10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2007
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from          to

Commission file number 1-14982

HUTTIG BUILDING PRODUCTS, INC.

(Exact name of registrant as specified in its charter)

Delaware	43-0334550
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

555 Maryville University Drive

Suite 400

St. Louis, Missouri 63141

(Address of principal executive offices, including zip code)

(314) 216-2600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share	New York Stock Exchange
Preferred Share Purchase Rights	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o     No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o     No þ

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 at least the past 90 days.  Yes þ     No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

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

Large accelerated filer o	Accelerated filer þ	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

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

The aggregate market value of the Common Stock held by non-affiliates of the registrant as of the last business day of the quarter ended June 30, 2007 was approximately $108 million. For purposes of this calculation only, the registrant has excluded stock beneficially owned by the registrants’ directors and officers. By doing so, the registrant does not admit that such persons are affiliates within the meaning of Rule 405 under the Securities Act of 1933 or for any other purposes.

The number of shares of Common Stock outstanding on February 15, 2008 was 21,389,976 shares.

DOCUMENTS INCORPORATED HEREIN BY REFERENCE.

Parts of the registrant’s definitive proxy statement for the 2008 Annual Meeting of Shareholders are incorporated by reference in Part III of this Annual Report on Form 10-K.

PART I

ITEM 1 — BUSINESS

General

Huttig Building Products, Inc., a Delaware corporation incorporated in 1913, is one of the largest domestic distributors of millwork, building materials and wood products used principally in new residential construction and in home improvement, remodeling and repair work. We purchase from leading manufacturers and we distribute our products through 36 wholesale distribution centers serving 44 states. Our distribution centers sell principally to building materials dealers, national buying groups, home centers and industrial users, including makers of manufactured homes. For the year ended December 31, 2007, we generated net sales of $874.8 million.

We conduct our business through a two-step distribution model. This means we resell the products we purchase from manufacturers to our customers, who then sell the products to the final end users, who are typically professional builders and independent contractors engaged in residential construction projects.

Our products fall into three categories: (i) millwork, which includes doors, windows, moulding, stair parts and columns, (ii) general building products, which include composite decking, connectors, fasteners, housewrap, roofing products and insulation, and (iii) wood products, which include engineered wood products, such as floor systems, as well as wood panels and lumber.

Doors and engineered wood products often require an intermediate value added service between the time the product leaves the manufacturer and before it is delivered to the final customer. Such services include pre-hanging doors and cutting engineered wood products from standard lengths to job-specific requirements, both of which services we perform on behalf of our customers. In addition, with respect to almost all of our products, we have the capability to buy in bulk and disaggregate these large shipments to meet individual customer requirements. For some products, we carry a depth and breadth of products that our customers cannot reasonably stock themselves. Our customers benefit from these services because they do not need to invest capital in door hanging facilities or cutting equipment, nor do they need to incur the costs associated with maintaining large inventories of products. Our size, broad geographic presence and extensive fleet and logistical capabilities enable us to purchase products in large volumes at favorable prices, stock a wide range of products for rapid delivery and manage inventory in a reliable, efficient manner.

We serve our customers, whether a local dealer or a national account, through our 36 wholesale distribution centers. This approach enables us to work with our customers and suppliers to ensure that local inventory levels, merchandising, purchasing and pricing are tailored to the requirements of each market. Each distribution center also has access to our single-platform nation-wide inventory management system. This provides the local manager with real-time inventory availability and pricing information. We also support our distribution centers with credit and financial controls, training and marketing programs and human resources expertise. We believe that these distribution capabilities and efficiencies offer us a competitive advantage as compared to those of local and regional competitors. Our geographic reach enables us to cover areas which accounted for approximately 80% of U.S. new housing starts in 2007.

In this Annual Report on Form 10-K, when we refer to “Huttig”, the “Company”, “we” or “us,” we mean Huttig Building Products, Inc. and its subsidiaries and predecessors unless the context indicates otherwise.

Industry Characteristics and Trends

The residential building materials distribution industry is characterized by its substantial size, its highly fragmented ownership structure and an increasingly competitive environment. The industry can be broken into two categories: (i) new construction and (ii) home repair and remodeling.

Residential construction activity in both categories is closely linked to a variety of factors directly affected by general economic conditions, including employment levels, job and household formation, interest rates, housing prices, tax policy, availability of mortgage financing, prices of commodity wood and steel

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products, immigration patterns, regional demographics and consumer confidence. We monitor a broad set of macroeconomic and regional indicators, including inventory levels of new and existing homes for sale, as well as new housing starts and permit issuances, as indicators of our potential future sales volume.

New housing activity in the United States is currently in a severe downturn, which is expected to continue during 2008. New housing starts in the United States decreased to approximately 1.35 million in 2007 from 1.80 million and 2.07 million in 2006 and 2005, respectively, including 1.05 million single-family residences in 2007 versus 1.47 million and 1.72 million in 2006 and 2005, respectively, based on data from the U.S. Census Bureau. According to the U.S. Census Bureau, total spending on new single-family residential construction in 2007 was $303 billion. The U.S. Census Bureau also estimates that aggregate expenditures for residential repair and remodeling were an additional $204 billion in 2007.

The residential building materials distribution industry has undergone significant changes over the last three decades. Prior to the 1970s, residential building products were distributed almost exclusively by local dealers, such as lumberyards and hardware stores. These channels served both the retail consumer and the professional builder. Dealers generally purchased their products from wholesale distributors and sold building products directly to homeowners, contractors and homebuilders. In the late 1970s and 1980s, substantial changes began to occur in the retail distribution of building products. The introduction of the mass retail, big box format by The Home Depot and Lowe’s began to alter this distribution channel, particularly in metropolitan markets. They began displacing local dealers by selling a broad range of competitively priced building materials to the homeowner and small home improvement contractor. We generally do not compete with building products mass retailers such as The Home Depot and Lowe’s. Their business model for building products is primarily suited to sell products that require little or no differentiation and that turn over in very high volumes. Conversely, a substantial portion of our product offering consists of products that typically require intermediate value-added handling and/or a large breadth of SKUs. Furthermore, we do not sell directly to retail customers.

We service large local, regional and national independent building products dealers who in turn sell to contractors and professional builders. These large local, regional and national building products dealers, often referred to as “pro dealers,” continue to distribute a significant portion of the residential building materials sold in the United States. These pro dealers operate in an increasingly competitive environment. Consolidation among building products manufacturers favors distributors that can buy in bulk and break down large production runs to specific local requirements. In addition, increasing scale and sophistication among professional builders and contractors places a premium on pro dealers that can make a wide variety of building products readily available at competitive prices. In response to the increasingly competitive environment for building products, many pro dealers have either consolidated or formed buying groups in order to increase their purchasing power and/or service levels.

We believe the evolving characteristics of the residential building materials distribution industry, particularly the consolidation trend, favor companies like us that operate nationally and have significant infrastructure in place to accommodate the needs of customers across geographic regions. We are the only national distributor of millwork products. Because of our wide geographic presence, size, purchasing power, materials handling efficiencies and investment in millwork services, we believe we are well positioned to serve the needs of the consolidating pro dealer community.

Products

Our goal is to offer products that allow us to provide value to our customers, either by performing incremental services on the products before delivering them to customers, buying products in bulk and disaggregating them for individual customers or carrying a depth and breadth of products that customers cannot reasonably stock themselves at each location. Our products can be broken into three main categories:

•  Millwork, including exterior and interior doors, pre-hung door units, windows, patio doors, mouldings, frames, stair parts and columns. Key brands in this product category include Therma-Tru, Masonite, HB&G, Woodgrain, Windsor and L. J. Smith;

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•  General building products, such as roofing, siding, insulation, flashing, housewrap, connectors and fasteners, decking, drywall, kitchen cabinets and other miscellaneous building products. Key brands in this product category include Typar, Timbertech, Simpson Strong-Tie, Owens Corning, CertainTeed and Grace;

•  Wood products, which include engineered wood products, such as floor systems, and other wood products, such as lumber and wood panels. Within the wood products category, engineered wood continues to be a focus product for us. The engineered wood product line offers us the ability to provide our customers with value-added services, such as floor system take-offs, cut-to-length packages and just-in-time, cross-dock delivery capabilities.

The following table sets forth information regarding the percentage of our net sales from continuing operations represented by our principal product categories sold during each of the last three fiscal years. While the table below generally indicates the mix of our sales by product category, changes in the prices of commodity wood products and in unit volumes sold typically affect our product mix on a year-to-year basis.

	2007		2006		2005
Millwork		50%		54%		53%
General Building Products		37%		32%		30%
Wood Products		13%		14%		17%

Customers

During 2007, we served over 7,000 customers, with no single customer accounting for more than 9% of our sales. Building materials pro dealers represent our single largest customer group. Our top 10 customers accounted for approximately 32% of our total sales in 2007.

Within the pro dealer category, a growing number of our customers represent national accounts. These are large pro dealers that operate in more than one state or region. We sell to pro dealer national accounts such as Pro-Build, 84 Lumber, Stock Building Supply, BMC West and Builders FirstSource, as well as to several large buying groups. To a much lesser extent, we also sell to home centers. We believe that our size, which lets us purchase in bulk, achieve operating efficiencies, operate on a national scale and offer competitive pricing, makes us well suited to service the consolidating pro dealer community. During 2007, our sales to national accounts, including buying groups, were 36% of our total sales, an increase from 35% of our total sales in 2006.

Organization

Huttig operates on a nation-wide basis. Customer sales are conducted principally through 36 distribution centers serving 44 states. Administrative and executive management functions are centralized in a headquarters office located in St. Louis, Missouri. We believe that this structure permits us to be closer to our customers and serve them better, while being able to take advantage of certain scale efficiencies that come from our size.

Headquarters functions generally include those activities that can be shared across our full distribution platform. These include items such as treasury management, accounting, information technology, human resources, legal, internal audit and investor relations along with small corporate operations, marketing, national accounts and product management groups.

Operating responsibility resides with each distribution center’s general manager. The general manager assumes responsibility for daily operations, inventory management, on-site personnel and logistics. Each distribution center generally maintains its own separate sales and warehouse staffs supported by a small administrative team.

Sales

Sales and operational responsibility principally lie with general managers at our distribution centers. The sales function is generally divided into two channels: outside sales and inside sales. Our outside field representatives make on-site calls to local and regional customers. Our inside sales people generally receive

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telephone orders from customers. In addition, we maintain a national account sales team to serve customers that span multiple regions. Our outside sales force is generally compensated by a base salary plus commissions determined primarily on sales margin.

Distribution Strategy and Operations

We conduct our business through a two-step distribution model. This means that we resell the products that we purchase from manufacturers to our customers, who then sell the products to the final end user. Our principal customer is the pro dealer. To a much more limited extent, we also sell to the retail home centers and certain industrial users, such as makers of manufactured housing.

Despite our nation-wide reach, the local distribution center is still a principal focus of our operations, and we tailor our business to meet local demand and customer needs. We customize product selection, inventory levels, services provided and prices to meet local market requirements. We support this strategy through our single platform information technology system. This system provides each distribution center’s general manager real-time access to pricing, inventory availability and margin analysis. This system provides product information both for that location and across the entire Huttig network of distribution centers. More broadly, our sales force, in conjunction with our product management teams, works with our suppliers and customers to get the appropriate mix, quantity and pricing of products suited to each local market.

We purchased products from more than 1,200 different suppliers in 2007. We generally negotiate with our major suppliers on a national basis to leverage our volume purchasing power, which we believe provides us with an advantage over our locally based competitors. The majority of our purchases are made from suppliers that offer payment discounts and volume-related incentive programs. Although we generally do not have exclusive distribution rights for our key products and we do not have long-term contracts with many of our suppliers, we believe our national footprint, buying power and distribution network makes us an attractive distributor for many manufacturers. Moreover, we have long-standing relationships with many of our key suppliers.

We carefully and regularly evaluate opportunities to introduce new products. This is primarily only when driven by customer demand or market requirements. We have found that customers generally welcome a greater breadth of product offering as it can improve their purchasing and operating efficiencies by providing for “one stop” shopping. Similarly, selectively broadening our product offering enables us to drive additional products through our distribution system, thereby increasing the efficiency of our operations by better utilizing our existing infrastructure.

We focus on selling respected, brand-name products. We believe that brand awareness is an increasingly important factor in building products purchasing decisions. We generally benefit from the quality levels, marketing initiatives and product support provided by manufacturers of branded products. We also benefit by being associated with the positive attributes that customers typically equate with branded products.

Competition

We compete with many local and regional building product distributors and in certain markets and product categories, with national building product distributors. In certain markets, we compete with national building materials suppliers with national distribution capability, such as BlueLinx, Boise Cascade and Weyerhaeuser. We also compete with product manufacturers that engage in direct sales, while at the same time distributing products for some of these same manufacturers.

The principal factors on which we compete are pricing and availability of product, service and delivery capabilities, ability to assist with problem-solving, customer relationships, geographic coverage and breadth of product offerings.

Our size, geographic coverage, and financial position are advantageous in obtaining and retaining distribution rights for brand name products. Our size also permits us to attract experienced sales and service personnel and gives us the resources to provide company-wide sales, product and service training programs. By working closely with our customers and suppliers and utilizing our single information technology platform,

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we believe our branches are well-positioned to maintain appropriate inventory levels and to deliver completed orders on time.

Cyclicality, Seasonality and Working Capital

Various cyclical and seasonal factors, such as general economic conditions and weather, historically have caused our results of operations to fluctuate from period to period. Our size, extensive nation-wide operating model and the geographic diversity of our distribution centers to some extent help to mitigate our exposure to these cyclical and seasonal factors. These factors include levels of new construction, home improvement and remodeling activity, weather, interest rates and other local, regional and national economic conditions. During the past two years, our results of operations have been adversely affected by the severe downturn in new housing activity in the United States. We expect this downturn to continue during 2008 based on the current level of housing activity and industry forecasts for 2008. We anticipate that fluctuations from period to period will continue in the future. Our first and fourth quarters are generally adversely affected by winter weather patterns in the Midwest and Northeast, which typically result in seasonal decreases in levels of construction activity in these areas. Because much of our overhead and expenses remain relatively fixed throughout the year, our operating profits also tend to be lower during the first and fourth quarters. In addition, other weather patterns, such as hurricane season in the Southeast region of the United States during the third and fourth quarters, can have an adverse impact on our profits in a particular period.

We depend on cash flow from operating activities and funds available under our secured credit facility to finance seasonal working capital needs, capital expenditures and any acquisitions that we may undertake. We typically generate cash from working capital reductions in the fourth quarter of the year and build working capital during the first quarter in preparation for our second and third quarters. Our working capital requirements are generally greatest in the second and third quarters, reflecting the seasonal nature of our business. The second and third quarters are also typically our strongest operating quarters, largely due to more favorable weather throughout many of our markets compared to the first and fourth quarters. We maintain significant inventories to meet rapid delivery requirements of our customers and to enable us to obtain favorable pricing, delivery and service terms with our suppliers. At December 31, 2007 and 2006, inventories constituted approximately 42% and 39% of our total assets, respectively. We closely monitor operating expenses and inventory levels during seasonally affected periods and, to the extent possible, manage variable operating costs to minimize seasonal effects on our profitability.

Credit

Huttig’s corporate management establishes an overall credit policy for sales to customers and then delegates responsibility for most credit decisions to credit personnel located within our two regions. Our credit policies, together with careful monitoring of customer balances, have resulted in average bad debt expense of less than 0.1% of net sales during each of the last three years. Approximately 98% of our sales in 2007 were to customers to whom we had provided credit for those sales.

Backlog

Our customers generally order products on an as-needed basis. As a result, virtually all product shipments in a given fiscal quarter result from orders received in that quarter. Consequently, order backlog represents only a very small percentage of the product sales that we anticipate in a given quarter and is not indicative of actual sales for any future period.

Tradenames

Historically, Huttig has operated under various trade names in the markets we serve, retaining the names of acquired businesses for a period of time to preserve local identification. To capitalize on our national presence, all of our distribution centers operate under the primary trade name “Huttig Building Products.” Huttig has no material patents, trademarks, licenses, franchises, or concessions other than the Huttig Building Products^® name and logo, which are registered trademarks.

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Environmental Matters

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

We have been identified as a potentially responsible party in connection with the cleanup of contamination at a formerly owned property in Montana and a currently owned property in Oregon. See Part I, Item 3 — “Legal Proceedings.”

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

Employees

As of December 31, 2007, we employed approximately 1,600 persons, of which approximately 15% were represented by unions. We have not experienced any significant strikes or other work interruptions in recent years and have maintained generally favorable relations with our employees.

Available Information

Huttig files with the U.S. Securities and Exchange Commission quarterly and annual reports on Forms 10-Q and 10-K, respectively, current reports on Form 8-K and proxy statements pursuant to the Securities Exchange Act of 1934, in addition to other information as required. The public may read and copy our SEC filings at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549 and may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. We file this information with the SEC electronically, and the SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.

Our website address is http://www.huttig.com. We make available, free of charge at the “Investor Relations” section of our website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the 1934 Act. This information is available on our website as soon as reasonably practicable after we electronically file it with, or furnish it to, the SEC. Reports of beneficial ownership filed pursuant to Section 16(a) of the 1934 Act are also available on our website. The information on our website is not part of this annual report on Form 10-K.

ITEM 1A — RISK FACTORS

In addition to the other information contained in this Form 10-K, the following risk factors should be considered carefully in evaluating the Company’s business. The Company’s business, financial condition or results of operations could be materially adversely affected by any of these risks. Please note that additional risks not presently known to the Company or that the Company currently deems immaterial may also impair its business and operations.

Our sales and profitability depend significantly on new residential construction and home improvement activity in markets in which we compete.

Our sales depend heavily on the strength of national and local new residential construction and home improvement and remodeling markets. The strength of these markets depends on new housing starts and residential renovation projects, which are a function of many factors beyond our control. Some of these factors include inventory levels of new and existing homes for sale, employment levels, job and household formation, interest rates, housing prices, tax policy, availability of mortgage financing, prices of commodity wood and

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steel products, immigration patterns, regional demographics and consumer confidence. During the past two years, our results of operations have been adversely affected by the severe downturn in new housing activity in the United States which is expected to continue during 2008. A prolonged continuation of the current downturn and any future downturns in the markets that we serve or in the economy generally could also have a material adverse effect on our operating results and financial condition, including but not limited to the valuation of our goodwill and deferred tax assets. Reduced levels of construction activity may result in intense price competition among building materials suppliers, which may adversely affect our gross margins.

The industry in which we compete is highly cyclical, and any downturn resulting in lower demand or increased supply could have a materially adverse impact on our financial results.

The building products distribution industry is subject to cyclical market pressures caused by a number of factors that are out of our control, such as general economic and political conditions, inventory levels of new and existing homes for sale, levels of new construction, home improvement and remodeling activity, interest rates and population growth. To the extent that cyclical market factors adversely impact overall demand for building products or the prices that we can charge for our products, our net sales and margins would likely decline in the same time frame as the cyclical downturn occurs. Because much of our overhead and expense is relatively fixed in nature, a decrease in sales and margin generally has a significant adverse impact on our results of operations. For example, during the past two years, our results of operations have been adversely affected by the severe downturn in new housing activity in the United States. Also, to the extent our customers experience downturns in business, our ability to collect our receivables could be adversely affected. Finally, the unpredictable nature of the cyclical market factors that impact our industry make it difficult to forecast our operating results.

Our financial results reflect the seasonal nature of our operations.

Our first quarter revenues and, to a lesser extent, our fourth quarter revenues are typically adversely affected by winter construction cycles and weather patterns in colder climates as the level of activity in the new construction and home improvement markets decreases. Because much of our overhead and expense remains relatively fixed throughout the year, our operating profits also tend to be lower during the first and fourth quarters. In addition, other weather patterns, such as hurricane season in the Southeast region of the United States during the third and fourth quarters, can have an adverse impact on our profits in a particular period.

The building materials distribution industry is fragmented and competitive, and we may not be able to compete successfully with some of our existing competitors or new entrants in the markets we serve.

The building materials distribution industry is fragmented and competitive. Our competition varies by product line, customer classification and geographic market. The principal competitive factors in our industry are:

•  pricing and availability of product;

•  service and delivery capabilities;

•  ability to assist with problem-solving;

•  customer relationships;

•  geographic coverage; and

•  breadth of product offerings.

Also, financial stability is important to manufacturers in choosing distributors for their products.

