SIDE - 9.28.13

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 ¨ No ý Although the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act, the registrant has filed all such Exchange Act reports for the preceding 12 months.



	September 28, 2013		December 29, 2012
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	10,204	$	9,594
Accounts receivable, net	167,452		121,387
Inventories	152,031		117,965
Income taxes receivable	79		2,690
Deferred income taxes	8,734		8,734
Prepaid expenses and other current assets	11,716		8,771
Total current assets	350,216		269,141
Property, plant and equipment, at cost	169,000		162,536
Less accumulated depreciation	66,110		54,084
Property, plant and equipment, net	102,890		108,452
Goodwill	477,500		482,613
Other intangible assets, net	575,154		599,644
Other assets	24,387		22,434
Total assets	$	1,530,147	$	1,482,284

Liabilities and Member’s Equity
Current liabilities:
Accounts payable	$	123,834	$	74,311
Accrued liabilities	97,462		75,297
Deferred income taxes	4,544		3,469
Income taxes payable	1,371		5,697
Total current liabilities	227,211		158,774
Deferred income taxes	129,944		130,777
Other liabilities	145,503		153,473
Long-term debt	836,523		808,205
Commitments and contingencies
Member’s equity	190,966		231,055
Total liabilities and member’s equity	$	1,530,147	$	1,482,284



	Quarters Ended					Nine Months Ended
	September 28, 2013		September 29, 2012			September 28, 2013			September 29, 2012
	(unaudited)
Net sales	$	339,905	$	325,034		$	873,464		$	852,379
Cost of sales	257,959		243,430			664,569			648,975
Gross profit	81,946		81,604			208,895			203,404
Selling, general and administrative expenses	57,115		59,451			176,753			178,463
Income from operations	24,831		22,153			32,142			24,941
Interest expense, net	20,328		19,085			59,560			56,697
Foreign currency loss (gain)	124		(17		)	555			220
Income (loss) before income taxes	4,379		3,085			(27,973		)	(31,976		)
Income tax expense	1,884		2,555			4,015			4,991
Net income (loss)	2,495		530			(31,988		)	(36,967		)
Other comprehensive income (loss):
Pension and other postretirement benefit adjustments, net of tax	173		16			478			40
Foreign currency translation adjustments, net of tax	5,828		11,662			(9,444		)	13,103
Total comprehensive income (loss)	$	8,496	$	12,208		$	(40,954	)	$	(23,824	)



	Nine Months Ended
	September 28, 2013			September 29, 2012
Operating Activities	(unaudited)
Net loss	$	(31,988	)	$	(36,967	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	32,617			39,402
Deferred income taxes	1,187			(732		)
Provision for losses on accounts receivable	622			1,505
Amortization of deferred financing costs and premium on senior notes	3,505			3,350
Loss (gain) on sale or disposal of assets	93			(15		)
Other non-cash charges	129			82
Changes in operating assets and liabilities:
Accounts receivable	(47,578		)	(38,132		)
Inventories	(35,070		)	(35,341		)
Accounts payable and accrued liabilities	73,006			61,623
Income taxes receivable / payable	(1,846		)	(5,403		)
Other assets and liabilities	(9,086		)	(3,476		)
Net cash used in operating activities	(14,409		)	(14,104		)
Investing Activities
Capital expenditures	(8,899		)	(3,720		)
Supply center acquisition	(348		)	—
Proceeds from the sale of assets	49			88
Net cash used in investing activities	(9,198		)	(3,632		)
Financing Activities
Borrowings under ABL facilities	123,944			147,574
Payments under ABL facilities	(200,944		)	(131,353		)
Equity contribution from parent	742			80
Issuance of senior notes	106,000			—
Financing costs	(5,445		)	(225		)
Net cash provided by financing activities	24,297			16,076
Effect of exchange rate changes on cash and cash equivalents	(80		)	(55		)
Net increase (decrease) in cash and cash equivalents	610			(1,715		)
Cash and cash equivalents at beginning of period	9,594			11,374
Cash and cash equivalents at end of period	$	10,204		$	9,659
Supplemental information:
Cash paid for interest	$	35,700		$	36,474
Cash paid for income taxes	$	4,438		$	11,149

Associated Materials, LLC (the “Company”) is a 100% owned subsidiary of Associated Materials Incorporated, formerly known as AMH Intermediate Holdings Corp. (“Holdings”). Holdings is a wholly owned subsidiary of Associated Materials Group, Inc. formerly known as AMH Investment Holdings Corp. (“Parent”), which is controlled by investment funds affiliated with Hellman & Friedman LLC (“H&F”). Holdings and Parent do not have material assets or operations other than their direct and indirect ownership, respectively, of the membership interest of the Company. Approximately 97% of the capital stock of Parent is owned by investment funds affiliated with H&F.

The Condensed Consolidated Financial Statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial reporting, the instructions to Form 10-Q, and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, these interim condensed consolidated financial statements contain all of the normal recurring accruals and adjustments considered necessary for a fair presentation of the unaudited results for the quarters and nine months ended September 28, 2013 and September 29, 2012. These financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 29, 2012, filed with the Securities and Exchange Commission on March 21, 2013 (“Annual Report”). A detailed description of the Company’s significant accounting policies and management judgments is located in the audited financial statements for the year ended December 29, 2012 included in its Annual Report. The Company’s contract with Window World, Inc. expired in December 2012 and was renewed in July 2013.

The Company was founded in 1947 when it first introduced residential aluminum siding under the Alside^® name and is a leading, vertically integrated manufacturer and distributor of exterior residential building products in the United States (“U.S.”) and Canada. The Company produces a comprehensive offering of exterior building products, including vinyl windows, vinyl siding, vinyl railing and fencing, aluminum trim coil, aluminum and steel siding and related accessories, which are produced at the Company’s 11 manufacturing facilities. The Company also sells complementary products that are manufactured by third parties, such as roofing materials, cladding materials, insulation, exterior doors, equipment and tools, and provides installation services. Because most of the Company’s building products are intended for exterior use, sales tend to be lower during periods of inclement weather. Weather conditions in the first quarter of each calendar year usually result in that quarter producing significantly less net sales and net cash flows from operations than in any other period of the year. Consequently, the Company has historically had losses or small profits in the first quarter and reduced profits from operations in the fourth quarter of each calendar year. Therefore, the results of operations for any interim period are not necessarily indicative of the results of operations for a full year.

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”). ASU 2013-11 eliminates diversity in practice in the presentation of unrecognized tax benefits. ASU 2013-11 requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit to be presented as a reduction to the related deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward, unless a net operating loss carryforward, a similar tax loss or a tax credit carryforward is not available at the reporting date under the governing tax law to settle taxes that would result from the disallowance of the tax position, or the entity does not intend to use the deferred tax asset for such purpose. ASU 2013-11 is effective for fiscal years and interim periods within those years, beginning after December 15, 2013. The Company does not believe that the adoption of the provisions of ASU 2013-11 will have a material impact on its consolidated financial position, results of operations or cash flows.

presentation of reclassification adjustments and current-period other comprehensive income. In addition, ASU 2013-02 requires the presentation of information about significant items reclassified out of accumulated other comprehensive income by component either on the face of the statement where net income is presented or as a separate disclosure in the notes to the financial statements. The new disclosure requirements are effective, prospectively, for fiscal years and interim periods within those years, beginning after December 15, 2012. ASU 2013-02 concerns presentation and disclosure only. Adoption of the provisions of ASU 2013-02 at the beginning of 2013 did not have an impact on the Company’s consolidated financial position, results of operations or cash flows.

In July 2012, the FASB issued ASU No. 2012-02, Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”). ASU 2012-02 permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If an entity determines that it is not more likely than not that the asset is impaired, the entity will have the option not to calculate annually the fair value of an indefinite-lived intangible asset. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. Adoption of the provisions of ASU 2012-02 at the beginning of 2013 did not have an impact on the Company’s consolidated financial position, results of operations or cash flows.

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The allowance for doubtful accounts is based on review of the overall condition of accounts receivable balances and review of significant past due accounts. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Account balances are charged off against the allowance for doubtful accounts after all means of collection have been exhausted and the potential for recovery is considered remote. Accounts receivable that are not expected to be collected within one year, net of the related allowance for doubtful accounts, are included in other assets in the Condensed Consolidated Balance Sheets.



	September 28, 2013						December 29, 2012
	Cost		Accumulated Amortization		Net Carrying Value		Cost		Accumulated Amortization		Net Carrying Value
Amortized customer bases	$	329,597	$	77,031	$	252,566	$	331,582	$	57,897	$	273,685
Amortized non-compete agreements	20		10		10		10		5		5
Total amortized intangible assets	329,617		77,041		252,576		331,592		57,902		273,690
Non-amortized trade names	322,578		—		322,578		325,954		—		325,954
Total intangible assets	$	652,195	$	77,041	$	575,154	$	657,546	$	57,902	$	599,644

The Company’s non-amortized intangible assets consist of the Alside^®, Revere^®, Gentek^®, Preservation^® and Alpine^® trade names and are tested for impairment at least annually at the beginning of the fourth quarter and on a more frequent basis if there are indications of potential impairment. The Company did not recognize any impairment losses of its other intangible assets during the quarters or nine months ended September 28, 2013 and September 29, 2012.

Finite lived intangible assets are amortized on a straight-line basis over their estimated useful lives. The estimated average amortization period for amortized customer bases and amortized non-compete agreements is 13 years and 3 years, respectively. Amortization expense related to other intangible assets was $6.5 million and $19.6 million for the quarter and nine months ended September 28, 2013, respectively. Amortization expense related to other intangible assets was $6.6 million and $19.7 million for the quarter and nine months ended September 29, 2012, respectively.

The Company recorded a manufacturing restructuring liability related to the discontinued use of the warehouse facility adjacent to the Ennis manufacturing plant. The accretion of related lease obligations was reported within selling, general and administrative expenses in the Condensed Consolidated Statements of Comprehensive Income (Loss). Changes in the manufacturing restructuring liability are as follows (in thousands):

Consistent with industry practice, the Company provides to homeowners limited warranties on certain products, primarily related to window and siding product categories. Changes in the warranty reserve are as follows (in thousands):



	Quarters Ended						Nine Months Ended
	September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
Balance at the beginning of the period	$	96,385		$	102,522		$	97,471		$	101,163
Provision for warranties issued and changes in estimates for pre-existing warranties	1,785			3,035			5,155			8,269
Claims paid	(1,967		)	(2,297		)	(5,725		)	(6,225		)
Foreign currency translation	261			499			(437		)	552
Balance at the end of the period	$	96,464		$	103,759		$	96,464		$	103,759

On February 20, 2012, David S. Nagle was appointed President, AMI Distribution. On February 24, 2012, Stephen E. Graham resigned from his position as Senior Vice President – Chief Financial Officer and Secretary of the Company. On February 27, 2012, the Company entered into an employment agreement with Paul Morrisroe, pursuant to which he agreed to serve as the Company’s Senior Vice President and Chief Financial Officer. The Company’s Senior Vice President of Human Resources, John F. Haumesser, resigned from his position effective April 19, 2012 and was succeeded by James T. Kenyon, who was named Senior Vice President and Chief Human Resources Officer on June 4, 2012.

