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

Quantitative and Qualitative Disclosures About Market Risk

      We have outstanding borrowings under the term loan and revolving portions of the AMI senior credit facility and may borrow under the revolving credit facility from time to time for general corporate purposes, including working capital and capital expenditures. Interest under the AMI senior credit facility is based on the variable London Interbank Offered Rate (LIBOR). At July 3, 2004, we had borrowings of $140.0 million under the term loan and $26.2 million under the revolving loan portion of the AMI senior credit facility. The effect of a  1/8% increase or decrease in interest rates would increase or decrease total interest expense for the six months ended July 3, 2004 by approximately $0.1 million.

      As of July 3, 2004, AMH had $267.9 million of senior discount notes due 2014 that bear an interest rate of 11 1/4%. Interest accrues at a rate of 11 1/4% on the notes in the form of an increase in the accreted value of the notes prior to March 1, 2009. Thereafter, cash interest of 11 1/4% on the notes accrues and is payable semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2009. AMI has $165.0 million of senior subordinated notes due 2012 that bear a fixed interest rate of 9 3/4%. The fair value of our 11 1/4% and 9 3/4% notes is sensitive to changes in interest rates. In addition, the

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      Our revenues are primarily from domestic customers and are realized in U.S. dollars. However, since the acquisition of Gentek, we now realize revenues from sales made through Gentek’s 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. However, payment terms among Canadian manufacturing facilities and these vendors are short-term in nature. Accordingly, we believe our direct foreign currency exchange rate risk is not material. At July 3, 2004, we had no currency hedges in place.

      See “Management’s discussion and analysis of financial condition and results of operations — effects of inflation” for a discussion of the market risk related to our principal raw materials, vinyl resin, aluminum and steel.

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