We compete with many local, regional and, in some markets and product categories, national building materials distributors and dealers. In addition, some product manufacturers sell and distribute their products directly to our customers, and the volume of such direct sales could increase in the future. Additionally,

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manufacturers of products distributed by us may elect to sell and distribute directly to our customers in the future or enter into exclusive supplier arrangements with other two-step distributors. In addition, home center retailers, which have historically concentrated their sales efforts on retail consumers and small contractors, may intensify their marketing efforts to larger contractors and homebuilders. Some of our competitors have greater financial and other resources and may be able to withstand sales or price decreases better than we can. We also expect to continue to face competition from new market entrants. We may be unable to continue to compete effectively with these existing or new competitors, which could have a material adverse effect on our financial condition and results of operations.

The termination of key supplier relationships or disruptions in the supply of products may have an immediate adverse effect on our financial condition and results of operations.

We distribute building materials that we purchase from a number of major suppliers. As is customary in our industry, many of our relationships with these suppliers are terminable without cause on short notice. Although we believe that relationships with our existing suppliers are strong and that in most cases we would have access to similar products from competing suppliers, the termination of key supplier relationships or any other disruption in our sources of supply, particularly of our most commonly sold items, could have a material adverse effect on our financial condition and results of operations. Supply shortages resulting from unanticipated demand or production difficulties could occur from time to time and could have a material adverse effect on our financial condition and results of operations.

If we are unable to meet the financial covenant under our credit facility, the lenders could elect to accelerate the repayment of the outstanding balance and, in that event, we would be forced to seek alternative sources of financing.

We are party to a five-year $160.0 million asset based senior secured revolving credit facility which contains a minimum fixed charge coverage ratio that is tested when our excess borrowing availability, as defined, is less than $25.0 million. This agreement matures in October 2011.

As a result of the risks we face in our business, we can give no assurance that we will be able to achieve sufficient financial results necessary to satisfy this covenant if it were required to be tested. If we were unable to maintain excess borrowing availability of more than $25.0 million and were also unable to comply with this financial covenant, our lenders would have the right, but not the obligation, to terminate the loan commitments and accelerate the repayment of the entire amount outstanding under the credit facility. The lenders also could foreclose on our assets that secure our credit facility. In that event, we would be forced to seek alternative sources of financing, which may not be available on terms acceptable to us, or at all.

Compliance with the restrictions and the financial covenant under our credit agreement will likely limit, at least in the near term, the amount available to us for borrowing under that facility and may limit management’s discretion with respect to certain business matters.

The borrowings under our credit agreement are collateralized by substantially all of the Company’s assets and are subject to certain operating limitations commonly applicable to a loan of this type, which, among other things, place limitations on indebtedness, liens, investments, mergers and acquisitions, dispositions of assets, cash dividends, stock repurchases and transactions with affiliates. A minimum fixed charge coverage ratio must be tested on a pro forma basis prior to consummation of certain significant business transactions outside the Company’s ordinary course of business and prior to increasing the size of the facility. These restrictions may limit management’s ability to operate our business in accordance with management’s discretion, which could limit our ability to pursue certain strategic objectives.

Fluctuation in prices of commodity wood and steel products that we buy and then resell may have a significant impact on our results of operations.

Changes in wood and steel commodity prices between the time we buy these products and the time we resell them have occurred in the past, and we expect fluctuations to occur again in the future. Such changes

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can adversely affect the gross margins that we realize on the resale of the products. We may be unable to manage these fluctuations effectively or minimize any impact of these changes on our financial condition and results of operations.

We may acquire other businesses, and, if we do, we may be unable to integrate them with our business, which may impair our financial performance.

If we find appropriate opportunities, we may acquire businesses that we believe provide strategic opportunities. If we acquire a business, the process of integration may produce unforeseen operating difficulties and expenditures and may absorb significant attention of our management that would otherwise be available for the ongoing development of our business. If we make future acquisitions, we may issue shares of stock that dilute other stockholders, expend cash, incur debt, assume contingent liabilities or create additional expenses relating to amortizing intangible assets with estimated useful lives, any of which might harm our business, financial condition or results of operations.

We face risks of incurring significant costs to comply with environmental regulations.

We are subject to federal, state and local environmental protection laws and regulations and may have to incur significant costs to comply with these laws and regulations in the future. We have been identified as a potentially responsible party in connection with the cleanup of contamination at a formerly owned property in Montana, where we are voluntarily remediating the property under the oversight of the Montana Department of Environmental Quality (DEQ). Until the Montana DEQ selects and orders us to implement a final remedy, we can give no assurance as to the scope or cost to us of any final remediation order. We have been identified as a potentially responsible party in connection with the cleanup of possible contamination at a currently owned property in Oregon. We are voluntarily remediating this property under the oversight of the Oregon Department of Environmental Quality. Until the Oregon DEQ selects a final remedy, we can give no assurance as to the scope or cost to us of any final remediation order. In addition, some of our current and former distribution centers are located in areas of current or former industrial activity where environmental contamination may have occurred, and for which we, among others, could be held responsible. As a result, we may incur material environmental liabilities in the future with respect to our current or former distribution center locations.

We face the risks that product liability claims and other legal proceedings relating to the products we distribute may adversely affect our business and results of operations.

As is the case with other companies in our industry, we face the risk of product liability and other claims of the type that are typical to our industry, such as asbestos and mold-related claims, in the event that the use of products that we have distributed causes personal injury or other damages. Product liability or other claims in the future, regardless of their ultimate outcome and whether or not covered under our insurance policies or indemnified by our suppliers, could result in costly litigation and have a material adverse effect on our business and results of operations.

Our failure to attract and retain key personnel could have a material adverse effect on our future success.

Our future success depends, to a significant extent, upon the continued service of our executive officers and other key management and sales personnel and on our ability to continue to attract, retain and motivate qualified personnel. The loss of the services of one or more key employees or our failure to attract, retain and motivate qualified personnel could have a material adverse effect on our business.

A number of our employees are unionized, and any work stoppages by our unionized employees may have a material adverse effect on our results of operations.

Approximately 15% of our employees are represented by labor unions as of December 31, 2007. As of December 31, 2007, we had 13 collective bargaining agreements. We may become subject to significant wage

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increases or additional work rules imposed by future agreements with labor unions representing our employees. Any such cost increases or new work rule implementation could increase our production costs and our selling, general, and administrative expenses to a material extent. In addition, although we have not experienced any strikes or other significant work interruptions in recent years and have maintained generally favorable relations with our employees, no assurance can be given that there will not be any work stoppages or other labor disturbances in the future, which could adversely impact our financial results.

Our retained accident risk is based on estimates, which may not be accurate and adjustments to these estimates may have a material adverse affect on our results of operations in any period in which such adjustment occurs.

We retain a portion of the accident risk under vehicle liability, workers’ compensation and other insurance programs. Loss accruals are based on our best estimate of the cost of resolution of these matters and are adjusted periodically as circumstances change. Due to limitations inherent in the estimation process, our estimates may change. Changes in the estimates of these accruals are charged or credited to earnings in the period determined and may have a material adverse affect on our results of operations in any such period.

Federal and state transportation regulations, as well as increases in the cost of fuel, could impose substantial costs on us, which could adversely affect our results of operations.

As of December 31, 2007, we have a fleet of approximately 240 tractors, 40 trucks and 390 trailers to service customers throughout the United States. The U.S. Department of Transportation, or DOT, regulates our operations, and we are subject to safety requirements prescribed by the DOT. Vehicle dimensions and driver hours of service also are subject to both federal and state regulation. More restrictive limitations on vehicle weight and size, trailer length and configuration or driver hours of service would increase our costs.

In addition, distributors are inherently dependent upon energy to operate and, therefore, are impacted by changes in diesel fuel prices. The cost of fuel, which has been at a historically high level over the last two years, is largely unpredictable and has a significant impact on the Company’s results of operations. Fuel availability, as well as pricing, is also impacted by political and economic factors. It is difficult to predict the future availability of fuel due to the following, among other, factors: dependency on foreign imports of crude oil and the potential for hostilities or other conflicts in oil producing areas; limited refining capacity; and the possibility of changes in governmental policies on fuel production, transportation and marketing. Significant disruptions in the supply of fuel could have a negative impact on the Company’s operations and results of operations.

ITEM 1B — UNRESOLVED STAFF COMMENTS

None.

ITEM 2 — PROPERTIES

Our corporate headquarters is located in leased facilities at 555 Maryville University Drive, Suite 400, St. Louis, Missouri 63141. We lease approximately half of our distribution centers and own the balance. Warehouse space at distribution centers aggregated to approximately 3.8 million square feet as of December 31, 2007. Distribution centers range in size from 21,100 square feet to 260,000 square feet. The types of facilities at these centers vary by location, from traditional wholesale distribution warehouses to facilities with broad product offerings and capabilities for a wide range of value added services such as pre-hung door operations. We believe that our locations are well maintained and adequate for their purposes.

ITEM 3 — LEGAL PROCEEDINGS

We are involved in various claims and litigation arising principally in the ordinary course of business. We believe that the disposition of these matters will not have a material adverse effect on our business or our financial condition.

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

Environmental Matters

In 1995, Huttig was identified as a potentially responsible party in connection with the clean up of contamination at a formerly owned property in Montana that was used for the manufacture of wood windows. We are voluntarily remediating this property under the oversight of and in cooperation with the Montana Department of Environmental Quality (Montana DEQ) and are complying with a 1995 unilateral administrative order of the Montana DEQ to complete a remedial investigation and feasibility study. The remedial investigation was completed and approved in 1998 by the Montana DEQ, which has issued its final risk assessment of this property. In March 2003, the Montana DEQ approved Huttig’s work plan for conducting a feasibility study to evaluate alternatives for cleanup. In July 2004, we submitted the feasibility study report, which evaluated several potential remedies, including continuation and enhancement of remedial measures already in place and operating. We also submitted plans for testing a newer technology that could effectively remediate the site. The Montana DEQ approved these plans and a pilot test of the remediation technology was completed in July 2007. The Montana DEQ is in the process of reviewing the results of the pilot test. After evaluating the results of the pilot test, the Montana DEQ will comment on the feasibility study report and its recommended remedy, and then will select a final remedy, publish a record of decision and negotiate with Huttig for an administrative order of consent on the implementation of the final remedy. We spent less than $0.2 million on remediation costs at this site in each of the years ended December 31, 2007 and 2006. The annual level of future remediation expenditures is difficult to estimate because of the uncertainty relating to the final remedy to be selected by the Montana DEQ. As of December 31, 2007, we have accrued $0.6 million for future costs of remediating this site, which management believes represents a reasonable estimate, based on current facts and circumstances, of the currently expected costs of continued remediation. Until the Montana DEQ selects a final remedy, however, management cannot estimate the top of the range of loss or cost to Huttig of the final remediation order.

In June 2004, as part of the due diligence conducted by a party interested in acquiring the American Pine Products facility, a previously unknown release of petroleum hydrocarbons and pentachlorophenol, or PCP, was discovered in soil and groundwater at the facility. Based on the initial investigation, we believe that the source of the contamination was a former wood-dipping operation on the property that was discontinued approximately 20 years ago, prior to our acquiring the facility. We voluntarily reported this discovery to the Oregon Department of Environmental Quality (Oregon DEQ) and agreed to participate in the Oregon DEQ’s voluntary cleanup program. Pursuant to this program, we have begun to remediate the property by product recovery under the oversight of the Oregon DEQ. We completed our investigation of the nature and extent of contamination and submitted a final remedial investigation report to the Oregon DEQ in November 2007. The remedial investigation report was approved by the Oregon DEQ in December 2007. We are currently preparing a feasibility study report that will evaluate the possible remedies for the site, and expect to submit it to the Oregon DEQ in the first quarter of 2008. We have also placed previous owners of the facility on notice of the related claim against them and continue to review whether we can recover our costs from other possible responsible parties. We spent less than $0.2 million on remediation costs at this site in each of the years ended December 31, 2007 and 2006. As of December 31, 2007, we have accrued approximately $0.2 million for future costs of remediating this site, which management believes represents a reasonable estimate, based on current facts and circumstances, of the currently expected costs of continued remediation. Until the Oregon DEQ selects a final remedy, however, management cannot estimate the top of the range of loss or cost to Huttig of the final remediation order.

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

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

No matters were submitted to a vote of our shareholders during the fourth quarter of 2007.

PART II

ITEM 5 — MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is listed on the New York Stock Exchange and trades under the symbol “HBP.”

At February 22, 2008, there were approximately 2,334 holders of record of our common stock. The following table sets forth the range of high and low sale prices of the common stock on the New York Stock Exchange Composite Tape during each quarter of the years ended December 31, 2007 and 2006:

	2007				2006
	High		Low		High		Low
First Quarter		6.87		5.26		9.31		7.93
Second Quarter		8.77		6.05		9.53		5.96
Third Quarter		7.66		4.81		8.19		4.78
Fourth Quarter		5.69		3.30		6.30		4.73

We have never declared, nor do we anticipate at this time declaring or paying, any cash dividends on our common stock in the foreseeable future in order to make cash generated available for use in operations, debt reduction, stock repurchases and, if any, acquisitions. Provisions of our credit facility contain various covenants, which, among other things, limit our ability to incur indebtedness, incur liens, make certain types of acquisitions, declare or pay dividends, repurchase stock or sell assets. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

See Part III, Item 12, for information on securities authorized for issuance under equity compensation plans.

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Performance Graph

The following Performance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into such filing.

The following table compares total shareholder returns for the Company over the last five years to the Standard and Poor’s 500 Stock Index and that of a peer group made up of other building material and industrial products distributors assuming a $100 investment made on December 31, 2002. Each of the three measures of cumulative total return assumes reinvestment of dividends. The stock performance shown on the graph below is not necessarily indicative of future price performance.

	12/02		12/03		12/04		12/05		12/06		12/07
Huttig Building Products	$	100.00		105.26		366.67		294.74		185.61		140.00
S&P 500	$	100.00		128.68		142.69		149.69		173.34		182.86
Peer Group Index(1)	$	100.00		144.55		223.01		341.64		277.75		188.66

(1) The peer group includes the following companies: QEP Co., Watsco Inc., Building Materials Holding Corporation and Universal Forest Products, Inc.

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ITEM 6 — SELECTED CONSOLIDATED FINANCIAL DATA

The following table summarizes certain selected financial data of continuing operations of Huttig for each of the five years in the period ended December 31, 2007. The information contained in the following table may not necessarily be indicative of our past or future performance. Such historical data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and notes thereto included elsewhere in this report.

	Year Ended December 31,
	2007			2006			2005(3)			2004			2003
	(In millions, except per share data)
Income Statement Data(1):
Net sales	$	874.8		$	1,102.7		$	1,097.2		$	938.4		$	790.5
Cost of sales		709.8			896.9			884.7			756.4			639.5
Gross margin		165.0			205.8			212.5			182.0			151.0
Operating expenses		174.9			209.9			182.9			157.7			144.1
Gain on disposal of capital assets		(2.4	)		—			(2.5	)		(4.6	)		(1.1	)
Operating profit (loss)		(7.5	)		(4.1	)		32.1			28.9			8.0
Interest expense, net		4.2			5.3			4.6			4.6			6.5
Income (loss) from continuing operations before income taxes		(11.7	)		(10.0	)		27.5			23.8			2.2
Provision (benefit) for income taxes		(3.7	)		(2.3	)		10.4			8.2			0.8
Net income (loss) from continuing operations		(8.0	)		(7.7	)		17.1			15.6			1.4
Per share:
Net income (loss) from continuing operations (basic)		(0.39	)		(0.38	)		0.85			0.80			0.07
Net income (loss) from continuing operations (diluted)		(0.39	)		(0.38	)		0.84			0.78			0.07
Balance Sheet Data (at end of year):
Total assets		212.7			250.6			271.3			218.8			228.6
Debt — bank, capital leases and other obligations(2)		26.6			45.7			33.2			37.5			67.8
Total shareholders’ equity		104.3			109.7			114.9			91.0			72.2

(1)	Amounts exclude operations classified as discontinued.
(2)	Debt includes both current and long-term portions of bank debt, capital leases and other obligations. See Note 5 to our consolidated financial statements.
(3)	Texas Wholesale Buildings Materials, Ltd. was acquired on January 11, 2005.

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ITEM 7 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Huttig is a distributor of building materials used principally in new residential construction and in home improvement, remodeling and repair work. We distribute our products through 36 distribution centers serving 44 states and sell primarily to building materials dealers, national buying groups, home centers and industrial users, including makers of manufactured homes.

Industry Conditions

Various factors historically have caused our results of operations to fluctuate from period to period. These factors include levels of construction, home improvement and remodeling activity, weather, prices of commodity wood and steel products, interest rates, competitive pressures, availability of credit and other local, regional and economic conditions. Many of these factors are cyclical or seasonal in nature. During the past two years, our results of operations have been adversely affected by the severe downturn in new housing activity in the United States. We expect the severe downturn in new housing activity to continue to adversely affect our operating results throughout 2008. We anticipate that further fluctuations in operating results from period to period will continue in the future. Our first quarter and fourth quarter are generally adversely affected by winter weather patterns in the Midwest and Northeast, which typically result in seasonal decreases in levels of construction activity in these areas. Because much of our overhead and expenses remain relatively fixed throughout the year, our operating profits tend to be lower during the first and fourth quarters.

We believe we have the product offerings, warehouse and builder support facilities, personnel, systems infrastructure and financial and competitive resources necessary for continued business success. Our future revenues, costs and profitability, however, are all likely to be influenced by a number of risks and uncertainties, including those in Item 1A — RISK FACTORS.

Critical Accounting Policies

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require management to make estimates and assumptions. Management bases these estimates and assumptions on historical results and known trends as well as management forecasts. Actual results could differ from these estimates and assumptions.

Accounts Receivable — Trade accounts receivable consist of amounts owed for orders shipped to customers and are stated net of an allowance for doubtful accounts. Huttig’s corporate management establishes an overall credit policy for sales to customers and delegates responsibility for most credit decisions to credit personnel located within Huttig’s two regions. The allowance for doubtful accounts is determined based on a number of factors including when customer accounts exceed 90 days past due or sooner depending on the credit strength of the customer. Our credit policies, together with monitoring of customer balances, have resulted in average bad debt expense of less than 0.1% of net sales during each of the last three years. Due to the current downturn in new housing activity, we expect that our bad debt expense could increase as our customers experience greater financial difficulties.

Inventory — Inventories are valued at the lower of cost or market. We review inventories on hand and record a provision for slow-moving and obsolete inventory based on historical and expected sales.

Valuation of Goodwill and Other Long-Lived Assets — We test the carrying value of our goodwill at each operating unit for impairment on an annual basis and between annual tests in certain circumstances. The carrying value of goodwill is considered impaired when an operating unit’s fair market value is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of goodwill. We test the carrying value of other long-lived assets, including intangible and other tangible assets, for impairment when events and circumstances warrant such review. The carrying value of long-lived assets is considered impaired when the anticipated undiscounted cash flows from such assets are less than the carrying value. In that event, a loss is recognized based on the amount by which the carrying

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value exceeds the fair market value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved.

Contingencies — We accrue expenses when it is probable that an asset has been impaired or a liability has been incurred and we can reasonably estimate the expense. Contingencies for which we have made accruals include environmental, product liability and other legal matters. It is possible that future results of operations for any particular quarter or annual period and our financial condition could be materially affected by changes in assumptions or other circumstances related to these matters. We accrue an estimate of the cost of resolution of these matters and make adjustments to the amounts accrued as circumstances change.

Insurance — We carry insurance policies on insurable risks with coverages and other terms that we believe are appropriate. We generally have self-insured retention limits and have obtained fully insured layers of coverage above such self-insured retention limits. Accruals for self-insurance losses are made based on our claims experience. We accrue for liabilities for existing and unreported claims when it is probable that future costs will be incurred and when we can estimate those costs.

Supplier Rebates — We enter into agreements with certain vendors providing for inventory purchase rebates upon achievement of specified volume purchasing levels. We record vendor rebates as a reduction of the cost of inventory purchased.

Income Taxes— We operate within multiple taxing jurisdictions and are subject to audit in these jurisdictions. These audits can involve complex issues, which may require an extended period of time to resolve. We regularly review our potential tax liabilities for tax years subject to audit. Changes in our tax liability occurred in 2007 and may occur in the future as our assessment changes based on the progress of tax examinations in various jurisdictions and/or changes in tax regulations. In management’s opinion, adequate provisions for income taxes have been made for all years presented.

Deferred tax assets and liabilities are recognized for the future tax benefits or liabilities attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates would be recognized in income in the period that includes the enactment date. We regularly review our deferred tax assets for recoverability and establish a valuation allowance when we believe that such assets may not be recovered, taking into consideration historical operating results, expectations of future earnings, changes in operations, the expected timing of the reversal of existing temporary differences and available tax planning strategies.