The Company recorded $0.1 million and $1.2 million for separation and hiring costs, including payroll taxes, certain benefits and related professional fees for the quarter and nine months ended September 28, 2013, respectively. Separation and hiring costs were $2.9 million for the nine months ended September 29, 2012, substantially all of which were recorded prior to the quarter ended September 29, 2012. These separation and hiring costs have been recorded as a component of selling, general and administrative expenses. As of September 28, 2013, remaining separation costs payable to the Company’s former executives of $1.3 million are accrued, which will be paid at various dates through 2014.

On June 17, 2013, a third-party relocation company, acting as the Company’s agent, entered into separate agreements with Jerry W. Burris, the Company’s Chief Executive Officer and President, (the “Burris Relocation Agreement”), and Paul Morrisroe, the Company’s Chief Financial Officer, (the “Morrisroe Relocation Agreement”, and together with the Burris Relocation Agreement, the “Relocation Agreements”), pursuant to which such relocation company purchased Mr. Burris’ former primary residence for $1.2 million and Mr. Morrisroe’s former primary residence for $0.5 million. The Relocation Agreements were entered into in furtherance of the relocation arrangements in Mr. Burris’ and Mr. Morrisroe’s respective employment agreements, which were entered into to permit Mr. Burris and Mr. Morrisroe to reside, on a full-time basis, near the Company’s corporate headquarters. The purchase prices of $1.2 million and $0.5 million, respectively, for Mr. Burris’ and Mr. Morrisroe’s former residences were determined based on independent third-party appraisals of the market value of the residences. Pursuant to their respective employment agreements and the Relocation Agreements, the Company paid Mr. Burris and Mr. Morrisroe, make-whole payments of $0.8 million and $0.1 million, respectively, to compensate each executive for the loss recognized on the sale his respective residence, which is included in the separation and hiring costs disclosed above. The assets acquired were recorded in prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets. Pursuant to these transactions, the Company also assumed mortgage balances for Mr. Burris and Mr. Morrisroe of $1.2 million and $0.4 million, respectively, which were included in accrued liabilities in the Condensed Consolidated Balance Sheets. The Company sold Mr. Morrisroe’s former residence in August 2013.

In October 2010, the Company and its wholly owned subsidiary, AMH New Finance, Inc. (collectively, the “Issuers”) issued and sold $730.0 million of 9.125% Senior Secured Notes due 2017 (the “9.125% notes”). The 9.125% notes bear interest at a rate of 9.125% per annum and are unconditionally guaranteed, jointly and severally, by each of the Issuers’ direct and indirect domestic subsidiaries that guarantees the Company’s obligations under the senior secured asset-based revolving credit facilities (the “ABL facilities”). Interest payments are remitted on a semi-annual basis on May 1 and November 1 of each year.

On May 1, 2013, the Issuers issued and sold an additional $100.0 million in aggregate principal amount of 9.125% notes (the “new notes”) at an issue price of 106.00% of the principal amount of the new notes in a private placement. The Company used the net proceeds of the offering to repay the outstanding borrowings under its ABL facilities and for other general corporate purposes. The new notes were issued as additional notes under the same indenture, dated as of October 13, 2010, governing the $730.0 million aggregate principal amount of 9.125% notes (the “existing notes”) issued in October 2010 in a private placement and subsequently registered under the Securities Act of 1933, as amended (the “Securities Act”), as supplemented by a supplemental indenture. The new notes are consolidated with and form a single class with the existing notes and have the same terms as to status, redemption, collateral and otherwise (other than issue date, issue price and first interest payment date) as the existing notes. The debt premium related to the issuance of the new notes is being amortized into interest

Pursuant to the terms of a registration rights agreement, the Issuers and the guarantors agreed to use their commercially reasonable efforts to register notes having substantially identical terms as the new notes with the Securities and Exchange Commission as part of an offer to exchange freely tradable exchange notes for the new notes. On September 30, 2013, the Issuers offered to exchange up to $100.0 million aggregate principal amount of 9.125% Senior Secured Notes due 2017 and the related guarantees (the “exchange notes”), which have been registered under the Securities Act for any and all of the new notes. All of the new notes were exchanged for exchange notes on October 31, 2013.

The Company may from time to time, in its sole discretion, purchase, redeem or retire the 9.125% notes in privately negotiated or open market transactions, by tender offer or otherwise. On July 15, 2013, Parent announced that it had filed a registration statement on Form S-1 with the Securities and Exchange Commission for a proposed initial public offering of its common stock, and that it intends to use proceeds from the offering to redeem a portion of the outstanding 9.125% notes.

On April 18, 2013, the Company, Holdings, certain direct or indirect wholly owned U.S. and Canadian restricted subsidiaries of the Company designated as a borrower or guarantor under the revolving credit agreement governing the ABL facilities, certain of the lenders party to the revolving credit agreement governing the ABL facilities, UBS AG, Stamford Branch and UBS AG Canada Branch, as administrative and collateral agents, and Wells Fargo Capital Finance, LLC, as co-collateral agent, amended and restated the revolving credit agreement (the “Amended and Restated Revolving Credit Agreement”) governing the ABL facilities in the amount of $225.0 million (comprised of a $150.0 million U.S. facility and a $75.0 million Canadian facility) pursuant to a revolving credit agreement maturing on the date that is the earlier of (i) April 18, 2018 and (ii) 90 days prior to the maturity date of the existing notes. The $150.0 million U.S. facility consisted of $141.5 million of U.S. tranche A revolving credit commitments and $8.5 million of U.S. tranche B revolving credit commitments. The $75.0 million Canadian facility consisted of $71.5 million of Canadian tranche A revolving credit commitment and $3.5 million of Canadian tranche B revolving credit commitments. During the quarter ended June 29, 2013, the Company terminated the tranche B revolving credit commitments of $12.0 million in accordance with the Amended and Restated Revolving Credit Agreement and wrote off $0.5 million of deferred financing fees related to the ABL facilities.

At the Company’s option, the U.S. and Canadian tranche A revolving credit loans under the Amended and Restated Revolving Credit Agreement governing the ABL facilities bear interest at the rate equal to (1) the London Interbank Offered Rate (“LIBOR”) (for eurodollar loans under the U.S. facility) or the Canadian Dealer Offered Rate (“CDOR”) (for loans under the Canadian facility), plus an applicable margin of 1.75%, or (2) the alternate base rate (for alternate base rate loans under the U.S. facility, which is the highest of a prime rate, the Federal Funds Effective Rate plus 0.50% and a one-month LIBOR rate plus 1.0% per annum) or the alternate Canadian base rate (for loans under the Canadian facility, which is the higher of a Canadian prime rate and the 30-day CDOR plus 1.0%), plus an applicable margin of 0.75%, in each case, which interest rate margin may vary in 25 basis point increments between three pricing levels determined by reference to the average excess availability in respect of the U.S. and Canadian tranche A revolving credit loans. In addition to paying interest on outstanding principal under the ABL facilities, the Company is required to pay a commitment fee in respect of the U.S. and Canadian tranche A revolving credit loans, payable quarterly in arrears, of 0.375%.

Availability under the U.S. and Canadian facilities are subject to a borrowing base, which is based on eligible accounts receivable and inventory of certain of the Company’s U.S. subsidiaries and eligible accounts receivable, inventory and, with respect to the Canadian tranche A revolving credit loans, equipment and real property, of certain of the Company’s Canadian subsidiaries, after adjusting for customary reserves established or modified from time to time by and at the permitted discretion of the administrative agent thereunder. To the extent that eligible accounts receivable, inventory, equipment and real property decline, the borrowing base will decrease and the availability under the ABL facilities may decrease below $213.0 million. In addition, if the amount of outstanding borrowings and letters of credit under the U.S. and Canadian facilities exceeds the borrowing base or the aggregate revolving credit commitments, the Company is required to prepay borrowings to eliminate the excess.

All obligations under the U.S. facility are guaranteed by each existing and subsequently acquired direct and indirect wholly owned material U.S. restricted subsidiary of the Company and the direct parent of the Company, other than certain excluded subsidiaries (“U.S. guarantors”). All obligations under the Canadian facility are guaranteed by each existing and subsequently acquired direct and indirect wholly owned material Canadian restricted subsidiary of the Company, other than certain excluded subsidiaries (“Canadian guarantors,” and together with U.S. guarantors, “ABL guarantors”) and the U.S. guarantors.

The U.S. security agreement provides that all obligations of the U.S. borrowers and the U.S. guarantors are secured by a security interest in substantially all of the present and future property and assets of the Company, including a first-priority security interest in the capital stock of the Company and a second-priority security interest in the capital stock of each direct, material wholly owned restricted subsidiary of the Company. The Canadian security agreement provides that all obligations of the Canadian borrowers and the Canadian guarantors are secured by the U.S. ABL collateral and a first-priority perfected security interest in substantially all of the Company’s Canadian assets, including a first-priority security interest in the capital stock of the Canadian borrowers and each direct, material wholly owned restricted subsidiary of the Canadian borrowers and Canadian guarantors.

The Amended and Restated Revolving Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, with respect to negative covenants, among other things, restrictions on indebtedness, liens, investments, fundamental changes, asset sales, dividends and other distributions, prepayments or redemption of junior debt, transactions with affiliates and negative pledge clauses. There are no financial covenants included in the Amended and Restated Revolving Credit Agreement, other than a springing fixed charge coverage ratio of at least 1.00 to 1.00, which will be tested only when excess availability is less than the greater of (i) 10.0% of the sum of (x) the lesser of (A) the U.S. tranche A borrowing base and (B) the U.S. tranche A revolving credit commitments and (y) the lesser of (A) the Canadian tranche A borrowing base and (B) the Canadian tranche A revolving credit commitments and (ii) $20.0 million for a period of five consecutive business days until the 30th consecutive day when excess availability exceeds the above threshold.

As of September 28, 2013, there was $1.0 million drawn under the Company’s ABL facilities and $182.0 million available for additional borrowings. The weighted average per annum interest rate applicable to borrowings under the U.S. portion of the ABL facilities was 4.3% as of September 28, 2013. There were no borrowings under the Canadian portion of the ABL facilities as of September 28, 2013. The Company had letters of credit outstanding of $11.0 million as of September 28, 2013 primarily securing insurance policy deductibles, certain lease facilities and the Company’s purchasing card program.

The Company's provision for income taxes in interim periods is computed by applying the appropriate estimated annual effective tax rates to income or loss before income taxes for the period. The Company adjusts its effective tax rate each quarter to be consistent with the estimated annual effective tax rate and records the tax impact of certain unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur. The components of the effective tax rate are as follows (in thousands, except percentage):



	Defined Benefit Pension and Other Postretirement Plans			Foreign Currency Translation			Accumulated Other Comprehensive Loss
Balance at June 29, 2013	$	(22,982	)	$	(9,232	)	$	(32,214	)
Other comprehensive loss before reclassifications	—			5,828			5,828
Reclassifications out of accumulated other comprehensive loss	173			—			173
Balance at September 28, 2013	$	(22,809	)	$	(3,404	)	$	(26,213	)



	Defined Benefit Pension and Other Postretirement Plans			Foreign Currency Translation			Accumulated Other Comprehensive Loss
Balance at December 29, 2012	$	(23,287	)	$	6,040		$	(17,247	)
Other comprehensive loss before reclassifications	—			(9,444		)	(9,444		)
Reclassifications out of accumulated other comprehensive loss	478			—			478
Balance at September 28, 2013	$	(22,809	)	$	(3,404	)	$	(26,213	)

Reclassifications out of accumulated other comprehensive loss for the quarter and nine months ended September 28, 2013 consist of the following (in thousands):



	Quarter Ended September 28, 2013			Nine Months Ended September 28, 2013
Defined Benefit Pension and Other Postretirement Plans:
Amortization of unrecognized prior service costs	$	5		$	15
Amortization of unrecognized cumulative actuarial net loss	202			568
Total before tax	207			583
Tax benefit	(34		)	(105		)
Net of tax	$	173		$	478

The Company sponsors defined benefit pension plans which cover hourly workers at its West Salem, Ohio plant, and hourly union employees at its Woodbridge, New Jersey plant as well as a defined benefit retirement plan covering U.S. salaried employees, which was frozen in 1998 and subsequently replaced with a defined contribution plan (the “Domestic Plans”). The Company also sponsors a defined benefit pension plan covering the Canadian salaried employees and hourly union employees at the Lambeth, Ontario plant, a defined benefit pension plan for the hourly union employees at its Burlington, Ontario plant and a defined benefit pension plan for the hourly union employees at its Pointe Claire, Quebec plant (the “Foreign Plans”).

