after the giving of such notice). The failure by Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of Executive hereunder or preclude Executive from asserting such fact or circumstance in enforcing his rights hereunder.

     5. Executive Covenants.

          (a) Confidential Information. Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its subsidiaries, and their respective businesses, which shall have been obtained by Executive during Executive’s employment by the Company or any of its subsidiaries and which shall not be or become public knowledge (other than by acts by Executive or his representatives in violation of this Agreement). After termination of Executive’s employment with the Company, Executive shall not, without the prior written consent of the Company, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this subparagraph (a) constitute a basis for deferring or withholding any amounts otherwise payable to Executive under this Agreement.

          (b) Covenant Not to Compete. At all times during Executive’s employment by the Company or any of its subsidiaries and for one year following termination of Executive’s employment, Executive shall not, unless acting with the prior written consent of the Company, directly or indirectly (i) own, manage, operate, finance, join, control or participate in the ownership, management, operation, financing or control of, or be associated as an officer, director, employee, partner, principal, agent, representative, consultant or otherwise with, or use

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or permit his name to be used in connection with, any profit or not-for-profit business or enterprise which at any time during such period designs, manufactures, assembles, sells, distributes or provides products (or related services) in competition with those designed, manufactured, assembled, sold, distributed, or provided, or under active development, by the Company (including all future developments in and improvements on such products and services) in any part of the world; (ii) offer or provide employment to, interfere with or attempt to entice away from the Company, either on a full-time or part-time or consulting basis, any person who then currently is, or who within one year prior thereto had been, employed by the Company; or (iii) directly or indirectly, solicit the business of, or do business with, any customer, supplier, or prospective customer or supplier of the Company with whom Executive had direct or indirect contact or about whom Executive may have acquired any knowledge while employed by the Company; provided, however, that this provision shall not be construed to prohibit the ownership by Executive of not more than 2% of any class of securities of any corporation which is engaged in any of the foregoing businesses that has a class of securities registered pursuant to the Securities Exchange Act of 1934. If Executive’s spouse engages in any of the restricted activities set forth in the preceding sentence, Executive shall be deemed to have indirectly engaged in such activities in violation of this covenant. This provision shall be extended at the option of the Company, for a period of time equal to all periods during which Executive is in violation of the foregoing covenant not to compete and to extend the covenant not to compete to run from the date any injunction may be issued against Executive, should that occur, to enable the Company to receive the full benefit of the covenant not to compete agreed to herein by Executive.

          (c) Rights and Remedies Upon Breach. It is recognized that the services to be rendered under this Agreement by Executive are special, unique and of extraordinary character. If Executive breaches, or threatens to commit a breach of, any of the provisions of Paragraph 5(a) or 5(b) (the “Covenants”), then the Company and/or any of its affiliates shall have the following rights and remedies, each of which shall be independent of the other and severally enforceable, and all of which rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity:

          (d) Specific Performance. The right and remedy to have the Covenants specifically enforced by any court having equity jurisdiction, including obtaining an injunction to prevent any continuing violation thereof, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will be difficult to ascertain and will not provide adequate remedy to the Company.

          (e) Severability of Covenants. If any of the Covenants, or any part thereof, are hereafter construed to be invalid or unenforceable in any jurisdiction, the same shall not affect the remainder of the Covenants or the enforceability thereof in any other jurisdiction, which shall be given full effect, without regard to the invalidity or unenforceability in such other jurisdiction.

          (f) Blue-Pencilling. If any of the Covenants, or any part thereof, are held to be unenforceable because of the duration of such provision or the geographical scope covered thereby, the parties agree that the court making such determination shall have the power to reduce the duration or geographical scope of such provision and, in its reduced form, such provision shall then be enforceable and shall be enforced; provided, however, that the

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determination of such court shall not affect the enforceability of the Covenants in any other jurisdiction.

          (g) Assignability. Executive specifically acknowledges and agrees that in the event the Company should undergo any change in ownership or change in structure or control, or should the Company transfer some or all of its assets to another entity, the Covenants contained herein and the right to enforce the Covenants may be assigned by the Company to any company, business, partnership, individual or entity, and that Executive will continue to remain bound by the Covenants.

          (h) Survival. This Paragraph 5 shall survive termination of this Agreement.

     6. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any benefit, bonus, incentive or other plans, programs, policies or practices, provided by the Company or any of its subsidiaries and for which Executive may qualify, nor shall anything herein limit or otherwise affect such rights as Executive may have under any stock option, restricted stock, stock appreciation right, or other agreements with the Company or any of its subsidiaries. Amounts which are vested benefits or which Executive is otherwise entitled to receive under any plan, policy, practice or program of the Company or any of its subsidiaries at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program provided, however, that in the event the terms of any such plan, policy, practice or program concerning the payment of benefits thereunder shall conflict with any provision of this Agreement, the terms of this Agreement shall take precedence but only if and to the extent the payment would not adversely affect the tax exempt status (if applicable) of any such plan, policy, practice or program and only if the employee agrees in writing that such payment shall be in lieu of any corresponding payment from such plan, policy, practice or program.