Share-Based Compensation — We have share-based compensation plans under which employees and directors may be granted awards. Prior to January 1, 2006, we accounted for stock-based compensation utilizing the intrinsic value method in accordance with the provisions of Accounting Principles Board Opinion No. 25 (APB 25), “Accounting for Stock Issued to Employees” and related Interpretations. Generally, no compensation expense was recognized for fixed option plans because the exercise prices of employee stock options equaled the market prices of the underlying stock on the dates of grant. However, prior to adoption of Statement of Financial Accounting Standards No. 123 (revised) “Share-Based Payment” (SFAS 123R), share-based compensation had been included in pro forma disclosures in the financial statement footnotes for periods prior to 2006.

Effective January 1, 2006, we adopted the fair value recognition provisions of SFAS No. 123R using the modified-prospective transition method. Among other items, SFAS 123R eliminated the use of APB 25 and the intrinsic value method of accounting, and required companies to recognize the cost of employee services received in exchange for awards of equity instruments, based on the grant date fair value of those awards, in the financial statements.

Under the modified-prospective transition method, awards that are granted, modified, repurchased or canceled after the date of adoption should be measured and accounted for in accordance with SFAS No. 123R. Stock-based awards that are granted prior to the effective date should continue to be accounted for in

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accordance with SFAS No. 123, except that stock option expense for unvested options must be recognized in the statement of operations.

We estimate the fair value of stock option awards on the date of grant utilizing a modified Black-Scholes option pricing model. The Black-Scholes option valuation model was developed for use in estimating the fair value of short-term traded options that have no vesting restrictions and are fully transferable. The estimate may materially change because it depends on, among other things, levels of share-based payments granted, the market value of our common stock as well as assumptions regarding a number of complex variables. These variables include, but are not limited to, our stock price, volatility, risk-free interest rate, dividend rate and employee stock option exercise behaviors and the related tax impact.

SFAS 123R also requires stock option award forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. If actual forfeitures vary from our estimates, we will recognize the difference in compensation expense in the period the actual forfeitures occur or when options vest.

Results of Operations

Fiscal 2007 Compared to Fiscal 2006

Continuing Operations

Net sales from continuing operations were $874.8 million in 2007, which were $227.9 million, or approximately 21%, lower than 2006. This decrease was attributable to a significant decline in new housing activity as new housing starts in the United States decreased 25% to approximately 1.35 million in 2007 from 1.80 million in 2006, including 1.05 million single-family residences in 2007 versus 1.47 million in 2006, based on data from the U.S. Census Bureau. We anticipate decreased housing starts in 2008 versus 2007 based on the current level of housing activity and industry forecasts for 2008.

By product category, sales decreased in all major product categories in 2007 from 2006. Millwork sales decreased 26% in 2007 to $436.9 million. Building product sales decreased 9% in 2007 to $321.7 million. Wood products decreased 27% to $116.2 million in 2007 with a 25% decrease in sales of engineered wood products and a 28% decrease in sales of other wood products. Sales of building products decreased less than the overall market due to new product initiatives in the building products category that we implemented over the past several years, including initiatives with respect to composite decking and railing, fasteners, connectors and housewrap.

Gross margin decreased approximately 20% to $165.0 million or 18.9% of sales in 2007 as compared to $205.8 million or 18.7% of sales in 2006. The 2007 results include a $1.5 million impact, or 0.1% of sales, from charges related to the impairment of inventory from liquidating inventory at our closed branches. The 2006 results include a $5.4 million impact, or 0.5% of sales, from charges related to the impairment of inventory associated with the exit of a wood decking product line and the conversion of six branches to a new exterior door vendor and from liquidating inventory at our closed branches. Excluding the 2007 and 2006 impairment charges, gross margin percentage decreased to 19.0% in 2007 from 19.2% in 2006. The 2007 gross margin percentage was adversely impacted by the lower mix of millwork sales and lower vendor rebates earned as compared to 2006, which was partially offset by a greater mix of higher margin products sold out of warehouse.

Operating expenses decreased $35.0 million to $174.9 million or 20.0% of sales in 2007, compared to $209.9 million or 19.0% of sales in 2006. Operating expenses for 2007 include $4.2 million of expenses, primarily severance and lease termination, associated with the shut down, consolidation or sale of six branches during 2007, severance costs associated with other workforce reductions and consolidation of leased space at headquarters. Operating expenses for 2007 also include $0.4 million related to goodwill impairment associated with continuing branch operations. Operating expenses for 2006 include $10.7 million of expenses related to the decision to discontinue the implementation of, and write-off capitalized costs associated with, a new enterprise resource planning system, $1.9 million of expenses, primarily severance and lease termination, associated with the shut down and consolidation of five branches during the third and fourth quarters of 2006

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and $0.9 million related to severance costs associated with other workforce reductions. Operating expenses in 2007 also reflected decreased wage and benefit costs from lower headcount, lower incentive compensation and lower building and equipment rent associated with reduced infrastructure levels. In the 2008 first quarter, the Company expects to incur an additional $0.5 million in charges related to the cost reduction actions initiated in the 2007 fourth quarter.

The results for the year ended December 31, 2007 included a gain on disposal of capital assets of $2.4 million primarily as a result of the sale of three previously closed facilities.

Net interest expense was $4.2 million in 2007 compared to $5.3 in 2006 primarily due to lower average debt outstanding and lower LIBOR-based borrowing rates in 2007 versus 2006. In addition, in 2006, we refinanced our previous credit agreement and recorded a non-cash charge of $1.1 million to write off the remaining unamortized loan fees related to this credit agreement and a $0.5 million gain on termination of a related interest rate swap in place on the prior credit facility.

Income taxes as a percentage of pre-tax loss for the years ended December 31, 2007 and 2006 were approximately 32% and 23%, respectively. In 2006, the benefit for certain state tax net operating loss carry forwards increased by $1.3 million, but was offset by a $2.7 million increase in the related valuation allowance, resulting in a $1.4 million net reduction to the overall 2006 income tax benefit.

As a result of the foregoing factors, we incurred a loss from continuing operations of $8.0 million in 2007 as compared to a loss from continuing operations of $7.7 million in 2006.

Discontinued Operations

Discontinued operating results in 2007 included $0.2 million in charges, net of tax.

Fiscal 2006 Compared to Fiscal 2005

Net sales from continuing operations were $1,102.7 million in 2006, which were $5.5 million higher than 2005. Our net sales increased 9% in the first half of 2006 over 2005, which increase was mostly offset by a 7% decline in the second half of 2006 over 2005 when the housing market began to decline. New housing starts in the United States decreased to approximately 1.8 million in 2006 from 2.1 million in 2005, including 1.47 million single-family residences in 2006 versus 1.72 million in 2005, based on data from the U.S. Census Bureau.

By product category, sales increased in millwork and building products, compared to 2005 and declined in wood products. Millwork sales increased 1% in 2006 to $591.6 million led by interior doors and columns, which increases were partially offset by a decrease in window sales. Building product sales increased 7% in 2006 to $351.9 million led by decking, connectors, fasteners and roofing. Wood products decreased 14% to $159.2 million in 2006 with an 11% increase in sales of engineered wood products partially offsetting a 22% decrease in sales of other wood products.

Gross margin decreased approximately 3% to $205.8 million or 18.7% of sales in 2006 as compared to $212.5 million or 19.4% of sales in 2005. The 2006 results include a $5.4 million, or 0.5% of sales, impact from charges related to the impairment of inventory associated with the exit of a wood decking product line and the conversion of six branches to a new exterior door vendor and from liquidating inventory at our closed branches. These items decreased gross margin percentage by approximately one-half of a percentage point in 2006. In addition, the 2006 gross margin percentage was negatively impacted from lower gross margins on exterior and interior doors and building products and higher customer rebates as compared to 2005.

Operating expenses increased $27.0 million to $209.9 million or 19.0% of sales in 2006, compared to $182.9 million or 16.7% of sales in 2005. Operating expenses for 2006 include $10.7 million of expenses related to the decision to discontinue the implementation of, and write-off capitalized costs associated with, a new enterprise resource planning system, $1.9 million of expenses, primarily severance and lease termination, associated with the shut down and consolidation of five branches during the third and fourth quarters of 2006, and $0.9 million related to severance cost associated with other workforce reductions in addition to the

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reductions in force associated with the branch closures and consolidation. Operating expenses in 2006 also reflected increased wage and benefit costs, fuel costs and building and equipment rent partially offset by lower incentive compensation costs. With the adoption of SFAS No. 123R, we recorded total stock-based compensation expense of $1.8 million in 2006 compared to $0.6 million in 2005.

The results for the year ended December 31, 2005 included a gain on the sale of a facility of $2.5 million.

Net interest expense was $5.3 million in 2006 compared to $4.6 in 2005 primarily due to higher LIBOR-based borrowing rates in 2006 versus 2005. In addition, in 2006, we refinanced our previous credit agreement and recorded a non-cash charge of $1.1 million to write off the remaining unamortized loan fees related to this credit agreement and a $0.5 million gain on termination of a related interest rate swap in place on the prior credit facility.

Income taxes as a percentage of pre-tax income (loss) for the years ended December 31, 2006 and 2005 were approximately 23% and 38%, respectively. In 2006, the benefit for certain state tax net operating loss carry forwards increased by $1.3 million, but was offset by a $2.7 million increase in the related valuation allowance, resulting in a $1.4 million net reduction to the overall 2006 income tax benefit.

As a result of the foregoing factors, we incurred a loss from continuing operations of $7.7 million in 2006 as compared to income from continuing operations of $17.1 million in 2005.

Liquidity and Capital Resources

We depend on cash flow from operations and funds available under our revolving credit facility to finance seasonal working capital needs, capital expenditures and any acquisitions that we may undertake. Our working capital requirements are generally greatest in the second and third quarters, which reflect the seasonal nature of our business. The second and third quarters are also typically our strongest operating quarters, largely due to more favorable weather throughout many of our markets compared to the first and fourth quarters. We typically generate cash from working capital reductions in the fourth quarter of the year and build working capital during the first quarter in preparation for our second and third quarters. We also maintain significant inventories to meet rapid delivery requirements of our customers and to enable us to obtain favorable pricing, delivery, and service terms with our suppliers. At December 31, 2007 and 2006, inventories constituted approximately 42% and 39% of our total assets, respectively. We also closely monitor operating expenses and inventory levels during seasonally affected periods and, to the extent possible, manage variable operating costs to minimize seasonal effects on our profitability.

Operations.  Cash provided from operating activities from continuing operations increased by $12.5 million to $13.8 million for the year ended December 31, 2007, from $1.3 million in 2006. Accounts receivable decreased by $18.0 million during 2007 compared to a decrease of $15.8 million a year ago. Days sales outstanding improved by 0.8 days to 28.5 days at December 31, 2007 from 29.3 days at December 31, 2006 based on annualized fourth quarter sales for the respective periods. Inventory decreased during 2007 by $8.6 million compared to a decrease of $2.4 million in 2006. Our inventory turns decreased to 6.2 turns in 2007 from 6.7 turns in 2006. Accounts payable decreased by $12.0 million during 2007 compared to a $26.4 million decrease in the year ago period.

Investing.  In 2007, net cash provided by investing activities was $1.0 million, as compared to $8.0 million of net cash used in investing activities in 2006. The Company received proceeds of $4.0 million, primarily as a result of our sales of the Spokane, WA, Grand Rapids, MI and Green Bay, WI facilities in 2007. In 2007, the Company invested $3.0 million in software and in machinery and equipment at multiple locations. Cash used in investing activities of $8.0 million for 2006 reflects $4.5 million related to the new enterprise resource planning system, that was subsequently written-off, and the balance relates primarily to machinery and equipment at multiple branch locations, net of proceeds from the sale of various other equipment.

Financing.  Cash used in financing activities of $19.1 million in 2007 reflects net debt repayments of $17.0 million on our revolving line of credit facility and payments of $3.2 for our capital lease and other debt obligations, which are partially offset by $1.1 million received from the exercise of stock options. Cash provided by financing activities of $11.4 million in 2006 reflects net borrowings of $16.0 million on our

20

revolving line of credit and term facilities and $1.1 million from the exercise of stock options, which were partially offset by payments of $5.3 million for our capital lease and other obligations and debt issuance costs of $0.4 million.

At December 31, 2007, under our credit facility we had revolving credit borrowings of $24.8 million outstanding at a weighted average interest rate of 6.53%, letters of credit outstanding totaling $5.2 million, primarily for health and workers’ compensation insurance, and $63.0 million of additional borrowing capacity. In addition, we had $1.8 million of other obligations outstanding at December 31, 2007.

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

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

Off-Balance Sheet Arrangements

In addition to funds available from operating cash flows and our bank credit facility as described above, we use operating leases as a principal off-balance sheet technique. Operating leases are employed as an alternative to purchasing certain property, plant and equipment. Future rental commitments, extending through the year 2020, under all non-cancelable operating leases in effect at December 31, 2007 total $84.5 million.

Divestitures

During 2005, we sold our remaining Builder Resource one-step branches and certain assets, including accounts receivable, inventory, equipment, and real property for $10.8 million in cash and reported an after-tax gain of $1.3 million. The after-tax gain is included in net income from discontinued operations for the year ended December 31, 2005. We used the proceeds of the sale to pay down debt and trade payables. We reported these branches as discontinued operations and related assets were classified as “held for sale” effective December 31, 2004.

Acquisition

During the first quarter of 2005, we, through our wholly owned subsidiary, Huttig Texas Limited Partnership, completed the purchase of substantially all of the assets of Texas Wholesale Building Materials for $15.0 million in cash, $2.2 million in guaranteed payments to the former majority owner and the assumption of certain liabilities. The source of funds for the acquisition was our existing credit facility.

Commitments and Contingencies

The table below summarizes our contractual obligations as of December 31, 2007 (in millions):

			Payments Due by Period
					2009-		2011-		Beyond
	Total		2008		2010		2012		2012
Long-term debt, including current portion(1)	$	26.6	$	1.2	$	0.4	$	24.9	$	0.1
Operating lease obligations		84.5		16.8		28.4		20.5		18.8
Guaranteed payments(2)		1.5		0.4		0.8		0.3		—
Purchase obligations(3)		—		—		—		—		—
Total	$	112.6	$	18.4	$	29.6	$	45.7	$	18.9

21

(1)	Amounts represent the expected cash payments of our long-term debt and do not include any fair value adjustments. The estimated fair value of our long-term debt approximates book value because interest rates on nearly all of the outstanding borrowings are reset every 30 to 90 days.
(2)	Amounts represent guaranteed payments related to the acquisition of Texas Wholesale Building Materials, Ltd. on January 11, 2005.
(3)	On August 2, 2004, we sold to Woodgrain Millwork, Inc. substantially all of the assets, but excluding the land, buildings, and building improvements, of American Pine Products, a mouldings manufacturing facility in Prineville, Oregon. We also entered into a non-exclusive supply agreement with Woodgrain under which we have agreed to purchase mouldings, doors, windows, door frames and other millwork products from Woodgrain for a period of five years at market prices. In 2008 and 2009, the supply agreement requires that we purchase a certain minimum unit volume of mouldings and door frames from Woodgrain and that Woodgrain sell such products at competitive market prices. The minimum volume requirements represent less than half of our current overall requirements for such products.

Recent Accounting Developments

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (SFAS 157). SFAS 157 provides guidance for using fair value to measure assets and liabilities. It also responds to investors’ requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. SFAS 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value, and does not expand the use of fair value in any new circumstances. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. We are currently evaluating the effect that the adoption of SFAS 157 will have on our consolidated results of operations and financial condition and are not yet in a position to determine such effects.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS 159). SFAS 159 allows entities the option to measure eligible financial instruments at fair value as of specified dates. Such election, which may be applied on an instrument-by-instrument basis, is typically irrevocable once elected. SFAS 159 is effective for fiscal years beginning after November 15, 2007. We are currently evaluating the effect that the adoption of SFAS 159 will have on our consolidated results of operations and financial condition and are not yet in a position to determine such effects.

Cautionary Statement Relevant to Forward-looking Information for the Purpose of “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995

This Annual Report on Form 10-K and our annual report to shareholders contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding:

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

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

•  our expectation that housing starts will decrease in 2008 from 2007;

•  our expectation that the severe downturn in new housing activity will continue to adversely affect our operating results during 2008;

•  our expectation that the bad debt expense could increase as our customers experience greater financial difficulties as a result of the current downturn in new housing activity;

•  our expectation that the disposition of the various claims and litigation in which we are involved will not have a material effect on our business or financial condition;

22

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

•  the future impact of competition and our ability to maintain favorable terms with our suppliers and transition to alternative suppliers of building products, and the effects of slower economic activity on our results of operations;

•  our expectation that the fluctuations in wood and steel commodity prices between the time we buy the products and the time we resell them will occur in the future;

•  our expectations regarding the additional charges we will incur in the 2008 first quarter related to cost reduction actions initiated in the 2007 fourth quarter;

•  our liquidity and exposure to market risk;

•  our anticipation that we will not pay dividends in the future;

•  our estimate of future amortization expense for intangible assets;

•  our expectation that there will not be any significant increases or decreases to our unrecognized tax benefits within the 12 months of the financial statement reporting date; and

•  cyclical and seasonal trends.

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

These statements present management’s expectations, beliefs, plans and objectives regarding our future business and financial performance. These forward-looking statements are based on current projections, estimates, assumptions and judgments, and involve known and unknown risks and uncertainties. We disclaim any obligation to publicly update or revise any of these forward-looking statements. There are a number of factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements. These factors include, but are not limited to those set forth under Item 1A-Risk Factors.

ITEM 7A — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have exposure to market risk as it relates to effects of changes in interest rates. We had debt outstanding at December 31, 2007 under our credit facility of $24.8 million.

All of our debt under our revolving credit facility accrues interest at a floating rate basis. If market interest rates for LIBOR had been different by an average of 1% for the year ended December 31, 2007, our interest expense and income before taxes would have changed by $0.5 million. These amounts are determined by considering the impact of the hypothetical interest rates on our borrowing cost. This analysis does not consider the effects of any change in the overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, management may take actions to further mitigate its exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in our financial structure.