The Company also provides postretirement benefits other than pension (“OPEB plans”) including health care or life insurance benefits to certain U.S. and Canadian retirees and in some cases, their spouses and dependents. The Company’s postretirement benefit plans in the U.S. include an unfunded health care plan for hourly workers at the Company’s former steel siding plant in Cuyahoga Falls, Ohio. With the closure of this facility in 1991, no additional employees are eligible to participate in this plan. There are three other U.S. unfunded plans covering either life insurance or health care benefits for small frozen groups of retirees. The Company’s foreign postretirement benefit plan provides life insurance benefits to active members at its Pointe Claire, Quebec plant and a closed group of Canadian salaried retirees. The actuarial valuation measurement date for the defined benefit pension plans and postretirement benefits other than pension is December 31.



	Quarters Ended
	September 28, 2013									September 29, 2012
	Domestic Plans			Foreign Plans			OPEB Plans			Domestic Plans			Foreign Plans			OPEB Plans
Net periodic benefit cost:
Service cost	$	239		$	698		$	2		$	208		$	611		$	2
Interest cost	735			937			39			771			990			52
Expected return on assets	(887		)	(970		)	—			(792		)	(940		)	—
Amortization of unrecognized:
Prior service costs	—			5			—			—			5			—
Cumulative actuarial net loss	82			130			(10		)	(1		)	12			—
Net periodic benefit cost	$	169		$	800		$	31		$	186		$	678		$	54



	Nine Months Ended
	September 28, 2013									September 29, 2012
	Domestic Plans			Foreign Plans			OPEB Plans			Domestic Plans			Foreign Plans			OPEB Plans
Net periodic benefit cost:
Service cost	$	774		$	2,119		$	9		$	564		$	1,814		$	9
Interest cost	2,177			2,844			138			2,292			2,940			175
Expected return on assets	(2,661		)	(2,946		)	—			(2,418		)	(2,791		)	—
Amortization of unrecognized:
Prior service costs	—			15			—			—			16			—
Cumulative actuarial net loss	180			394			(6		)	3			34			—
Net periodic benefit cost	$	470		$	2,426		$	141		$	441		$	2,013		$	184

The actuarial valuations require significant estimates and assumptions to be made by management, primarily the funding interest rate, discount rate and expected long-term return on plan assets. These assumptions are all susceptible to changes in market conditions. The funding interest rate and discount rate are based on representative bond yield curves maintained and monitored by independent third parties. In determining the expected long-term rate of return on plan assets, the Company considers historical market and portfolio rates of return, asset allocations and expectations of future rates of return.

The Company is involved from time to time in litigation arising in the ordinary course of business, none of which, after giving effect to existing insurance coverage, is expected to have a material adverse effect on the Company’s financial position, results of operations or liquidity. From time to time, the Company is also involved in proceedings and potential proceedings relating to environmental and product liability matters.

The Woodbridge, New Jersey facility is currently the subject of an investigation and/or remediation before the New Jersey Department of Environmental Protection (“NJDEP”) under ISRA Case No. E20030110 for the Company’s indirect wholly owned subsidiary, Gentek Building Products, Inc. (“Gentek”). The facility is currently leased by Gentek. Previous operations at the facility resulted in soil and groundwater contamination in certain areas of the property. In 1999, the property owner and Gentek signed a remediation agreement with NJDEP, pursuant to which the property owner and Gentek agreed to continue an investigation/remediation that had been commenced pursuant to a Memorandum of Agreement with NJDEP. Under the remediation agreement, NJDEP required posting of a remediation funding source of approximately $100,000 that was provided by Gentek under a self-guarantee as of December 31, 2011. In March 2012, the self-guarantee was replaced by a $228,000 standby letter of credit provided to the NJDEP. In May 2013, the amount of the standby letter of credit was increased to $339,500. Although investigations at this facility are ongoing and it appears probable that a liability will be incurred, the Company cannot currently estimate the amount of liability that may be associated with this facility as the delineation process

On September 20, 2010, the Company and its subsidiary, Gentek Buildings Products, Inc. (“Gentek”), were named as defendants in an action filed in the United States District Court for the Northern District of Ohio, captioned Donald Eliason, et al. v. Gentek Building Products, Inc., et al (the “Eliason complaint”). The complaint was filed by a number of individual plaintiffs on behalf of themselves and a putative nationwide class of owners of steel and aluminum siding products manufactured by the Company and Gentek or their predecessors. The plaintiffs assert a breach of express and implied warranty, along with related causes of action, claiming that an unspecified defect in the siding causes paint to peel off the metal and that the Company and Gentek have failed adequately to honor their warranty obligations to repair, replace or refinish the defective siding. Plaintiffs seek unspecified actual and punitive damages, restitution of monies paid to the defendants and an injunction against the claimed unlawful practices, together with attorneys’ fees, costs and interest. Since such time that the Eliason complaint was filed, seven additional putative class actions have been filed.

On February 13, 2013, the Company entered into a Settlement Agreement and Release of Claims (the “Settlement”) with the named plaintiffs. The Settlement was preliminarily approved by the Court on March 5, 2013. On August 1, 2013 following a fairness hearing the Court issued a final judgment and order approving the Settlement (“Final Judgment and Order”). The Settlement became effective on September 2, 2013 when the time period for appealing the Final Judgment and Order ended.

The Settlement provides for the certification of a class for settlement purposes only of commercial and residential property owners who purchased steel siding manufactured and warranted by the Company during the period January 1, 1991 to March 15, 2013 (the date on which notice of the Settlement was first sent to settlement class members) and whose siding allegedly experienced “Steel Peel,” which is characterized for the purposes of settlement by the separation of any layer of the finish on the steel siding from the steel siding itself. Subject to the terms and conditions of the Settlement, the Company has agreed that (1) the first time an eligible settlement class member submits a valid Steel Peel warranty claim for siding, the Company will, at its option, repair or replace the siding or, at such class member’s option, make a cash settlement payment to such class member equal to the cost to the Company of the repair or replacement option selected by the Company; (2) the second time such class member submits a valid Steel Peel warranty claim for the same siding, the same options will be available; and (3) the third time such a claim is submitted, such class member may elect to have the Company either refinish or replace the siding or may elect to receive a one-time $8,000 payment. If the $8,000 payment option is chosen, the Company will have no further obligation to such class member in connection with the warranty.

Under the Settlement, the Company has agreed to pay the sum of $2.5 million to compensate class counsel for attorneys’ fees and litigation expenses incurred and to be incurred in connection with the lawsuit. The Company also incurred $0.6 million associated with executing the notice provisions of the Settlement. The settlement costs related to the attorneys’ fees and notice costs were recognized by the Company as of December 29, 2012 and fully paid as of September 28, 2013. The Company did not recognize additional settlement costs in the quarter and nine months ended September 28, 2013. The Company expects to incur additional warranty costs associated with the Settlement, however, the Company does not believe the incremental costs, which currently cannot be estimated for recognition purposes, will be material.

The Settlement does not constitute an admission of liability, culpability, negligence or wrongdoing on the Company’s part, and the Company believes it has valid defenses to the claims asserted. Upon final approval by the court, the Settlement will release all claims that were or could have been asserted against the Company in the lawsuit or that relate to any aspect of the subject matter of the lawsuit.

Other environmental claims and product liability claims are administered by the Company in the ordinary course of business, and the Company maintains pollution and remediation and product liability insurance covering certain types of claims. Although it is difficult to estimate the Company’s potential exposure to these matters, the Company believes that the resolution of these matters will not have a material adverse effect on its financial position, results of operations or liquidity.

The Company is in the business of manufacturing and distributing exterior residential building products. The Company has a single operating segment and a single reportable segment. The Company’s chief operating decision maker is considered to be the Chief Executive Officer. The chief operating decision maker allocates resources and assesses performance of the business and other activities at the single operating segment level. Net sales by principal product offering are as follows (in thousands):



	Quarters Ended				Nine Months Ended
	September 28, 2013		September 29, 2012		September 28, 2013		September 29, 2012
Vinyl windows	$	100,869	$	95,844	$	271,063	$	261,201
Vinyl siding products	64,457		66,708		165,317		175,340
Metal products	50,132		51,691		128,129		133,923
Third-party manufactured products	95,475		87,714		235,758		223,794
Other products and services	28,972		23,077		73,197		58,121
	$	339,905	$	325,034	$	873,464	$	852,379

The Company’s payment obligations under its 9.125% notes are fully and unconditionally guaranteed, jointly and severally, on a senior basis, by its domestic 100% owned subsidiaries, Gentek Holdings, LLC and Gentek Building Products, Inc. AMH New Finance, Inc. is a co-issuer of the 9.125% notes and is a domestic 100% owned subsidiary of the Company having no operations, revenues or cash flows for the periods presented.

Associated Materials Canada Limited, Gentek Canada Holdings Limited and Gentek Buildings Products Limited Partnership are Canadian companies and do not guarantee the 9.125% notes. In the opinion of management, separate financial statements of the respective Subsidiary Guarantors would not provide additional material information that would be useful in assessing the financial composition of the Subsidiary Guarantors.



