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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549



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FORM 10-K/A



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



For the fiscal year ended December 31, 2004



FOR ANNUAL AND TRANSITION REPORTS

PURSUANT TO SECTIONS 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934



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



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|                                                               |  |                                                                                               |  |                                     
|-------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (Primary Standard Industrial Classification Code Number of Registrant and each Co-Registrant) |  | (I.R.S. Employer Identification No.)



Norcraft Holdings,
L.P.

Norcraft Companies, L.P.

(Exact name of registrants as specified in their charters)



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|         |  |      |  |           
|-------- |  | ---- |  | ----------
|Delaware |  | 2434 |  | 75-3132727
|Delaware |  | 2434 |  | 36-4231718



3020 Denmark Avenue,
Suite 100

Eagan, MN 55121

(800) 297-0661

(Address, including zip code and telephone number, including area code of Registrants and
Co-Registrants principal executive offices)



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|                        |  |                        
|----------------------- |  | -----------------------
|Mark Buller             |  | Leigh Ginter           
|Chief Executive Officer |  | Chief Financial Officer



Norcraft Companies
L.P.

3020 Denmark Avenue, Suite 100

Eagan, MN 55121

(800) 297-0661

(Names, address, including zip code and telephone number, including area code of Agents for Service)



Not Applicable

(Former name,
former address and former fiscal year, if changed since last report)



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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, and (2) have been subject to such filing requirements for the past 90 days.    Yes  x    No ̈.



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



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



This Form 10-K is a combined annual 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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EXPLANATORY NOTE



During the review of Norcraft Holdings, L.P.s (Holdings) Form 10-Q for the period ended June 30, 2005, Holdings examined
the classification on its balance sheet of a portion of its outstanding limited partnership units. The Company had classified these securities as a component of stockholders equity in its financial statements for the year ended December 31,
2004 filed in its Form 10-K with the SEC (the Original Filing).



Based on the review of the terms and conditions of the outstanding limited partnership units, Holdings noted that certain employee equity holders may request that Holdings repurchase limited partnership units upon their death or disability.
Following such a request, Holdings must use commercially reasonable efforts to repurchase such units at fair market value, subject to limitations on the repurchase of equity contained in Norcraft Companies, L.P.s (Norcraft,
together with Holdings, the Company) senior credit facility and the indentures governing the Companys outstanding senior discount notes and senior subordinated notes. Because such a provision could result in a cash liquidation of
the limited partnership units that is outside the control of the Company, management has concluded that these outstanding limited partnership units should be classified as a component of members equity subject to put request, or mezzanine
equity, and not a component of members equity, or permanent equity on the Companys balance sheet. Any changes in the fair market value of these units are reported as changes in members equity subject to put request in the statement
of members equity and comprehensive income. The restated financial statements for each of the years in the periods ended December 31, 2004 and 2003 are reflected in this Amendment to the Companys Annual Report on Form 10-K. The
restatement is a correction in classification of certain limited partnership units of Holdings between members equity subject to put request, or mezzanine equity, and members equity, or permanent equity on the balance sheet and has no
impact on the Companys historical statements of operations or cash flows. See further discussion in Note 19. In addition to this amended Form 10-K for the year ended December 31, 2004, the Company has also amended its Forms 10-Q for the
quarters ended September 30, 2004, and March 31, 2005.



Pursuant to this Form
10-K/ANorcraft Holdings, L.P. amends the following information previously included in the fiscal 2004 Form 10-K filed on March 31, 2005:



| |  |  | Item 6: Selected Financial Data
| | - |  | -------------------------------



| |  |  | Item 8: Financial Statements
| | - |  | ----------------------------



| |  |  | Item 9A: Controls and Procedures
| | - |  | --------------------------------



| |  |  | Item 13: Certain Relationships and Related Transactions
| | - |  | -------------------------------------------------------



Additionally, this Form 10-K/A contains new exhibits 31.1, 31.2, 32.1 and 32.2, dated the date of the filing of this Form 10-K/A. Except for the amended information
described above, this Form 10-K/A continues to describe conditions as of the date of the Original Filing, and we have not updated the disclosures contained herein to reflect events that have occurred subsequent to that date. Other events occurring
after the date of the Original Fling or other information necessary to reflect subsequent events have been disclosed in reports filed with the SEC subsequent to the Original Filing.



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Item 6. Selected Financial Data



The selected data presented below is derived from our audited financial statements, which are included elsewhere in this report. The
predecessor company financial statements have been presented at their historical cost basis. The successor company financial statements have been prepared giving effect to the Acquisition (as described in Managements Discussion and
Analysis of Financial Condition and Results of Operations), including recapitalization of our company in accordance with EITF 88-16, Basis in Leveraged Buyout Transactions, as a partial purchase. The selected data presented below under the
captions Statement of Operations Data and Balance Sheet Data for, and as of the end of, the period ended December 31, 2000, are derived from the unaudited financial statements of Norcraft.



