##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549





FORM 10-Q







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

For the quarterly period ended March 31, 2010

OR



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

For the transition period from  to

Commission file numbers: 333-119696 and
333-114924





Norcraft Holdings, L.P.

Norcraft Companies, L.P.

(Exact name of registrants as specified in their charters)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 75-3132727                          
|Delaware                                                       |  | 36-4231718                          
|(State or Other Jurisdiction of
Incorporation or Organization) |  | (I.R.S. Employer
Identification No.)

3020 Denmark Avenue, Suite 100

Eagan, MN 55121

(Address of Principal Executive Offices)

(800) 297-0661

(Registrants Telephone Number, Including Area Code)





Indicate by check mark whether the registrants: (1) have 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) have been subject to such filing requirements for the past 90
days.    Yes   ̈    No  x.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈.

Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers or smaller reporting companies.
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 |  |  ̈ |  | Accelerated Filer         |  |  ̈
|                        |  |   | 
|Non-Accelerated Filer   |  | x |  | Smaller Reporting Company |  |  ̈

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x.

This Form 10-Q is a combined quarterly report being filed separately by two registrants: Norcraft Holdings, L.P. and Norcraft Companies, L.P. Unless the
context indicates otherwise, any reference in this report to Holdings refers to Norcraft Holdings, L.P. and any reference to Norcraft refers to Norcraft Companies, L.P., the wholly-owned operating subsidiary of Holdings. The
Company, we, us and our refer to Norcraft Holdings, L.P., together with Norcraft Companies, L.P.









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##### Table of Contents

Norcraft Holdings,
L.P.                    Norcraft Companies, L.P.

Table of Contents



|           |  |                                                                                                                                            |  |     
|---------- |  | ------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|           |  |                                                                                                                                            |  | Page
|PART I     |  | FINANCIAL INFORMATION                                                                                                                      |  |     
|           |  |                                                                                                                                           
|Item 1.    |  | Unaudited Condensed Consolidated Financial Statements                                                                                      |  |     
|           |  | Consolidated Balance Sheets at March 31, 2010 and December 31, 2009                                                                        |  | 3   
|           |  | Consolidated Statements of Operations for the three months ended March 31, 2010 and 2009                                                   |  | 4   
|           |  | Consolidated Statements of Changes in Members Equity (Deficit) and Comprehensive Income (Loss) for the three months ended March
 31, 2010 |  | 5   
|           |  | Consolidated Statements of Cash Flows for the three months ended March 31, 2010 and 2009                                                   |  | 6   
|           |  | Notes to Consolidated Financial Statements                                                                                                 |  | 7   
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations                                                      |  | 16  
|Item 3.    |  | Quantitative and Qualitative Disclosures of Market Risk                                                                                    |  | 20  
|Item 4T.   |  | Controls and Procedures                                                                                                                    |  | 21  
|           |  |                                                                                                                                           
|PART II    |  | OTHER INFORMATION                                                                                                                          |  |     
|Item 1.    |  | Legal Proceedings                                                                                                                          |  | 22  
|Item 1A.   |  | Risk Factors                                                                                                                               |  | 22  
|Item 6.    |  | Exhibits                                                                                                                                   |  | 22  
|           | 
|SIGNATURES |  | 23                                                                                                                                        

This combined Form 10-Q is
separately filed by Norcraft Holdings, L.P. and Norcraft Companies, L.P. Each Registrant hereto is filing on its own behalf all of the information contained in this quarterly report that relates to such Registrant. Each Registrant hereto is not
filing any information that does not relate to such Registrant, and therefore makes no representation as to any such information.



2



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PART I. FINANCIAL INFORMATION



|Item 1. | 
|------- | 

Consolidated Balance Sheets

(dollar amounts in thousands)

(unaudited)



|                                                |  |                         |         |   |                          |   |         |               |  |   |                  |   |  |   |         |  
|----------------------------------------------- |  | ----------------------- | ------- | - | ------------------------ | - | ------- | ------------- |  | - | ---------------- | - |  | - | ------- | -
|                                                |  | Norcraft Holdings, L.P. |         |   | Norcraft Companies, L.P. |  
|                                                |  | March 31,2010           |         |   | December 31,2009         |   |         | March 31,2010 |  |   | December 31,2009 |  
|ASSETS                                          |  |                         |         |   |                          |   |         |               |  |   |                  |   |  |   |         |  
|Current assets:                                 |  |                         |         |   |                          |   |         |               |  |   |                  |   |  |   |         |  
|Cash and cash equivalents                       |  | $                       | 20,816  |   |                          | $ | 20,863  |               |  | $ | 19,302           |   |  | $ | 16,731  |  
|Trade accounts receivable, net                  |  |                         | 22,026  |   |                          |   | 17,987  |               |  |   | 22,026           |   |  |   | 17,987  |  
|Inventories                                     |  |                         | 17,628  |   |                          |   | 16,380  |               |  |   | 17,628           |   |  |   | 16,380  |  
|Prepaid expenses                                |  |                         | 1,459   |   |                          |   | 1,629   |               |  |   | 1,459            |   |  |   | 1,629   |  
|                                                |  |                         |         |   |                          |   |         |               |  |   |                  |   |  |   |         |  
|                                                |  |                         |         |  
|Total current assets                            |  |                         | 61,929  |   |                          |   | 56,859  |               |  |   | 60,415           |   |  |   | 52,727  |  
|                                                |  |                         |         |  
|Property, plant and equipment, net              |  |                         | 30,884  |   |                          |   | 31,925  |               |  |   | 30,884           |   |  |   | 31,925  |  
|                                                |  |                         |         |  
|Other assets:                                   |  |                         |         |   |                          |   |         |               |  |   |                  |   |  |   |         |  
|Goodwill                                        |  |                         | 88,421  |   |                          |   | 88,421  |               |  |   | 88,421           |   |  |   | 88,421  |  
|Brand names                                     |  |                         | 35,100  |   |                          |   | 35,100  |               |  |   | 35,100           |   |  |   | 35,100  |  
|Customer relationships, net                     |  |                         | 38,215  |   |                          |   | 39,332  |               |  |   | 38,215           |   |  |   | 39,332  |  
|Deferred financing costs, net                   |  |                         | 7,442   |   |                          |   | 7,483   |               |  |   | 6,921            |   |  |   | 6,908   |  
|Display cabinets, net                           |  |                         | 5,543   |   |                          |   | 5,394   |               |  |   | 5,543            |   |  |   | 5,394   |  
|Other                                           |  |                         | 49      |   |                          |   | 70      |               |  |   | 49               |   |  |   | 70      |  
|                                                |  |                         |         |   |                          |   |         |               |  |   |                  |   |  |   |         |  
|                                                |  |                         |         |  
|Total other assets                              |  |                         | 174,770 |   |                          |   | 175,800 |               |  |   | 174,249          |   |  |   | 175,225 |  
|                                                |  |                         |         |   |                          |   |         |               |  |   |                  |   |  |   |         |  
|                                                |  |                         |         |  
|Total assets                                    |  | $                       | 267,583 |   |                          | $ | 264,584 |               |  | $ | 265,548          |   |  | $ | 259,877 |  
|                                                |  |                         |         |   |                          |   |         |               |  |   |                  |   |  |   |         |  
|                                                |  |                         |         |  
|LIABILITIES AND MEMBERS EQUITY (DEFICIT)       |  |                         |         |   |                          |   |         |               |  |   |                  |   |  |   |         |  
|Current liabilities:                            |  |                         |         |   |                          |   |         |               |  |   |                  |   |  |   |         |  
|Accounts payable                                |  | $                       | 8,740   |   |                          | $ | 6,626   |               |  | $ | 8,740            |   |  | $ | 6,626   |  
|Accrued expenses                                |  |                         | 19,686  |   |                          |   | 16,841  |               |  |   | 19,250           |   |  |   | 15,096  |  
|                                                |  |                         |         |   |                          |   |         |               |  |   |                  |   |  |   |         |  
|                                                |  |                         |         |  
|Total current liabilities                       |  |                         | 28,426  |   |                          |   | 23,467  |               |  |   | 27,990           |   |  |   | 21,722  |  
|                                                |  |                         |         |  
|Long-term debt                                  |  |                         | 233,700 |   |                          |   | 233,700 |               |  |   | 180,000          |   |  |   | 180,000 |  
|Unamortized discount on bonds payable           |  |                         | (2,781  | ) |                          |   | (2,903  | )             |  |   | (2,781           | ) |  |   | (2,903  | )
|Other liabilities                               |  |                         | 305     |   |                          |   | 287     |               |  |   | 305              |   |  |   | 287     |  
|                                                |  |                         |         |  
|Commitments and contingencies                   |  |                         |        |   |                          |   |        |               |  |   |                 |   |  |   |        |  
|                                                |  |                         |         |  
|Members equity subject to put request          |  |                         | 8,076   |   |                          |   | 7,546   |               |  |   |                 |   |  |   |        |  
|                                                |  |                         |         |  
|Members equity (deficit)                       |  |                         | (143    | ) |                          |   | 2,487   |               |  |   | 60,034           |   |  |   | 60,771  |  
|                                                |  |                         |         |   |                          |   |         |               |  |   |                  |   |  |   |         |  
|                                                |  |                         |         |  
|Total liabilities and members equity (deficit) |  | $                       | 267,583 |   |                          | $ | 264,584 |               |  | $ | 265,548          |   |  | $ | 259,877 |  
|                                                |  |                         |         |   |                          |   |         |               |  |   |                  |   |  |   |         |  

See notes to consolidated financial statements.



3



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Consolidated Statements of Operations

(dollar amounts in thousands)

(unaudited)



|                                             |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|-------------------------------------------- |  | --------------------------- | ------ | - | --------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                             |  | Norcraft Holdings, L.P.     |        |   | Norcraft Companies, L.P.    |  
|                                             |  | Three Months EndedMarch 31, |        |   | Three Months EndedMarch 31, |  
|                                             |  | 2010                        |        |   | 2009                        |   |        | 2010 |  |   | 2009   |  
|Net sales                                    |  | $                           | 61,833 |   |                             | $ | 61,296 |      |  | $ | 61,833 |   |  | $ | 61,296 |  
|Cost of sales                                |  |                             | 44,617 |   |                             |   | 45,323 |      |  |   | 44,617 |   |  |   | 45,323 |  
|                                             |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Gross profit                                 |  |                             | 17,216 |   |                             |   | 15,973 |      |  |   | 17,216 |   |  |   | 15,973 |  
|                                             |  |                             |        |  
|Selling, general and administrative expenses |  |                             | 12,671 |   |                             |   | 12,692 |      |  |   | 12,671 |   |  |   | 12,692 |  
|                                             |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Income from operations                       |  |                             | 4,545  |   |                             |   | 3,281  |      |  |   | 4,545  |   |  |   | 3,281  |  
|                                             |  |                             |        |  
|Other expense:                               |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Interest expense, net                        |  |                             | 6,354  |   |                             |   | 6,353  |      |  |   | 5,045  |   |  |   | 3,467  |  
|Amortization of deferred financing costs     |  |                             | 367    |   |                             |   | 1,182  |      |  |   | 313    |   |  |   | 1,062  |  
|Other, net                                   |  |                             | 30     |   |                             |   | 39     |      |  |   | 30     |   |  |   | 39     |  
|                                             |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|                                             |  |                             |        |  
|Total other expense                          |  |                             | 6,751  |   |                             |   | 7,574  |      |  |   | 5,388  |   |  |   | 4,568  |  
|                                             |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|                                             |  |                             |        |  
|Net loss                                     |  | $                           | (2,206 | ) |                             | $ | (4,293 | )    |  | $ | (843   | ) |  | $ | (1,287 | )
|                                             |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |        |  

See notes to consolidated financial statements.