	Company			Co-Issuer		Subsidiary Guarantors			Non-Guarantor Subsidiaries			Reclassification/ Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	9,484		$	—	$	—		$	720		$	—		$	10,204
Accounts receivable, net	116,187			—		14,141			37,124			—			167,452
Intercompany receivables	376,617			—		52,853			1,794			(431,264		)	—
Inventories	110,454			—		8,976			32,601			—			152,031
Income taxes receivable	—			—		79			—			—			79
Deferred income taxes	5,317			—		3,417			—			—			8,734
Prepaid expenses and other current assets	7,613			—		918			3,185			—			11,716
Total current assets	625,672			—		80,384			75,424			(431,264		)	350,216
Property, plant and equipment, net	65,670			—		1,617			35,603			—			102,890
Goodwill	300,642			—		24,650			152,208			—			477,500
Other intangible assets, net	384,744			—		44,767			145,643			—			575,154
Investment in subsidiaries	(34,919		)	—		(128,902		)	—			163,821			—
Intercompany receivable	—			835,523		—			—			(835,523		)	—
Other assets	22,225			—		122			2,040			—			24,387
Total assets	$	1,364,034		$	835,523	$	22,638		$	410,918		$	(1,102,966	)	$	1,530,147
Liabilities and Member’s Equity
Current liabilities:
Accounts payable	$	86,354		$	—	$	10,066		$	27,414		$	—		$	123,834
Intercompany payables	1,794			—		—			429,470			(431,264		)	—
Accrued liabilities	80,686			—		6,180			10,596			—			97,462
Deferred income taxes	1,177			—		—			3,367			—			4,544
Income taxes payable	71			—		—			1,300			—			1,371
Total current liabilities	170,082			—		16,246			472,147			(431,264		)	227,211
Deferred income taxes	76,968			—		17,633			35,343			—			129,944
Other liabilities	89,495			—		23,678			32,330			—			145,503
Long-term debt	836,523			835,523		—			—			(835,523		)	836,523
Member’s equity	190,966			—		(34,919		)	(128,902		)	163,821			190,966
Total liabilities and member’s equity	$	1,364,034		$	835,523	$	22,638		$	410,918		$	(1,102,966	)	$	1,530,147



	Company			Co-Issuer		Subsidiary Guarantors			Non-Guarantor Subsidiaries		Reclassification/ Eliminations			Consolidated
Net sales	$	256,304		$	—	$	46,845		$	81,750	$	(44,994	)	$	339,905
Cost of sales	197,199			—		43,411			62,343		(44,994		)	257,959
Gross profit	59,105			—		3,434			19,407		—			81,946
Selling, general and administrative expenses	44,922			—		978			11,215		—			57,115
Income from operations	14,183			—		2,456			8,192		—			24,831
Interest expense, net	19,711			—		—			617		—			20,328
Foreign currency loss	—			—		—			124		—			124
(Loss) income before income taxes	(5,528		)	—		2,456			7,451		—			4,379
Income tax (benefit) expense	(238		)	—		(43		)	2,165		—			1,884
(Loss) income before equity income (loss) from subsidiaries	(5,290		)	—		2,499			5,286		—			2,495
Equity income (loss) from subsidiaries	7,785			—		5,286			—		(13,071		)	—
Net income (loss)	2,495			—		7,785			5,286		(13,071		)	2,495
Other comprehensive income (loss):
Pension and other postretirement benefit adjustments, net of tax	173			—		113			101		(214		)	173
Foreign currency translation adjustments, net of tax	5,828			—		5,828			5,828		(11,656		)	5,828
Total comprehensive income (loss)	$	8,496		$	—	$	13,726		$	11,215	$	(24,941	)	$	8,496



	Company			Co-Issuer		Subsidiary Guarantors			Non-Guarantor Subsidiaries			Reclassification/ Eliminations			Consolidated
Net sales	$	667,048		$	—	$	131,740		$	206,355		$	(131,679	)	$	873,464
Cost of sales	513,518			—		122,695			160,035			(131,679		)	664,569
Gross profit	153,530			—		9,045			46,320			—			208,895
Selling, general and administrative expenses	139,194			—		3,782			33,777			—			176,753
Income from operations	14,336			—		5,263			12,543			—			32,142
Interest expense, net	57,905			—		—			1,655			—			59,560
Foreign currency loss	—			—		—			555			—			555
(Loss) income before income taxes	(43,569		)	—		5,263			10,333			—			(27,973		)
Income tax expense (benefit)	1,177			—		(119		)	2,957			—			4,015
(Loss) income before equity income (loss) from subsidiaries	(44,746		)	—		5,382			7,376			—			(31,988		)
Equity income (loss) from subsidiaries	12,758			—		7,376			—			(20,134		)	—
Net (loss) income	(31,988		)	—		12,758			7,376			(20,134		)	(31,988		)
Other comprehensive income (loss):
Pension and other postretirement benefit adjustments, net of tax	478			—		331			303			(634		)	478
Foreign currency translation adjustments, net of tax	(9,444		)	—		(9,444		)	(9,444		)	18,888			(9,444		)
Total comprehensive (loss) income	$	(40,954	)	$	—	$	3,645		$	(1,765	)	$	(1,880	)	$	(40,954	)



	Company			Co-Issuer		Subsidiary Guarantors			Non-Guarantor Subsidiaries			Consolidated
Net cash (used in) provided by operating activities	$	(16,872	)	$	—	$	(3,234	)	$	5,697		$	(14,409	)
Investing Activities
Capital expenditures	(8,496		)	—		(10		)	(393		)	(8,899		)
Supply center acquisition	(348		)	—		—			—			(348		)
Proceeds from the sale of assets	49			—		—			—			49
Net cash used in investing activities	(8,795		)	—		(10		)	(393		)	(9,198		)
Financing Activities
Borrowings under ABL facilities	79,891			—		—			44,053			123,944
Payments under ABL facilities	(148,391		)	—		—			(52,553		)	(200,944		)
Intercompany transactions	(5,381		)	—		3,244			2,137			—
Equity contribution from parent	742			—		—			—			742
Issuance of senior notes	106,000			—		—			—			106,000
Financing costs	(5,030		)	—		—			(415		)	(5,445		)
Net cash provided by (used in) financing activities	27,831			—		3,244			(6,778		)	24,297
Effect of exchange rate changes on cash and cash equivalents	—			—		—			(80		)	(80		)
Net increase (decrease) in cash and cash equivalents	2,164			—		—			(1,554		)	610
Cash and cash equivalents at beginning of period	7,320			—		—			2,274			9,594
Cash and cash equivalents at end of period	$	9,484		$	—	$	—		$	720		$	10,204



	Company			Co-Issuer		Subsidiary Guarantors			Non-Guarantor Subsidiaries			Reclassification/ Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	7,320		$	—	$	—		$	2,274		$	—		$	9,594
Accounts receivable, net	91,556			—		9,179			20,652			—			121,387
Intercompany receivables	371,236			—		56,097			1,794			(429,127		)	—
Inventories	83,523			—		7,359			27,083			—			117,965
Income taxes receivable	—			—		—			2,690			—			2,690
Deferred income taxes	5,317			—		3,417			—			—			8,734
Prepaid expenses and other current assets	5,025			—		784			2,962			—			8,771
Total current assets	563,977			—		76,836			57,455			(429,127		)	269,141
Property, plant and equipment, net	67,236			—		1,947			39,269			—			108,452
Goodwill	300,641			—		24,650			157,322			—			482,613
Other intangible assets, net	399,650			—		45,104			154,890			—			599,644
Investment in subsidiaries	(38,564		)	—		(127,136		)	—			165,700			—
Intercompany receivable	—			730,000		—			—			(730,000		)	—
Other assets	20,207			—		171			2,056			—			22,434
Total assets	$	1,313,147		$	730,000	$	21,572		$	410,992		$	(993,427	)	$	1,482,284
Liabilities and Member’s Equity
Current liabilities:
Accounts payable	$	54,003		$	—	$	4,826		$	15,482		$	—		$	74,311
Intercompany payables	1,794			—		—			427,333			(429,127		)	—
Accrued liabilities	55,599			—		10,173			9,525			—			75,297
Deferred income taxes	—			—		—			3,469			—			3,469
Income taxes payable	1,495			—		3,053			1,149			—			5,697
Total current liabilities	112,891			—		18,052			456,958			(429,127		)	158,774
Deferred income taxes	76,968			—		17,633			36,176			—			130,777
Other liabilities	92,733			—		24,451			36,289			—			153,473
Long-term debt	799,500			730,000		—			8,705			(730,000		)	808,205
Member’s equity	231,055			—		(38,564		)	(127,136		)	165,700			231,055
Total liabilities and member’s equity	$	1,313,147		$	730,000	$	21,572		$	410,992		$	(993,427	)	$	1,482,284



	Company			Co-Issuer		Subsidiary Guarantors			Non-Guarantor Subsidiaries			Reclassification/ Eliminations			Consolidated
Net sales	$	241,436		$	—	$	47,830		$	84,424		$	(48,656	)	$	325,034
Cost of sales	181,626			—		44,944			65,516			(48,656		)	243,430
Gross profit	59,810			—		2,886			18,908			—			81,604
Selling, general and administrative expenses	46,961			—		1,603			10,887			—			59,451
Income from operations	12,849			—		1,283			8,021			—			22,153
Interest expense, net	18,538			—		—			547			—			19,085
Foreign currency gain	—			—		—			(17		)	—			(17		)
(Loss) income before income taxes	(5,689		)	—		1,283			7,491			—			3,085
Income tax expense (benefit)	462			—		(23		)	2,116			—			2,555
(Loss) income before equity income (loss) from subsidiaries	(6,151		)	—		1,306			5,375			—			530
Equity income (loss) from subsidiaries	6,681			—		5,375			—			(12,056		)	—
Net income (loss)	530			—		6,681			5,375			(12,056		)	530
Other comprehensive income (loss):
Pension and other postretirement benefit adjustments, net of tax	16			—		11			12			(23		)	16
Foreign currency translation adjustments, net of tax	11,662			—		11,662			11,662			(23,324		)	11,662
Total comprehensive income (loss)	$	12,208		$	—	$	18,354		$	17,049		$	(35,403	)	$	12,208



	Company			Co-Issuer		Subsidiary Guarantors			Non-Guarantor Subsidiaries		Reclassification/ Eliminations			Consolidated
Net sales	$	636,915		$	—	$	133,563		$	218,919	$	(137,018	)	$	852,379
Cost of sales	485,784			—		126,420			173,789		(137,018		)	648,975
Gross profit	151,131			—		7,143			45,130		—			203,404
Selling, general and administrative expenses	141,729			—		4,782			31,952		—			178,463
Income from operations	9,402			—		2,361			13,178		—			24,941
Interest expense, net	55,315			—		—			1,382		—			56,697
Foreign currency loss	—			—		—			220		—			220
(Loss) income before income taxes	(45,913		)	—		2,361			11,576		—			(31,976		)
Income tax expense (benefit)	1,868			—		(59		)	3,182		—			4,991
(Loss) income before equity income (loss) from subsidiaries	(47,781		)	—		2,420			8,394		—			(36,967		)
Equity income (loss) from subsidiaries	10,814			—		8,394			—		(19,208		)	—
Net (loss) income	(36,967		)	—		10,814			8,394		(19,208		)	(36,967		)
Other comprehensive income (loss):
Pension and other postretirement benefit adjustments, net of tax	40			—		35			36		(71		)	40
Foreign currency translation adjustments, net of tax	13,103			—		13,103			13,103		(26,206		)	13,103
Total comprehensive (loss) income	$	(23,824	)	$	—	$	23,952		$	21,533	$	(45,485	)	$	(23,824	)



	Company			Co-Issuer		Subsidiary Guarantors			Non-Guarantor Subsidiaries			Consolidated
Net cash (used in) provided by operating activities	$	(22,131	)	$	—	$	7,028		$	999		$	(14,104	)
Investing Activities
Capital expenditures	(2,956		)	—		(67		)	(697		)	(3,720		)
Proceeds from the sale of assets	87			—		1			—			88
Net cash used in investing activities	(2,869		)	—		(66		)	(697		)	(3,632		)
Financing Activities
Borrowings under ABL facilities	74,218			—		—			73,356			147,574
Payments under ABL facilities	(74,619		)	—		—			(56,734		)	(131,353		)
Intercompany transactions	26,410			—		(6,962		)	(19,448		)	—
Equity contribution from parent	80			—		—			—			80
Financing costs	(209		)	—		—			(16		)	(225		)
Net cash provided by (used in) financing activities	25,880			—		(6,962		)	(2,842		)	16,076
Effect of exchange rate changes on cash and cash equivalents	—			—		—			(55		)	(55		)
Net increase (decrease) in cash and cash equivalents	880			—		—			(2,595		)	(1,715		)
Cash and cash equivalents at beginning of period	7,855			—		—			3,519			11,374
Cash and cash equivalents at end of period	$	8,735		$	—	$	—		$	924		$	9,659

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited consolidated financial statements and related notes thereto included elsewhere in this quarterly report. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I, Item 1A. “Risk Factors” in our Annual Report and under Part II, Item 1A. “Risk Factors” or elsewhere in this report.