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

23

ITEM 8 — FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Huttig Building Products, Inc.:

We have audited the accompanying consolidated balance sheets of Huttig Building Products, Inc. as of December 31, 2007 and 2006, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2007. We also have audited Huttig Building Products, Inc.’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Huttig Building Products, Inc.’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Huttig Building Products, Inc. as of December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles. Also in our opinion, Huttig Building Products, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

/s/ KPMG LLP

St. Louis, Missouri

February 29, 2008

24

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2007			2006			2005
	(In millions, except share and per share data)
Net sales	$	874.8		$	1,102.7		$	1,097.2
Cost of sales		709.8			896.9			884.7
Gross margin		165.0			205.8			212.5
Operating expenses		174.9			209.9			182.9
Gain on disposal of capital assets		(2.4	)		—			(2.5	)
Operating income (loss)		(7.5	)		(4.1	)		32.1
Interest expense, net		4.2			5.3			4.6
Write-off of unamortized loan fees		—			1.1			—
Gain on derivative		—			(0.5	)		—
Income (loss) from continuing operations before income taxes		(11.7	)		(10.0	)		27.5
Provision (benefit) for income taxes		(3.7	)		(2.3	)		10.4
Income (loss) from continuing operations		(8.0	)		(7.7	)		17.1
Income (loss) from discontinued operations, net of taxes		(0.2	)		—			1.3
Net Income (loss)	$	(8.2	)	$	(7.7	)	$	18.4
Net income (loss) from continuing operations per share — basic	$	(0.39	)	$	(0.38	)	$	0.85
Net income (loss) from discontinued operations per share — basic		(0.01	)		—			0.07
Net income (loss) per share — basic	$	(0.40	)	$	(0.38	)	$	0.92
Net income (loss) from continuing operations per share — diluted	$	(0.39	)	$	(0.38	)	$	0.84
Net income (loss) from discontinued operations per share — diluted		(0.01	)		—			0.06
Net income (loss) per share — diluted	$	(0.40	)	$	(0.38	)	$	0.90

See notes to consolidated financial statements

25

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,
	2007		2006
	(In millions)
ASSETS
CURRENT ASSETS:
Cash and equivalents	$	1.8	$	6.1
Trade accounts receivable, net		56.1		74.1
Inventories, net		88.7		97.3
Other current assets		13.6		15.9
Total current assets		160.2		193.4
PROPERTY, PLANT AND EQUIPMENT
Land		5.6		6.0
Building and improvements		30.2		32.8
Machinery and equipment		30.0		31.9
Gross property, plant and equipment		65.8		70.7
Less accumulated depreciation		39.2		40.7
Property, plant and equipment, net		26.6		30.0
OTHER ASSETS:
Goodwill, net		18.3		19.1
Other		5.1		5.8
Deferred income taxes		2.5		2.3
Total other assets		25.9		27.2
TOTAL ASSETS	$	212.7	$	250.6

See notes to consolidated financial statements

26

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,
	2007			2006
	(In millions, except share and per share data)
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	1.2		$	2.9
Trade accounts payable		50.1			62.1
Deferred income taxes		5.3			4.5
Accrued compensation		6.3			7.8
Other accrued liabilities		15.9			16.8
Total current liabilities		78.8			94.1
NON-CURRENT LIABILITIES:
Long-term debt, less current maturities		25.4			42.8
Other non-current liabilities		4.2			4.0
Total non-current liabilities		29.6			46.8
SHAREHOLDERS’ EQUITY
Preferred shares; $.01 par (5,000,000 shares authorized)		—			—
Common shares; $.01 par (50,000,000 shares authorized:
20,968,445 shares issued at December 31, 2007 and 20,896,145 shares issued at December 31, 2006)		0.2			0.2
Additional paid-in capital		36.1			35.5
Retained earnings		68.2			76.0
Less: Treasury shares, at cost (31,219 shares at December 31, 2007 and 371,837 shares at December 31, 2006)		(0.2	)		(2.0	)
Total shareholders’ equity		104.3			109.7
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	212.7		$	250.6

See notes to consolidated financial statements

27

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

	Common Shares		Additional						Other			Treasury			Total
	Outstanding,		Paid-In			Retained			Comprehensive			Shares,			Shareholders’
	at Par Value		Capital			Earnings			Income (Loss)			at Cost			Equity
	(In millions))
Balance at January 1, 2005	$	0.2	$	33.4		$	65.3		$	(0.2	)	$	(7.7	)	$	91.0
Net income							18.4									18.4
Fair market value adjustment, net of tax										0.6						0.6
Comprehensive income																19.0
Restricted stock issued, net of forfeitures				(0.5	)								0.5			—
Stock options exercised				1.0									3.3			4.3
Stock compensation				0.6												0.6
Balance at December 31, 2005		0.2		34.5			83.7			0.4			(3.9	)		114.9
Net loss							(7.7	)								(7.7	)
Fair market value adjustment, net of tax										(0.4	)					(0.4	)
Comprehensive loss																(8.1	)
Restricted stock issued, net of forfeitures				(0.8	)								0.8			—
Stock options exercised				—									1.1			1.1
Stock compensation				1.8												1.8
Balance at December 31, 2006		0.2		35.5			76.0			—			(2.0	)		109.7
Net loss							(8.2	)								(8.2	)
Comprehensive loss																(8.2	)
Cummulative effect of adoption of FIN 48							0.4									0.4
Restricted stock issued, net of forfeitures				(1.1	)								1.1			—
Stock options exercised				0.1									0.7			0.8
Stock compensation				1.6												1.6
Balance at December 31, 2007	$	0.2	$	36.1		$	68.2		$	—		$	(0.2	)	$	104.3

See notes to consolidated financial statements

28

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2007			2006			2005
	(In millions)
Cash Flows From Operating Activities:
Net income (loss)	$	(8.2	)	$	(7.7	)	$	18.4
Adjustments to reconcile net income (loss) to cash provided by operations:
Net loss from discontinued operations		0.2			—			(1.3	)
Depreciation and amortization		4.8			6.2			6.0
Stock compensation		1.6			1.8			0.6
Impairment of long-lived assets		1.3			10.7			—
Gain on disposal of capital assets		(2.4	)		—			(2.5	)
Other adjustments		1.3			(0.3	)		0.3
Changes in operating assets and liabilities:
Trade accounts receivable		18.0			15.8			(9.4	)
Inventories		8.6			2.4			(17.2	)
Trade accounts payable		(12.0	)		(26.4	)		24.6
Other		0.6			(1.2	)		(3.7	)
Net cash provided from operating activities from continuing operations		13.8			1.3			15.8
Net cash used in operating activities from discontinued operations		—			—			(1.0	)
Total net cash provided from operating activities		13.8			1.3			14.8
Cash Flows From Investing Activities:
Capital expenditures		(3.0	)		(8.2	)		(6.5	)
Acquisition of Texas operations		—			—			(15.0	)
Proceeds from disposition of discontinued operations		—			—			10.8
Proceeds from disposition of capital assets		4.0			0.2			2.8
Total cash provided from (used in) investing activities		1.0			(8.0	)		(7.9	)
Cash Flows From Financing Activities:
Payments of debt on term and revolving credit agreements		(277.4	)		(439.1	)		(368.8	)
Borrowings of debt on term and revolving credit agreements		260.4			455.1			359.8
Repayment of capital lease and other obligations		(3.2	)		(5.3	)		(1.4	)
Debt issuance costs		—			(0.4	)		—
Exercise of stock options		1.1			1.1			3.0
Total cash provided from (used in) financing activities		(19.1	)		11.4			(7.4	)
Net increase (decrease) in cash and equivalents		(4.3	)		4.7			(0.5	)
Cash and equivalents, beginning of period		6.1			1.4			1.9
Cash and equivalents, end of period	$	1.8		$	6.1		$	1.4
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	4.3		$	4.8		$	4.2
Income taxes paid (refunded)		(4.4	)		4.8			7.3
Cash received from exercise of stock options		0.6			0.8			3.0
Non-cash financing activities:
Assets acquired with debt obligations		1.1			1.8			8.4

See notes to consolidated financial statements

29

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2007, 2006 and 2005

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES

Organization — Huttig Building Products, Inc. and subsidiaries (the “Company” or “Huttig”) is a distributor of building materials used principally in new residential construction and in home improvement, remodeling and repair work. Huttig’s products are distributed through 36 distribution centers serving 44 states and are sold primarily to building materials dealers, national buying groups, home centers and industrial users including makers of manufactured homes.

Principles of Consolidation — The consolidated financial statements include the accounts of Huttig Building Products, Inc. and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated.

Reclassifications — Certain prior year amounts have been reclassified to conform to the current year presentation.

Revenue Recognition — Revenues are recorded when title passes to the customer, which occurs upon delivery of product, less an allowance for returns, customer rebates, and discounts for early payments. Returned products for which the Company assumes responsibility are estimated based on historical returns and are accrued as a reduction of sales at the time of the original sale.

Use of Estimates — The preparation of the Company’s consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates.

Cash and Equivalents — The Company considers all highly liquid interest-earning investments with an original maturity of three months or less at the date of purchase to be cash equivalents. The carrying value of cash and equivalents approximates their fair value.

Accounts Receivable — Trade accounts receivable consist of amounts owed for orders shipped to customers and are stated net of an allowance for doubtful accounts. Huttig’s corporate management establishes an overall credit policy for sales to customers. The allowance for doubtful accounts is determined based on a number of factors including when customer accounts exceed 90 days past due along with the credit strength of the customer.

Inventory— Inventories are valued at the lower of cost or market. The Company’s entire inventory is comprised of finished goods. The Company reviews inventories on hand and records a provision for slow-moving and obsolete inventory. The provision for slow-moving and obsolete inventory is based on historical and expected sales. Approximately 85% and 84% of inventories were determined by using the LIFO (last-in, first-out) method of inventory valuation as of December 31, 2007 and December 31, 2006, respectfully. The balance of all other inventories is determined by the average cost method, which approximates costs on a FIFO (first-in, first-out) method. The replacement cost would be higher than the LIFO valuation by $8.9 million in 2007 and $9.7 million in 2006.

Supplier Rebates — The Company enters into agreements with certain vendors providing for inventory purchase rebates upon achievement of specified volume purchasing levels. The Company records vendor rebates as a reduction of the cost of inventory purchased.

Property, Plant and Equipment — Property, plant and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets and is charged to operating expenses. Buildings and improvements lives range from 3 to 25 years. Machinery and equipment

30

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

lives range from 3 to 10 years. The Company recorded depreciation expense of $4.1 million, $5.2 million and $4.9 million in 2007, 2006 and 2005, respectively.

Goodwill and Other Intangible Assets  — Goodwill is reviewed for impairment annually, or more frequently if certain indicators arise. The Company also reassesses useful lives of previously recognized intangible assets. See Note 3, “Goodwill and Other Intangible Assets” for additional information.

Valuation of Long-Lived Assets — The Company periodically evaluates the carrying value of its long-lived assets, including intangible and other tangible assets, when events and circumstances warrant such a review. The carrying value of long-lived assets is considered impaired when the anticipated undiscounted cash flows from such assets are less than the carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved.

Shipping — Costs associated with shipping products to the Company’s customers are charged to operating expense. Shipping costs were approximately $40.2 million, $43.2 million and $37.6 million in 2007, 2006, and 2005, respectively.

Income Taxes— Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes using currently enacted tax rates. A valuation allowance is established to reduce deferred income tax assets if it is more likely than not that a deferred tax asset will not be realized.

Net Income Per Share — Basic net income per share is computed by dividing income available to common stockholders by weighted average shares outstanding. Diluted net income per share reflects the effect of all other potentially dilutive common shares using the treasury stock method.

Accounting For Stock-Based Compensation — Prior to January 1, 2006, the Company accounted for share-based compensation under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). Therefore, the Company measured compensation expense for its share-based compensation using the intrinsic value method, that is, as the excess, if any, of the fair market value of the Company’s stock at the grant date over the amount required to be paid to acquire the stock, and provided the disclosures required by SFAS 123, “Accounting for Stock-Based Compensation” (“SFAS 123”) and SFAS 148, “Accounting for Stock-Based Compensation — Transition and Disclosure” (“SFAS 148”). See Footnote 9.

Effective January 1, 2006, the Company began recording compensation expense associated with stock options and other equity-based compensation in accordance with SFAS No. 123 (revised) “Share-Based Payment” (“SFAS 123R”), using the modified prospective transition method and therefore has not restated results for prior periods. Under the modified prospective transition method, share-based compensation expense for 2006 includes 1) compensation expense for all share-based awards granted on or after January 1, 2006 as determined based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R and 2) compensation expense for share-based compensation awards granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123. The Company recognizes compensation expense over the requisite service period of the award, which is generally three years.

Concentration of Credit Risk — The Company is engaged in the distribution of building materials throughout the United States. The Company grants credit to customers, substantially all of whom are dependent upon the construction sector. The Company regularly evaluates its customers’ financial condition but does not generally require collateral. The concentration of credit risk with respect to trade accounts receivable is limited due to the Company’s large customer base located throughout the United States. The

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Company maintains an allowance for doubtful accounts based upon the expected collectibility of its accounts receivable.

Accounting for Derivative Instruments and Hedging Activities — SFAS No. 133, as amended, established accounting and reporting standards for derivative instruments, including certain derivative instruments used for hedging activities. All derivative instruments, whether designated in hedging relationships or not, are required to be recorded on the balance sheet at fair value. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in other comprehensive income and are recognized in the statement of income when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings. If the derivative is not designated as a hedge for accounting purposes, changes in fair value are immediately recognized in earnings.

Financial Information About Industry Segments

Statement of Financial Accounting Standards (“SFAS”) No. 131, “Disclosures about Segments of an Enterprise and Related Information” (“SFAS 131”) defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Each of our branches is considered an operating segment of our business. Under SFAS 131, segments may be aggregated if the segments have similar economic characteristics and if the nature of the products, distribution methods, customers and regulatory environments are similar. The Company has aggregated its branches into one reporting segment, consistent with SFAS 131.

2.   RECENT ACCOUNTING DEVELOPMENTS

Recent Accounting Developments.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 provides guidance for using fair value to measure assets and liabilities. It also responds to investors’ requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value and the effect of fair value measurements on earnings. SFAS 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value, and does not expand the use of fair value in any new circumstances. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company is currently evaluating the effect that the adoption of SFAS 157 will have on its consolidated results of operations and financial condition and is not yet in a position to determine such effect.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS 159). SFAS 159 allows entities the option to measure eligible financial instruments at fair value as of specified dates. Such election, which may be applied on an instrument by instrument basis, is typically irrevocable once elected. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the effect that the adoption of SFAS 159 will have on its consolidated results of operations and financial condition and is not yet in a position to determine such effects.

3.   GOODWILL AND OTHER INTANGIBLE ASSETS

Under SFAS No. 142, “Goodwill and other Intangible Assets” (“SFAS No. 142”), goodwill is not amortized, but is reviewed for impairment annually, or more frequently if certain indicators arise. In addition, the statement requires reassessment of the useful lives of previously recognized intangible assets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

SFAS No. 142 prescribes a two-step process for impairment testing of goodwill. During the fourth quarter of each of 2007 and 2006, the Company performed the annual test for impairment of the Company’s reporting units. The Company recorded $0.4 million in goodwill impairment in 2007 and no goodwill impairment in 2006. In addition, the Company also reduced goodwill by $0.4 million for three closed branches and one sold branch in 2007. Goodwill and other intangible assets as of December 31, 2007 and 2006 consisted of the following (in millions):

					Accumulated
	Cost				Amortization
	2007		2006		2007		2006
Unamortizable intangible assets:
Goodwill, net	$	18.3	$	19.1		N/A		N/A
Amortizable intangible assets(1):
Covenant not to compete		2.5		2.5	$	1.2	$	0.8
Customer relationships		1.4		1.4		0.2		0.1
Trademarks		0.5		0.5		0.4		0.3

(1) Amortizable intangible assets are included in “Other Assets”

The Company recorded amortization expense of $0.5 million for each of the years ended December 31, 2007, 2006 and 2005. The Company expects to record amortization expense for its existing intangible assets of approximately $0.5 million per year from 2008 to 2010, approximately $0.1 million in 2010 and 2011, and in total, approximately $0.9 million thereafter.

4.   ALLOWANCE FOR DOUBTFUL ACCOUNTS

The allowance for doubtful accounts as of December 31, 2007, 2006 and 2005 consisted of the following (in millions):

	2007			2006			2005
Balance at beginning of year	$	0.8		$	0.9		$	0.8
Provision charged to expense		0.8			0.8			0.2
Write-offs, less recoveries		(0.8	)		(0.9	)		(0.1	)
Balance at end of year	$	0.8		$	0.8		$	0.9

5.   LONG-TERM DEBT

Debt as of December 31, 2007 and 2006 consisted of the following (in millions):

	2007		2006
Revolving credit facility	$	24.8	$	41.8
Other obligations		1.8		3.9
Total debt		26.6		45.7
Less current portion		1.2		2.9
Long-term debt	$	25.4	$	42.8

Credit Agreement — The Company has a five-year $160.0 million asset based senior secured revolving credit facility (“credit facility”). Borrowing availability under the credit facility is based on eligible accounts receivable and inventory. The Company has the right to add a real estate component to increase borrowing availability, but not in excess of the $160.0 million commitment. Additionally, the credit facility includes an

33

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

option to request an increase in the size of the facility by up to an additional $40.0 million, subject to certain conditions and approvals. The Company must also pay a fee in the range of 0.25% to 0.32% per annum on the average daily-unused amount of the revolving credit commitment. The entire unpaid balance under the credit facility is due and payable on October 20, 2011, the maturity date of the credit facility.

At December 31, 2007, under the credit facility the Company had revolving credit borrowings of $24.8 outstanding at a weighted average interest rate of 6.53%, letters of credit outstanding totaling $5.2 million, primarily for health and workers’ compensation insurance, and $63.0 million of additional borrowing capacity. In addition, the Company had $1.8 of other obligations outstanding at December 31, 2007.

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

In connection with the closing of the current credit facility in 2006, the Company terminated an interest rate swap agreement, associated with the term loan under the prior credit facility. The interest rate swap termination resulted in a gain of $0.5 million that partially offset a charge of $1.1 million to write off unamortized costs associated with the prior loan facility. Both the gain and write-off were recognized in the 2006 fourth quarter.

Maturities — At December 31, 2007, the aggregate scheduled maturities of debt are as follows (in millions):

2008	$	1.2
2009		0.4
2010		—
2011		24.9
2012		—
Thereafter		0.1
Total	$	26.6

The estimated fair value of the Company’s debt approximates book value since the interest rates on nearly all of the outstanding borrowings are frequently adjusted.

6.   PREFERRED SHARE PURCHASE RIGHTS

In December 1999, the Company adopted a Shareholder Rights Plan. The Company distributed one preferred share purchase right for each outstanding share of common stock at December 16, 1999. The preferred rights were not exercisable when granted and may only become exercisable under certain circumstances involving actual or potential acquisitions of the Company’s common stock by a person or affiliated persons. Depending upon the circumstances, if the rights become exercisable, the holder may be entitled to purchase shares of the Company’s Series A Junior Participating Preferred Stock. Preferred shares purchasable upon exercise of the rights will not be redeemable. Each preferred share will be entitled to preferential rights regarding dividend and liquidation payments, voting power, and, in the event of any merger, consolidation or other transaction in which common shares are exchanged, preferential exchange rate. The rights will remain in existence until December 6, 2009 unless they are earlier terminated, exercised or

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

redeemed. The Company has authorized 5 million shares of $0.01 par value preferred stock of which 250,000 shares have been designated as Series A Junior Participating Preferred Stock.

7.   COMMITMENTS AND CONTINGENCIES

The Company leases certain of its vehicles, equipment and warehouse and manufacturing facilities from various third parties with non-cancelable operating leases with various terms. Certain leases contain renewal or purchase options. Future minimum payments, by year, and in the aggregate, under these leases with initial terms of one year or more consisted of the following at December 31, 2007 (in millions):

	Non-Cancelable		Minimum
	Operating		Sublease
	Leases		Income			Net
2008	$	18.2	$	(1.4	)	$	16.8
2009		15.9		(1.2	)		14.7
2010		14.7		(1.0	)		13.7
2011		12.1		(0.6	)		11.5
2012		9.6		(0.6	)		9.0
Thereafter		20.6		(1.8	)		18.8
Total minimum lease payments	$	91.1	$	(6.6	)	$	84.5

Operating lease obligations expire in varying amounts through 2020. Rental expense for all operating leases was $23.6 million, $26.3 million and $23.2 million in 2007, 2006 and 2005, respectively.

The Company carries insurance policies on insurable risks with coverage and other terms that it believes to be appropriate. The Company generally has self-insured retention limits and has obtained fully insured layers of coverage above such self-insured retention limits. Accruals for self-insurance losses are made based on claims experience. Liabilities for existing and unreported claims are accrued for when it is probable that future costs will be incurred and can be reasonably estimated.

In 1995, Huttig was identified as a potentially responsible party in connection with the clean up of contamination at a formerly owned property in Montana that was used for the manufacture of wood windows. Huttig is voluntarily remediating this property under the oversight of and in cooperation with the Montana Department of Environmental Quality (Montana DEQ) and is complying with a 1995 unilateral administrative order of the Montana DEQ to complete a remedial investigation and feasibility study. The remedial investigation was completed and approved in 1998 by the Montana DEQ, which has issued its final risk assessment of this property. In March 2003, the Montana DEQ approved Huttig’s work plan for conducting a feasibility study to evaluate alternatives for cleanup. In July 2004, the Company submitted the feasibility study report, which evaluated several potential remedies, including continuation and enhancement of remedial measures already in place and operating. Huttig also submitted plans for testing a newer technology that could effectively remediate the site. The Montana DEQ approved these plans and a pilot test of the remediation technology was completed in July 2007. The Montana DEQ is in the process of reviewing the results of the pilot test. After evaluating the results of the pilot test, the Montana DEQ will comment on the feasibility study report and its recommended remedy, and then will select a final remedy, publish a record of decision and negotiate with Huttig for an administrative order of consent on the implementation of the final remedy. Huttig spent less than $0.2 million on remediation costs at this site in each of the years ended December 31, 2007 and 2006. The annual level of future remediation expenditures is difficult to estimate because of the uncertainty relating to the final remedy to be selected by the Montana DEQ. As of December 31, 2007, the Company has accrued $0.6 million for future costs of remediating this site, which management believes represents a reasonable estimate, based on current facts and circumstances, of the currently expected costs of

35

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

continued remediation. Until the Montana DEQ selects a final remedy, however, management cannot estimate the top of the range of loss or cost to Huttig of the final remediation order.

In June 2004, as part of the due diligence conducted by a party interested in acquiring the American Pine Products facility, a previously unknown release of petroleum hydrocarbons and pentachlorophenol, or PCP, was discovered in soil and groundwater at the facility. Based on the initial investigation, the Company believes that the source of the contamination was a former wood-dipping operation on the property that was discontinued approximately 20 years ago, prior to Huttig acquiring the facility. Huttig voluntarily reported this discovery to the Oregon Department of Environmental Quality (Oregon DEQ) and agreed to participate in the Oregon DEQ’s voluntary cleanup program. Pursuant to this program, the Company has begun to remediate the property by product recovery under the oversight of the Oregon DEQ. The Company completed an investigation and submitted a final remedial investigation report to the Oregon DEQ in November 2007. The remedial investigation report was approved by the Oregon DEQ in December 2007. Huttig is currently preparing a feasibility study report that will evaluate the possible remedies for the site, and expects to submit it to Oregon DEQ in the first quarter of 2008. Huttig has also placed previous owners of the facility on notice of the related claim against them and continues to review whether costs can be recovered from other possible responsible parties. The Company spent less than $0.2 million per year on remediation costs at this site in each of the years ended December 31, 2007 and 2006. As of December 31, 2007, Huttig has accrued approximately $0.2 million for future costs of remediating this site, which management believes represents a reasonable estimate, based on current facts and circumstances, of the currently expected costs of continued remediation. Until the Oregon DEQ selects a final remedy, however, management cannot estimate the top of the range of loss or cost to Huttig of the final remediation order.