4



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Consolidated Statements of Changes in Members Equity
(Deficit) and Comprehensive Income (Loss)

(dollar amounts in thousands)

(unaudited)



|                                                      |  |                          |        |   |                        |   |        |  
|----------------------------------------------------- |  | ------------------------ | ------ | - | ---------------------- | - | ------ | -
|                                                      |  | Norcraft Holdings, L.P.  |       
|                                                      |  | Members Equity(Deficit) |        |   | Totalcomprehensiveloss |  
|                                                      |  |                         
|Members equity at January 1, 2010                    |  | $                        | 2,487  |   |                        |   |        |  
|                                                      |  |                         
|Stock compensation expense                            |  |                          | 45     |   |                        |   |        |  
|                                                      |  |                         
|Accretion on members interest subject to put request |  |                          | (530   | ) |                        |   |        |  
|                                                      |  |                         
|Foreign currency translation adjustment               |  |                          | 61     |   |                        |   | 61     |  
|                                                      |  |                         
|Net loss                                              |  |                          | (2,206 | ) |                        |   | (2,206 | )
|                                                      |  |                          |        |   |                        |   |        |  
|                                                      |  |                         
|Total comprehensive loss                              |  |                          |        |   |                        | $ | (2,145 | )
|                                                      |  |                          |        |   |                        |   |        |  
|                                                      |  |                         
|Members deficit at March 31, 2010                    |  | $                        | (143   | ) |                        |   |        |  
|                                                      |  |                          |        |   |                        |   |        |  
|                                                      | 
|                                                      |  | Norcraft Companies, L.P. |       
|                                                      |  | Members Equity(Deficit) |        |   | Totalcomprehensiveloss |  
|Members equity at January 1, 2010                    |  | $                        | 60,771 |   |                        |   |        |  
|                                                      |  |                         
|Stock compensation expense                            |  |                          | 45     |   |                        |   |        |  
|                                                      |  |                         
|Foreign currency translation adjustment               |  |                          | 61     |   |                        |   | 61     |  
|                                                      |  |                         
|Net loss                                              |  |                          | (843   | ) |                        |   | (843   | )
|                                                      |  |                          |        |   |                        |   |        |  
|                                                      |  |                         
|Total comprehensive loss                              |  |                          |        |   |                        | $ | (782   | )
|                                                      |  |                          |        |   |                        |   |        |  
|                                                      |  |                         
|Members equity at March 31, 2010                     |  | $                        | 60,034 |   |                        |   |        |  
|                                                      |  |                          |        |   |                        |   |        |  

See notes to consolidated financial statements.



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##### Table of Contents

Consolidated Statements of Cash Flows

(dollar amounts in thousands)

(unaudited)



|                                                                                |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |         |  
|------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | --------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------- | -
|                                                                                |  | Norcraft Holdings, L.P.     |        |   | Norcraft Companies, L.P.    |  
|                                                                                |  | Three Months EndedMarch 31, |        |   | Three Months EndedMarch 31, |  
|                                                                                |  | 2010                        |        |   | 2009                        |   |        | 2010 |  |   | 2009   |  
|Cash flows from operating activities:                                           |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |         |  
|Net loss                                                                        |  | $                           | (2,206 | ) |                             | $ | (4,293 | )    |  | $ | (843   | ) |  | $ | (1,287  | )
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |         |  
|Depreciation and amortization of property, plant and equipment                  |  |                             | 1,457  |   |                             |   | 1,432  |      |  |   | 1,457  |   |  |   | 1,432   |  
|Amortization:                                                                   |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |         |  
|Customer relationships                                                          |  |                             | 1,117  |   |                             |   | 1,117  |      |  |   | 1,117  |   |  |   | 1,117   |  
|Deferred financing costs                                                        |  |                             | 367    |   |                             |   | 1,182  |      |  |   | 313    |   |  |   | 1,062   |  
|Display cabinets                                                                |  |                             | 1,088  |   |                             |   | 1,425  |      |  |   | 1,088  |   |  |   | 1,425   |  
|Discount amortization/accreted interest                                         |  |                             | 122    |   |                             |   |       |      |  |   | 122    |   |  |   |        |  
|Provision for uncollectible accounts receivable                                 |  |                             | (26    | ) |                             |   | 282    |      |  |   | (26    | ) |  |   | 282     |  
|Provision for obsolete and excess inventory                                     |  |                             | 354    |   |                             |   | 293    |      |  |   | 354    |   |  |   | 293     |  
|Provision for warranty claims                                                   |  |                             | 641    |   |                             |   | 515    |      |  |   | 641    |   |  |   | 515     |  
|Stock compensation expense                                                      |  |                             | 45     |   |                             |   | 55     |      |  |   | 45     |   |  |   | 55      |  
|Gain on disposal of assets                                                      |  |                             | (1     | ) |                             |   | (6     | )    |  |   | (1     | ) |  |   | (6      | )
|Change in operating assets and liabilities:                                     |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |         |  
|Trade accounts receivable                                                       |  |                             | (3,935 | ) |                             |   | (1,575 | )    |  |   | (3,935 | ) |  |   | (1,575  | )
|Inventories                                                                     |  |                             | (1,591 | ) |                             |   | (61    | )    |  |   | (1,591 | ) |  |   | (61     | )
|Prepaid expenses                                                                |  |                             | 173    |   |                             |   | 417    |      |  |   | 173    |   |  |   | 417     |  
|Other assets                                                                    |  |                             | 21     |   |                             |   | (12    | )    |  |   | 21     |   |  |   | (12     | )
|Accounts payable and accrued expenses                                           |  |                             | 4,482  |   |                             |   | 499    |      |  |   | 5,791  |   |  |   | 3,375   |  
|                                                                                |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |         |  
|                                                                                |  |                             |        |  
|Net cash provided by operating activities                                       |  |                             | 2,108  |   |                             |   | 1,270  |      |  |   | 4,726  |   |  |   | 7,032   |  
|                                                                                |  |                             |        |  
|Cash flows from investing activities:                                           |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |         |  
|Proceeds from sale of property and equipment                                    |  |                             | 1      |   |                             |   | 8      |      |  |   | 1      |   |  |   | 8       |  
|Purchase of property, plant and equipment                                       |  |                             | (595   | ) |                             |   | (596   | )    |  |   | (595   | ) |  |   | (596    | )
|Additions to display cabinets                                                   |  |                             | (1,237 | ) |                             |   | (692   | )    |  |   | (1,237 | ) |  |   | (692    | )
|                                                                                |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |         |  
|                                                                                |  |                             |        |  
|Net cash used in investing activities                                           |  |                             | (1,831 | ) |                             |   | (1,280 | )    |  |   | (1,831 | ) |  |   | (1,280  | )
|                                                                                |  |                             |        |  
|Cash flows from financing activities:                                           |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |         |  
|Payment in financing costs                                                      |  |                             | (326   | ) |                             |   |       |      |  |   | (326   | ) |  |   |        |  
|Transfer to restricted cash                                                     |  |                             |       |   |                             |   | (5,618 | )    |  |   |       |   |  |   | (5,618  | )
|Distributions to members                                                        |  |                             |       |   |                             |   |       |      |  |   |       |   |  |   | (5,762  | )
|                                                                                |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |         |  
|                                                                                |  |                             |        |  
|Net cash used in financing activities                                           |  |                             | (326   | ) |                             |   | (5,618 | )    |  |   | (326   | ) |  |   | (11,380 | )
|                                                                                |  |                             |        |  
|Effect of exchange rates on cash                                                |  |                             | 2      |   |                             |   | (13    | )    |  |   | 2      |   |  |   | (13     | )
|                                                                                |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |         |  
|                                                                                |  |                             |        |  
|Net increase (decrease) in cash and cash equivalents                            |  |                             | (47    | ) |                             |   | (5,641 | )    |  |   | 2,571  |   |  |   | (5,641  | )
|                                                                                |  |                             |        |  
|Cash and cash equivalents, beginning of the period                              |  |                             | 20,863 |   |                             |   | 59,406 |      |  |   | 16,731 |   |  |   | 59,406  |  
|                                                                                |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |         |  
|                                                                                |  |                             |        |  
|Cash and cash equivalents, end of period                                        |  | $                           | 20,816 |   |                             | $ | 53,765 |      |  | $ | 19,302 |   |  | $ | 53,765  |  
|                                                                                |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |         |  
|                                                                                |  |                             |        |  
|Supplemental disclosure of non-cash transactions:                               |  |                             |        |   |                             |   |        |      |  |   |        |   |  |   |         |  
|Change in equity subject to put request                                         |  | $                           | 530    |   |                             | $ | (5,685 | )    |  | $ |       |   |  | $ |        |  
|Purchase of property, plant and equipment with consideration other than cash    |  | $                           | 201    |   |                             | $ |       |      |  | $ | 201    |   |  | $ |        |  

See notes to
consolidated financial statements.



6



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##### Table of Contents

Norcraft Holdings,
L.P.                    Norcraft Companies, L.P.

Notes to Consolidated Financial Statements

(in thousands)

(unaudited)



|1. | Basis of Presentation
|-- | ---------------------

The accompanying financial statements are those of Norcraft Holdings, L.P. (Holdings) and one of its wholly owned subsidiaries
Norcraft Companies, L.P. (Norcraft). Holdings and Norcraft are collectively referred to as the Company.

The consolidated financial statements of Holdings include the accounts of its 100% owned subsidiaries, Norcraft
Intermediate Holdings, L.P., which is the immediate parent of Norcraft, and Norcraft Capital Corp. In August 2004, Holdings and Norcraft Capital Corp. issued $118.0 million of
93/4% senior discount notes for gross proceeds of
$80.3 million. Holdings and Norcraft Capital Corp. are the sole obligors of these notes. In March 2009, Norcraft distributed approximately $5.7 million to Holdings to enable it to make cash interest payments on the senior discount notes. On
April 3, 2009, as described in Note 7 below, Norcraft distributed an additional $10.0 million to Holdings to enable it to make future cash interest payments on these notes. On September 1, 2009, a cash interest payment of approximately
$5.7 million was made for these notes out of the $10.0 million. In December 2009, $64.3 million of the senior discount notes were repurchased resulting in a loss from debt extinguishment of $1.6 million. Other than the remaining $53.7 million of the
senior discount notes, cash, related deferred issuance costs, related interest and amortization expense and related debt extinguishment loss, all other assets, liabilities, income, expenses and cash flows of the consolidated financial statements of
Holdings presented for all periods represent those of its wholly-owned subsidiary Norcraft.