Associated Materials, LLC (“we,” “us”, “our” or “our Company”) is a leading, vertically integrated manufacturer and distributor of exterior residential building products in the United States (“U.S.”) and Canada. We produce a comprehensive offering of exterior building products, including vinyl windows, vinyl siding, vinyl railing and fencing, aluminum trim coil, aluminum and steel siding and related accessories, which we produce at our 11 manufacturing facilities. We also sell complementary products that are manufactured by third parties, such as roofing materials, cladding materials, insulation, exterior doors and equipment and tools, and provide installation services. We distribute these products through our extensive dual-distribution network to over 50,000 professional exterior contractors, builders and dealers, whom we refer to as our “contractor customers.” This dual distribution network consists of 124 company-operated supply centers, through which we sell directly to our contractor customers, and our direct sales channel. Through our direct sales channel, we sell to more than 275 independent distributors, dealers and national account customers. The products we sell are generally marketed under our brand names, such as Alside^®, Revere^®, Gentek^® UltraGuard^® and Preservation^®.

Because our exterior residential building products are consumer durable goods, our sales are impacted by, among other things, the availability of consumer credit, consumer interest rates, employment trends, changes in levels of consumer confidence and national and regional trends in the housing market. Our sales are also affected by changes in consumer preferences with respect to types of building products. Overall, we believe the long-term fundamentals for the building products industry remain strong as homes continue to get older, pent-up demand in the residential repair and remodeling market normalizes, household formation is expected to be strong, demand for energy efficiency products continues and vinyl remains an optimal material for exterior window and siding solutions, all of which we believe bodes well for the demand for our products in the future.

Our net sales for the quarter and nine months ended September 28, 2013 were $339.9 million and $873.5 million, respectively, representing increases of 4.6% and 2.5%, respectively, from the same periods in 2012. The increase in sales dollars was primarily driven by strong demand in the new construction market and improvement in the residential repair and remodeling market. Vinyl windows, vinyl siding, metal products and third-party manufactured products comprised approximately 30%, 19%, 15% and 28%, respectively, of our net sales for the quarter ended September 28, 2013 and approximately 31%, 19%, 15% and 27%, respectively, of our net sales for the nine months ended September 28, 2013. Vinyl windows, vinyl siding, metal products and third-party manufactured products comprised approximately 30%, 21%, 16% and 27%, respectively, of our net sales for the quarter ended September 29, 2012 and approximately 31%, 21%, 16% and 26%, respectively, of our net sales for the nine months ended September 29, 2012. Our gross profit for the quarter and nine months ended September 28, 2013 was up $0.3 million and $5.5 million, respectively, or 0.4% and 2.7%, respectively, compared to the same periods in 2012, primarily due to higher sales volumes in our Installed Sales Solutions (“ISS”) business, vinyl windows and third-party manufactured products, decreases in the cost of certain materials and lower depreciation expense, partially offset by lower gross margins due to increased sales in our new construction business, an unfavorable shift in customer mix as well as investment in our workforce for new products.

A significant portion of our selling, general and administrative expenses are fixed costs, including payroll and benefit costs for our supply center employees, corporate employees and sales representatives, the building lease costs of our supply centers and the warehouse at our Ennis location, delivery and sales vehicle costs, other administrative expenses and costs related to the operation of our supply centers and corporate office. Other than fixed costs, our selling, general and administrative expenses include incentives and commissions, marketing costs, certain delivery charges such as fuel costs incurred to deliver product to our customers, and customer sales rewards. Selling, general and administrative costs for the quarter and nine months ended September 28, 2013 decreased $2.3 million and $1.7 million, respectively, compared to the same periods in 2012. The improvement in our selling, general and administrative expenses were primarily due to decreased marketing related costs and lower bad debt expense, partially offset by costs associated with the proposed initial public offering of Associated Materials Group, Inc., formerly known as AMH Investment Holdings Corp. (“Parent”), including the preparation of a registration statement on Form S-1 (the “proposed initial public offering of Parent”) and increased consulting fees related to corporate strategic initiatives.

Because most of our building products are intended for exterior use, sales tend to be lower during periods of inclement weather. Weather conditions in the first quarter of each calendar year usually result in that quarter producing significantly less net sales and net cash flows from operations than in any other period of the year. Consequently, we have historically had losses or small profits in the first quarter and reduced profits from operations in the fourth quarter of each calendar year. To meet seasonal cash flow needs during the periods of reduced sales and net cash flows from operations, we have typically utilized our revolving credit facilities and repay such borrowings in periods of higher cash flow. We typically generate the majority of our cash flow in the third and fourth quarters.

Management manages our business with the aim of profitably growing the business and makes operating decisions and assesses the performance of the business based on financial and other measures that it believes provide important data regarding the business. Management primarily uses Adjusted EBITDA, a non-GAAP financial measure, along with GAAP measures of profitability, including gross profit, income from operations and net income, to measure operating performance. See “-Results of Operations.” In addition, management uses certain techniques related to our corporate strategy of expanding our network of company-operated supply centers to achieve profitable growth. As part of this growth strategy, management performs a trading area review to assess our ability to penetrate particular markets. Management assesses whether to open or acquire a new supply center in a given region based on local economic conditions, such as existing and expected growth rates in the region, unemployment rates and labor costs. Additionally, management reviews the competitive environment in the region and our existing market share in the particular region. Once managements has decided to expand our presence in a given region, it then decides between opening a new “greenfield” location in that region or acquiring an existing store based on the number and quality of potential acquisition opportunities and the willingness of the owners of those businesses to sell. We typically target cash flows from operations to achieve a break-even rate within two years of opening a new “greenfield” or acquired supply center.

Our business is comprised of one reportable segment, which consists of the single business of manufacturing and distributing exterior residential building products. For financial information about our reportable segment as well as the geographic areas where we conduct business and long-lived assets by country, please see Note 18 to the audited consolidated financial statements included in our Annual Report.

On April 18, 2013, our Company, our parent company, Associated Materials Incorporated, and certain direct or indirect wholly owned U.S. and Canadian restricted subsidiaries of our Company entered into an amended and restated revolving credit agreement (the “Amended and Restated Revolving Credit Agreement”), which amended our revolving credit agreement governing our senior secured asset-based revolving credit facilities (the “ABL facilities”) to, among other things, reduce the interest rate margins in respect of the loans by 75 basis points, extend the maturity of the loans and commitments to the earlier of (1) April 18, 2018 and (2) 90 days prior to the maturity of our 9.125% Senior Secured Notes due 2017 (the “9.125% notes”) and permit the offering of the new notes (as defined below).

On May 1, 2013, our Company and AMH New Finance, Inc. issued and sold an additional $100.0 million in aggregate principal amount of 9.125% notes (the “new notes”) in a private placement. We used the net proceeds of the offering to repay outstanding borrowings under our ABL facilities and for other general corporate purposes. The new notes were issued as additional notes under the same indenture, dated as of October 13, 2010, governing the $730.0 million aggregate principal amount of 9.125% notes (the “existing notes”) issued on October 13, 2010 in a private placement and subsequently registered under the Securities Act of 1933, as amended (the “Securities Act”), as supplemented by a supplemental indenture (the “Indenture”).

On September 30, 2013, we offered to exchange up to $100.0 million aggregate principal amount of 9.125% Senior Secured Notes due 2017 and the related guarantees (the “exchange notes”), which have been registered under the Securities Act for any and all of the new notes. All of the new notes were exchanged for exchange notes on October 31, 2013. See “Liquidity and Capital Resources — Description of Our Indebtedness.”

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



	Quarters Ended					Nine Months Ended
	September 28, 2013		September 29, 2012			September 28, 2013			September 29, 2012
Net sales	$	339,905	$	325,034		$	873,464		$	852,379
Cost of sales	257,959		243,430			664,569			648,975
Gross profit	81,946		81,604			208,895			203,404
Selling, general and administrative expenses	57,115		59,451			176,753			178,463
Income from operations	24,831		22,153			32,142			24,941
Interest expense, net	20,328		19,085			59,560			56,697
Foreign currency loss (gain)	124		(17		)	555			220
Income (loss) before income taxes	4,379		3,085			(27,973		)	(31,976		)
Income tax expense	1,884		2,555			4,015			4,991
Net income (loss)	$	2,495	$	530		$	(31,988	)	$	(36,967	)
Other Data:
EBITDA (1)	$	35,580	$	35,368		$	64,204		$	64,123
Adjusted EBITDA (1)	37,401		36,075			70,360			69,334



	Quarters Ended						Nine Months Ended
	September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
Net income (loss)	$	2,495		$	530		$	(31,988	)	$	(36,967	)
Interest expense, net	20,328			19,085			59,560			56,697
Income tax expense	1,884			2,555			4,015			4,991
Depreciation and amortization	10,873			13,198			32,617			39,402
EBITDA	35,580			35,368			64,204			64,123
Purchase accounting related adjustments (a)	(963		)	(952		)	(2,892		)	(2,889		)
Executive officer separation and hiring costs (b)	57			46			1,193			2,921
Bank audit fees (c)	33			52			67			94
(Gain) loss on disposal or write-offs of assets	(3		)	(43		)	93			(17		)
Stock-based compensation expense (d)	47			31			123			82
Other normalizing and unusual items (e)	2,526			684			7,017			2,221
Non-cash expense adjustments (f)	—			906			—			2,579
Foreign currency loss (gain) (g)	124			(17		)	555			220
Run-rate cost savings (h)	—			—			—			—
Adjusted EBITDA	$	37,401		$	36,075		$	70,360		$	69,334



	Quarters Ended						Nine Months Ended
	September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
Pension expense adjustment (i)	$	(663	)	$	(673	)	$	(1,999	)	$	(2,015	)
Amortization related to fair value adjustment of leased facilities (ii)	(117		)	(110		)	(344		)	(338		)
Amortization related to warranty liabilities (iii)	(183		)	(169		)	(549		)	(536		)
Total	$	(963	)	$	(952	)	$	(2,892	)	$	(2,889	)



	Quarters Ended					Nine Months Ended
	September 28, 2013			September 29, 2012		September 28, 2013			September 29, 2012
Professional fees (i)	$	2,541		$	299	$	6,556		$	1,011
Accretion on lease liability (ii)	118			141		394			399
Excess severance costs (iii)	—			48		65			170
Insurance claim payment in dispute (iv)	(200		)	—		(200		)	—
Excess legal expense (v)	67			196		202			641
Total	$	2,526		$	684	$	7,017		$	2,221

Run-rate cost savings include actions around operational and engineering improvements, procurement savings and reductions in selling, general and administrative expenses. The run-rate cost savings were estimated to be approximately $13 million and $14 million for the nine months ended September 28, 2013 and September 29, 2012, respectively. Our Amended and Restated Revolving Credit Agreement and the Indenture permit us to include run-rate cost savings in our calculation of Adjusted EBITDA in an amount, taken together with the amount of certain restructuring costs, up to 10% of Consolidated EBITDA, as defined in such debt instruments. As such, only $10.8 million of the approximately $13 million of cost savings identified for the four consecutive fiscal quarters ended September 28, 2013 and $9.9 million of the approximately $14 million for the four consecutive fiscal quarters ended September 29, 2012 have been included in the Adjusted EBITDA run-rate for purposes of calculating our debt covenants. However, as the 10% threshold is calculated using Consolidated EBITDA for the four consecutive fiscal quarter covenant test period, we are not presenting any run rate cost savings when calculating Adjusted EBITDA for the nine months ended September 28, 2013 and September 29, 2012.