The Company accrues expenses for contingencies when it is probable that an asset has been impaired or a liability has been incurred and management can reasonably estimate the expense. Contingencies for which the Company has made accruals include environmental, product liability and other legal matters. It is possible, however, that future results of operations for any particular quarter or annual period and our financial condition could be materially affected by changes in assumptions or other circumstances related to these matters.

8.   EMPLOYEE BENEFIT PLANS

Defined Benefit Plans — The Company participates in several multi-employer pension plans that provide benefits to certain employees under collective bargaining agreements. Total contributions to these plans were $0.7 million, $0.6 million, and $0.6 million in 2007, 2006 and 2005, respectively.

Defined Contribution Plans — The Company sponsors a qualified defined contribution plan covering substantially all its employees. The plan provides for Company matching contributions based upon a percentage of the employee’s voluntary contributions. The Company’s matching contributions were $1.3 million, $1.6 million and $1.2 million for the years ended December 31, 2007, 2006 and 2005, respectively.

The Company has established a nonqualified deferred compensation plan to allow for the deferral of employee voluntary contributions that are limited under the Company’s existing qualified defined contribution plan. The plan provides for deferral of up to 44% of an employee’s total compensation and matching contributions based upon a percentage of the employee’s voluntary contributions. The Company’s matching contributions to this plan were less than $0.1 million in each of 2007, 2006 and 2005.

9.   STOCK AND INCENTIVE COMPENSATION PLANS

2005 Executive Incentive Compensation Plan

In 2005, the Company’s Board of Directors adopted and the Company’s stockholders approved the 2005 Executive Incentive Compensation Plan under which incentive awards of up to 675,000 shares of common stock could be granted. In 2007, this Plan was amended to increase the number of shares that may be granted

36

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

by 750,000 shares, to 1,425,000 shares. In addition, upon adoption of this Plan, no further awards may be issued under the Company’s 1999 Stock Incentive Plan or the 2001 Stock Incentive Plan; however, shares forfeited under those plans are available for subsequent issuance under this Plan. The Plan allows the Company to grant awards to key employees, including restricted stock awards and stock options, subject primarily to the requirement of continued employment. The awards for this Plan are available for grant over a ten-year period unless terminated earlier by the Board of Directors. In 2006 and 2005, the Company granted 188,750 and 142,000 options with a weighted average exercise price of $8.77 and $10.05, respectively. No options were issued in 2007. The options vest 50% on the first anniversary of the date of grant, 25% on the second anniversary and the remaining 25% on the third anniversary. In 2007, the Company granted 223,500 shares of restricted stock, net of forfeitures, at an average market value of $6.31. In 2006, the Company granted 95,000 and 74,915 shares of restricted stock, net of forfeitures, at a market value of $8.78 and $8.76 per share, respectively. In 2005, the Company granted 64,000 and 25,000 shares of restricted stock, net of forfeitures, at a market value of $10.09 and $11.00 per share, respectively. The restricted shares generally vest ratably over three years; however, 74,915 shares of restricted stock granted on February 28, 2006 vested 50% on each of December 31, 2006 and December 31, 2007. The unearned compensation is amortized to expense over the respective vesting periods. No monetary consideration is paid by employees who receive restricted stock. Restricted stock can be granted with or without performance restrictions.

2005 Non-Employee Directors’ Restricted Stock Plan

In 2005, the Company’s Board of Directors adopted and the Company’s stockholders approved the 2005 Non-Employee Directors’ Restricted Stock Plan providing for awards of restricted stock and restricted stock units to directors who are not employees of the Company. This Plan replaces the 1999 Non-Employee Director Restricted Stock Plan. This Plan authorizes the granting of awards of up to 75,000 shares of stock. The awards for this Plan are available for grant over a ten-year period unless terminated earlier by the Board of Directors. In 2007, the Company granted 19,845 restricted stock units at a market value of $6.81 per share. In 2006, the Company granted 13,680 and 13,824 restricted stock units at a market value of $8.78 and $8.69 per share, respectively. No awards were granted in 2005. The 2007 grant of restricted stock units vest on the date of the 2008 annual shareholders’ meeting. The first 2006 grant of restricted stock units vested on the date of the 2006 annual shareholders’ meeting and the second 2006 grant vested on the date of the 2007 annual shareholders’ meeting. The total market value of the awards granted was recorded as unearned compensation in the Statement of Shareholders’ Equity and is amortized to expense over the respective vesting periods.

EVA Incentive Compensation Plan

The Company’s EVA Incentive Compensation Plan (the “EVA Plan”) is intended to maximize shareholder value by aligning management’s interests with those of shareholders by rewarding management for sustainable and continuous improvement in operating results. Expense (benefit) recorded under the EVA Plan was $(0.2) million and $(0.4) million in 2006 and 2005, respectively. No expense (benefit) was recorded under the EVA plan in 2007.

Accounting For Stock-Based Compensation

Prior to January 1, 2006, the Company accounted for its stock option plans using the intrinsic value method of accounting provided under APB Opinion No. 25 “Accounting for Stock Issued to Employees,” (“APB 25”) and related interpretations, as permitted by Financial Accounting Standards (SFAS) No. 123. Accordingly, share-based compensation for stock options was included as pro forma disclosure in the financial statement footnotes and continues to be provided in this manner for periods prior to January 1, 2006, as results for prior periods have not been restated. The grant values based on the date of grant for the grants prior to December 31, 2005 would not have been significantly different than calculated under SFAS No. 123R.

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Had the 2005 compensation cost been determined according to SFAS No. 123R, which was adopted by Huttig on January 1, 2006, the Company’s net income and earnings per share would have approximated the following pro forma amounts:

	2005
	(In millions,
	except per share amounts)
Net income as reported	$	18.4
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects		0.4
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(0.8	)
Net income, pro forma	$	18.0
Net income per share — basic
As reported	$	0.92
Pro Forma	$	0.90
Net income per share — diluted
As reported	$	0.90
Pro Forma	$	0.88

The Company recognized approximately $1.6 million, or $1.0 million, net of tax effects, in non-cash stock-based compensation expense for the year ended December 31, 2007, comprised of stock options ($0.3 million) and restricted stock awards ($1.3 million). The Company recognized approximately $1.8 million, or $1.1 million, net of tax effects, in non-cash stock-based compensation expense for the year ended December 31, 2006, comprised of stock options ($0.8 million) and restricted stock awards ($1.0 million). Cash received from exercises of stock options for the years ended December 31, 2007, 2006 and 2005 was $0.6 million, $0.8 million and $3.0 million, respectively.

At December 31, 2007 the Company has 913,651 shares available under all of the stock compensation plans. On January 29, 2008, the Company issued 452,750 restricted shares.

Stock Options

The fair value of each option award is estimated as of the date of grant using the Black-Scholes option pricing model. The weighted average assumptions used in the model were as follows:

	2006			2005
Volatility		49	%		50	%
Risk-free interest rate		44	%		41	%
Dividend yield		0	%		0	%
Expected life of options (years)		6			6
Weighted average fair value of options granted	$	4.48		$	5.18

The volatility is estimated based on historical volatility of Huttig stock calculated over the expected term of the option.

The risk-free interest rate assumption is based on observed interest rates appropriate for the expected term of the Company’s employee stock options. The Company has not paid any dividends on common stock since its inception and does not anticipate paying any dividends on its common stock for the foreseeable future. The

38

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

expected life is estimated based on the Company’s past history of exercises and post-vesting employment termination behavior.

The following table summarizes the stock option transactions pursuant to the Company’s stock incentive plans for the three years ended December 31, 2007:

										Average
				Weighted		Average		Aggregate		Remaining		Unrecognized
				Average		Remaining		Intrinsic		Vesting		Compensation
	Shares			Exercise Price		Contractual		Value		Period		Expense
	(000’s)			per Share		Term (Years)		(000’s)		(Months)		(000’s)
Options outstanding at January 1, 2005		1,841		$	4.49
Granted		142			10.05
Exercised		(635	)		4.72
Forfeited		(56	)		5.81
Options outstanding at December 31, 2005		1,292			4.90
Granted		189			8.77
Exercised		(198	)		4.11
Forfeited		(59	)		7.82
Options outstanding at December 31, 2006		1,224			5.49
Granted		—			—
Exercised		(208	)		2.69
Forfeited		(121	)		8.57
Options outstanding at December 31, 2007		895		$	5.72		3.3	$	—		10	$	146
Exercisable at December 31, 2007		811		$	5.37		2.8	$	—		N/A		N/A

The following table summarizes information about stock options outstanding at December 31, 2007:

			Options Outstanding				Options Exercisable
			Weighted
			Average
	Number		Remaining		Weighted		Number		Weighted
Range of	Outstanding		Contractual Life		Average		Exercisable		Average
Exercise Price	(000’s)		(Years)		Exercise Price		(000’s)		Exercise Price
$2.30		250		0.3	$	2.30		250	$	2.30
$2.98		10		5.6		2.98		10		2.98
$4.29 — $4.40		181		2.5		4.31		181		4.31
$7.23		233		3.3		7.23		233		7.23
$8.69 — $8.78		133		7.7		8.77		69		8.77
$9.12 — $10.09		88		6.9		10.04		68		10.04
Total		895		3.3	$	5.72		811	$	5.37

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Restricted Stock and Restricted Stock Units

The following summary presents the information regarding the restricted stock and restricted stock units as of December 31, 2007 and changes during 2007 and 2006:

										Average
				Weighted		Average		Aggregate		Remaining		Unrecognized
				Average		Remaining		Intrinsic		Vesting		Compensation
	Shares			Grant Date		Contractual		Value		Period		Expense
	(000’s)			Fair Value		Term (Years)		(000’s)		(Months)		(000’s)
Outstanding at December 31, 2005		97		$	9.69
Granted		207			8.76
Restricted stock vested		(73	)		8.67
Forfeited		(21	)		9.47
Outstanding at December 31, 2006		210			9.15
Granted		262			6.12
Restricted stock vested		(93	)		9.16
Forfeited		(37	)		7.98
Outstanding at December 31, 2007		342		$	6.95		8.9	$	1,182		11	$	1,418
Restricted stock units vested at
December 31, 2007		28		$	8.73		8.1	$	95		N/A		N/A

10.   INCOME TAXES

The provision for income taxes, relating to continuing operations, is composed of the following (in millions):

	2007			2006			2005
Current:
U.S. Federal tax (benefit)	$	(4.1	)	$	(0.4	)	$	9.7
State and local tax		0.1			—			0.4
Total current		(4.0	)		(0.4	)		10.1
Deferred:
U.S. Federal tax (benefit)		0.3			(3.0	)		0.2
State and local tax		—			1.1			0.1
Total deferred		0.3			(1.9	)		0.3
Total income tax (benefit)	$	(3.7	)	$	(2.3	)	$	10.4

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HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A reconciliation of income taxes based on the application of the statutory federal income tax rate to income taxes as set forth in the consolidated statements of continuing operations follows:

	2007			2006			2005
Federal statutory rate		35.0	%		35.0	%		35.0	%
Increase (decrease) in taxes resulting from:
State and local taxes		7.4			2.8			2.5
Contingency accrual		0.8			1.8			—
Valuation allowance		(7.6	)		(13.6	)		—
Nondeductible items		(3.6	)		(2.1	)		0.8
Other, net		(0.4	)		(0.7	)		(0.4	)
Effective income tax rate		31.6	%		23.2	%		37.9	%

In 2007, the Company re-evaluated its reserve for uncertain tax positions and recorded a $0.1 million reduction in the reserve, largely due to the lapse of statutes of limitations. In 2006, the Company successfully closed certain audits of its federal and state tax returns, analyzed its income tax accrual positions based upon the most recent audit results and reduced its previously provided income tax accruals by $0.2 million. No significant additional liabilities were asserted as a result of these audits. Tax expense in 2007 and 2006 includes $0.3 million and $2.7 million, respectively, to increase the valuation allowance attributed to state tax loss carryforwards based on the Company’s current projections of future state taxable income.

Deferred income taxes at December 31, 2007 and 2006 are comprised of the following (in millions):

	2007					2006
	Assets			Liabilities		Assets			Liabilities
Accelerated depreciation	$	1.3		$	—	$	1.2		$	—
Goodwill		—			0.8		—			0.6
Purchase price book and tax basis differences		0.3			—		0.5			—
Inventories		—			6.9		—			6.7
Insurance related		0.7			—		0.8			—
Employee benefits related		1.5			—		1.4			—
Other accrued liabilities		0.9			—		0.8			—
State tax loss carryforwards		5.9			—		5.1			—
Other		0.2			—		0.3			—
Gross deferred tax assets and liabilities		10.8			7.7		10.1			7.3
Valuation allowance		(5.9	)		—		(5.0	)		—
Total	$	4.9		$	7.7	$	5.1		$	7.3

The state tax loss carryforwards reflected above have expiration dates extending out to 2026 and are primarily attributable to losses in only one legal entity. The associated valuation allowance was increased in both 2007 and 2006 to equal the entire deferred tax asset of this entity, in accordance with paragraph 21 of FASB Statement No. 109, “Accounting for Income Taxes”. During 2006, less than $0.1 million of the asset relating to these carryforwards was utilized on amended 2004 state filings following the conclusion of the IRS audit of our 2004 Federal return.

41

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The total deferred income tax assets (liabilities) as presented in the accompanying consolidated balance sheets are as follows (in millions):

	2007			2006
Net current deferred taxes	$	(5.3	)	$	(4.5	)
Net long-term deferred taxes		2.5			2.3

On January 1, 2007, Huttig adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”). As a result of the implementation, the Company recognized a $0.4 million decrease to liabilities for uncertain tax positions. This decrease was accounted for as an increase to the beginning balance of retained earnings on the balance sheet. Including the cumulative-effect decrease to liabilities for uncertain tax positions, at the beginning of 2007, Huttig had approximately $0.4 million of unrecognized tax benefits, all of which, if recognized, would affect the effective income tax rate in future periods. As of December 31, 2007, there have been no material changes to the liabilities for uncertain tax positions. The Company does not expect any significant increases or decreases to its unrecognized tax benefits within 12 months of this reporting date.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):

Balance at January 1, 2007	$	0.4
Lapse of statute of limitations		(0.1	)
Balance at December 31, 2007	$	0.3

In connection with the adoption of FIN 48, the Company has elected to include interest and penalties related to uncertain tax positions in income tax expense. Currently, the Company has $0.3 million of unrecognized tax benefits and $0.2 million of accrued interest related to uncertain tax positions included in “Other non-current liabilities” on the balance sheet.

Huttig and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. The Company has substantially concluded all U.S. federal income tax matters for years through 2004, and is currently under examination by the Internal Revenue Service for 2005. Open tax years related to state jurisdictions remain subject to examination but are not considered material.

42

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

11.   BASIC AND DILUTED NET INCOME PER SHARE

The following table sets forth the computation of net income per basic and diluted share (net income amounts in millions, share amounts in thousands, per share amounts in dollars):

	2007			2006			2005
Net income (loss) available to common shareholders
Net income (loss) from continuing operations	$	(8.0	)	$	(7.7	)	$	17.1
Net income (loss) from discontinued operations		(0.2	)		—			1.3
Net income (loss) (numerator)	$	(8.2	)	$	(7.7	)	$	18.4
Weighted average number of basic shares outstanding (denominator)		20,570			20,270			19,917
Net income (loss) per share — Basic
Net income (loss) from continuing operations	$	(0.39	)	$	(0.38	)	$	0.85
Net income (loss) from discontinued operations		(0.01	)		—			0.07
Net income (loss)	$	(0.40	)	$	(0.38	)	$	0.92
Weighted average number of basic shares outstanding		20,570			20,270			19,917
Effect of dilutive securities		—			—			472
Weighted average number of diluted shares outstanding (denominator)		20,570			20,270			20,389
Net income (loss) per share — Diluted
Net income (loss) from continuing operations	$	(0.39	)	$	(0.38	)	$	0.84
Net income (loss) from discontinued operations		(0.01	)		—			0.06
Net income (loss)	$	(0.40	)	$	(0.38	)	$	0.90

At December 31, 2007 and 2006, all outstanding stock options and all non-vested restricted shares, aggregating 1,238,000 and 1,435,000, respectively, were anti-dilutive. At December 31, 2005, stock options and restricted shares totaling 219,000 shares were anti-dilutive. Anti-dilutive shares were not included in the computations of diluted income per share amounts in 2007, 2006 and 2005.

43

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

12.   SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following table provides selected consolidated financial information from continuing operations on a quarterly basis for each quarter of 2007 and 2006. The Company’s business is seasonal and particularly sensitive to weather conditions. Interim amounts are therefore subject to significant fluctuations (in millions, except per share data).

	First			Second		Third			Fourth			Full
	Quarter			Quarter		Quarter			Quarter			Year
2007
Net sales	$	222.4		$	$239.5	$	233.0		$	179.9		$	874.8
Gross profit		41.8			45.7		43.4			34.1			165.0
Operating profit (loss)		(3.8	)		2.9		1.0			(7.6	)		(7.5	)
Net income (loss) from continuing operations		(3.2	)		1.1		(0.1	)		(5.8	)		(8.0	)
Net loss from discontinued operations		(0.2	)		—		—			—			(0.2	)
Net income per share — Diluted
Net income (loss) from continuing operations	$	(0.16	)	$	0.05		—		$	(0.28	)	$	(0.39	)
Net loss from discontinued operations		(0.01	)		—		—			—			(0.01	)
Net income (loss)	$	(0.17	)	$	0.05		—		$	(0.28	)	$	(0.40	)
2006
Net sales	$	281.1		$	$296.3	$	294.2		$	231.1		$	1,102.7
Gross profit		54.7			56.4		49.9			44.8			205.8
Operating profit (loss)		4.9			6.7		(13.1	)		(2.6	)		(4.1	)
Net income (loss) from continuing operations		2.4			3.3		(9.1	)		(4.3	)		(7.7	)
Net income from discontinued operations		—			—		—			—			—
Net income per share — Diluted
Net income (loss) from continuing operations	$	0.12		$	0.16	$	(0.45	)	$	(0.21	)	$	(0.38	)
Net income from discontinued operations		—			—		—			—			—
Net income (loss)	$	0.12		$	0.16	$	(0.45	)	$	(0.21	)	$	(0.38	)

13.   DISCONTINUED OPERATIONS

Huttig sold its mouldings manufacturer, American Pine Products, in August of 2004, and its one-step branches in three separate transactions in August and December of 2004, and in February of 2005. These operations are accounted for as discontinued operations. The sale of American Pine Products and the one-step branches in 2004 approximated net book value. The discontinued operations of the Company had no sales in 2007 and 2006 and $2.5 million in sales for 2005. A net loss from discontinued operations of $0.2 million was recorded in 2007 and no income or loss was recorded in 2006. In 2005, the Company recorded $1.3 million in net income from discontinued operations.

14.   ACQUISITION

Effective January 1, 2005, the Company, through its wholly owned subsidiary, Huttig Texas Limited Partnership, completed the purchase of substantially all of the assets of Texas Wholesale Building Materials, Ltd. (“Texas Wholesale”) for $15.0 million in cash, $2.2 million in guaranteed payments to the former majority owner and the assumption of certain liabilities. Texas Wholesale’s results of operations have been

44

HUTTIG BUILDING PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

included in the consolidated financial statements since the date of acquisition. The Texas Wholesale acquisition represents the Company’s first full line distribution operation in the state of Texas.

15.   ASSET IMPAIRMENT

The Company recorded an impairment charge of $10.7 million in the caption “Operating expenses” on its consolidated statements of operations for the year ended December 31, 2006 for the discontinued implementation of a new enterprise resource system.

16.   BRANCH CLOSURES AND OTHER SEVERANCE

In 2007, the Company closed its Long Island, New York, Dothan, Alabama, Spokane, Washington, Greensburg, Pennsylvania, and Kansas City, Missouri branch operations and sold its Green Bay, Wisconsin branch operations. The Company recorded $4.2 million in operating charges from the closures, from severance associated with other reductions in force in 2007 and from the consolidation of leased space at its headquarters location in the caption “Operating expenses” on its consolidated statements of operations for 2007. In addition, the Company recorded $1.5 million in inventory losses related to the branch closures recorded in the caption “Cost of sales” on its consolidated statements of operations for 2007.