The accompanying financial
statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the interim consolidated financial
statements and accompanying notes included herein should be read in conjunction with the more detailed information contained in the Companys Annual Report on Form 10-K for the year ended December 31, 2009, as filed with the Securities and
Exchange Commission. The unaudited interim consolidated financial statements as of March 31, 2010 and 2009 and for the three months ended March 31, 2010 and 2009 include all normal recurring adjustments which management considers necessary
for the fair presentation of financial position, results of operations and cash flows for the interim periods.

Unless
separately stated, the information included in the notes herein relate to both Holdings and Norcraft.



|2. | Trade Accounts Receivable
|-- | -------------------------

Trade accounts receivable consists of the following:



|                                           |  |               |        |   |                  |   |        |  
|------------------------------------------ |  | ------------- | ------ | - | ---------------- | - | ------ | -
|                                           |  | March 31,2010 |        |   | December 31,2009 |  
|Trade accounts receivable                  |  | $             | 22,989 |   |                  | $ | 18,985 |  
|Less: Allowance for uncollectible accounts |  |               | (963   | ) |                  |   | (998   | )
|                                           |  |               |        |   |                  |   |        |  
|Trade accounts receivable, net             |  | $             | 22,026 |   |                  | $ | 17,987 |  
|                                           |  |               |        |   |                  |   |        |  



|3. | Inventories
|-- | -----------

Inventories
consist of the following:



|                           |  |               |        |                  |   |       
|-------------------------- |  | ------------- | ------ | ---------------- | - | ------
|                           |  | March 31,2010 |        | December 31,2009
|Raw materials and supplies |  | $             | 10,893 |                  | $ | 11,173
|Work in process            |  |               | 2,424  |                  |   | 2,610 
|Finished goods             |  |               | 4,311  |                  |   | 2,597 
|                           |  |               |        |                  |   |       
|                           |  |              
|                           |  | $             | 17,628 |                  | $ | 16,380
|                           |  |               |        |                  |   |       



7



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##### Table of Contents

|4. | Intangible Assets
|-- | -----------------

Intangible assets subject to amortization consist of the following:



|                         |  |                          |        |                         |                   |         |                      |  |                         |        |  |   |         |  
|------------------------ |  | ------------------------ | ------ | ----------------------- | ----------------- | ------- | -------------------- |  | ----------------------- | ------ |  | - | ------- | -
|                         |  | Norcraft Holdings, L.P.  |       
|                         |  | March 31, 2010           |        |                         | December 31, 2009 |        
|                         |  | Gross CarryingAmount     |        | AccumulatedAmortization |                   |         | Gross CarryingAmount |  | AccumulatedAmortization |       
|Customer relationships   |  | $                        | 67,000 |                         | $                 | (28,785 | )                    |  | $                       | 67,000 |  | $ | (27,668 | )
|Deferred financing costs |  |                          | 8,916  |                         |                   | (1,474  | )                    |  |                         | 8,590  |  |   | (1,107  | )
|                         |  |                          |        |                         |                   |         |                      |  |                         |        |  |   |         |  
|Total                    |  | $                        | 75,916 |                         | $                 | (30,259 | )                    |  | $                       | 75,590 |  | $ | (28,775 | )
|                         |  |                          |        |                         |                   |         |                      |  |                         |        |  |   |         |  
|                         | 
|                         |  | Norcraft Companies, L.P. |       
|                         |  | March 31, 2010           |        |                         | December 31, 2009 |        
|                         |  | Gross CarryingAmount     |        | AccumulatedAmortization |                   |         | Gross CarryingAmount |  | AccumulatedAmortization |       
|Customer relationships   |  | $                        | 67,000 |                         | $                 | (28,785 | )                    |  | $                       | 67,000 |  | $ | (27,668 | )
|Deferred financing costs |  |                          | 7,308  |                         |                   | (387    | )                    |  |                         | 6,982  |  |   | (74     | )
|                         |  |                          |        |                         |                   |         |                      |  |                         |        |  |   |         |  
|Total                    |  | $                        | 74,308 |                         | $                 | (29,172 | )                    |  | $                       | 73,982 |  | $ | (27,742 | )
|                         |  |                          |        |                         |                   |         |                      |  |                         |        |  |   |         |  

There were no events or circumstances during the three months ended March 31, 2010 to indicate that the
following assets not subject to amortization might be impaired.



|            |  |               |         |                  |   |        
|----------- |  | ------------- | ------- | ---------------- | - | -------
|            |  | March 31,2010 |         | December 31,2009
|Goodwill    |  | $             | 88,421  |                  | $ | 88,421 
|Brand names |  |               | 35,100  |                  |   | 35,100 
|            |  |               |         |                  |   |        
|Total       |  | $             | 123,521 |                  | $ | 123,521
|            |  |               |         |                  |   |        



|5. | Accrued Expenses
|-- | ----------------

Accrued
expenses consist of the following:



|                                            |  |                          |        |                  |   |       
|------------------------------------------- |  | ------------------------ | ------ | ---------------- | - | ------
|                                            |  | Norcraft Holdings, L.P. 
|                                            |  | March 31,2010            |        | December 31,2009
|                                            |  |                         
|Salaries, wages and employee benefits       |  | $                        | 6,134  |                  | $ | 6,842 
|Commissions, rebates and marketing programs |  |                          | 2,213  |                  |   | 2,457 
|Workers compensation                       |  |                          | 2,223  |                  |   | 2,005 
|Interest                                    |  |                          | 6,316  |                  |   | 2,926 
|Other, including product warranty accruals  |  |                          | 2,800  |                  |   | 2,611 
|                                            |  |                          |        |                  |   |       
|                                            |  |                         
|                                            |  | $                        | 19,686 |                  | $ | 16,841
|                                            |  |                          |        |                  |   |       
|                                            | 
|                                            |  | Norcraft Companies, L.P.
|                                            |  | March 31,2010            |        | December 31,2009
|                                            |  |                         
|Salaries, wages and employee benefits       |  | $                        | 6,134  |                  | $ | 6,842 
|Commissions, rebates and marketing programs |  |                          | 2,213  |                  |   | 2,457 
|Workers compensation                       |  |                          | 2,223  |                  |   | 2,005 
|Interest                                    |  |                          | 5,880  |                  |   | 1,181 
|Other, including product warranty accruals  |  |                          | 2,800  |                  |   | 2,611 
|                                            |  |                          |        |                  |   |       
|                                            |  |                         
|                                            |  | $                        | 19,250 |                  | $ | 15,096
|                                            |  |                          |        |                  |   |       



8



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##### Table of Contents

Product warranty accrual activity is as follows for Norcraft Holdings, L.P. and Norcraft
Companies, L.P.:



|                        |  |               |      |   |               |   |      |  
|----------------------- |  | ------------- | ---- | - | ------------- | - | ---- | -
|                        |  | March 31,2010 |      |   | March 31,2009 |  
|                        |  |              
|Beginning balance       |  | $             | 494  |   |               | $ | 635  |  
|Accruals for warranties |  |               | 641  |   |               |   | 515  |  
|Claims paid             |  |               | (576 | ) |               |   | (583 | )
|                        |  |               |      |   |               |   |      |  
|                        |  |              
|Ending balance          |  | $             | 559  |   |               | $ | 567  |  
|                        |  |               |      |   |               |   |      |  

Product warranty accrual is a component of the Other category in the accrued expenses tables
above.



|6. | Stock-Based Compensation
|-- | ------------------------

Holdings has a management incentive plan, (the Plan) which provides for the grants of incentive Class D limited partnership
units in Holdings to selected employees of the Company.

Previously, under the terms of the Plan, the Class D units generally
began to vest on December 31 of the first full year following the date of grant, with 50% of the units typically vesting over a five year period (time based vesting) and 50% vesting over a five year period subject to the Company meeting certain
performance based criteria in each of those years (probability based vesting).

During the first quarter of 2010, the vesting
terms for the outstanding Class D units were modified. The outstanding units, along with the newly issued units, will now vest with time-based vesting over a three year period. In addition, certain units exercise prices were reduced to the
fair market value of a Class A unit of Holdings.

Upon vesting, each Class D unit entitles the unit holder the option to
purchase one Class A unit in Holdings. All Class D units will be issued with an exercise price equal to the then fair value of Holdings Class A units as determined by the Company.

The fair value of the Class D units granted is based on the Black-Scholes option-pricing model. In accordance with ASC Topic 718, the
Company is required to incorporate a volatility factor in the fair value calculation. The volatility factor is developed through the use of a sample of peer group companies consisting of publicly-traded companies that operate in the Companys
same industry.

Compensation expense related to Class D units was negligible for the three months ended March 31, 2010.
This compares to compensation expense of $0.1 million for the three months ended March 31, 2009. Because individuals receiving these Class D unit awards are employees of Norcraft, the compensation expense is recorded at the Norcraft level.

A summary of Class D Unit activity under the Plan is as follows:



|                    |  |                                  |   |  |                                    |     
|------------------- |  | -------------------------------- | - |  | ---------------------------------- | ----
|                    |  | Three Months EndedMarch 31,
2010
|                    |  | Units                            |   |  | Weighted-AverageExercise Price (1)
|Beginning balance   |  | 4,727,220                        |   |  | $                                  | 0.24
|Granted             |  | 3,472,765                        |   |  | $                                  | 0.35
|Exercised           |  |                                 |   |  | $                                  |    
|Forfeited/expired   |  | (1,406,837                       | ) |  | $                                  | 1.87
|                    |  |                                  |   |  |                                    |     
|                    |  |                                 
|Ending balance      |  | 6,793,148                        |   |  | $                                  | 0.27
|                    |  |                                  |   |  |                                    |     
|                    |  |                                 
|Exercisable balance |  | 3,254,157                        |   |  | $                                  | 0.17
|                    |  |                                  |   |  |                                    |     
|                    |  |                                  |   |  |                                    |     
|(1)    As modified. |  |                                  |   |  |                                    |     

The intrinsic values of the issued Class D units and exercisable Class D units at March 31,
2010 were $1.0 million and $0.8 million, respectively.

The Plan will terminate in December 2015.



9



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##### Table of Contents

|7. | Long-term Debt
|-- | --------------

Long-term
debt consists of the following:



|                                                                                                   |  |                         |         |                          |   |               |  |                  |         |  |   |        
|-------------------------------------------------------------------------------------------------- |  | ----------------------- | ------- | ------------------------ | - | ------------- |  | ---------------- | ------- |  | - | -------
|                                                                                                   |  | Norcraft Holdings, L.P. |         | Norcraft Companies, L.P.
|                                                                                                   |  | March 31,2010           |         | December 31,2009         |   | March 31,2010 |  | December 31,2009
|Senior secured second lien notes payable (due in 2015 with semi-annual interest payments at 10.5%) |  | $                       | 180,000 |                          | $ | 180,000       |  | $                | 180,000 |  | $ | 180,000
|Senior discount notes (due in 2012 with interest payable at 9.75%)                                 |  |                         | 53,700  |                          |   | 53,700        |  |                  |        |  |   |       
|                                                                                                   |  |                         |         |                          |   |               |  |                  |         |  |   |        
|Long term debt                                                                                     |  | $                       | 233,700 |                          | $ | 233,700       |  | $                | 180,000 |  | $ | 180,000
|                                                                                                   |  |                         |         |                          |   |               |  |                  |         |  |   |        

We anticipate that the funds generated by operations
and current available cash balances will be sufficient to meet working capital requirements, make required member tax distributions and to finance capital expenditures over the next 12 to 18 months.