Net sales were $339.9 million for the third quarter of 2013, an increase of $14.9 million, or 4.6%, compared to $325.0 million for the same period in 2012. The increase was primarily due to a $6.2 million, or 29.8%, increase in net sales in our ISS business and a $5.0 million, or 5.2%, increase in vinyl windows sales as a result of an increase in unit volume of approximately 6%. Both our ISS and window business benefited from increased demand in the new construction market. Our window sales were also favorably impacted by improvement in the repair and remodeling market. In addition, net sales for third-party manufactured products increased $7.8 million, or 8.8%, compared to the prior year period. Partially offsetting these increases were a $2.3 million decline in vinyl siding sales and a $1.6 million decline in metal products sales. Vinyl siding unit volume was relatively flat compared to the prior year third quarter. Compared to the prior year quarter, net sales were negatively impacted by $3.5 million due to a weaker Canadian dollar in 2013.

Gross profit in the third quarter of 2013 was $81.9 million, or 24.1% of net sales, compared to gross profit of $81.6 million, or 25.1% of net sales, for the same period in 2012. The gross profit was relatively flat compared to the prior year period as the favorable volume impact of $3.9 million due to higher sales in our ISS business, vinyl windows and third-party manufactured products and lower depreciation costs of $1.9 million was offset by decreased gross margin due to increased sales in new construction business and an unfavorable shift in customer mix of $4.1 million as well as investment in our workforce for new products. All these factors contributed to the decline in gross profit as a percentage of sales compared to the same period in 2012. For the quarter ended September 28, 2013, a weaker Canadian dollar in 2013 negatively impacted our gross margin by $2.8 million compared to the prior year period.

Selling, general and administrative expenses were $57.1 million, or 16.8% of net sales, for the third quarter of 2013 versus $59.5 million, or 18.3% of net sales, for the same period in 2012. The decrease of $2.3 million in selling, general and administrative expenses was primarily due to a $1.0 million decrease in marketing related costs, a $1.0 million decrease in bad debt expense and lower incentive compensation expense of $0.9 million, partially offset by $1.6 million of costs associated with the proposed initial public offering of Parent.

The income tax expense of $1.9 million for the third quarter of 2013 reflected an effective income tax rate of 43.0%, whereas the income tax expense of $2.6 million for the same period in 2012 reflected an effective income tax rate of 82.8%. The higher than statutory effective tax rate for both periods was primarily the result of income tax expense on foreign income partially offset by operating losses in the U.S. with no tax benefit recognized due to the valuation allowance on U.S. deferred tax assets.

Net sales were $873.5 million for the nine months ended September 28, 2013, an increase of $21.1 million, or 2.5%, compared to $852.4 million for the same period in 2012. The increase in net sales was primarily driven by continuing growth in our ISS business. Net sales for ISS increased $16.0 million, or 31.0%, compared to the same period in 2012. The improvement in net sales was also due to an increase in vinyl window sales of $9.9 million, or 3.8%, primarily as a result of an increase in unit volume of approximately 5%. Both our ISS and window business benefited from increased demand in the new construction market. Our window sales were also favorably impacted by improvement in the residential repair and remodeling market. In addition, net sales for third-party manufactured products increased $12.0 million, or 5.3%, compared to the same period in 2012. Partially offsetting these increases were a $10.0 million decline in vinyl siding sales as a result of a decline in unit volume of approximately 3%, and a $5.8 million decrease in metal products sales, compared to the same period in 2012, largely due to soft Canadian market conditions. Compared to the same period in 2012, net sales were negatively impacted by $5.1 million for the nine months ended September 28, 2013 due to the weaker Canadian dollar in 2013.

Gross profit in the nine months ended September 28, 2013 was $208.9 million, or 23.9% of net sales, compared to gross profit of $203.4 million, or 23.9% of net sales, for the same period in 2012. The increase of $5.5 million in gross profit was primarily driven by lower cost for certain materials of $6.4 million, lower depreciation expense of $5.7 million and the favorable volume impact of $4.5 million due to higher sales in the ISS business, vinyl windows and third-party manufactured products partially offset by a decrease in our gross margin due to strong demand in the lower-margin new construction market and unfavorable customer mix of $6.7 million as well as investment in our workforce for new products. Gross profit as a percentage of sales was flat compared to prior year. For the nine months ended September 28, 2013, a weaker Canadian dollar in 2013 negatively impacted our gross margin by $4.1 million compared to the prior year period.

Selling, general and administrative expenses were $176.8 million, or 20.2% of net sales, for the nine months ended September 28, 2013 versus $178.5 million, or 20.9% of net sales, for the same period in 2012. The decrease of $1.7 million in selling, general and administrative expenses was primarily the result of a $2.3 million decrease in marketing related costs, a $1.7 million decrease in executive officers’ separation and hiring costs, lower depreciation expense of $1.1 million and decreased bad debt expense of $0.9 million partially offset by $2.2 million of costs associated with the proposed initial public offering of Parent and increased consulting fees of $3.3 million related to corporate strategic initiatives compared to the prior year.

Interest expense, net was $59.6 million and $56.7 million for the nine months ended September 28, 2013 and September 29, 2012, respectively. The $2.9 million increase in interest expense in the current year primarily relates to the additional $100.0 million of 9.125% Senior Secured Notes due 2017 issued on May 1, 2013, partially offset by lower interest rates and a lower principal balance on the ABL Facilities.

The income tax expense of $4.0 million for the nine months ended September 28, 2013 reflected a negative effective income tax rate of 14.4%, whereas the income tax expense of $5.0 million for the same period in 2012 reflected a negative effective income tax rate of 15.6%. The lower than statutory effective tax rate in both periods was primarily a result of operating losses in the U.S. with no tax benefit recognized due to the valuation allowance on U.S. deferred tax assets partially offset by income tax expense on foreign income.

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”). ASU 2013-11 eliminates diversity in practice in the presentation of unrecognized tax benefits. ASU 2013-11 requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit to be presented as a reduction to the related deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward, unless a net operating loss carryforward, a similar tax loss or a tax credit carryforward is not available at the reporting date under the governing tax law to settle taxes that would result from the disallowance of the tax position, or the entity does not intend to use the deferred tax asset for such purpose. ASU 2013-11 is effective for fiscal years and interim periods within those years, beginning after December 15, 2013. We do not believe that the adoption of the provisions of ASU 2013-11 will have a material impact on our consolidated financial position, results of operations or cash flows.

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). ASU 2013-02 requires the disclosure of additional information about reclassification adjustments, including (1) changes in accumulated other comprehensive income balances by component and (2) significant items reclassified out of accumulated other comprehensive income. Required disclosures include disaggregation of the total change of each component of other comprehensive income and the separate presentation of reclassification adjustments and current-period other comprehensive income. In addition, ASU 2013-02 requires the presentation of information about significant items reclassified out of accumulated other comprehensive income by component either on the face of the statement where net income is presented or as a separate disclosure in the notes to the financial statements. The new disclosure requirements are effective, prospectively, for fiscal years and interim periods within those years, beginning after December 15, 2012. ASU 2013-02 concerns presentation and disclosure only. Adoption of the provisions of ASU 2013-02 at the beginning of 2013 did not have an impact on our consolidated financial position, results of operations or cash flows.

In July 2012, the FASB issued ASU No. 2012-02, Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”). ASU 2012-02 permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. If an entity determines that it is not more likely than not that the asset is impaired, the entity will have the option not to calculate annually the fair value of an indefinite-lived intangible asset. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. Adoption of the provisions of ASU 2012-02 at the beginning of 2013 did not have an impact on our consolidated financial position, results of operations or cash flows.

As of September 28, 2013, we had cash and cash equivalents of $9.5 million and $0.7 million in the United States and Canada, respectively. As of September 28, 2013, we had available borrowing capacity of $182.0 million under our ABL facilities, after giving effect to outstanding letters of credit and borrowing base limitations. We believe that borrowing capacity under the credit facilities and current cash and cash equivalents will provide sufficient liquidity to maintain our current operations and capital expenditure requirements and service our debt obligations for at least the next 12 months.

Net cash used in operating activities was $14.4 million for the nine months ended September 28, 2013, compared to $14.1 million for the same period in 2012, which was a $0.3 million increase in the use of cash from the comparable prior year period. Changes in accounts receivable was a use of cash of $47.6 million for the nine months ended September 28, 2013, compared to a use of cash of $38.1 million for the nine months ended September 29, 2012. The net decrease in cash flow from accounts receivable of $9.5 million reflected an increase in sales volume in the current year third quarter compared to the prior year period as well as timing of collections from customers. Change in accounts payable and accrued liabilities was a source of cash of $73.0 million for the nine months ended September 28, 2013, compared to a source of cash of $61.6 million for the nine months ended September 29, 2012, resulting in a net increase in cash flows of $11.4 million. This increase was largely attributable to lower beginning accounts payable balances in the current year compared to the prior year, primarily due to timing of purchases. Cash flows used in operating activities for the nine months ended September 28, 2013 include income tax payments of $4.4 million compared to $11.1 million of income tax payments for the same period in 2012.

Net cash used in investing activities during the nine months ended September 28, 2013 consisted of $8.9 million of capital expenditures primarily related to investments in our new window platform to be launched in 2014 and $0.3 million for a supply center acquisition. During the nine months ended September 29, 2012, net cash used in investing activities consisted of capital expenditures of $3.7 million primarily related to various investments at our manufacturing facilities.

Net cash provided by financing activities for the nine months ended September 28, 2013 included proceeds of $106.0 million from the issuance of the additional 9.125% Senior Secured Notes due 2017 on May 1, 2013, borrowings of $123.9 million under our ABL facilities and an equity contribution from Parent of $0.7 million. These inflows were partially offset by repayments of $200.9 million under our ABL facilities and $5.4 million of financing costs related to issuance of the additional 9.125% Senior Secured Notes due 2017 and amendment of our ABL facilities during the current year second quarter. Net cash used in financing activities for the nine months ended September 29, 2012 included borrowings of $147.6 million under our ABL facilities offset by repayments of $131.4 million and payment of financing costs of $0.2 million.

In October 2010, our Company and our wholly owned subsidiary, AMH New Finance, Inc. (collectively, the “Issuers”) issued and sold $730.0 million of 9.125% Senior Secured Notes due 2017 (the “9.125% notes”). The 9.125% notes bear interest at a rate of 9.125% per annum and are unconditionally guaranteed, jointly and severally, by each of the Issuers’ direct and indirect domestic subsidiaries that guarantees our obligations under the senior secured asset-based revolving credit facilities (the “ABL facilities”). Interest payments are remitted on a semi-annual basis on May 1 and November 1 of each year.