In 2006, the Company closed its Grand Rapids, Michigan, Minneapolis, Minnesota and Hazelwood, Missouri branches, consolidated its Fort Wayne, Indiana branch into its Indianapolis, Indiana branch operations and consolidated its Albany, New York branch operations into its Selkirk, New York operations. The Company recorded $2.9 million in operating charges from the closures and from severance associated with other reductions in force in 2006 in the caption “Operating expenses” on its consolidated statements of operations for 2006. In addition, the Company recorded $1.0 million in inventory losses related to the branch closures recorded in the caption “Cost of sales” on its consolidated statements of operations for 2006.

At December 31, 2007 and 2006, the Company has $1.8 million and $1.2 million, respectively, in accruals related to severance and the remaining building lease rentals that will be paid out over the terms of the various leases through 2015.

Branch Closure Reserve and Other Severance (in millions)

				Operating
	Inventory			Expenses			Total
Balance December 31, 2005	$	—		$	—		$	—
Branch closures and other serverance		1.0			2.9			3.9
Amount paid/utilized		(1.0	)		(1.7	)		(2.7	)
Balance December 31, 2006		—			1.2			1.2
Branch closures and other serverance		1.5			4.2			5.7
Amount paid/utilized		(1.5	)		(3.6	)		(5.1	)
Balance December 31, 2007	$	—		$	1.8		$	1.8

In the 2008 first quarter, the Company expects to incur an additional $0.5 million in charges related to the cost reduction actions initiated in the 2007 fourth quarter.

45

ITEM 9 — CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A — CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures — The Company, under the supervision and with the participation of our Disclosure Committee and management, including our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934). Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective as of December 31, 2007 in all material respects in (a) causing information required to be disclosed by us in reports that we file or submit under the Securities and Exchange Act of 1934 to be recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (b) causing such information to be accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in the Company’s internal control on financial reporting during the Company’s fiscal fourth quarter ended December 31, 2007 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Control systems must reflect resource constraints and be cost-effective, can be undercut by simple errors and misjudgments, and can be circumvented by individuals within an organization. Because of these and other inherent limitations in all control systems, no matter how well they are designed, our disclosure controls and procedures and internal controls can provide reasonable, but not absolute, protection from error and fraud.

Management’s Report on Internal Control Over Financial Reporting — The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included an evaluation of the design of the Company’s internal control over financial reporting and testing of the operational effectiveness of its internal control over financial reporting. Management reviewed the results of its assessment with the Audit Committee of our Board of Directors. Based on our evaluation under the framework in Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2007.

ITEM 9B — OTHER INFORMATION

None.

46

PART III

ITEM 10 — DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information regarding executive officers and directors of Huttig is set forth in the Company’s definitive proxy statement for its 2008 Annual Meeting of Stockholders (the “2008 Proxy Statement”) under the caption “Executive Officers” and “Election of Directors”, respectively, and is incorporated herein by reference. Information regarding Section 16(a) beneficial ownership reporting compliance is set forth in the 2008 Proxy Statement under the caption “Section 16(a) Beneficial Ownership Reporting Compliance,” and is incorporated herein by reference.

The information regarding the Company’s “audit committee financial expert” and identification of the members of the Audit Committee of the Company’s Board of Directors is set forth in the 2008 Proxy Statement under the caption “Board Committees” and is incorporated herein by reference.

The Company adopted a Code of Business Conduct and Ethics applicable to all directors and employees, including the principal executive officer, principal financial officer and principal accounting officer. The Code of Business Conduct and Ethics is available on the Company’s website at www.huttig.com. The contents of the Company’s website are not part of this Annual Report. Stockholders may request a free copy of the Code of Business Conduct and Ethics from:

Huttig Building Products, Inc.

Attention: Corporate Secretary

555 Maryville University Dr.

Suite 400

St. Louis, Missouri 63141

(314) 216-2600

The Company intends to post on its website any amendments to, or waivers from, its Code of Business Conduct and Ethics within two days of any such amendment or waiver.

ITEM 11 — EXECUTIVE COMPENSATION

The information required by Item 11 is set forth in the 2008 Proxy Statement under the captions “Board of Directors and Committees of the Board of Directors,” “Executive Compensation,” “Compensation Committee Interlocks and Insider Participation” and “Report on Executive Compensation by the Management Organization and Compensation Committee of the Company” and is incorporated herein by reference.

ITEM 12 — SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Except as set forth below, the information required by Item 12 is set forth in the 2008 Proxy Statement under the captions “Beneficial Ownership of Common Stock by Directors and Management” and “Principal Stockholders of the Company, “ and is incorporated herein by reference.

47

Equity Compensation Plan Information

The following table presents information, as of December 31, 2007, for equity compensation plans under which Huttig’s equity securities are authorized for issuance.

						Number of Securities
						Remaining Available for
	Number of Securities to be			Weighted-Average		Future Issuance Under
	Issued Upon Exercise of			Exercise Price of		Equity Compensation Plans
	Outstanding Options,			Outstanding Option		(Excluding Securities
	Warrants and Rights			Warrants and Rights		Reflected in Column (a))
Plan Category	(a)			(b)		(c)
Equity compensation plans approved by security holders		1,062,557		$	4.11		913,651(1	)
Equity compensation plans not approved by security holders(2)		175,000	(3)	$	4.31		—
Total		1,237,557		$	4.14		913,651

(1)	To the extent such shares are not issued pursuant to future option grants, 886,000 of such shares are available for issuance in the form of awards of restricted stock under the Company’s 2005 Executive Incentive Compensation Plan and 27,651 of such shares are available for awards under the Company’s 2005 Non-Employee Directors’ Restricted Stock Plan.
(2)	Includes written option agreements providing for option grants to certain of the Company’s non-employee directors (see footnote (3) below).
(3)	Includes options to purchase 100,000 shares at a per share price of $4.29 granted on January 24, 2000 to Mr. Evans, a director of the Company. Includes options to purchase 20,000 shares at a per share exercise price of $4.34 granted on January 22, 2001 to each of Messrs. Bigelow, Forté and Gardner, all of whom are directors of the Company. Includes options to purchase 15,000 shares at a per share price of $4.34 granted on January 22, 2001 to Mr. Tullis, a former director of the Company. Each of these options has vested in full.

ITEM 13 — CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 is set forth in the 2008 Proxy Statement under the captions “Certain Relationships and Related Transactions” and “Director Independence,” and is incorporated herein by reference.

ITEM 14 — PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by Item 14 is set forth in the 2008 Proxy Statement under the caption “Principal Accounting Firm Services and Fees,” and is incorporated herein by reference.

48

PART IV

ITEM 15 — EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this report:

1. Financial Statements:

Reports of Independent Registered Public Accounting Firms

Consolidated Balance Sheets as of December 31, 2007 and 2006

Consolidated Statements of Operations for the years ended December 31, 2007, 2006 and 2005

Consolidated Statements of Changes in Shareholders’ Equity for the years ended December

31, 2007, 2006 and 2005

Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005

Notes to Consolidated Financial Statements

2. Exhibits:

Exhibit Index

3	.1	Restated Certificate of Incorporation of the Company. (Incorporated by reference to Exhibit 3.1 to the Form 10 filed with the Commission on September 21, 1999.)
3	.2	Amended and Restated Bylaws of the Company as amended as of September 26, 2007. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on September 28, 2007.)
4	.1	Rights Agreement dated December 6, 1999 between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent. (Incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999 (the “1999 Form 10-K”).)
4	.2	Amendment No. 1 to Rights Agreement between the Company and ChaseMellon Shareholders Services, L.L.C. (Incorporated by reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000.)
4	.3	Amendment No. 2 to Rights Agreement, dated February 25, 2005, by and between the Company and Mellon Investor Services LLC, as Rights Agent (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on March 3, 2005.)
4	.4	Amendment No. 3 to Rights Agreement, dated April 14, 2005, by and between the Company and Mellon Investor Services LLC, as Rights Agent (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 18, 2005.)
4	.5	Certificate of Designations of Series A Junior Participating Preferred Stock of the Company. (Incorporated by reference to Exhibit 4.6 to the 1999 Form 10-K.)
4	.6	Credit Agreement dated as of October 20, 2006 among the Company, Huttig, Inc. and Huttig Texas Limited Partnership, the other credit parties signatory thereto, the lenders signatory thereto, General Electric Capital Corporation, as agent lender, GE Capital Financial, Inc., as an L/C issuer and the other lenders signatory thereto from time to time (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2006.)
10	.1	Tax Allocation Agreement by and between Crane and the Company dated December 16, 1999. (Incorporated by reference to Exhibit 10.1 to the 1999 Form 10-K.)
10	.2	Employee Matters Agreement between Crane and the Company dated December 16, 1999. (Incorporated by reference to Exhibit 10.2 to the 1999 Form 10-K.)
*10	.3	1999 Stock Incentive Plan. (Incorporated by reference to Exhibit 10.5 to Amendment No. 4 to the Form 10 filed with the Commission on December 6, 1999.)
*10	.4	Form of Stock Option Agreement under the Company’s 1999 Stock Incentive Plan. (Incorporated by reference to Exhibit 10.6 to the 1999 Form 10-K.)
*10	.5	Amended and Restated 2001 Stock Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002.)

49

*10	.6	Form of Stock Option Agreement under the Company’s 2001 Stock Incentive Plan. (Incorporated by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 (the “2001 Form 10-K”).)
*10	.7	Form of Indemnification Agreement for Executive Officers and Directors. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on October 4, 2005.)
10	.8	Registration Rights Agreement by and between The Rugby Group PLC and the Company dated December 16, 1999. (Incorporated by reference to Exhibit 10.14 to the 1999 Form 10-K.)
10	.9	Letter Agreement dated August 20, 2001 between the Company and The Rugby Group Limited. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 29, 2001)
*10	.10	Form of Restricted Stock Agreement for awards under the Company’s 1999 Stock Incentive Plan (Incorporated by reference to Exhibit 10.25 to the 2001 Form 10-K.)
10	.11	Master Supply Agreement, dated August 2, 2004, between the Company and Woodgrain Millwork, Inc. (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2004)+
10	.12	Asset Purchase and Sale Agreement, dated January 11, 2005, between Huttig Texas Limited Partnership, a subsidiary of the Company and Texas Wholesale Building Materials, Ltd. (Incorporated by reference to Exhibit 10.26 to the 2004 Form 10-K)
10	.13	Asset Purchase and Sale Agreement, dated January 11, 2005, between the Company and Hendricks Companies, Inc. (Incorporated by reference to Exhibit 10.27 to the 2004 Form 10-K)
10	.14	Settlement Agreement dated January 19, 2005, between the Company and The Rugby Group Ltd. and Rugby IPD Corp. (Incorporated by reference to Exhibit 10.28 to the Company’s Form 10-K/A (Amendment No. 1) filed with the Commission on August 8, 2005)
10	.15	Joint Defense Agreement dated January 19, 2005, between the Company and The Rugby Group Ltd. and Rugby IPD Corp (Incorporated herein by reference to Exhibit 10.29 to the 2004 Form 10-K)+
*10	.16	Amendment No. 1 to 1999 Stock Incentive Plan (Incorporated by reference to Exhibit 10.35 to the Company’s Form 10-K/A (Amendment No. 1) filed with the Commission on August 8, 2005)
*10	.17	Amendment No. 1 to Amended and Restated 2001 Stock Incentive Plan (Incorporated by reference to Exhibit 10.36 to the Company’s Form 10-K/A (Amendment No. 1) filed with the Commission on August 8, 2005)
*10	.18	Form of Restricted Stock Agreement under the Company’s Amended and Restated 2001 Stock Incentive Plan (Incorporated by reference to Exhibit 10.37 to the Company’s Form 10-K/A (Amendment No. 1) filed with the Commission on August 8, 2005)
*10	.19	EVA Incentive Compensation Plan (as amended effective January 1, 2004) (Incorporated by reference to Exhibit 10.38 to the Company’s Form 10-K/A (Amendment No. 2) filed with the Commission on October 17, 2005)
*10	.20	Deferred Compensation Plan (Incorporated by reference to Exhibit 10.39 to the Company’s Form 10-K/A (Amendment No. 2) filed with the Commission on October 17, 2005)
*10	.21	Letter agreement dated May 5, 2005 between David L. Fleisher and the Company (Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2005)
*10	.22	2005 Executive Incentive Compensation Plan, as Amended and Restated Effective February 27, 2007 (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2007)
*10	.23	2005 Nonemployee Directors’ Restricted Stock Plan (Incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2005)
*10	.24	Form of Restricted Stock Agreement under 2005 Executive Incentive Compensation Plan (incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2005)

50

*10	.25	Form of Stock Option Agreement under 2005 Executive Compensation Plan (Incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2005)
*10	.26	Form of Restricted Stock Unit Agreement under the 2005 Nonemployee Directors’ Restricted Stock Plan (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005)
*10	.27	EVA Executive Incentive Plan for the year 2006 (Incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005.)
*10	.28	Form of 2006 Amended and Restated Change of Control Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2006)
*10	.29	Agreement between Hank Krey and the Company dated April 28, 2006 (Incorporated by reference to Exhibit 10.1 to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2006)
*10	.30	Employment Agreement dated December 31, 2006 between Michael A. Lupo and the Company (Incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.)
*10	.31	Executive Agreement dated December 4, 2006 between Jon P. Vrabely and the Company (Incorporated herein by reference to Exhibit 10.38 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.)
*10	.32	Separation Agreement and Release of All Claims between Darlene Schroeder and the Company fully executed on November 1, 2007 (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2007.)
*10	.33	Deferred Compensation Plan — 2008 Restatement
*10	.34	Offer Letter dated December 21, 2006 from the Company to Gregory W. Gurley
*10	.35	Compensation arrangements for certain named executive officers
*10	.36	Compensation arrangements with outside directors
21	.1	Subsidiaries
23	.1	Consent of KPMG LLP, independent registered public accounting firm
31	.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31	.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32	.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*  Management contract or compensatory plan or arrangement.

+  Certain portions of this Exhibit have been omitted based on an order granting confidential treatment under the Securities Exchange Act of 1934.

51

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

HUTTIG BUILDING PRODUCTS, INC.

By:  /s/  JON P. VRABELY

President and Chief Executive Officer

Date: February 29, 2008

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/  JON P. VRABELY Jon P. Vrabely	President, Chief Executive Officer and Director	February 29, 2008
/s/  DAVID L. FLEISHER David L. Fleisher	Vice President and Chief Financial Officer (Principal Accounting Officer)	February 29, 2008
/s/  R. S. EVANS R. S. Evans	Chairman of the Board	February 26, 2008
/s/  E. THAYER BIGELOW E. Thayer Bigelow	Director	February 29, 2008
/s/  RICHARD S. FORTÉ Richard S. Forté	Director	February 26, 2008
/s/  DORSEY R. GARDNER Dorsey R. Gardner	Director	February 27, 2008
/s/  PHILIPPE J. GASTONE Philippe J. Gastone	Director	February 26, 2008
/s/  DONALD L. GLASS Donald L. Glass	Director	February 26, 2008
/s/  MICHAEL A. LUPO Michael A. Lupo	Director	February 29, 2008
/s/  J. KEITH MATHENEY J. Keith Matheney	Director	February 29, 2008
/s/  DELBERT H. TANNER Delbert H. Tanner	Director	February 26, 2008
/s/  STEVEN A. WISE Steven A. Wise	Director	February 29, 2008

52

EX-10.33

Exhibit 10.33

HUTTIG BUILDING PRODUCTS, INC.

DEFERRED COMPENSATION PLAN

(2008 RESTATEMENT)

HUTTIG BUILDING PRODUCTS, INC.
DEFERRED COMPENSATION PLAN
(2008 RESTATEMENT)

ARTICLE I — INTRODUCTION

1.1	History and Structure. The Huttig Building Products, Inc. Deferred Compensation Plan (“Plan”) was adopted effective as of January 1, 2002.
	The vested account balances in the plan were frozen as of December 31, 2004, except for adjustments for earnings and losses, because of Section 409A of the Internal Revenue Code enacted by the American Jobs Creation Act of 2004. Contributions after 2004 and amounts that became vested after 2004 were credited to separate accounts designed to comply with Section 409A. This 2008 Restatement governs payment of amounts credited to such separate accounts.
1.2	Purpose of the Plan. The purpose of the Plan is to attract and retain competent management and other highly compensated employees by offering Eligible Employees flexible compensation opportunities, including:

• allowing Participants to defer current pretax income and earn a tax-deferred rate of return on their deferred compensation in order to save for retirement and for shorter periods of time for purposes other than retirement; and

• replacing matching contributions from the Company that are not available under limitations on Participants’ deferrals under Huttig’s 401(k) Plan.

	The Plan shall not constitute a “qualified plan” subject to the limitations of Section 401(a) of the Code, nor shall it constitute a “funded plan,” for purposes of such requirements. The Plan shall be exempt from the participation and vesting requirements of Part 2 of Title I of ERISA, the funding requirements of Part 3 of Title I of ERISA, and the fiduciary requirements of Part 4 of Title I of ERISA by reason of the exclusions afforded plans which are unfunded and maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.
1.3	Effect of Restatement. This 2008 Restatement is effective January 1, 2008, except as otherwise explicitly provided in this document.
	Each Participant’s vested Accounts as of December 31, 2004, without regard to any credits for contributions or transfers as described in Sections 4.1 and 4.4 thereafter, but as adjusted for earnings or losses in accordance with Section 4.3 from time to time, are referred to as the “Grandfathered Accounts.” Payment of benefits credited to Grandfathered Accounts shall be governed by the Deferred Compensation Plan as in effect on October 3, 2004.

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Amounts that became vested on or after January 1, 2005, and contributions or transfers as described in Sections 4.1 and 4.4 for periods on and after January 1, 2005, each as adjusted for earnings or losses in accordance with Section 4.3, are credited to separate accounts. Payment of amounts during the period after 2004 and before 2008 that were credited to such non-grandfathered accounts were administered in accordance with a good faith interpretation of §409A and IRS regulations and guidance thereunder, as documented in part in annual prospectuses, plan summaries and administration forms.

On and after January 1, 2008, payment of amounts credited to such non-grandfathered accounts shall be governed by this 2008 Restatement, as amended from time to time.

ARTICLE II — DEFINITIONS AND CONSTRUCTION

2.1 Definitions. The following words and phrases shall have the meaning set forth below, unless a different meaning is required by the context in which the word or phrase is used.

(a)	Account shall mean one or more bookkeeping accounts, established in accordance with Article IV hereof, to which a Participant’s Deferred Compensation and any Matching Contributions are credited, together with any earnings thereon.
(b)	Affiliate shall mean (i) a corporation that is a member of a controlled group of corporations (as determined pursuant to Section 414(b) of the Code) which includes the Company and (ii) a trade or business (whether or not incorporated) which is under common control (as determined pursuant to Section 414(c) of the Code) of the Company.
(c)	Beneficiary shall mean the person or persons designated by the Participant in a written instrument filed with the Committee to receive payment of the Participant’s Account upon the death of the Participant.
(d)	Board shall mean the Board of Directors of the Company.
(e)	Claimant shall have the meaning set forth in Section 8.3 hereof.
(f)	Code shall mean the Internal Revenue Code of 1986, as amended.
(g)	Committee shall mean the individual or individuals designated by the Company to administer the Plan in accordance with Article VIII hereof. If at any time no Committee shall be in office, the functions of the Committee specified in the Plan shall be exercised by the Board.
(h)	Common Stock shall mean the Common Stock, par value $.01 per share, of the Company.