ABL Facility

In December 2009, in connection with the issuance of the senior secured second lien notes, Norcraft entered into a new senior secured
first-lien asset-based revolving credit facility (the ABL Facility) pursuant to a credit agreement dated as of December 9, 2009 (the ABL Credit Agreement) by and among Norcraft, as borrower, Norcraft Intermediate
Holdings, L.P. and other guarantors party thereto, as guarantors, the lenders party thereto and UBS Securities LLC, as arranger, bookmanager, documentation agent and syndication agent, and UBS AG, Stamford Branch, as issuing bank, administrative
agent and collateral agent and UBS Loan Finance LLC, as swingline lender. The ABL Facility provides for aggregate commitments of up to $25.0 million, subject to a current borrowing base of approximately $18.4 million, including a letter of credit
sub-facility and has a maturity date of December 9, 2013.

The ABL Credit Agreement contains restrictive covenants that
limit the ability of Norcraft Intermediate Holdings, L.P. and its subsidiaries from (1) selling assets, (2) altering the business that Norcraft currently conducts, (3) engaging in mergers, acquisitions and other business combinations,
(4) declaring dividends or redeeming or repurchasing the Companys equity interests, (5) incurring additional debt or guarantees, (6) making loans and investments, (7) incurring liens, (8) entering into transactions
with affiliates, (9) engaging in sale and leaseback transactions and (10) prepaying the senior secured second lien notes, the senior discount notes and any subordinated debt. As of March 31, 2010, the Company was in compliance with
these provisions.

Indebtedness incurred pursuant to the ABL Credit Agreement will be guaranteed by Norcraft Intermediate
Holdings, L.P., Norcraft Finance Corp., Norcraft Canada Corporation and all of Norcrafts current and future subsidiaries, subject to exceptions for foreign subsidiaries to the extent of adverse tax consequences, and is secured by a first
priority security interest in substantially all of Norcrafts and the guarantors existing and future property and assets, including accounts receivable, inventory, equipment, general intangibles, intellectual property, investment
property, other personal property, owned real property, cash and proceeds of the foregoing.

As of March 31, 2010, there
were no borrowings outstanding under the ABL Facility; however, there were approximately $5.4 million of letters of credit outstanding under the ABL Facility at March 31, 2010, and therefore, the Companys total availability under the ABL
Facility as of December 31, 2010, was approximately $13.0 million.

The Company has no unused letters of credit.

Senior Secured Second Lien Notes

In December 2009, Norcraft and Norcraft Finance Corp., a 100% owned finance subsidiary of Norcraft, issued, on a joint
and several basis, $180.0 million aggregate principal amount of
10 1/2% senior secured second lien notes (the
senior secured second lien notes). Interest accrues on the senior secured second lien notes and is payable semiannually on June 15 and December 15 of each year at a rate of
10 1/2% per annum, commencing on June 15,
2010. Proceeds from these senior secured second lien notes were used to redeem the 9% senior subordinated notes due 2011 and to make a distribution to Holdings to allow Holdings to repurchase a portion of the
9 3/4% senior discount notes due 2012.



10



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##### Table of Contents

Norcraft may redeem the senior secured second lien notes, in whole or in part, at any time
on or after December 15, 2012, at a redemption price equal to 100% of the principal amount of the senior secured second lien notes plus a premium declining ratably to par plus accrued interest.

At any time before December 15, 2012, Norcraft may redeem up to 35% of the aggregate principal amount of the senior secured second
lien notes issued under the indenture with the offerings of proceeds of qualified equity offering at a redemption price equal to 110.5% of the principal amount, plus accrued interest.

If Norcraft experiences a change of control, Norcraft may be required to offer to purchase the senior secured second lien notes at a
purchase price equal to 101% of the principal amount, plus accrued interest.

Prior to December 15, 2012, Norcraft may
redeem the senior secured second lien notes, in whole or in part, at a redemption price equal to 100% of the principal amount plus a make-whole premium plus accrued interest.

Senior Discount Notes

On August 17, 2004, Holdings and Norcraft Capital Corp., a 100% owned finance subsidiary of Holdings, issued, on
a joint and several basis, $118.0 million aggregate principal amount at maturity ($80.3 million gross proceeds) of
93/4% senior discount notes due 2012 (the
senior discount notes). The net proceeds of this offering were used to make a distribution to Holdings limited partners. Norcraft Capital Corp. was formed on August 12, 2004 and has no operations. Interest accrued on the
senior discount notes in the form of an increase in the accreted value of the note prior to September 1, 2008. Since that time, cash interest on the senior discount notes accrues and is payable semiannually in arrears on March 1 and
September 1 of each year at a rate of 93/4%
per annum. The first cash interest payment was made on March 1, 2009. In December 2009, $64.3 million of the senior discount notes were repurchased resulting in a loss from debt extinguishment of $1.6 million.

Holdings may redeem the senior discount notes, in whole or in part, at a redemption price equal to 100% of the principal amount plus a
premium, declining ratably to par, plus accrued and unpaid interest.

If Holdings experiences a change in control, it may be
required to purchase the senior discount notes at a purchase price equal to 101% of the accreted value plus accrued and unpaid interest.

Additionally, the terms of the indenture governing the senior discount notes limit Holdings ability to, among other things, incur
additional indebtedness, dispose of assets, make acquisitions, make other investments, pay dividends and make various other payments. The terms also include cross-default provisions. As of March 31, 2010, Holdings was in compliance with these
provisions.

Holdings currently relies on distributions from Norcraft in order to pay cash interest on the senior discount
notes. The indenture governing the senior secured second lien notes significantly restricts Norcraft and its subsidiaries from paying dividends and otherwise transferring assets to Holdings. Under the terms of the indenture governing the senior
secured second lien notes, Norcraft may make distributions of up to $25.0 million in the aggregate to Holdings or Norcraft Intermediate Holdings, L.P. to pay interest and principal on the debt issued by them. In 2009, Norcraft distributed
approximately $15.7 million to Holdings to enable it to make cash interest payments on the senior discount notes. In addition, in December 2009, a portion of the net proceeds from the senior secured second lien notes offering were distributed to
Holdings to allow Holdings to repurchase $64.3 million principal amount of its senior discount notes. Norcraft expects to make regular distributions to Holdings, subject to certain limitations, to permit Holdings to make further distributions to its
equity holders to pay taxes on the Companys net income allocated to them.

The Company currently anticipates that the
distributions permitted under the indenture governing the Companys senior secured second lien notes will be sufficient to allow Holdings to make cash interest payments on the senior discount notes through September 2012. No assurances can be
made that such amounts will be sufficient, however, and if Norcraft is not permitted to make additional cash distributions to Holdings, Holdings will be required to raise additional proceeds through equity or debt financings in order to fund such
obligations. Such financing may not be available on terms acceptable to the Company or at all.



11



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##### Table of Contents

The following represents certain condensed consolidating financial information as of
March 31, 2010 and December 31, 2009 and for the periods ended March 31, 2010 and 2009 for the issuers and for Norcraft Canada Corporation, a wholly-owned subsidiary of Norcraft, which fully and unconditionally guarantees the senior
secured second lien notes. In addition, the terms and conditions of the senior secured second lien notes limit Norcrafts ability to pay dividends or other payments to Holdings. In this regard, the net assets of Norcraft are restricted assets
of Holdings. As such, condensed financial information for Holdings (the parent company) is also presented. The information presented follows the equity method of accounting except for consolidated amounts.

CONDENSED CONSOLIDATING BALANCE SHEETS

As of March 31, 2010 (unaudited)