The new notes were issued as additional notes under the same indenture, dated as of October 13, 2010, governing the $730.0 million aggregate principal amount of 9.125% notes (the “existing notes”) issued in October 2010 in a private placement and subsequently registered under the Securities Act of 1933, as amended (the “Securities Act”), as supplemented by a supplemental indenture. The new notes are consolidated with and form a single class with the existing notes and have the same terms as to status, redemption, collateral and otherwise (other than issue date, issue price and first interest payment date) as the existing notes. The debt premium related to the issuance of the new notes is being amortized into interest expense over the life of the new notes. The unamortized premium of $5.5 million is included in the long-term debt balance for the 9.125% notes. The effective interest rate of the new notes, including the premium, is 7.5% as of September 28, 2013.

We may from time to time, in our sole discretion, purchase, redeem or retire the 9.125% notes in privately negotiated or open market transactions, by tender offer or otherwise. On July 15, 2013, Parent announced that it had filed a registration statement on Form S-1 with the Securities and Exchange Commission for a proposed initial public offering of its common stock, and that it intends to use proceeds from the offering to redeem a portion of the outstanding 9.125% notes.

On April 18, 2013, our Company, Holdings, certain direct or indirect wholly owned U.S. and Canadian restricted subsidiaries of our Company designated as a borrower or guarantor under the revolving credit agreement governing the ABL facilities, certain of the lenders party to the revolving credit agreement governing the ABL facilities, UBS AG, Stamford Branch and UBS AG Canada Branch, as administrative and collateral agents, and Wells Fargo Capital Finance, LLC, as co-collateral agent, amended and restated the revolving credit agreement (the “Amended and Restated Revolving Credit Agreement”) governing the ABL facilities in the amount of $225.0 million (comprised of a $150.0 million U.S. facility and a $75.0 million Canadian facility) pursuant to a revolving credit agreement maturing on the date that is the earlier of (i) April 18, 2018 and (ii) 90 days prior to the maturity date of the existing notes. The $150.0 million U.S. facility consisted of $141.5 million of U.S. tranche A revolving credit commitments and $8.5 million of U.S. tranche B revolving credit commitments. The $75.0 million Canadian facility consisted of $71.5 million of Canadian tranche A revolving credit commitment and $3.5 million of Canadian tranche B revolving credit commitments. During the quarter ended June 29, 2013, we terminated the tranche B revolving credit commitments of $12.0 million in accordance with the Amended and Restated Revolving Credit Agreement and wrote off $0.5 million of deferred financing fees related to the ABL facilities.

At our option, the U.S. and Canadian tranche A revolving credit loans under the Amended and Restated Revolving Credit Agreement governing the ABL facilities bear interest at the rate equal to (1) the London Interbank Offered Rate (“LIBOR”) (for eurodollar loans under the U.S. facility) or the Canadian Dealer Offered Rate (“CDOR”) (for loans under the Canadian facility), plus an applicable margin of 2.00%, or (2) the alternate base rate (for alternate base rate loans under the U.S. facility, which is the highest of a prime rate, the Federal Funds Effective Rate plus 0.50% and a one-month LIBOR rate plus 1.0% per annum) or the alternate Canadian base rate (for loans under the Canadian facility, which is the higher of a Canadian prime rate and the 30-day CDOR plus 1.0%), plus an applicable margin of 1.00%, in each case, which interest rate margin may vary in 25 basis point increments between three pricing levels determined by reference to the average excess availability in respect of the U.S. and Canadian tranche A revolving credit loans. In addition to paying interest on outstanding principal under the ABL facilities, we are required to pay a commitment fee in respect of the U.S. and Canadian tranche A revolving credit loans, payable quarterly in arrears, of 0.375%.

Availability under the U.S. and Canadian facilities are subject to a borrowing base, which is based on eligible accounts receivable and inventory of certain of our U.S. subsidiaries and eligible accounts receivable, inventory and, with respect to the Canadian tranche A revolving credit loans, equipment and real property, of certain of our Canadian subsidiaries, after adjusting for customary reserves established or modified from time to time by and at the permitted discretion of the administrative agent thereunder. To the extent that eligible accounts receivable, inventory, equipment and real property decline, the borrowing base will decrease and the availability under the ABL facilities may decrease below $213.0 million. In addition, if the amount of

All obligations under the U.S. facility are guaranteed by each existing and subsequently acquired direct and indirect wholly owned material U.S. restricted subsidiary of our Company and the direct parent of our Company, other than certain excluded subsidiaries (“U.S. guarantors”). All obligations under the Canadian facility are guaranteed by each existing and subsequently acquired direct and indirect wholly owned material Canadian restricted subsidiary of our Company, other than certain excluded subsidiaries (“Canadian guarantors,” and together with U.S. guarantors, “ABL guarantors”) and the U.S. guarantors.

The U.S. security agreement provides that all obligations of the U.S. borrowers and the U.S. guarantors are secured by a security interest in substantially all of the present and future property and assets of our Company, including a first priority security interest in the capital stock of our Company and a second-priority security interest in the capital stock of each direct, material wholly owned restricted subsidiary of our Company. The Canadian security agreement provides that all obligations of the Canadian borrowers and the Canadian guarantors are secured by the U.S. ABL collateral and a first-priority perfected security interest in substantially all of our Canadian assets, including a first priority security interest in the capital stock of the Canadian borrowers and each direct, material wholly owned restricted subsidiary of the Canadian borrowers and Canadian guarantors.

As of September 28, 2013, there was $1.0 million drawn under our ABL facilities and $182.0 million available for additional borrowings. The weighted average per annum interest rate applicable to borrowings under the U.S. portion of the ABL facilities was 4.3% as of September 28, 2013. There were no borrowings under the Canadian portion of the ABL facilities as of September 28, 2013. We had letters of credit outstanding of $11.0 million as of September 28, 2013 primarily securing insurance policy deductibles, certain lease facilities and our purchasing card program.

There are no financial maintenance covenants included in the Amended and Restated Revolving Credit Agreement and the Indenture, other than a springing Consolidated EBITDA (as defined in such debt instruments) to consolidated fixed charges ratio (the “fixed charge coverage ratio”) of at least 1.00 to 1.00, which is triggered as of the end of the most recently ended four consecutive fiscal quarter period for which financial statements have been delivered prior to such date of determination, only when excess availability is less than, for a period of five consecutive business days, the greater of (i) 10.0% of the sum of (x) the lesser of (A) the U.S. tranche A borrowing base and (B) the U.S. tranche A revolving credit commitments and (y) the lesser of (A) the Canadian tranche A borrowing base and (B) the Canadian tranche A revolving credit commitments and (ii) $20.0 million until the 30th consecutive day when excess availability exceeds the above threshold. The fixed charge coverage ratio was 1.31:1.00 for the four consecutive fiscal quarter test period ended September 28, 2013. Our Amended and Restated Revolving Credit Agreement and the Indenture governing the 9.125% notes permit us to include run-rate cost savings in our calculation of Adjusted EBITDA in an amount, taken together with the amount of certain restructuring costs, up to 10% of Consolidated EBITDA for the relevant test period.

As of November 8, 2013, we have not triggered such fixed charge coverage ratio covenant for 2013, and we currently do not expect to be required to test such covenant for the remainder of fiscal year 2013, although as of November 8, 2013 we would be in compliance with such covenant if it were required to be tested. Should the economic conditions or other factors described herein cause our results of operations to deteriorate beyond our expectations, we may trigger such covenant and, if so triggered, may not be able to satisfy such covenant and be forced to refinance such debt or seek a waiver. Even if new financing is available, it may not be available on terms that are acceptable to us. If we are required to seek a waiver, we may be required to pay significant amounts to the lenders under our ABL facilities to obtain such a waiver.

In addition to the financial covenant described above, certain incurrences of debt and investments require compliance with financial covenants under the Amended and Restated Revolving Credit Agreement and the Indenture. The breach of any of these covenants could result in a default under the Amended and Restated Revolving Credit Agreement and the Indenture, and the lenders or note holders, as applicable, could elect to declare all amounts borrowed due and payable. See Item 1A. “Risk Factors” in our Annual Report.

EBITDA is calculated by reference to net income plus interest and amortization of other financing costs, provision for income taxes, depreciation and amortization. Consolidated EBITDA, as defined in the Amended and Restated Revolving Credit Agreement and the Indenture, is calculated by adjusting EBITDA to reflect adjustments permitted in calculating covenant compliance under these agreements. Consolidated EBITDA will be referred to as Adjusted EBITDA herein. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA are appropriate to provide additional information to investors to demonstrate our ability to comply with our financial covenant.

Our future contractual obligations were previously reported in our Annual Report on Form 10-K for the year ended December 29, 2012. On May 1, 2013, the Issuers, issued and sold an additional $100.0 million in aggregate principal amount of 9.125% notes due 2017 at an issue price of 106.00% of the principal amount of such notes in a private placement. Since December 29, 2012, there have been no material changes in our contractual obligations or commercial commitments other than the obligation under the aforementioned new notes.

We review goodwill for impairment on an annual basis at the beginning of the fourth quarter, or more frequently if events or circumstances change that would impact the value of these assets. The impairment test is conducted using an income approach. As we do not have a market for our equity, management performs the annual impairment analysis utilizing a discounted cash flow approach incorporating current estimates regarding performance and macroeconomic factors discounted at a weighted average cost of capital. Assumptions used in our impairment evaluation, such as long-term sales growth rates, forecasted operating margins and discount rate are based on the best available market information and are consistent with our internal forecasts and operating plans. Changes in these estimates or a decline in general economic condition could change our conclusion regarding an impairment of goodwill and potentially result in a non-cash impairment loss in a future period. The cash flow model used to derive fair value is most sensitive to the discount rate, long-term sales growth rate and forecasted operating margin assumptions used. Our 2012 Step 1 impairment test indicated that the fair value of our enterprise exceeded carrying value by approximately 5% as of December 29, 2012. Relatively small changes in these key assumptions could have resulted in our Company not passing Step 1.

The principal raw materials used by us are vinyl resin, aluminum, steel, resin stabilizers and pigments, glass, window hardware, and packaging materials, as well as diesel fuel, all of which have historically been subject to price changes. Raw material pricing on our key commodities has fluctuated significantly over the past several years. Our freight costs may also fluctuate based on changes in gasoline and diesel fuel costs related to our trucking fleet. Our ability to maintain gross margin levels on our products during periods of rising raw material costs and freight costs depends on our ability to obtain selling price increases. Furthermore, the results of operations for individual quarters can be negatively impacted by a delay between the timing of raw material cost increases and price increases on our products. There can be no assurance that we will be able to maintain the selling price increases already implemented or achieve any future price increases. At September 28, 2013, we had no raw material hedge contracts in place.

All statements (other than statements of historical facts) included in this report regarding the prospects of the industry and our prospects, plans, financial position and business strategy may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “predict,” “potential” or “continue” or the negatives of these terms or variations of them or similar terminology. Although we believe that the expectations reflected in these forward-looking statements are reasonable, it does not assure that these expectations will prove to be correct. Such statements reflect the current views of our management with respect to our operations, results of operations and future financial performance. The following factors are among those that may cause actual results to differ materially from the forward-looking statements:

We have outstanding borrowings under our ABL facilities and may incur additional borrowings from time to time for general corporate purposes, including working capital and capital expenditures. As of September 28, 2013, the interest rate applicable to outstanding loans under the U.S. and Canadian tranche A revolving facilities is, at our option, equal to either a United States or Canadian adjusted base rate plus an applicable margin ranging from 0.75% to 1.25%, or LIBOR plus an applicable margin ranging from 1.75% to 2.25%, with the applicable margin in each case depending on our quarterly average “excess availability” as defined in the credit facilities.