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(i)	Company shall mean Huttig Building Products, Inc., a Delaware corporation.
(j)	Compensation shall mean a Participant’s base salary, bonus and/or commission. The Committee may, for the next succeeding Plan Year, change the types of compensation properly deferrable under the Plan prior to the Deferral Election Deadline.
(k)	Deferral Election shall mean the agreement between the Company and an Eligible Employee pursuant to which the Eligible Employee consents to participation and the deferral of Compensation hereunder, and designates the type and amount of Compensation to be deferred for a Plan Year.
(1)	Deferral Election Deadline shall mean the date the Committee designates by Rule as the last date an Eligible Employee may file a Deferral Election with the Committee for the next succeeding Plan Year which shall in no event be later than the last day of the Plan Year preceding the Plan Year for which the Deferral Election is made.
	Notwithstanding the preceding, the Deferral Election Deadline for an Employee who becomes an Eligible Employee during a Plan Year and who satisfies the requirements for newly-eligible status under Section 409A of the Code, shall mean the 30th day after such individual became an Eligible Employee.
(m)	Deferred Compensation shall mean the Compensation elected by the Participant to be deferred pursuant to the Plan.
(n)	Eligible Employee shall mean an Employee of the Employer whom the Committee designates as eligible to participate in the Plan. Notwithstanding the foregoing, the Committee shall permit only a select group of management or highly compensated employees to be Eligible Employees.
(o)	Employee shall mean any person employed as an employee by the Employer and on the payroll of the Employer. If a person’s status as an employee is redetermined retroactively, such redetermination shall not affect participation in the Plan prior to the redetermination.
(p)	Employer shall mean the Company and any Affiliate that has adopted the Plan with consent of the Company.
(q)	ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended.
(r)	Fair Market Value of a share of Common Stock shall mean the fair value thereof, determined under such Rules as the Committee may establish. Unless the Committee so establishes a different meaning, Fair Market Value of a share of Common Stock shall mean as of a particular date, (i) if shares of Common Stock

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	are listed on a national securities exchange, the closing sales price per share of Common Stock on the consolidated transaction reporting system for the principal national securities exchange on which shares of Common Stock are listed on that date or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, (ii) if shares of Common Stock are not so listed but are quoted on the NASDAQ National Market, the closing sales price per share of Common Stock reported by the NASDAQ National Market on that date, or, if there shall have been no such sales reported on that date, on the last preceding date on which such a sale was so reported or (iii) if the Common Stock is not so listed or quoted but is traded in the over-the-counter market, the mean between the closing bid and asked price on that date, or, if there are no quotations available for such date, on the last preceding date on which such quotations shall be available, as reported by the NASDAQ Stock Market, or, if not reported by the NASDAQ Stock Market, by the National Quotations Bureau Incorporated.
(s)	Funds shall mean one or more of the mutual funds, investment portfolios or contracts selected by the Committee.
(t)	Huttig 401(k) Plan shall mean the Huttig Building Products, Inc. Savings and Profit Sharing Plan, as the same may be amended from time to time and intended to constitute a cash or deferred plan in accordance with the provisions of Section 401(k)of the Code.
(u)	Participant shall mean each Eligible Employee who has properly completed and filed a Deferral Election with the Committee.
(v)	Permanent Disability shall have the meaning given to such term in the Huttig 401(k)Plan.
(w)	Plan shall mean this Huttig Building Products, Inc. Deferred Compensation Plan, as amended from time to time.
(x)	Plan Year shall mean the calendar year.
(y)	Pre-Retirement Account shall mean the Account or Accounts to which a Participant elects to contribute Deferred Compensation and from which, pursuant to Article V, distributions are made.
(z)	Retirement shall mean a Participant’s Termination of Employment on or after attainment of age 55.
(aa)	Retirement Account shall mean the Account to which a Participant elects to contribute Deferred Compensation and to which Company matching contributions are made, and from which, pursuant to Article V, distributions are made.

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(bb)	Rule shall mean a determination, regulation, standard, or rule of general applicability made by the Committee or the Board.
(cc)	Specified Employee shall mean a Specified Employee as defined in Treas. Reg. § 1.409A — l(i) (generally officers earning over $140,000, as indexed for inflation, per year who are among the 50 highest paid employees).
(dd)	Termination of Employment shall mean separation from service from the Company and its affiliates (generally 50% common control with the Company), as defined in IRS regulations under Section 409A of the Code (generally, a decrease in the performance of services to no more than 20% of the average for the preceding 36-month period, and disregarding leave of absences up to six months where there is a reasonable expectation the Employee will return).

2.2 Construction. If any provision of the Plan or any Rule is determined to be for any reason invalid or unenforceable, the remaining provisions of the Plan and the remaining Rules shall continue in full force and effect. The terms and provisions of the Plan and the Rules hereunder shall be construed and enforced according to the principles, and in the priority, as follows: first, in accordance with the meaning under, and which will bring the Plan into conformity with, section 409A of the Code; and secondly in accordance with the laws of the State of Delaware (other than its laws regarding choice of laws). The Plan shall be deemed to contain the provisions necessary to comply with such laws. The masculine gender, where appearing in the Plan or the Rules, shall include the feminine gender, and vice versa. The terms “delivered to the Committee” and “filed with the Committee,” as used in the Plan or the Rules, shall include, respectively, delivery to and filing with a person or persons designated by the Committee for the disbursement and the receipt of administrative forms. Headings and subheadings in the Plan or the Rules are for the purpose of reference only and are not to be considered in the construction of the Plan or the Rules.

ARTICLE III — PARTICIPATION AND VESTING

3.1 Eligibility and Participation. An Eligible Employee who properly completes and files with the Committee a Deferral Election pursuant to which a portion of his Compensation is deferred under the Plan shall become a Participant. A Participant shall remain a Participant with respect to his existing Account until his entire Account under the Plan is extinguished, through distribution or otherwise; provided, however, that except as set forth in this Section 3.1, a Participant’s Deferral Election shall be effective only for Compensation earned for service performed during the Plan Year for which it was filed (in the case of a newly-Eligible Employee during a Plan Year, the Deferral Election shall be effective for Compensation for services performed after the date of such election). Base salary Compensation paid after the end of a Plan Year for services performed during the final payroll period of the preceding Plan Year shall be treated as base salary Compensation for services performed in the subsequent Plan Year.

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3.2

Ceasing to be an Eligible Employee. Status as an Eligible Employee will be redetermined from time to time, at least annually; provided that an Eligible Employee may be designated as ineligible only as of the first day of a subsequent Plan Year. If an Eligible Employee desires to participate during a Plan Year, he must file a Deferral Election for such Plan Year by the Deferral Election Deadline. If an individual ceases for any reason to be an Eligible Employee, through Termination of Employment or otherwise, he shall not again become eligible to make a Deferral Election until he again becomes an Eligible Employee.

3.3

Vesting. A Participant shall be 100% vested at all times in his Account balances representing Deferred Compensation and earnings, interest and losses thereon. A Participant shall become vested in his Account balances representing Company matching contributions that may be credited to a Participant’s account under Section 4.4 hereof in accordance with the following schedule:

Years of Service

Interest	Vested
Less than 1 year	None
1 year but fewer than 2		20	%
2 years but fewer than 3		40	%
3 years but fewer than 4		60	%
4 years but fewer than 5		80	%
5 years or more		100	%

Years of service for vesting purposes hereunder shall be determined in accordance with the provisions of the Huttig 401(k) Plan. However, a Participant will become 100% vested, regardless of years of service, if he suffers a Permanent Disability, reaches age 65, or dies while actively employed.

ARTICLE IV — DEFERRAL ELECTIONS, CREDITING OF ACCOUNTS, EMPLOYER CONTRIBUTIONS

4.1 Deferral Elections. Each Eligible Employee shall be provided an opportunity to make a Deferral Election with respect to such portion of his Compensation as the Committee designates by Rule. The Committee may require or permit separate Deferral Elections to be made with respect to different elements of Compensation, and may provide that Deferral Elections shall be subject to minimum and maximum limitations on the amount deferred; provided, however, that a Participant may not defer more than 44% of his salary and 44% of his commission or bonus for any Plan Year, or such lesser percentages established by the Committee prior to the commencement of the Plan Year. Deferral Elections for a Plan Year shall be filed with the Committee no earlier than the date permitted by the Committee, and no later than the Deferral Election Deadline. Deferral Elections for a Plan Year shall become irrevocable at such time as the Committee may designate by Rule, but (except in the case of a newly-Eligible Employee) no later than the last day of the preceding Plan Year. A newly-Eligible Employee’s Deferral Election

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	shall become irrevocable 30 days after the date the Employee became an Eligible Employee. A Participant’s Deferral Election shall automatically terminate upon the earlier to occur of (i) the end of the Plan Year for which it was filed, (ii) with respect to base salary deferrals, his Termination of Employment, or (iii) the date on which the Participant received a hardship distribution under the Huttig 401(k) Plan and such plan requires that deferrals be suspended for a period of time following the hardship distribution. If a Deferral Election is cancelled because of a 401 (k) hardship distribution, any later Deferral Elections shall be subject to the provisions governing initial deferral elections. The Committee shall determine the form and manner of filing the Deferral Election, which shall be by such means as the Committee shall require or permit, including, but not limited to traditional writing or electronic means.
4.2	Participant Accounts. Pursuant to each Participant’s Deferral Election, there may be established a Retirement Account and up to one new or existing Pre-Retirement Account, as designated by the Participant, to which there shall be credited any Deferred Compensation. The amounts deferred in accordance with the Participant’s Deferral Election shall be credited to the Participant’s Account(s) as soon as administratively feasible after the regular compensation payment dates that such amounts would otherwise have been paid as current cash compensation had there been no deferral. Subject to limitations applicable to Account balances invested in Common Stock as may be determined by the Committee, Participants may be able to rebalance their accumulated Account balances among the Funds available for deferral of Compensation under the Plan. Establishment and maintenance of Accounts hereunder shall not be construed as giving any person any interest in assets of the Employer, or a right to payment other than as provided hereunder. An Account shall be maintained until all amounts credited to such Account have been withdrawn, distributed, forfeited, or otherwise extinguished in accordance with the terms and provisions of this Plan.
4.3	Directed Investments; Rates of Return. Each Participant’s Account shall be credited with a number of shares of one or more Funds (which may be hypothetical or actual, as determined by the Committee), made available by the Committee and elected by the Participant in his Deferral Election with regard to his Deferred Compensation. The number of such actual or hypothetical shares shall be determined by dividing the cash amount directed to each Fund by the net asset value of such Fund. Earnings and/or losses on Account balances shall be determined as though such balances had actually been invested in the Funds selected by the Participant, on the basis of actual earnings or losses of those Funds, whether or not the Company invests any assets in any actual investment funds. The Committee may approve, as a hypothetical investment option for a Participant’s Deferred Compensation, shares of Common Stock, and unless otherwise determined by the Committee, credits for 50% of Company matching contributions shall be deemed to be invested in shares of Common Stock. The number of such shares shall be determined by dividing the amount of the Participant’s Deferred Compensation and/or the Company’s matching contribution invested or credited in Common Stock by the Fair Market Value of the Common Stock on the date such Deferred Compensation or matching contributions are credited to his Account.

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4.4

Company Contributions. The Company shall credit each Participant’s Retirement Account with a matching contribution equal to (a) 50% of the Participant’s Deferred Compensation (regardless of whether such Deferred Compensation is credited to his Retirement Account or to his Pre-Retirement Account), up to a maximum of 6% of such Participant’s total Compensation, less (b) the maximum Matching Contributions (as such term is defined in the Huttig 401 (k) Plan) the Participant could have received in the Huttig 401 (k) Plan at a 6% contribution rate.

When credited to an Eligible Participant’s Retirement Account, unless otherwise determined by the Committee, 50% of any Company matching contributions will be in the form of Common Stock. Eligible Participants may transfer (in accordance with procedures established by the Committee) any such Company contributions out of Common Stock and into any other Funds available under the Plan only when such amounts are fully vested in accordance with Section 3.3, or in the event that Common Stock ceases to be offered as an investment option under the Plan.

ARTICLE V — DISTRIBUTION OF BENEFITS

5.1	Time and Form of Distribution of Grandfathered Benefits. The time and form of distribution for a Participant’s Grandfathered Benefit shall be the form and at the time or times provided by the terms of the Plan as in effect on October 3, 2004.
5.2	Time of Distribution. As a part of making a Deferral Election, a Participant shall elect the time and form of distribution of his Account. If a Participant elects to defer some of his Compensation into a Pre-Retirement Account, as provided in Section 4.2, he shall designate a time of payment not earlier than five years after the first year for which the Deferral Election is made. Alternatively, the Participant’s Deferral Election may elect a distribution at Retirement. Company Matching Contributions made pursuant to Section 4.4 are credited to the Participant’s Retirement Account.
	A Participant may elect to further defer distribution of a Pre-Retirement or Retirement Account, or change his election from lump sum to installments or from installments to lump sum, in accordance with Section 5.6.
5.3	Form of Distribution. A Participant shall elect the form of distribution on his Deferral Election. Optional forms of distribution for Retirement Accounts shall include a single lump sum payment or annual installment payments for 5, 10 or 15 years. Optional forms of distribution for Pre-Retirement Accounts shall include a single lump sum payment or annual installment payments for up to five years. If a Participant’s entire vested Account at the time of any payment is less than $10,000, the payment shall be made in a single lump-sum, regardless of the form of payment selected by the Participant.
	Pre-Retirement and/or Retirement Accounts in which a Participant has elected payment in installments shall continue to be credited with earnings and/or reduced to reflect losses in accordance with Section 4.3 until such Accounts are paid in full. The amount of each

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	installment payment shall be determined under the declining balance accounting method. For example, a five year installment payout would be paid as follows: 1/5 of the Account balance in the first year; 1/4th of the remaining Account balance in the second year; 1/3rd of the remaining Account balance in the third year; 1/2 of the remaining Account balance in the fourth year; and the balance of the remaining Account balance in the fifth year.
	For purposes of this Plan, a series of installment payments shall be treated as a single payment pursuant to Treas. Reg. §1.409A-2(b)(2).
5.4	Alternate Time and Form of Payment. Notwithstanding a Participant’s Deferral Election, (a) if a Participant experiences a Termination of Employment prior to the time that he is eligible for Retirement, his entire vested Account balance shall be payable to him in a single lump-sum immediately upon such Termination of Employment; and (b) on a Participant’s Retirement, any Pre-Retirement Account (including Pre-Retirement Accounts in pay status) shall be paid in accordance with the Participant’s Retirement Account election or, if no such election has been made, in a single lump sum payment immediately on Retirement; provided, however, if a Participant retired before January 1, 2008, then any Pre-Retirement Account that is in pay status on January 1, 2008 shall continue to be paid in accordance with the Participant’s election for such Pre-Retirement Account and, provided further, if a Participant who retires in 2008 has a Pre-Retirement Account in pay status, there shall be no change in the amount payable in 2008 from such Pre-Retirement Account and, effective January 1, 2009, the remainder of such account shall be paid in accordance with the Participant’s Retirement Account election or, if no such election has been made, in a lump sum.
5.5	Distributions Due to Unforeseeable Emergency. The immediate payment of all or a portion of a Participant’s Account may be made due to an Unforeseeable Emergency. Amounts of distributions shall be limited to the amount reasonably necessary to satisfy the Participant’s need (plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution) after taking into account the extent to which the Unforeseeable Emergency is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship). The Participant shall retain discretion whether to apply for early payment due to Unforeseeable Emergency. The Committee shall retain discretion to determine whether an Unforeseeable Emergency exists, as well as the amount reasonably necessary to satisfy the Participant’s need.
	For these purposes, an “Unforeseeable Emergency” shall mean a severe financial hardship of the Participant resulting from an illness or accident of the Participant or the Participant’s spouse or dependent (as defined in section 152, without regard to section 152(b)(1), (b)(2), and (d)(1)(B)); loss of the Participant’s property due to casualty; or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant as defined in Section 409A of the Code and the regulations thereunder.

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	The Committee’s interpretation of this Section 5.5 shall be limited by Section 409A of the Code, and IRS regulations and guidance thereunder.
5.6	Subsequent Deferral Elections. A Participant may change his distribution date or distribution method to delay payment of the balance credited to a Pre-Retirement Account or a Retirement Account; provided, however, that (a) such change must be made at least twelve months before the date on which the first payment from such Pre-Retirement Account or Retirement Account would otherwise have been made, and (b) the first payment under the new distribution date or method is a date not less than five years from the date such payment would otherwise have been made. Such a subsequent deferral election shall not become effective until twelve months after the date on which such election is made. For example, if the payment was scheduled to be made in a lump sum on January 1, 2010, a Participant could elect installment payments over five years, so long as the election was made before January 1, 2009, and the first installment payment was deferred until at least January 1, 2015.
5.7	Method of Payment. All benefits under the Plan shall be paid by negotiable check or other cash equivalent from the trust (if any) or other general funds of the Employer, or, if the Committee so designates, in the form of a fully paid insurance or annuity contract or, subject to the limitations of Section 11.1. in shares of Common Stock, valued at their Fair Market Value at the time of payment.
5.8	Death of a Participant. In the event of the death of a Participant prior to distribution of all amounts otherwise payable to the Participant hereunder, the Participant’s Beneficiary or Beneficiaries shall be entitled to distribution of all vested amounts credited to the Participant’s Account(s). Such payment shall be in the form of a single lump sum payable as soon as administratively feasible following the death of the Participant. Each Participant may designate a Beneficiary or Beneficiaries to receive payment of his benefits under the Plan in the event of his death, and may revoke or change such designation, in accordance with such procedures as the Committee shall establish. Unless the Committee otherwise provides, a Participant may revoke his designation of Beneficiary (without the consent of any Beneficiary) and make a new designation of Beneficiary by filing a new form with the Committee. A properly completed and executed change in a designation of Beneficiary, unless the Committee provides to the contrary, shall take effect immediately upon being filed with the Committee during the Participant’s lifetime. If upon a Participant’s death no valid designation of Beneficiary is on file with the Committee, or if a Beneficiary dies before payments are completed and there are no living contingent or successive Beneficiaries, then, unless the Committee establishes a different Rule, any remaining payments under the Plan shall be made (1) to the Participant’s surviving spouse, if any, or (2) if there is no surviving spouse, then to the Participant’s estate.
5.9	Withholding. The Employer shall have the right to deduct applicable taxes (including, but not limited to taxes under the Federal Insurance Contributions Act) from any amounts payable hereunder to a Participant or Beneficiary and from amounts otherwise subject to any tax, and to withhold an appropriate amount of cash or a number of shares of

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	Common Stock or a combination thereof for payment of taxes or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes.
5.10	Facility of Payment. In the event any distribution is payable under the Plan to a minor or other individual who is legally, physically or mentally incompetent to receive such payment, the Committee in its sole discretion shall pay such benefits to one or more of the following persons: (a) directly to such minor or other person; (b) to the legal guardian or conservator of such minor or other person; (c) to the spouse, parent, brother, sister, child or other relative of such minor or other person for the use of such minor or other person; or (d) to such other person as the Committee deems appropriate. The Committee shall not be required to see to the application of any distribution so made to any of such persons, but the receipt therefore shall be a full discharge of the liability of the Plan, the Committee, the Company, and the trustee (if any) to such minor or other person.
5.11	Waiver and Release. The Committee may condition the payment of some or all benefits hereunder on the Participant’s entering into a binding release and waiver in such form as the Committee shall permit which must be executed not later than 30 days following a distribution event.
5.12	Specified Employee Six Month Deferral. Notwithstanding anything to the contrary in this Article V, a payment on account of Termination of Employment to a Specified Employee may not be made until at least six months after such Termination of Employment. Any payment otherwise due in such six month period shall be suspended and become payable at the end of such six month period. If the Participant elected installment payments, the first such payment shall be delayed and the remaining installment payments shall be payable on the anniversary dates of the date of Termination of Employment.
5.13	Actual Date of Payment. An amount payable on a date specified in this Article V shall be paid as soon as administratively feasible after such date; but no later than the later of the end of the calendar year in which the specified date occurs or the 15th day of the third calendar month following such specified date. The payment date may be postponed further if calculation of the amount of the payment is not administratively practicable due to events beyond the control of the Company. The amount due the Participant shall be determined based on the vested balance credited to the Account of the Participant on the actual date of payment.
5.14	Automatic Deferral. Notwithstanding any other provision of this Plan to the contrary, no amount shall be paid to any Participant before the earliest date on which the Employer’s federal income tax deduction for such payment is not precluded by Section 162(m) of the Code. In the event any payment is delayed solely as a result of the preceding restriction, such payment shall be made as soon as administratively feasible following the first date as of which Section 162(m) of the Code no longer precludes the deduction of such payment.

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ARTICLE VI — PAYMENT LIMITATIONS

6.1 Assignment. No Participant or Beneficiary of a Participant shall have any right to assign, pledge, hypothecate, anticipate or in any way create a lien on any amounts payable hereunder. No amounts payable hereunder shall be subject to assignment or transfer or otherwise be alienable, either by voluntary or involuntary act, or by operation of law, or subject to attachment, execution, garnishment, sequestration or other seizure under any legal, equitable or other process, or be liable in any way for the debts or defaults of Participants and their Beneficiaries.