|                                              |  |                            |         |   |                         |   |                |  |   |              |   |  |                                    |        |   |                       |   |         |              |  |   |                                   |   |  |   |         |   |  |   |         |  
|--------------------------------------------- |  | -------------------------- | ------- | - | ----------------------- | - | -------------- |  | - | ------------ | - |  | ---------------------------------- | ------ | - | --------------------- | - | ------- | ------------ |  | - | --------------------------------- | - |  | - | ------- | - |  | - | ------- | -
|                                              |  | NorcraftCompanies,L.P. (1) |         |   | NorcraftFinanceCorp.(1) |   | NorcraftCanada |  |   | Eliminations |   |  | ConsolidatedNorcraftCompanies,L.P. |        |   | NorcraftHoldings,L.P. |   |         | Eliminations |  |   | ConsolidatedNorcraftHoldings,L.P. |  
|Current assets                                |  | $                          | 56,505  |   |                         | $ |               |  | $ | 3,910        |   |  | $                                  |       |   |                       | $ | 60,415  |              |  | $ | 1,514                             |   |  | $ |        |   |  | $ | 61,929  |  
|Property, plant & equipment, net              |  |                            | 26,092  |   |                         |   |               |  |   | 4,792        |   |  |                                    |       |   |                       |   | 30,884  |              |  |   |                                  |   |  |   |        |   |  |   | 30,884  |  
|                                              |  |                            |         |   |                         |   |                | 
|Investments in subsidiary                     |  |                            | (1,501  | ) |                         |   |               |  |   |             |   |  |                                    | 1,501  |   |                       |   |        |              |  |   | 60,034                            |   |  |   | (60,034 | ) |  |   |        |  
|                                              |  |                            |         |   |                         |   |                | 
|Other assets                                  |  |                            | 183,007 |   |                         |   |               |  |   | 213          |   |  |                                    | (8,971 | ) |                       |   | 174,249 |              |  |   | 521                               |   |  |   |        |   |  |   | 174,770 |  
|                                              |  |                            |         |   |                         |   |                |  |   |              |   |  |                                    |        |   |                       |   |         |              |  |   |                                   |   |  |   |         |   |  |   |         |  
|                                              |  |                            |         |   |                         |   |                | 
|Total assets                                  |  | $                          | 264,103 |   |                         | $ |               |  | $ | 8,915        |   |  | $                                  | (7,470 | ) |                       | $ | 265,548 |              |  | $ | 62,069                            |   |  | $ | (60,034 | ) |  | $ | 267,583 |  
|                                              |  |                            |         |   |                         |   |                |  |   |              |   |  |                                    |        |   |                       |   |         |              |  |   |                                   |   |  |   |         |   |  |   |         |  
|                                              |  |                            |         |   |                         |   |                | 
|Current liabilities                           |  | $                          | 26,545  |   |                         | $ |               |  | $ | 1,445        |   |  | $                                  |       |   |                       | $ | 27,990  |              |  | $ | 436                               |   |  | $ |        |   |  | $ | 28,426  |  
|                                              |  |                            |         |   |                         |   |                | 
|Long-term debt                                |  |                            | 180,000 |   |                         |   |               |  |   | 8,971        |   |  |                                    | (8,971 | ) |                       |   | 180,000 |              |  |   | 53,700                            |   |  |   |        |   |  |   | 233,700 |  
|Unamortized discount on bonds payable         |  |                            | (2,781  | ) |                         |   |               |  |   |             |   |  |                                    |       |   |                       |   | (2,781  | )            |  |   |                                  |   |  |   |        |   |  |   | (2,781  | )
|                                              |  |                            |         |   |                         |   |                | 
|Other liabilities                             |  |                            | 305     |   |                         |   |               |  |   |             |   |  |                                    |       |   |                       |   | 305     |              |  |   |                                  |   |  |   |        |   |  |   | 305     |  
|Members equity subject to put request        |  |                            |        |   |                         |   |               |  |   |             |   |  |                                    |       |   |                       |   |        |              |  |   | 8,076                             |   |  |   |        |   |  |   | 8,076   |  
|                                              |  |                            |         |   |                         |   |                | 
|Members equity (deficit)                     |  |                            | 60,034  |   |                         |   |               |  |   | (1,501       | ) |  |                                    | 1,501  |   |                       |   | 60,034  |              |  |   | (143                              | ) |  |   | (60,034 | ) |  |   | (143    | )
|                                              |  |                            |         |   |                         |   |                |  |   |              |   |  |                                    |        |   |                       |   |         |              |  |   |                                   |   |  |   |         |   |  |   |         |  
|Total liabilities & members equity (deficit) |  | $                          | 264,103 |   |                         | $ |               |  | $ | 8,915        |   |  | $                                  | (7,470 | ) |                       | $ | 265,548 |              |  | $ | 62,069                            |   |  | $ | (60,034 | ) |  | $ | 267,583 |  
|                                              |  |                            |         |   |                         |   |                |  |   |              |   |  |                                    |        |   |                       |   |         |              |  |   |                                   |   |  |   |         |   |  |   |         |  
|                                             
|As of December 31, 2009 (unaudited)           | 
|                                              |  |                            |         |   |                         |   |                | 
|                                              |  | NorcraftCompanies,L.P. (1) |         |   | NorcraftFinanceCorp.(1) |   | NorcraftCanada |  |   | Eliminations |   |  | ConsolidatedNorcraftCompanies,L.P. |        |   | NorcraftHoldings,L.P. |   |         | Eliminations |  |   | ConsolidatedNorcraftHoldings,L.P. |  
|Current assets                                |  | $                          | 48,475  |   |                         | $ |               |  | $ | 4,252        |   |  | $                                  |       |   |                       | $ | 52,727  |              |  | $ | 4,132                             |   |  | $ |        |   |  | $ | 56,859  |  
|Property, plant & equipment, net              |  |                            | 27,148  |   |                         |   |               |  |   | 4,777        |   |  |                                    |       |   |                       |   | 31,925  |              |  |   |                                  |   |  |   |        |   |  |   | 31,925  |  
|                                              |  |                            |         |   |                         |   |                | 
|Investments in subsidiary                     |  |                            | (1,529  | ) |                         |   |               |  |   |             |   |  |                                    | 1,529  |   |                       |   |        |              |  |   | 60,771                            |   |  |   | (60,771 | ) |  |   |        |  
|                                              |  |                            |         |   |                         |   |                | 
|Other assets                                  |  |                            | 184,346 |   |                         |   |               |  |   | 213          |   |  |                                    | (9,334 | ) |                       |   | 175,225 |              |  |   | 575                               |   |  |   |        |   |  |   | 175,800 |  
|                                              |  |                            |         |   |                         |   |                |  |   |              |   |  |                                    |        |   |                       |   |         |              |  |   |                                   |   |  |   |         |   |  |   |         |  
|                                              |  |                            |         |   |                         |   |                | 
|Total assets                                  |  | $                          | 258,440 |   |                         | $ |               |  | $ | 9,242        |   |  | $                                  | (7,805 | ) |                       | $ | 259,877 |              |  | $ | 65,478                            |   |  | $ | (60,771 | ) |  | $ | 264,584 |  
|                                              |  |                            |         |   |                         |   |                |  |   |              |   |  |                                    |        |   |                       |   |         |              |  |   |                                   |   |  |   |         |   |  |   |         |  
|                                              |  |                            |         |   |                         |   |                | 
|Current liabilities                           |  | $                          | 20,285  |   |                         | $ |               |  | $ | 1,437        |   |  | $                                  |       |   |                       | $ | 21,722  |              |  | $ | 1,745                             |   |  | $ |        |   |  | $ | 23,467  |  
|                                              |  |                            |         |   |                         |   |                | 
|Long-term debt                                |  |                            | 180,000 |   |                         |   |               |  |   | 9,334        |   |  |                                    | (9,334 | ) |                       |   | 180,000 |              |  |   | 53,700                            |   |  |   |        |   |  |   | 233,700 |  
|Unamortized discount on bonds payable         |  |                            | (2,903  | ) |                         |   |               |  |   |             |   |  |                                    |       |   |                       |   | (2,903  | )            |  |   |                                  |   |  |   |        |   |  |   | (2,903  | )
|                                              |  |                            |         |   |                         |   |                | 
|Other liabilities                             |  |                            | 287     |   |                         |   |               |  |   |             |   |  |                                    |       |   |                       |   | 287     |              |  |   |                                  |   |  |   |        |   |  |   | 287     |  
|Members equity subject to put request        |  |                            |        |   |                         |   |               |  |   |             |   |  |                                    |       |   |                       |   |        |              |  |   | 7,546                             |   |  |   |        |   |  |   | 7,546   |  
|                                              |  |                            |         |   |                         |   |                | 
|Members equity (deficit)                     |  |                            | 60,771  |   |                         |   |               |  |   | (1,529       | ) |  |                                    | 1,529  |   |                       |   | 60,771  |              |  |   | 2,487                             |   |  |   | (60,771 | ) |  |   | 2,487   |  
|                                              |  |                            |         |   |                         |   |                |  |   |              |   |  |                                    |        |   |                       |   |         |              |  |   |                                   |   |  |   |         |   |  |   |         |  
|Total liabilities & members equity (deficit) |  | $                          | 258,440 |   |                         | $ |               |  | $ | 9,242        |   |  | $                                  | (7,805 | ) |                       | $ | 259,877 |              |  | $ | 65,478                            |   |  | $ | (60,771 | ) |  | $ | 264,584 |  
|                                              |  |                            |         |   |                         |   |                |  |   |              |   |  |                                    |        |   |                       |   |         |              |  |   |                                   |   |  |   |         |   |  |   |         |  

|(1) | Co-issuers
|--- | ----------



12



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##### Table of Contents

CONDENSED CONSOLIDATING OPERATIONS STATEMENTS

For the Three Months Ended March 31, 2010 (unaudited)



|                                                      |  |                            |        |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |        |              |  |                                   |        |   |  |   |       |  |   |        |  
|----------------------------------------------------- |  | -------------------------- | ------ | - | ------------------------ | - | -------------- |  | - | ------------ | - |  | ---------------------------------- | ---- | - | --------------------- | - | ------ | ------------ |  | --------------------------------- | ------ | - |  | - | ----- |  | - | ------ | -
|                                                      |  | NorcraftCompanies,L.P.
(1) |        |   | NorcraftFinanceCorp. (1) |   | NorcraftCanada |  |   | Eliminations |   |  | ConsolidatedNorcraftCompanies,L.P. |      |   | NorcraftHoldings,L.P. |   |        | Eliminations |  | ConsolidatedNorcraftHoldings,L.P. |       
|Net sales                                             |  | $                          | 58,006 |   |                          | $ |               |  | $ | 4,551        |   |  | $                                  | (724 | ) |                       | $ | 61,833 |              |  | $                                 |       |   |  | $ |      |  | $ | 61,833 |  
|                                                      |  |                            |        |   |                          |   |                | 
|Cost of sales                                         |  |                            | 41,266 |   |                          |   |               |  |   | 4,075        |   |  |                                    | (724 | ) |                       |   | 44,617 |              |  |                                   |       |   |  |   |      |  |   | 44,617 |  
|                                                      |  |                            |        |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |        |              |  |                                   |        |   |  |   |       |  |   |        |  
|                                                      |  |                            |        |   |                          |   |                | 
|Gross profit                                          |  |                            | 16,740 |   |                          |   |               |  |   | 476          |   |  |                                    |     |   |                       |   | 17,216 |              |  |                                   |       |   |  |   |      |  |   | 17,216 |  
|Equity in earnings (losses) of subsidiary             |  |                            | (33    | ) |                          |   |               |  |   |             |   |  |                                    | 33   |   |                       |   |       |              |  |                                   | (843   | ) |  |   | 843   |  |   |       |  
|Selling, general and administrative expenses          |  |                            | 12,167 |   |                          |   |               |  |   | 504          |   |  |                                    |     |   |                       |   | 12,671 |              |  |                                   |       |   |  |   |      |  |   | 12,671 |  
|                                                      |  |                            |        |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |        |              |  |                                   |        |   |  |   |       |  |   |        |  
|Income (loss) from operations                         |  |                            | 4,540  |   |                          |   |               |  |   | (28          | ) |  |                                    | 33   |   |                       |   | 4,545  |              |  |                                   | (843   | ) |  |   | 843   |  |   | 4,545  |  
|Other expense (income):                               |  |                            |        |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |        |              |  |                                   |        |   |  |   |       |  |   |        |  
|                                                      |  |                            |        |   |                          |   |                | 
|Interest expense, net                                 |  |                            | 5,040  |   |                          |   |               |  |   | 5            |   |  |                                    |     |   |                       |   | 5,045  |              |  |                                   | 1,309  |   |  |   |      |  |   | 6,354  |  
|Amortization of deferred financing costs              |  |                            | 313    |   |                          |   |               |  |   |             |   |  |                                    |     |   |                       |   | 313    |              |  |                                   | 54     |   |  |   |      |  |   | 367    |  
|                                                      |  |                            |        |   |                          |   |                | 
|Other, net                                            |  |                            | 30     |   |                          |   |               |  |   |             |   |  |                                    |     |   |                       |   | 30     |              |  |                                   |       |   |  |   |      |  |   | 30     |  
|                                                      |  |                            |        |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |        |              |  |                                   |        |   |  |   |       |  |   |        |  
|                                                      |  |                            |        |   |                          |   |                | 
|Total other expense, net                              |  |                            | 5,383  |   |                          |   |               |  |   | 5            |   |  |                                    |     |   |                       |   | 5,388  |              |  |                                   | 1,363  |   |  |   |      |  |   | 6,751  |  
|                                                      |  |                            |        |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |        |              |  |                                   |        |   |  |   |       |  |   |        |  
|                                                      |  |                            |        |   |                          |   |                | 
|Net income (loss)                                     |  | $                          | (843   | ) |                          | $ |               |  | $ | (33          | ) |  | $                                  | 33   |   |                       | $ | (843   | )            |  | $                                 | (2,206 | ) |  | $ | 843   |  | $ | (2,206 | )
|                                                      |  |                            |        |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |        |              |  |                                   |        |   |  |   |       |  |   |        |  
|                                                     
|For the Three Months Ended March 31, 2009 (unaudited) | 
|                                                      |  | NorcraftCompanies,L.P.
(1) |        |   | NorcraftFinanceCorp. (1) |   | NorcraftCanada |  |   | Eliminations |   |  | ConsolidatedNorcraftCompanies,L.P. |      |   | NorcraftHoldings,L.P. |   |        | Eliminations |  | ConsolidatedNorcraftHoldings,L.P. |       
|                                                      |  |                            |        |   |                          |   |                | 
|Net sales                                             |  | $                          | 60,090 |   |                          | $ |               |  | $ | 2,079        |   |  | $                                  | (873 | ) |                       | $ | 61,296 |              |  | $                                 |       |   |  | $ |      |  | $ | 61,296 |  
|                                                      |  |                            |        |   |                          |   |                | 
|Cost of sales                                         |  |                            | 44,113 |   |                          |   |               |  |   | 2,083        |   |  |                                    | (873 | ) |                       |   | 45,323 |              |  |                                   |       |   |  |   |      |  |   | 45,323 |  
|                                                      |  |                            |        |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |        |              |  |                                   |        |   |  |   |       |  |   |        |  
|                                                      |  |                            |        |   |                          |   |                | 
|Gross profit                                          |  |                            | 15,977 |   |                          |   |               |  |   | (4           | ) |  |                                    |     |   |                       |   | 15,973 |              |  |                                   |       |   |  |   |      |  |   | 15,973 |  
|Equity in earnings (losses) of subsidiary             |  |                            | (333   | ) |                          |   |               |  |   |             |   |  |                                    | 333  |   |                       |   |       |              |  |                                   | (1,287 | ) |  |   | 1,287 |  |   |       |  
|Selling, general and administrative expenses          |  |                            | 12,363 |   |                          |   |               |  |   | 329          |   |  |                                    |     |   |                       |   | 12,692 |              |  |                                   |       |   |  |   |      |  |   | 12,692 |  
|                                                      |  |                            |        |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |        |              |  |                                   |        |   |  |   |       |  |   |        |  
|Income (loss) from operations                         |  |                            | 3,281  |   |                          |   |               |  |   | (333         | ) |  |                                    | 333  |   |                       |   | 3,281  |              |  |                                   | (1,287 | ) |  |   | 1,287 |  |   | 3,281  |  
|Other expense (income):                               |  |                            |        |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |        |              |  |                                   |        |   |  |   |       |  |   |        |  
|                                                      |  |                            |        |   |                          |   |                | 
|Interest expense, net                                 |  |                            | 3,465  |   |                          |   |               |  |   | 2            |   |  |                                    |     |   |                       |   | 3,467  |              |  |                                   | 2,886  |   |  |   |      |  |   | 6,353  |  
|Amortization of deferred financing costs              |  |                            | 1,062  |   |                          |   |               |  |   |             |   |  |                                    |     |   |                       |   | 1,062  |              |  |                                   | 120    |   |  |   |      |  |   | 1,182  |  
|                                                      |  |                            |        |   |                          |   |                | 
|Other, net                                            |  |                            | 41     |   |                          |   |               |  |   | (2           | ) |  |                                    |     |   |                       |   | 39     |              |  |                                   |       |   |  |   |      |  |   | 39     |  
|                                                      |  |                            |        |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |        |              |  |                                   |        |   |  |   |       |  |   |        |  
|                                                      |  |                            |        |   |                          |   |                | 
|Total other expense, net                              |  |                            | 4,568  |   |                          |   |               |  |   |             |   |  |                                    |     |   |                       |   | 4,568  |              |  |                                   | 3,006  |   |  |   |      |  |   | 7,574  |  
|                                                      |  |                            |        |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |        |              |  |                                   |        |   |  |   |       |  |   |        |  
|                                                      |  |                            |        |   |                          |   |                | 
|Net income (loss)                                     |  | $                          | (1,287 | ) |                          | $ |               |  | $ | (333         | ) |  | $                                  | 333  |   |                       | $ | (1,287 | )            |  | $                                 | (4,293 | ) |  | $ | 1,287 |  | $ | (4,293 | )
|                                                      |  |                            |        |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |        |              |  |                                   |        |   |  |   |       |  |   |        |  