We have $830.0 million aggregate principal amount of 9.125% notes outstanding as of September 28, 2013 that bear a fixed interest rate of 9.125%. The fair value of our 9.125% notes is sensitive to changes in interest rates. In addition, the fair value is affected by our overall credit rating, which could be impacted by changes in our future operating results. These notes have an estimated fair value of $887.1 million based on quoted market prices as of September 28, 2013.

Our revenues are primarily from domestic customers and are realized in U.S. dollars. However, we realize revenues from sales made through our Canadian distribution centers in Canadian dollars. Our Canadian manufacturing facilities acquire raw materials and supplies from U.S. vendors, which results in foreign currency transactional gains and losses upon settlement of the obligations. Payment terms among Canadian manufacturing facilities and these vendors are short-term in nature. We may, from time to time, enter into foreign exchange forward contracts with maturities of less than three months to reduce our exposure to fluctuations in the Canadian dollar. As of September 28, 2013, we were a party to foreign exchange forward contracts for Canadian dollars, the value of which was $0.1 million. A 10% strengthening or weakening from the levels experienced during 2013 of the U.S. dollar relative to the Canadian dollar would have resulted in a $0.7 million decrease or increase, respectively, in comprehensive loss for the nine months ended September 28, 2013.

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

We are involved from time to time in litigation arising in the ordinary course of business, none of which, after giving effect to existing insurance coverage, is expected to have a material adverse effect on our financial position, results of operations or liquidity. From time to time, we are also involved in proceedings and potential proceedings relating to environmental and product liability matters.

The Woodbridge, New Jersey facility is currently the subject of an investigation and/or remediation before the New Jersey Department of Environmental Protection (“NJDEP”) under ISRA Case No. E20030110 for our indirect wholly owned subsidiary, Gentek Building Products, Inc. (“Gentek”). The facility is currently leased by Gentek. Previous operations at the facility resulted in soil and groundwater contamination in certain areas of the property. In 1999, the property owner and Gentek signed a remediation agreement with NJDEP, pursuant to which the property owner and Gentek agreed to continue an investigation/remediation that had been commenced pursuant to a Memorandum of Agreement with NJDEP. Under the remediation agreement, NJDEP required posting of a remediation funding source of approximately $100,000 that was provided by Gentek under a self-guarantee as of December 31, 2011. In March 2012, the self-guarantee was replaced by a $228,000 standby letter of credit provided to the NJDEP. In May 2013, the amount of the standby letter of credit was increased to $339,500. Although investigations at this facility are ongoing and it appears probable that a liability will be incurred, we cannot currently estimate the amount of liability that may be associated with this facility as the delineation process has not been completed. We believe this matter will not have a material adverse effect on our financial position, results of operations or liquidity.

On September 20, 2010, our Company and our subsidiary, Gentek Buildings Products, Inc. (“Gentek”), were named as defendants in an action filed in the United States District Court for the Northern District of Ohio, captioned Donald Eliason, et al. v. Gentek Building Products, Inc., et al (the “Eliason complaint”). The complaint was filed by a number of individual plaintiffs on behalf of themselves and a putative nationwide class of owners of steel and aluminum siding products manufactured by our Company and Gentek or their predecessors. The plaintiffs assert a breach of express and implied warranty, along with related causes of action, claiming that an unspecified defect in the siding causes paint to peel off the metal and that our Company and Gentek have failed adequately to honor their warranty obligations to repair, replace or refinish the defective siding. Plaintiffs seek unspecified actual and punitive damages, restitution of monies paid to the defendants and an injunction against the claimed unlawful practices, together with attorneys’ fees, costs and interest. Since such time that the Eliason complaint was filed, seven additional putative class actions have been filed.

On February 13, 2013, we entered into a Settlement Agreement and Release of Claims (the “Settlement”) with the named plaintiffs. The Settlement was preliminarily approved by the Court on March 5, 2013. On August 1, 2013 following a fairness hearing the Court issued a final judgment and order approving the Settlement (“Final Judgment and Order”). The Settlement became effective on September 2, 2013 when the time period for appealing the Final Judgment and Order ended.

The Settlement provides for the certification of a class for settlement purposes only of commercial and residential property owners who purchased steel siding manufactured and warranted by us during the period January 1, 1991 to March 15, 2013 (the date on which notice of the Settlement was first sent to settlement class members) and whose siding allegedly experienced “Steel Peel,” which is characterized for the purposes of settlement by the separation of any layer of the finish on the steel siding from the steel siding itself. Subject to the terms and conditions of the Settlement, we have agreed that (1) the first time an eligible settlement class member submits a valid Steel Peel warranty claim for siding, we will, at our option, repair or replace the siding or, at such class member’s option, make a cash settlement payment to such class member equal to the cost to us of the repair or replacement option selected by us; (2) the second time such class member submits a valid Steel Peel warranty claim for the same siding, the same options will be available; and (3) the third time such a claim is submitted, such class member may elect to have us either refinish or replace the siding or may elect to receive a one-time $8,000 payment. If the $8,000 payment option is chosen, we will have no further obligation to such class member in connection with the warranty.

executing the notice provisions of the Settlement. The settlement costs related to the attorneys’ fees and notice costs were recognized by us as of December 29, 2012 and fully paid as of September 28, 2013. We did not recognize additional settlement costs in the quarter and nine months ended September 28, 2013. We expect to incur additional warranty costs associated with the Settlement, however, we do not believe the incremental costs, which currently cannot be estimated for recognition purposes, will be material.

Other environmental claims and product liability claims are administered by us in the ordinary course of business, and we maintain pollution and remediation and product liability insurance covering certain types of claims. Although it is difficult to estimate our potential exposure to these matters, we believe that the resolution of these matters will not have a material adverse effect on our financial position, results of operations or liquidity.

There have been no material changes to the risk factors disclosed in Part 1, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 29, 2012 and in Part II, Item 1A. “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended June 29, 2013, filed with the Securities and Exchange Commission on March 21, 2013 and August 8, 2013, respectively, which include detailed discussions of risk factors that could materially affect our business, financial condition or results of operations and are incorporated herein by reference.



Exhibit Number		Description

3.1		Certificate of Formation of Associated Materials, LLC (incorporated by reference to Exhibit 3.1 to Associated Materials, LLC’s Annual Report on Form 10-K, filed with the SEC on March 25, 2008).

3.2		Amended and Restated Limited Liability Company Agreement of Associated Materials, LLC (incorporated by reference to Exhibit 3.2 to Associated Materials, LLC’s Annual Report on Form 10-K, filed with the SEC on April 1, 2011).

10.1*		Amendment No. 1 to Employment Agreement, dated as of October 25, 2013, between Associated Materials, LLC and David S. Nagle.

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

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

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

101.INS†		XBRL Instance Document.

101.SCH†		XBRL Taxonomy Extension Schema Document.

101.CAL†		XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB†		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE†		XBRL Taxonomy Extension Presentation Linkbase Document.

101.DEF†		XBRL Taxonomy Extension Definition Linkbase Document.



Delaware		75-1872487
(State or Other Jurisdiction of Incorporation of Organization)		(I.R.S. Employer Identification No.)

3773 State Rd. Cuyahoga Falls, Ohio		44223
(Address of Principal Executive Offices)		(Zip Code)



Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer	ý (Do not check if a smaller reporting company)	Smaller reporting company	¨



PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets September 28, 2013 and December 29, 2012	1

	Condensed Consolidated Statements of Comprehensive Income (Loss) Quarter and Nine Months ended September 28, 2013 and September 29, 2012	2

	Condensed Consolidated Statements of Cash Flows Nine Months ended September 28, 2013 and September 29, 2012	3

	Notes to Condensed Consolidated Financial Statements	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	32

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	34

Item 6.	Exhibits	34

SIGNATURES		35



	September 28, 2013		December 29, 2012
Allowance for doubtful accounts, current	$	3,408	$	3,737
Allowance for doubtful accounts, non-current	5,150		5,434
	$	8,558	$	9,171



	September 28, 2013		December 29, 2012
Raw materials	$	30,903	$	26,749
Work-in-progress	11,008		11,589
Finished goods	110,120		79,627
	$	152,031	$	117,965



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



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



	September 28, 2013		December 29, 2012
9.125% Senior Secured Notes due 2017	$	835,523	$	730,000
Borrowings under the ABL facilities	1,000		78,205
Total long-term debt	$	836,523	$	808,205


(a)	Represents the elimination of the impact of adjustments related to purchase accounting recorded as a result of the merger in October 13, 2010 (“Merger”), which include the following (in thousands):


(ii)	Represents the elimination of the impact of amortization related to net liabilities recorded in purchase accounting for the fair value of our leased facilities as a result of the Merger.


(iii)	Represents the elimination of the impact of amortization related to net liabilities recorded in purchase accounting for the fair value of warranty liabilities as a result of the Merger.


(c)	Represents bank audit fees incurred under our current and prior ABL facilities.


(d)	Represents stock-based compensation related to restricted shares issued to certain of our directors and officers.


(i)	Represents management’s estimate of unusual consulting and advisory fees primarily associated with corporate cost savings and other strategic initiatives. Included in these fees are costs of $1.6 million and $2.2 million incurred in the quarter and nine months ended September 28, 2013, respectively, related to the proposed initial public offering of Parent.


(ii)	Represents accretion on the liability recorded at present value for future lease costs in connection with our warehouse facility adjacent to the Ennis manufacturing plant, which we discontinued using during 2009.


(iii)	Represents management’s estimates for excess severance expense primarily due to unusual changes within non-executive management.


(iv)	Represents the recovery of an insurance payment related to a claim that previously was in dispute with our insurance carrier.


(v)	Represents excess legal expense incurred in connection with the defense of actions filed by plaintiffs and a putative nationwide class of homeowners regarding certain warranty related claims related to steel and aluminum siding.


(f)	Represents the non-cash expense relating to warranty provision in excess of claims paid.


(g)	Represents foreign currency gain or loss recognized in the income statement, including gain or loss on foreign currency exchange hedging agreements.


•	declines in remodeling and home building industries, economic conditions and changes in interest rates, foreign currency exchange rates and other conditions;


•	deteriorations in availability of consumer credit, employment trends, levels of consumer confidence and spending and consumer preferences;


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


•	delays in the development of new or improved products or our inability to successfully develop new or improved products;


•	changes in raw material costs and availability of raw materials and finished goods;


•	our ability to continuously improve organizational productivity and global supply chain efficiency and flexibility;


•	our ability to comply with certain financial covenants in the Indenture and ABL facilities and the restrictions such indentures impose on our ability to operate our business;


•	increases in mortgage rates, changes in mortgage interest deductions and the reduced availability of financing;


•	the other factors discussed under Part I, Item 1A. “Risk Factors” in our Annual Report and under Part II, Item 1A. “Risk Factors” and elsewhere in this report.



			ASSOCIATED MATERIALS, LLC
			(Registrant)

Date:	November 8, 2013	By:	/s/ Paul Morrisroe
			Paul Morrisroe
			Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)



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