     7. Full Settlement. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against Executive or others. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement. The Company agrees to pay, to the full extent permitted by law, all legal fees and expenses which Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company or others of the validity or enforceability of, or liability under, any provision of Paragraph 4(b) of this Agreement or any guarantee of performance thereof, plus in each case interest at the applicable Federal rate provided for in Code Section 7872(f)(2).

     8. Notices. Any notice, request, instruction or other document to be given hereunder by any party to the other shall be in writing and shall be deemed to have been duly given (i) on the date of delivery if delivered personally, or by telecopy or telefacsimile, (ii) on the first business day following the date of dispatch if delivered by Federal Express or other next-day courier service, or (iii) on the third business day following the date of receipt requested, postage prepaid. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.

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(a) If to the Company:	Huttig Building Products, Inc.
	555 Maryville University Drive, Suite 240
	St. Louis, Missouri 63141
	Attention: General Counsel
(b) If to Executive:	Jon Vrabely
	2039 Wilson Ridge Lane
	Chesterfield, MO 63005

     9. Waiver of Breach. The waiver of either the Company or Executive of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by either the Company or Executive.

     10. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of both the Company and Executive and their respective successors, assigns, heirs and legal representatives, but neither this Agreement nor any rights hereunder shall be assigned by either the Company or Executive without the consent in writing of the other party. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

     11. Governing Law and Venue. This Agreement shall be governed by and constructed in accordance with the laws of the State of Missouri. However, in the event of any legal or equitable action arising under this Agreement, the venue of such action shall not lie exclusively within Missouri but may lie in any court having proper jurisdiction over such matter.

     12. Enforcement Costs. Except as specifically provided herein, if any party hereto institutes any action or proceeding to enforce this Agreement the prevailing party in such action or proceeding shall be entitled to recover from the nonprevailing party all legal costs and expenses incurred by the prevailing party in such action, including, but not limited to, reasonable attorney fees, paralegal fees, law clerk fees, and other legal costs and expenses, whether incurred at or before trial, and whether incurred at the trial level or in any appellate, bankruptcy, or other legal proceeding.

     13. Amendment; Integration. No change or modification of this Agreement shall be valid unless the same is in writing and signed by the person or party to be charged. The Company and Executive agree that they will negotiate in good faith and jointly execute an amendment to modify this Agreement to the extent necessary to comply with the requirements of Code Section 409A, or any successor statute, regulation and guidance thereto; provided, however, under no circumstances shall the Company be obligated to increase its financial obligations to Executive in connection with any such amendment. Effective as of the Commencement Date, this Agreement shall supersede any and all other agreements, either oral or written, between the parties hereto with respect to the subject matter hereof; including,

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without limitation, the 2006 Amended and Restated Change of Control Agreement by and between the Executive and the Company, dated October 25, 2006, except this Agreement shall not supersede the Indemnification Agreement by and between Executive and the Company, dated October 10, 2005, or any restricted stock or option agreement entered into prior to the Commencement Date.

     14. Severability. If any portion of this Agreement shall be, for any reason, invalid or unenforceable, the remaining portion or portions shall nevertheless be valid, enforceable and carried into effect, unless to do so would clearly violate the present legal and valid intention of the parties hereto.

     15. Tax Consequences. Executive hereby acknowledges and agrees that the Company makes no representations or warranties regarding the tax treatment or tax consequences of any compensation, benefits or other payments under this Agreement, including, without limitation, by operation of Code Section 409A, or any successor statute, regulation and guidance thereto.

     16. Headings. The headings of this Agreement are inserted for convenience only and are not to be considered in construction of the provisions hereof.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officers, and Executive has hereunto set his hand, as of the day and year first above written.

Huttig Building Products, Inc.
By:	/s/ Robert S. Evans
Name:	Robert S. Evans
Title:	Chairman
EXECUTIVE:
/s/ Jon P. Vrabely
Jon Vrabely

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EX-31.1

EXHIBIT 31.1

Huttig Building Products, Inc. and Subsidiaries
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jon P. Vrabely, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Huttig Building Products, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably like to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2008	/s/ Jon P. Vrabely
	Jon P. Vrabely
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Huttig Building Products, Inc. and Subsidiaries
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, David L. Fleisher, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Huttig Building Products, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably like to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2008	/s/ David L. Fleisher
	David L. Fleisher
	Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the quarterly report of Huttig Building Products, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jon P. Vrabely, President and Chief Executive Officer of the Company, and I, David L. Fleisher, Vice President and Chief Financial Officer of the Company, certify, to our knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jon P. Vrabely  

Jon P. Vrabely 

President and Chief Executive Officer 

August 8, 2008 

/s/ David L. Fleisher  

David L. Fleisher 

Vice President and Chief Financial Officer 

August 8, 2008