13



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CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Three Months Ended March 31, 2010 (unaudited)



|                                                      |  |                            |         |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |         |              |  |   |                                   |   |  |   |        |   |  |   |        |  
|----------------------------------------------------- |  | -------------------------- | ------- | - | ------------------------ | - | -------------- |  | - | ------------ | - |  | ---------------------------------- | ---- | - | --------------------- | - | ------- | ------------ |  | - | --------------------------------- | - |  | - | ------ | - |  | - | ------ | -
|                                                      |  | NorcraftCompanies,L.P.
(1) |         |   | NorcraftFinanceCorp. (1) |   | NorcraftCanada |  |   | Eliminations |   |  | ConsolidatedNorcraftCompanies,L.P. |      |   | NorcraftHoldings,L.P. |   |         | Eliminations |  |   | ConsolidatedNorcraftHoldings,L.P. |  
|Cash flows provided by (used in) operating activities |  | $                          | 4,855   |   |                          | $ |               |  | $ | (129         | ) |  | $                                  |     |   |                       | $ | 4,726   |              |  | $ | (2,618                            | ) |  | $ |       |   |  | $ | 2,108  |  
|Cash flows provided by (used in) investing activities |  |                            | (1,206  | ) |                          |   |               |  |   | (262         | ) |  |                                    | (363 | ) |                       |   | (1,831  | )            |  |   |                                  |   |  |   |       |   |  |   | (1,831 | )
|Cash flows provided by (used in) financing activities |  |                            | (326    | ) |                          |   |               |  |   | (363         | ) |  |                                    | 363  |   |                       |   | (326    | )            |  |   |                                  |   |  |   |       |   |  |   | (326   | )
|Effect of exchange rates on cash                      |  |                            |        |   |                          |   |               |  |   | 2            |   |  |                                    |     |   |                       |   | 2       |              |  |   |                                  |   |  |   |       |   |  |   | 2      |  
|                                                      |  |                            |         |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |         |              |  |   |                                   |   |  |   |        |   |  |   |        |  
|Net increase (decrease) in cash and cash equivalents  |  |                            | 3,323   |   |                          |   |               |  |   | (752         | ) |  |                                    |     |   |                       |   | 2,571   |              |  |   | (2,618                            | ) |  |   |       |   |  |   | (47    | )
|Cash and cash equivalents, beginning of period        |  |                            | 15,791  |   |                          |   |               |  |   | 940          |   |  |                                    |     |   |                       |   | 16,731  |              |  |   | 4,132                             |   |  |   |       |   |  |   | 20,863 |  
|                                                      |  |                            |         |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |         |              |  |   |                                   |   |  |   |        |   |  |   |        |  
|Cash and cash equivalents, end of period              |  | $                          | 19,114  |   |                          | $ |               |  | $ | 188          |   |  | $                                  |     |   |                       | $ | 19,302  |              |  | $ | 1,514                             |   |  | $ |       |   |  | $ | 20,816 |  
|                                                      |  |                            |         |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |         |              |  |   |                                   |   |  |   |        |   |  |   |        |  
|                                                     
|For the Three Months Ended March 31, 2009 (unaudited) | 
|                                                      |  | NorcraftCompanies,L.P.
(1) |         |   | NorcraftFinanceCorp. (1) |   | NorcraftCanada |  |   | Eliminations |   |  | ConsolidatedNorcraftCompanies,L.P. |      |   | NorcraftHoldings,L.P. |   |         | Eliminations |  |   | ConsolidatedNorcraftHoldings,L.P. |  
|Cash flows provided by (used in) operating activities |  | $                          | 7,743   |   |                          | $ |               |  | $ | (711         | ) |  | $                                  |     |   |                       | $ | 7,032   |              |  | $ |                                  |   |  | $ | (5,762 | ) |  | $ | 1,270  |  
|Cash flows provided by (used in) investing activities |  |                            | (2,199  | ) |                          |   |               |  |   | (68          | ) |  |                                    | 987  |   |                       |   | (1,280  | )            |  |   |                                  |   |  |   |       |   |  |   | (1,280 | )
|Cash flows provided by (used in) financing activities |  |                            | (11,380 | ) |                          |   |               |  |   | 987          |   |  |                                    | (987 | ) |                       |   | (11,380 | )            |  |   |                                  |   |  |   | 5,762  |   |  |   | (5,618 | )
|Effect of exchange rates on cash                      |  |                            |        |   |                          |   |               |  |   | (13          | ) |  |                                    |     |   |                       |   | (13     | )            |  |   |                                  |   |  |   |       |   |  |   | (13    | )
|                                                      |  |                            |         |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |         |              |  |   |                                   |   |  |   |        |   |  |   |        |  
|Net increase (decrease) in cash and cash equivalents  |  |                            | (5,836  | ) |                          |   |               |  |   | 195          |   |  |                                    |     |   |                       |   | (5,641  | )            |  |   |                                  |   |  |   |       |   |  |   | (5,641 | )
|Cash and cash equivalents, beginning of period        |  |                            | 59,366  |   |                          |   |               |  |   | 40           |   |  |                                    |     |   |                       |   | 59,406  |              |  |   |                                  |   |  |   |       |   |  |   | 59,406 |  
|                                                      |  |                            |         |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |         |              |  |   |                                   |   |  |   |        |   |  |   |        |  
|Cash and cash equivalents, end of period              |  | $                          | 53,530  |   |                          | $ |               |  | $ | 235          |   |  | $                                  |     |   |                       | $ | 53,765  |              |  | $ |                                  |   |  | $ |       |   |  | $ | 53,765 |  
|                                                      |  |                            |         |   |                          |   |                |  |   |              |   |  |                                    |      |   |                       |   |         |              |  |   |                                   |   |  |   |        |   |  |   |        |  



|(1) | Co-issuers
|--- | ----------



14



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##### Table of Contents

|8. | Accounting Changes
|-- | ------------------

In
January 2010, the FASB issued Accounting Standards Update (ASU) 2010-06, Fair Value Measurements and Disclosures (Topic 820), Improving Disclosures about Fair Value Measurements, amending ASC 820. ASU 2010-06 requires entities to provide
new disclosures and clarify existing disclosures relating to fair value measurements. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009,
except for the disclosures about purchases, sales, issuances, and settlements in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The
adoption of ASU 2010-06 had no current impact and is expected to have no subsequent impact on the consolidated financial statements.



15



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##### Table of Contents

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

Uncertainty of Forward Looking Statements and Information

This report contains forward looking statements. All statements other than statements of historical acts included in this report that address
activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward looking statements. Forward looking statements give our current expectations and projections relating to the financial condition,
results of operations, plans, objectives, future performance and business of our company. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as
anticipate, estimate, expect, project, intend, plan, believe and other words and terms of similar meaning in connection with any discussion of the timing or nature
of future operating or financial performance or other events.

These forward looking statements are based on our expectations and beliefs
concerning future events affecting us. They are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Although we believe that the
expectations reflected in our forward looking statements are reasonable, we do not know whether our expectations will prove correct. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties.