ARTICLE VII — FUNDING AND EXPENSES

7.1	Funding. Benefits under the Plan shall be funded solely by the Employers. Benefits hereunder shall constitute an unfunded general obligation of the Employer of the Participant. In the event a Participant has been employed by more than one Employer (i.e., the Company and one of its Affiliates), benefits hereunder shall constitute an unfunded general obligation of each of the Participant’s Employers in proportion to the amounts deferred while in the employ of the respective Employers. All payments under the Plan shall be deemed made by the respective Employers from general assets available to all unsecured creditors of such Employer in the event of its insolvency. Each Participant has merely the status of a general unsecured creditor of the Employer. Notwithstanding the foregoing, the Employer may, but need not, create for purposes of the Plan a trust of the type commonly referred to as a “rabbi” trust, which may, but need not, be in substantial conformity to the terms of the model trust published by the Internal Revenue Service in Rev. Proc. 92-64 or any successor thereto. The Employers may transfer assets to the trustee of such trust to hold and to make distributions under the Plan on behalf of the Employers. The assets so held in trust shall remain the general assets of the respective Employers, which are the grantors under the trust. The rights of Participants and their Beneficiaries under the Plan and the trust shall be exclusively unsecured contractual rights. No Participant or Beneficiary shall have any right, title or interest whatsoever in the trust. In its discretion, the Company may direct the Employer to purchase life insurance insuring the lives of the Participants and may require the Participants to provide information necessary to obtain such life insurance.
7.2	Creditor Status. A Participant and his Beneficiary or Beneficiaries shall be general creditors of the Employer with respect to the payment of any benefit under the Plan, unless such benefits are provided under a contract of insurance or an annuity contract that has been delivered to the Participant, in which case the Participant and his Beneficiary or Beneficiaries shall look to the insurance carrier or annuity provider for payment, and not to the Employers. The Employer’s obligation for such benefit shall be discharged by the purchase and delivery of such annuity or insurance contract.
7.3	Expenses. The expenses of administering the Plan shall be borne by the Employers.

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ARTICLE VIII — ADMINISTRATION

8.1	Committee. Except for rights and powers expressly reserved to the Board or the Company, the Plan will be administered by the Committee. Members of the Committee may participate in the Plan, but no member of the Committee shall be entitled to make decisions that relate solely to his own participation.
8.2	Committee Powers. The Committee shall have the power and authority in its sole and absolute discretion:

(a)	to make and from time to time amend Rules by which the Plan will be implemented and administered from time to time, which Rules shall be binding on the Company, Employers, and all Participants and their Beneficiaries, even though they may apply retroactively to Participants whose employment has terminated;
(b)	to construe and interpret the Plan, determine the application of the Plan to situations where such application is unclear or disputable, to resolve all questions arising under the Plan (including questions of fact) and make equitable adjustments for any mistakes or errors made in the administration of the Plan; provided that individual exceptions to Rules shall not be permitted;
(c)	to determine all questions arising in the administration of the Plan, including the power to determine the status of individuals as Eligible Employees, the rights of Participants and their Beneficiaries and the amount of their respective benefits and such determination, interpretation or other action shall be final and binding for all purposes and upon all persons;
(d)	to adopt, amend and rescind such rules (including Rules), regulations and forms as it may deem necessary for the proper and efficient administration of the Plan consistent with its purposes, which rules may permit case-by-case determinations;
(e)	to enforce and administer the Plan in accordance with its terms and the rules, regulations and forms it adopts; to appoint a plan administrator and to delegate to the plan administrator such administrative duties as the Committee shall deem appropriate;
(f)	to take such action and establish such procedures as it deems necessary or appropriate to coordinate deferrals and benefits under this Plan and any other plan;
(g)	to select, monitor and prospectively change the investment funds and rates of return to be credited under the Plan;

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(h)	to take such action and establish such procedures as it deems necessary or appropriate to implement Participant elections and designations of investment funds and rates of return, and to coordinate the Employers’ actions, if any, taken to reduce or eliminate the Employers’ exposure to market fluctuations;
(i)	to direct the appropriate person to make payments from the Plan;
(j)	to employ such counsel, auditors, actuaries, or other specialists (who may be counsel, auditors, actuaries or other specialists for the Company) and to engage such clerical or other services to the extent such services are not provided by the Company;
(k)	to maintain records concerning the Plan sufficient to prepare reports, returns and other information required by the Plan or by law, and to communicate the terms of the Plan and any material amendments thereto to the Eligible Employees and Participants;
(1)	to delegate such of its powers and authorities (including the power and authority to delegate) to such person or persons, with his, her, its or their consent, as the Committee may appoint; and
(m)	to do all other things the Committee deems necessary or desirable for the advantageous administration of the Plan and to make the Plan fully effective in accordance with its terms and intent.

8.3

Claims for Benefits. In the event that a Participant or Beneficiary claims to be eligible for benefits, or claims any rights hereunder (hereinafter a “Claimant”), he must complete and submit a written request for such benefit with the Committee setting forth his claim. The request must be made within 60 days of the date of vesting and must be addressed to the Committee, Huttig Building Products, Inc. at the Company’s then principal place of business.

8.4

Claim Decision. Upon receipt of a claim, the Committee shall advise the Claimant that a reply will be forthcoming within 90 days and shall, in fact, deliver such reply within such period. The Committee may, however, extend the reply period for an additional 90 days for reasonable cause. If the claim is denied in whole or in part, the Committee shall adopt a written opinion, using language calculated to be understood by the Claimant, setting forth:

(a)	the specific reason or reasons for such denial;
(b)	the specific reference to pertinent provisions of the Plan on which such denial is based;

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(c)	a description of any additional material or information necessary for the Claimant to perfect his claim and an explanation why such material or such information is necessary;
(d)	appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and
(e)	the time limits for requesting a review under Section 8.5 and for review under Section 8.6 hereof.

8.5	Request for Review. Within 60 days after the receipt by the Claimant of the written opinion described above, the Claimant may request in writing that the Chief Executive Officer of the Company review the determination of the Committee. Such request must be addressed to the Chief Executive Officer, Huttig Building Products, Inc. at the Company’s then principal place of business. The Claimant or his duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Chief Executive Officer. If the Claimant does not request a review of the Committee’s determination by the Chief Executive Officer within such 60 day period, he shall be barred and estopped from challenging the Committee’s determination.
8.6	Review of Decision. Within 60 days after the Chief Executive Officer’s receipt of a request for review, he will review the Committee’s determination. After considering all materials presented by the Claimant, the Chief Executive Officer will render a written opinion, written in a manner calculated to be understood by the Claimant, setting forth the specific reasons for the decision and containing specific references to the pertinent provisions of the Plan on which the decision is based. If special circumstances require that the 60 day time period be extended, the Chief Executive Officer will so notify the Claimant and will render the decision as soon as possible, but no later than 120 days after receipt of the request for review.
8.7	Standard of Review. The Committee and the Chief Executive Officer shall possess and exercise discretionary authority to make determinations as to a Participant’s eligibility for benefits and to construe the terms of the Plan. The determination of the Chief Executive Officer shall be final and non-reviewable unless found to be arbitrary and capricious by a court of competent review. Such determination shall be binding upon the Employers and the Claimant.
8.8	Receipt and Release of Necessary Information. In implementing the terms of the Plan, the Committee may, without the consent of or notice to any person, release to or obtain from any other organization or person any information, with respect to any person, which the Committee deems to be necessary for such purposes. Any Participant or Beneficiary claiming benefits under the Plan shall furnish to the Committee such information as may be necessary to determine eligibility for and amount of benefit, as a condition of claiming and receiving such benefit.

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8.9

Overpayment and Underpayment of Benefits. The Committee may adopt, in its sole discretion, whatever rules, procedures and accounting practices are appropriate in providing for the collection of any overpayment of benefits. If a Participant or Beneficiary receives an underpayment of benefits, the Committee shall direct that immediate payment be made to make up for the underpayment. If an overpayment is made to a Participant or Beneficiary, for whatever reason, the Committee may, in its sole discretion, withhold payment of any further benefits under the Plan until the overpayment has been collected or may require repayment of benefits paid under the Plan without regard to further benefits to which the Participant or Beneficiary may be entitled.

8.10

Account Statements. In accordance with Rules established by the Committee, each Participant shall receive, at least quarterly, statements with respect to his Account(s).

ARTICLE IX — OTHER BENEFIT PLANS OF THE COMPANY

9.1 Other Plans. Nothing contained in the Plan shall prevent a Participant prior to his death, or his Beneficiary after his death, from receiving, in addition to any payments provided for under the Plan, any payments provided for under any other plan or benefit program of the Employer, or which would otherwise be payable or distributable to the Participant or Beneficiary under any plan or policy of the Employer or otherwise. Nothing in the Plan shall be construed as preventing the Company or any Affiliate from establishing any other or different plans providing for current or deferred compensation for employees. Benefits provided under the Plan shall not constitute earnings or compensation for purposes of determining contributions or benefits under any other plan of an Employer, unless specifically provided otherwise in such plan.

ARTICLE X — AMENDMENT AND TERMINATION OF THE PLAN

10.1 Amendment and Termination. Except as otherwise provided in this Section 10.1, the Committee may amend or terminate the Plan at any time and in its sole discretion, by written resolution. Any such amendment or termination shall be binding on the Company, the Employers, and all Participants and their Beneficiaries, even though it may be retroactive and applicable to Participants who have incurred a Termination of Employment. The Committee may amend any Rule at any time. However, no amendment or termination of the Plan and no amendment of a Rule shall adversely affect the right of a Participant to payment of a benefit to which the Participant would be entitled (then or thereafter) under the terms of the Plan if the Participant’s employment terminated immediately before the adoption of such amendment or termination of the Plan or Rule, unless such amendment or termination of the Plan or amendment of the Rule, in the reasonable judgment of the Committee, is required to comply with applicable law or to preserve the tax treatment of benefits under the Plan for the Employers or for the Participant, or is consented to by the affected Participant. Except for amendments necessary to comply with applicable law, no amendment of the Plan may be made without the approval of the Board if such amendment either (a) materially increases the

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	benefits accruing to Participants under the Plan or (b) is made after the first event constituting a part of a change in control of the Company.
	Any termination of this Plan will take place only as permitted by the Commissioner of the Internal Revenue Service in generally applicable guidance issued under Section 409A of the Code and the regulations thereunder. A termination of the Plan must comply with the provisions of Section 409A of the Code and the regulations and guidance promulgated thereunder, including, but not limited to, restrictions on the timing of final distributions and the adoption of future deferred compensation arrangements.
10.2	Continuation. The Company intends to continue the Plan indefinitely, but nevertheless assumes no contractual obligation beyond the promise to pay the benefits described in this Plan to its Participants.

ARTICLE XII — SHARES OF COMMON STOCK

11.1

Shares Available for Issuance. Any shares of Common Stock that may be distributed to Participants in accordance with Article V hereof shall be limited to available shares that may be purchased in the open market or in private transactions or held as treasury shares and may not be authorized but unissued shares of Common Stock.

11.2

Adjustments in Event of Changes in Capitalization. In the event of any change in the outstanding Common Stock of the Company by reason of any stock split, share dividend, recapitalization, merger, consolidation, reorganization, combination, or exchange or reclassification of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common shareholders other than cash dividends, the number or kind of hypothetical shares or share equivalents that may be credited under the Plan shall be automatically adjusted so that the proportionate interest of the Participants shall be maintained as before the occurrence of such event. Such adjustment shall be conclusive and binding for all purposes of the Plan.

ARTICLE XII — MISCELLANEOUS

12.1

No Right to Continued Employment. Nothing contained in the Plan shall be construed as a contract of employment between the Company or any Affiliate and an employee, or as a right of any person to be continued in the employment of the Company or any Affiliate, or as a limitation of the right of the Company or an Affiliate to discharge any of its employees, with or without cause.

12.2

Indemnification. The Company hereby indemnifies each member of the Committee and each employee who is delegated responsibilities under the Plan against any and all liabilities and expenses, including attorney’s fees, actually and reasonably incurred by them in connection with any threatened, pending or completed legal action or judicial or administrative proceeding to which they may be a party, or may be threatened to be made

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	a party, by reason of membership on such Committee or due to a delegation of responsibilities, except with regard to any matters as to which they shall be adjudged in such action or proceeding to be liable for gross negligence or willful misconduct in connection therewith.
12.3	Successors. All obligations of the Company under the Plan shall be binding on any successor, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
12.4	No Fiduciary Relationship. Nothing contained in the Plan and no action taken pursuant to the provisions hereof shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and the Participant or any other person.
12.5	Risk of Loss. Each Participant agrees to assume all risk in connection with the value of his Accounts under the Plan.
12.6	Governing Law. The Plan shall be construed and administered in accordance with the laws of the State of Missouri (without regard to the principles of conflicts of law which might otherwise apply) to the extent not pre-empted by ERISA.

     IN WITNESS WHEREOF, Huttig Building Products, Inc. has adopted this 2008 Restatement of the Plan this 29th day of January, 2008, effective as of January 1, 2008.

	HUTTIG BUILDING PRODUCTS, INC.
By:	/s/ David L. Fleisher
	Vice President — Chief Financial Officer

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EX-10.34

Exhibit 10.34

December 21, 2006

Mr. Gregory W. Gurley
9003 Sand Ridge Drive
Holland, OH 43528

Dear Greg:

This letter confirms our offer for you to join Huttig Building Products, Inc., as Vice President — Marketing and Product Management reporting to Jon Vrabely, President and Chief Executive Officer. It is anticipated that your employment with the Company will begin no later than January 29, 2007.

This offer is contingent on your satisfactory completion of the requirements of our pre-employment screening process, in accordance with company policy, which may include drug testing, background inquiries, criminal background check, and possibly a motor vehicle history. In addition, because the U.S. Immigration Reform and Control Act requires employers to verify employment eligibility for all new hires, your employment with Huttig depends on successful verification of eligibility within three days of your start date.

Compensation

Your annual base salary will be $225,000, which will be paid semi-monthly. You will also receive a $10,000 signing bonus, payable within the first 30 days of your employment. As the Vice President — Marketing and Product Management, you will be eligible to participate in and receive bonus awards under the Company’s Executive Incentive Plan, which is based on a calculation of Economic Value Added and which may change from time to time as approved by the Compensation Committee of the Board of Directors. In addition, we will recommend to the Board of Directors that you be awarded 20,000 shares of restricted stock. The amount of the grant and effective date is at the discretion of the Board, but is expected to be between April 1 through April 30, 2007.

You will be provided a company-leased vehicle in accordance with the Company leased vehicle program or $650 per month in lieu of being furnished a company leased vehicle. The Company will also provide you with a laptop and cell phone.

Relocation

As a condition of your employment with the Company, you will be required to relocate to the St. Louis, Missouri, area. Therefore, the Company will provide with the relocation benefits described in Policy HP-414, Relocation Expense. The Company will also provide you with temporary housing for up to a 6-month period.

Employee Benefits

Since you will be classified as a full-time salaried employee, you and any eligible family members will be qualified to participate in our group health insurance plan and our 401(k) plan effective on the first day of the month following 30 calendar days of continuous employment. You will also be eligible to purchase Huttig Building Products common stock through the Employee Stock Purchase Plan upon commencement of your employment.

Vacation Eligibility

On an annual basis, you will be entitled to 15 days of vacation.

By your signature below, you acknowledge that your employment with Huttig is an “at will” relationship for no definite time period and can be terminated at any time, with or without notice, and with or without cause, by either party.

We are excited to extend to you this offer of employment and look forward to working with you. If you have any questions, please feel free to contact me at 314-216-2615.

Yours truly,

/s/ Jon P. Vrabely

Jon Vrabely
President and Chief Executive Officer

Accepted	/s/ Gregory W. Gurley	Date	12/26/06
	Gregory W. Gurley

cc:                 Darlene Schroeder, Vice President — Human Resources

EX-10.35

Exhibit 10.35

Compensation Arrangements for
Certain Named Executive Officers

Set forth below is a summary of the compensation arrangements of the executive officers to be named in the Company’s 2008 Proxy Statement for the Annual Meeting of Stockholders, other than Mr. Jon P. Vrabely, the Company’s President and Chief Executive Officer, who is covered by a written employment agreement filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 (the “Form 10-K”).

Each of the executive officers named below is an employee at will whose compensation and employment status may be changed at any time in the discretion of the Company’s Board of Directors.

Base Salaries. On February 15, 2008, the base salaries of the executive officers are as set forth below:

Name and Position	Base Salary Amount
David L. Fleisher, Vice President, Chief Financial Officer and Secretary	$	300,000
Greg W. Gurley, Vice President, Product Management and Marketing	$	225,000
Brian D. Robinson, Vice President, Chief Information Officer	$	199,500
Richard A. Baltz, Vice President, Internal Audit	$	190,000

Base salaries are adjusted from time to time. Any such adjustments are approved by the Management Organization and Compensation Committee.

Bonuses and Equity Awards. These executive officers are also eligible to participate in the Company’s annual incentive compensation plans and equity incentive compensation plans, as provided in the terms of such plans. Such plans, and any forms of awards thereunder providing for material terms, are included as exhibits to the Form 10-K.

EX-10.36

EXHIBIT 10.36

COMPENSATION ARRANGEMENTS FOR OUTSIDE DIRECTORS

Cash Compensation

The Board of Directors approved a 10% reduction in cash compensation to outside directors, effective January 1, 2008. Effective as of that date, the cash fees paid to outside directors are as set forth below.

     Chairman of the Board

The Chairman of the Board of Directors, Mr. R.S. Evans, receives a cash retainer fee of $90,000 per year. Mr. Evans receives no other cash compensation for his service on the Board and its Committees.

     Other Non-Employee Directors

Non-employee directors, other than Mr. Evans, receive the following cash compensation:

• $22,500 annual Board retainer

• $9,000 annual retainer for chairman of the Audit Committee

• $1,350 annual retainer for other Audit Committee members

• $2,700 annual retainer for chairman of the Management Organization and Compensation Committee

• $1,800 annual retainer for Executive Committee members

• $1,800 for each Board meeting and Committee meeting attended

Stock Compensation

Non-employee directors are awarded, on the date of the Annual Meeting of Stockholders, an annual grant of restricted stock units (“RSUs”) for shares of Company common stock having a value of approximately $15,000 on the date of grant. The RSUs vest in full on the date of the next Annual Meeting of Stockholders or upon a change in control of the Company. The shares of stock represented by vested RSUs are delivered to the director upon cessation of his service on the Board. All unvested RSUs are forfeited upon cessation of a director’s service on the Board for any reason. Each non-employee director received a grant of 2,205 RSUs on April 23, 2007, with a value of approximately $15,000, based on the fair market value of Company common stock on that date. These RSUs vest on April 21, 2008, the date of the 2008 Annual Meeting of Stockholders.

The Company reimburses its directors for reasonable expenses incurred in attending Board and Committee meetings.

EX-21.1

EXHIBIT 21.1

Subsidiaries of the Company

Name of Subsidiary	Jurisdiction of Incorporation or Organization
Huttig, Inc.	Delaware
Huttig Building Materials, Inc.	Delaware
Huttig Texas Holding, Inc.	Delaware
Huttig Texas Limited Partnership	Texas

54

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Huttig Building Products, Inc.:

We consent to the incorporation by reference in the registration statement Nos. 333-92495, 333-92497, 333-92499, 333-75610, 333-81410, 333-131090, and 333-145151 on Form S-8 and registration statement No. 333-130525 on Form S-3 of Huttig Building Products, Inc. of our reports dated February 29, 2008, with respect to the consolidated balance sheets of Huttig Building Products, Inc. as of December 31, 2007 and 2006, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2007, and the effectiveness of internal control over financial reporting as of December 31, 2007, which report appears in the December 31, 2007 annual report on Form 10-K of Huttig Building Products, Inc.

/s/  KPMG LLP

St. Louis, Missouri

February 29, 2008

55

EX-31.1

EXHIBIT 31.1

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

I, Jon P. Vrabely, certify that:

1. I have reviewed this annual report on Form 10-K of Huttig Building Products, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have;

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  Jon P. Vrabely

Jon P. Vrabely

President and Chief Executive Officer

Date: February 29, 2008

56

EX-31.2

EXHIBIT 31.2

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

I, David L. Fleisher, certify that:

1. I have reviewed this annual report on Form 10-K of Huttig Building Products, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have;

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  David L. Fleisher

David L. Fleisher

Vice President and Chief Financial Officer

Date: February 29, 2008

57

EX-32.1

EXHIBIT 32.1

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

In connection with the Annual Report of Huttig Building Products, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jon P. Vrabely, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  Jon P. Vrabely

Jon P. Vrabely

Chief Executive Officer

February 29, 2008

A signed original of this written statement required by Section 906 has been provided to Huttig Building Products, Inc. and will be retained by Huttig Building Products, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

58

EX-32.2

EXHIBIT 32.2

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

In connection with the Annual Report of Huttig Building Products, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David L. Fleisher, Vice President — Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2 The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  David L. Fleisher

David L. Fleisher

Vice President — Chief Financial Officer

February 29, 2008

A signed original of this written statement required by Section 906 has been provided to Huttig Building Products, Inc. and will be retained by Huttig Building Products, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

59