Because of these factors, we caution that investors should not place undue reliance on any of our forward looking statements. Further, any
forward looking statement speaks only as of the date on which it is made and except as required by law we undertake no obligation to update any forward looking statement to reflect events or circumstances after the date on which it is made or to
reflect the occurrence of anticipated or unanticipated events or circumstances.

Overview

The following discussion of our financial condition and results of operations should be read together with the consolidated financial statements and the
accompanying notes included elsewhere in this quarterly report. Additionally, the following discussion should be read together with the Selected Financial Data and our consolidated financial statements and the accompanying notes included in our 2009
Annual Report on Form 10-K. All of our operations are conducted through Norcraft Companies, L.P. (Norcraft). Norcraft is an indirect wholly-owned subsidiary of Norcraft Holdings, L.P. (Holdings). The words
Company, we, us and our refer to Holdings together with Norcraft.

We are
a leader in manufacturing, assembling and finishing kitchen and bathroom cabinetry in the U.S. We provide our customers with a single source for a broad range of high-quality cabinetry, including stock, semi-custom and custom cabinets manufactured
in both framed and frameless, or full access construction. We market our products through six brands: Mid Continent
CabinetryTM, Norcraft
Cabinetry®,
UltraCraft®, StarMark
Cabinetry®,
FieldstoneTMand
Brookwood®. The Mid Continent and Norcraft brands correspond to the Mid Continent division, while the UltraCraft
brand corresponds to that division and the StarMark, Fieldstone and Brookwood brands correspond to the StarMark division. Additionally, our Winnipeg, Canada facility sells cabinets into the Canadian market under the Norcraft Canada brand.

As mentioned below, during the three months ended March 31, 2010, although the number of incoming orders has slightly improved relative
to the prior three months ended March 31, 2009, overall demand remains below pre-recession levels. As in past quarters, cost reductions and commodity pricing continue to have a positive impact on gross profit margins.



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Results of Operations

The following table outlines for the periods indicated, selected operating data as a percentage of net sales.



|                                             |  |                             |    |  |                             |    |  |       |    |  |       |   
|-------------------------------------------- |  | --------------------------- | -- |  | --------------------------- | -- |  | ----- | -- |  | ----- | --
|                                             |  | Norcraft Holdings, L.P.     |    |  | Norcraft Companies, L.P.    |   
|                                             |  | Three Months EndedMarch 31, |    |  | Three Months EndedMarch 31, |   
|                                             |  | 2010                        |    |  | 2009                        |    |  | 2010  |    |  | 2009  |   
|                                             |  |                             |    | 
|Net sales                                    |  | 100.0                       | %  |  | 100.0                       | %  |  | 100.0 | %  |  | 100.0 | % 
|Cost of sales                                |  | 72.2                        | %  |  | 73.9                        | %  |  | 72.2  | %  |  | 73.9  | % 
|                                             |  |                             |    |  |                             |    |  |       |    |  |       |   
|Gross profit                                 |  | 27.8                        | %  |  | 26.1                        | %  |  | 27.8  | %  |  | 26.1  | % 
|Selling, general and administrative expenses |  | 20.5                        | %  |  | 20.7                        | %  |  | 20.5  | %  |  | 20.7  | % 
|                                             |  |                             |    |  |                             |    |  |       |    |  |       |   
|Income from operations                       |  | 7.3                         | %  |  | 5.4                         | %  |  | 7.3   | %  |  | 5.4   | % 
|                                             |  |                             |    | 
|Interest expense, net                        |  | 10.3                        | %  |  | 10.4                        | %  |  | 8.2   | %  |  | 5.7   | % 
|Amortization of deferred financing costs     |  | 0.6                         | %  |  | 1.9                         | %  |  | 0.5   | %  |  | 1.7   | % 
|Other, net                                   |  | 0.0                         | %  |  | 0.1                         | %  |  | 0.0   | %  |  | 0.1   | % 
|                                             |  |                             |    |  |                             |    |  |       |    |  |       |   
|Net loss                                     |  | (3.6                        | )% |  | (7.0                        | )% |  | (1.4  | )% |  | (2.1  | )%
|                                             |  |                             |    |  |                             |    |  |       |    |  |       |   

Three Months Ended March 31, 2010 Compared with Three Months Ended March 31, 2009

Net Sales. Net sales increased by $0.5 million, or 0.9%, from $61.3 million for the three months ended March 31, 2009 to $61.8 million for the
same period of 2010. The industry-wide slow-down in the U.S. housing market and general economic slow-down continue to impact sales across all U.S. divisions. Various customers, channels and product lines have been impacted differently by the
industry slow-down because of price points, geographies and various other factors. The increase in sales is mainly attributable to the increase in sales from the Winnipeg, Canada facility.

Cost of Sales. Cost of sales decreased by $0.7 million, or 1.6%, from $45.3 million for the three months ended March 31, 2009 to $44.6
million for same period of 2010. The decrease was primarily attributable to lower commodity pricing. Cost of sales as a percentage of net sales decreased from 73.9% for the three months ended March 31, 2009 to 72.2% for the same period of 2010.

Gross Profit. Gross profit increased by $1.2 million, or 7.8%, from $16.0 million for the three months ended March 31, 2009 to
$17.2 million for the same period of 2010. Gross profit as a percentage of net sales increased from 26.1% for the three months ended March 31, 2009 to 27.8% for the same period of 2010.

Selling, General and Administrative Expenses.Selling, general and administrative expenses were flat at $12.7 million for the three months ended
March 31, 2009 and 2010. Selling, general and administrative expenses as a percentage of net sales decreased from 20.7% for the three months ended March 31, 2009 to 20.5% for the same period of 2010.

Income from Operations.Income from operations increased by $1.2 million, or 38.5%, from $3.3 million for the three months ended March 31,
2009 compared to $4.5 million for the same period of 2010. The increase in income from operations was a result of factors described above. Income from operations as a percentage of net sales increased from 5.4% for the three months ended
March 31, 2009 to 7.3% for the same period of 2010.

Interest, Amortization of Deferred Financing Fees and Other Expenses.
Holdings consolidated interest, amortization of deferred financing fees and other expenses decreased by $0.9 million, or 10.9%, from $7.6 million for the three months ended March 31, 2009 to $6.7 million for the same period of 2010.
Amortization of deferred financing charges decreased by $0.9 million mostly related to the termination of our senior secured credit facility during the first quarter of 2009. Interest, amortization of deferred financing fees and other expenses for
Holdings as a percentage of net sales decreased from 12.4% for the three months ended March 31, 2009 to 10.9% for the same period of 2010.

Interest, amortization of deferred financing fees and other expenses increased for Norcraft by $0.7 million, or 18.0%, from $4.6 million for the three
months ended March 31, 2009 to $5.3 million for the same period of 2010. Interest, amortization of deferred financing fees and other expenses for Norcraft as a percentage of net sales increased from 7.5% for the three months ended
March 31, 2009 to 8.7% for the same period of 2010.



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Net Loss. Holdings net loss decreased by $2.1 million from $4.3 million for the three months
ended March 31, 2009 compared to $2.2 million for the same period of 2010, for the reasons described above. Net loss as a percentage of net sales for Holdings decreased from (7.0)% for the three months ended March 31, 2009 to (3.6)% for
the same period of 2010.

Norcrafts net loss decreased $0.5 million from $1.3 million for the three months ended March 31, 2009
compared to $0.8 million for the same period of 2010, for the reasons described above. Net loss as a percentage of net sales for Norcraft decreased from (2.1)% for the three months ended March 31, 2009 to (1.4)% for the same period of 2010.

Liquidity and Capital Resources

Cash Flows

Our primary cash needs
are working capital, capital expenditures, display cabinets, members tax distributions and debt service. We finance these cash requirements through internally-generated cash flow.

Cash provided by operating activities of Holdings was $2.1 million for the three months ended March 31, 2010, compared with $1.3 million for the
same period of 2009, an increase of $0.8 million. The increase was primarily due to a decrease in net loss of $2.1 million as discussed above and a $4.0 million change in operating liabilities offset by a $4.1 million change in operating assets and
$1.2 million of lower amortization costs for deferred financing and display cabinets.

Cash provided by operating activities of Norcraft was
$4.7 million for the three months ended March 31, 2010, compared with $7.0 million for the same period of 2009, a decrease of $2.3 million. The decrease was primarily due to a decrease in net loss of $0.5 million as discussed above and a $2.4
million change in operating liabilities offset by a $4.1 million change in operating assets and $1.1 million of lower amortization costs for deferred financing and display cabinets.

Cash used in investing activities was $1.8 million for the three months ended March 31, 2010, compared with $1.3 million for the same period of
2009, an increase of $0.5 million. Capital expenditures were $0.6 million for both the three months ended March 31, 2010 and 2009. Also, additions to display cabinets were $1.2 million for the three months ended March 31, 2010, compared
with $0.7 million for the same period of 2009, an increase of $0.5 million.

Cash used in financing activities of Holdings was $0.3 million
for the three months ended March 31, 2010, compared with $5.6 million used in the same period of 2009, a decrease of $5.3 million. This decrease was due to a transfer of restricted cash of $5.6 million during the first quarter of 2009, offset
by payments of financing costs of $0.3 million during the first quarter of 2010.

Cash used in financing activities of Norcraft was $0.3
million for the three months ended March 31, 2010, compared with $11.4 million used in the same period of 2009, a decrease of $11.1 million. This decrease was mostly due to distributions to members of $5.8 million and a transfer of restricted
cash of $5.6 million during the first quarter of 2009, offset by payments of financing costs of $0.3 million during the first quarter of 2010.

We and our subsidiaries have from time to time repurchased certain of our debt obligations and may in the future, as part of various financing and
investment strategies we may elect to pursue, purchase additional outstanding indebtedness of ours or our subsidiaries or outstanding equity securities of Holdings, in tender offers, open market purchases, privately negotiated transactions or
otherwise. We may also sell certain assets or properties and use the proceeds to reduce our indebtedness or the indebtedness of our subsidiaries. These purchases or sales, if any, could have a material positive or negative impact on our liquidity
available to repay outstanding debt obligations or on our consolidated results of operations. These transactions could also require or result in amendments to the agreements governing outstanding debt obligations or changes in our leverage or other
financial ratios, which could have a material positive or negative impact on our ability to comply with the covenants contained in our debt agreements. These transactions, if any, will depend on prevailing market conditions, our liquidity
requirements, contractual restrictions and other factors. The amounts involved may be material.

Debt Structure

ABL Facility. In December 2009, in connection with issuance of the senior secured second lien notes, Norcraft entered into a new senior secured
first-lien asset-based revolving credit facility, or the ABL facility pursuant to a Credit Agreement dated as of December 9, 2009, or the ABL credit agreement, by and among Norcraft, as borrower, Norcraft Intermediate Holdings, L.P. and other
guarantors party thereto, as guarantors, the lenders party thereto and UBS Securities LLC, as arranger, bookmanager, documentation agent and syndication agent, and UBS AG, Stamford Branch, as issuing bank, administrative agent and collateral agent
and UBS Loan Finance LLC, as swingline lender. The ABL facility provides for aggregate commitments of up to $25.0 million subject to a current borrowing base of approximately $18.3 million, including a letter of credit sub-facility and has a
maturity date of December 9, 2013.



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The ABL credit agreement contains restrictive covenants that limit the ability of Norcraft Intermediate
Holdings, L.P. and its subsidiaries from (1) selling assets, (2) altering the business that Norcraft currently conducts, (3) engaging in mergers, acquisitions and other business combinations, (4) declaring dividends or redeeming
or repurchasing our equity interests, (5) incurring additional debt or guarantees, (6) making loans and investments, (7) incurring liens, (8) entering into transactions with affiliates, (9) engaging in sale and leaseback
transactions and (10) prepaying the senior secured second lien notes, the senior discount notes and any subordinated debt.

Indebtedness
incurred pursuant to the ABL credit agreement will be guaranteed by Norcraft Intermediate Holdings, L.P., Norcraft Finance Corp., Norcraft Canada Corporation and all of Norcrafts current and future subsidiaries, subject to exceptions for
foreign subsidiaries to the extent of adverse tax consequences, and is secured by a first priority security interest in substantially all of Norcrafts and the guarantors existing and future property and assets, including accounts
receivable, inventory, equipment, general intangibles, intellectual property, investment property, other personal property, owned real property, cash and proceeds of the foregoing.

As of March 31, 2010, there were no borrowings outstanding under the ABL facility; however, there were approximately $5.4 million of letters of
credit outstanding under the ABL facility at March 31, 2010, and therefore, our total availability under the ABL facility as of March 31, 2010, was approximately $13.0 million.

We and our subsidiaries have no unused letters of credit.

Senior Secured Second Lien Notes. In December 2009, Norcraft and Norcraft Finance Corp., a 100% owned finance subsidiary of
Norcraft, issued, on a joint and several basis, $180.0 million aggregate principal amount of senior secured second lien notes. Interest accrues on the senior second lien notes and is payable semiannually on June 15 and December 15 of each
year at a rate of 10 1/2% per annum,
commencing on June 15, 2010. Proceeds from these senior secured second lien notes were used to redeem the 9% senior subordinated notes due 2011 and to make a distribution to Holdings to allow Holdings to repurchase a portion of the
9 3/4% senior discount notes due 2012.

Norcraft may redeem the senior secured second lien notes, in whole or in part, at any time on or after December 15, 2012, at a
redemption price equal to 100% of the principal amount of the notes plus a premium declining ratably to par plus accrued interest.

At any time
before December 15, 2012, Norcraft may redeem up to 35% of the aggregate principal amount of the notes issued under the indenture with the offerings of proceeds of qualified equity interests at a redemption price equal to 110.5% of the
principal amount, plus accrued interest.

If Norcraft experiences a change of control, Norcraft may be required to offer to purchase the notes
at a purchase price equal to 101% of the principal amount, plus accrued interest.

Prior to December 15, 2012, Norcraft may redeem the
notes, in whole or in part, at a redemption price equal to 100% of the principal amount plus a make-whole premium plus accrued interest.

Senior Discount Notes. On August 17, 2004, Holdings and Norcraft Capital Corp., a 100% owned finance subsidiary of
Holdings, issued, on a joint and several basis, $118.0 million aggregate principal amount at maturity ($80.3 million gross proceeds) of
9 3/4% senior discount notes due 2012. The net
proceeds of this offering were used to make a distribution to Holdings limited partners. Norcraft Capital Corp. was formed on August 12, 2004 and has no operations. Interest accrued on the senior discount notes in the form of an increase
in the accreted value of the note prior to September 1, 2008. Since that time, cash interest on the senior discount notes accrues and is payable semiannually in arrears on March 1 and September 1 of each year at a rate of
9 3/4% per annum. The first cash interest
payment was made on March 1, 2009. In December 2009, $64.3 million of the senior discount notes were repurchased resulting in a loss from debt extinguishment of $1.6 million. As of March 31, 2010, there was approximately $53.7 million
principal amount of senior discount notes outstanding.

Holdings may redeem the senior discount notes, in whole or in part, at a
redemption price equal to 100% of the principal amount plus a premium, declining ratably to par, plus accrued and unpaid interest.

If Holdings
experiences a change in control, it may be required to offer to purchase the senior discount notes at a purchase price equal to 101% of the accreted value plus accrued and unpaid interest.

Additionally, the terms of the indenture governing the senior discount notes limit Holdings ability to, among other things, incur additional
indebtedness, dispose of assets, make acquisitions, make other investments, pay dividends and make various other payments. The terms also include cross-default provisions. As of March 31, 2010, Holdings was in compliance with these provisions.

Holdings currently relies on distributions from Norcraft in order to pay cash interest on the senior discount notes. The indenture
governing our senior secured second lien notes significantly restricts Norcraft and its subsidiaries from paying dividends and otherwise transferring assets to Holdings. Under the terms of the indenture governing our senior secured second lien
notes,



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Norcraft may make distributions of up to $25.0 million in the aggregate to Holdings or Norcraft Intermediate Holdings, L.P. to pay interest and principal on our debt issued by them. In 2009,
Norcraft distributed approximately $15.7 million to Holdings to enable it to make cash interest payments on the senior discount notes. In addition, in December 2009, a portion of the net proceeds from our senior secured second lien notes offering
were distributed to Holdings to allow Holdings to repurchase a portion of its senior discount notes. Norcraft expects to make regular distributions to Holdings, subject to certain limitations, to permit Holdings to pay interest on its debt as well
as to make further distributions to its equity holders to pay taxes on our net income allocated to them.

We currently anticipate that the
distributions permitted under the indenture governing our senior secured second lien notes will be sufficient to allow Holdings to make cash interest payments on the senior discount notes through September 2012. If Norcraft is not permitted to make
cash distributions to Holdings, Holdings will be required to raise additional proceeds through equity or debt financings in order to fund such obligations. Such financing may not be available on terms acceptable to us or at all.

Off balance sheet arrangements

There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition,
capital expenditures or capital resources that are material to investors.

Taxes; Distributions to our Limited Partners

Holdings is a limited partnership. As such, our income is allocated to our limited partners for inclusion in their respective tax returns. Accordingly, no
liability or provision for federal income taxes and deferred income taxes attributable to our operations are included in our financial statements. We are subject to various state and local taxes.

The indenture governing our senior secured second lien notes significantly restricts Norcraft and its subsidiaries from paying dividends and otherwise
transferring assets to Holdings. Norcraft expects to make regular distributions to Holdings, subject to certain limitations, to permit Holdings to make further distributions to its equity holders to pay taxes on our net income allocated to them.

Inflation; Seasonality

Our
costs of sales are subject to inflationary pressures and price fluctuations of the raw materials we use. We have generally been able over time to recover the effects of inflation and price fluctuations through sales price increases.

Our sales have historically been moderately seasonal and have been strongest in April through October which coincides with construction seasonality.

Critical Accounting Polices

In our Annual Report on Form 10-K for the year ended December 31, 2009, we identified the critical accounting policies which affect our more
significant estimates and assumptions used in preparing our consolidated financial statements. The basis for developing the estimates and assumptions within our critical accounting policies is based on historical information and known current trends
and factors. The estimates and assumptions are evaluated on an ongoing basis and actual results have been within the Companys expectations. We have not changed these policies from those previously disclosed in our annual report.

Item 3. Quantitative and Qualitative Disclosures of Market Risk

We currently do not hedge against interest rate movements or foreign currency fluctuations. The risk inherent in our market-sensitive instruments and
positions is the potential loss arising from adverse changes to interest rates as discussed below.

Variable Interest Rates

Our earnings could be affected by changes in interest rates due to the impact those changes would have on interest expense from variable rate
debt instruments and on interest income generated from our cash and investment balances. At March 31, 2010, the Company had no borrowings on our variable rate ABL facility; however future earnings could be affected by changes in interest rates.

Foreign Currency

We
have minimal exposure to market risk from changes in foreign currency exchange rates and interest rates that could affect our results of operations and financial condition. Our largest exposure comes from the Canadian dollar, where approximately 8%
of our sales during the period ended March 31, 2010 were derived from Norcraft Canada and our revenues from such sales were denominated in Canadian dollar.



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Item 4T. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Companys management, with the participation of the Companys Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of the Companys disclosure controls and procedures as of March 31, 2010.

There are inherent limitations to the
effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Our disclosure controls and procedures are designed to provide reasonable
assurance of achieving their control objectives.

Based on that evaluation, the Companys Chief Executive Officer and Chief Financial
Officer concluded that the Companys disclosure controls and procedures were effective as of March 31, 2010. Disclosure controls and procedures provide reasonable assurance that the information required to be disclosed by the Company in
the reports it files or submits with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated
to our management, including the principal executive and principal financial offers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Controls

The Companys internal control over financial reporting is a process designed by, or under the supervision of, the registrants principal
executive and principal financial officers, or persons performing similar functions, and effected by the registrants board of directors, management and other personnel 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. The Companys internal control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors and (iii) 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.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.



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##### Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

During the ordinary course of business, we have become and may in the future become subject to pending and threatened legal actions and proceedings. All
of the current legal actions and proceedings that we are a party to are of an ordinary or routine nature incidental to our operations, the resolution of which should not have a material adverse effect on our financial condition, results of
operations or cash flows. We are not currently a party to any product liability claims. The majority of the pending legal proceedings involve claims for workers compensation. These claims are generally covered by insurance, but there can be no
assurance that our insurance coverage will be adequate to cover any such liability.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in the Companys Annual Report on Form 10-K for the year ended
December 31, 2009. The materialization of any risks and uncertainties identified in Part I, Item 2, Uncertainty of Forward Looking Statements and Information contained in this report together with those previously disclosed in
the Form 10-K or those that are presently unforeseen could result in significant adverse effects on our financial condition, results of operations and cash flows.

Item 6. Exhibits



|     |  |                                                                                                                                                                          
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|31.1 |  | Certification by Mark Buller pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                             
|     | 
|31.2 |  | Certification by Leigh Ginter pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                            
|     | 
|32.1 |  | Certification by Mark Buller pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. 
|     | 
|32.2 |  | Certification by Leigh Ginter pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.



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SIGNATURES

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



NORCRAFT HOLDINGS, L.P.(Registrant)NORCRAFT COMPANIES, L.P.(Registrant)




| |  |                                                                        |  |  |  |                                                                        
| |  | ---------------------------------------------------------------------- |  |  |  | -----------------------------------------------------------------------
| |  | /s/ Mark Buller                                                        |  |  |  | /s/ Leigh Ginter                                                       
| |  |                                                                        |  |  |  |                                                                        
| |  | Mark Buller                                                            |  |  |  | Leigh Ginter                                                           
| |  | Chief Executive Officer                                                |  |  |  | Chief Financial Officer                                                
| |  |                                                                        | 
| |  | Date: May 17, 2010                                                     |  |  |  | Date: May 17, 2010                                                     
| |  | Signing on behalf of the
Registrant and as Principal Executive Officer |  |  |  | Signing on behalf of the
Registrant and as Principal Accounting Officer



23