|                                            |  |                                |         |                                                        |      |                                                 |         |                                   |  |   |         |  |   |         |  |   |        |  |   |         |  
|------------------------------------------- |  | ------------------------------ | ------- | ------------------------------------------------------ | ---- | ----------------------------------------------- | ------- | --------------------------------- |  | - | ------- |  | - | ------- |  | - | ------ |  | - | ------- | -
|                                            |  | Predecessor                    |         | Norcraft Holdings L.P.                                 |     
|                                            |  | Successor                      |        
|                                            |  | Fiscal Year Ended December 31, |         | For the PeriodJanuary 1, 2003 through October 20, 2003 |      | For the PeriodOctober 21throughDecember 31,2003 |         | Fiscal YearEnded December 31,2004 | 
|                                            |  | 2000                           |         |                                                        | 2001 |                                                 |         | 2002                              |  |   |        
|Statement of Operations Data:               |  |                                |         |                                                        |      |                                                 |         |                                   |  |   |         |  |   |         |  |   |        |  |   |         |  
|Net sales                                   |  | $                              | 113,696 |                                                        |      | $                                               | 136,855 |                                   |  | $ | 203,860 |  | $ | 203,899 |  | $ | 52,777 |  | $ | 330,275 |  
|Cost of sales                               |  |                                | 91,854  |                                                        |      |                                                 | 96,607  |                                   |  |   | 141,705 |  |   | 135,918 |  |   | 36,341 |  |   | 227,433 |  
|                                            |  |                                |         |                                                        |      |                                                 |         |                                   |  |   |         |  |   |         |  |   |        |  |   |         |  
|Gross profit                                |  |                                | 21,842  |                                                        |      |                                                 | 40,248  |                                   |  |   | 62,155  |  |   | 67,981  |  |   | 16,436 |  |   | 102,842 |  
|Selling, general and administrative expense |  |                                | 24,069  |                                                        |      |                                                 | 30,026  |                                   |  |   | 36,031  |  |   | 37,721  |  |   | 10,168 |  |   | 58,244  |  
|Other                                       |  |                                |        |                                                        |      |                                                 |        |                                   |  |   |        |  |   | 4,127   |  |   |       |  |   |        |  
|                                            |  |                                |         |                                                        |      |                                                 |         |                                   |  |   |         |  |   |         |  |   |        |  |   |         |  
|Income/(loss) from operations               |  |                                | (2,227  | )                                                      |      |                                                 | 10,222  |                                   |  |   | 26,124  |  |   | 26,133  |  |   | 6,268  |  |   | 44,598  |  
|Interest expense                            |  |                                | 4,252   |                                                        |      |                                                 | 3,585   |                                   |  |   | 2,574   |  |   | 1,422   |  |   | 3,217  |  |   | 18,815  |  
|Amortization of deferred financing costs    |  |                                | 119     |                                                        |      |                                                 | 198     |                                   |  |   | 301     |  |   | 267     |  |   | 391    |  |   | 2,714   |  
|Other, net                                  |  |                                | 189     |                                                        |      |                                                 | 12      |                                   |  |   | 641     |  |   | 638     |  |   | 610    |  |   | (58     | )
|                                            |  |                                |         |                                                        |      |                                                 |         |                                   |  |   |         |  |   |         |  |   |        |  |   |         |  
|Total other expense                         |  |                                | 4,560   |                                                        |      |                                                 | 3,795   |                                   |  |   | 3,516   |  |   | 2,327   |  |   | 4,218  |  |   | 21,471  |  
|Income/(loss) from continuing operations    |  |                                | (6,787  | )                                                      |      |                                                 | 6,427   |                                   |  |   | 22,608  |  |   | 23,806  |  |   | 2,050  |  |   | 23,127  |  
|Income/(loss) from discontinued operations  |  |                                | (510    | )                                                      |      |                                                 | (439    | )                                 |  |   |        |  |   |        |  |   |       |  |   |        |  
|Loss on disposal of discontinued operations |  |                                |        |                                                        |      |                                                 | (4,049  | )                                 |  |   |        |  |   |        |  |   |       |  |   |        |  
|                                            |  |                                |         |                                                        |      |                                                 |         |                                   |  |   |         |  |   |         |  |   |        |  |   |         |  
|Net income/(loss)                           |  | $                              | (7,297  | )                                                      |      | $                                               | 1,939   |                                   |  | $ | 22,608  |  | $ | 23,806  |  | $ | 2,050  |  | $ | 23,127  |  
|                                            |  |                                |         |                                                        |      |                                                 |         |                                   |  |   |         |  |   |         |  |   |        |  |   |         |  
|Other Financial Data:                       |  |                                |         |                                                        |      |                                                 |         |                                   |  |   |         |  |   |         |  |   |        |  |   |         |  
|Ratio of earnings to fixed charges (2)      |  |                                |        |                                                        |      |                                                 | 2.6x    |                                   |  |   | 8.2x    |  |   | 12.8x   |  |   | 1.6x   |  |   | 2.0x    |  



|                                                     |                               |              |         |  |         |        |      |   |         |  |   |         |  |   |        
|---------------------------------------------------- | ----------------------------- | ------------ | ------- |  | ------- | ------ | ---- | - | ------- |  | - | ------- |  | - | -------
|                                                     |                               | December 31,
|                                                     | 2000(1)                       |              | 2001(1) |  | 2002(1) |        | 2003 |   | 2004   
|                                                     | (dollar amounts in thousands)
|Balance Sheet Data:                                  |                               |              |         |  |         |        |      |   |         |  |   |         |  |   |        
|Total assets                                         |                               | $            | 82,023  |  | $       | 80,773 |      | $ | 103,940 |  | $ | 356,842 |  | $ | 369,992
|Total debt                                           |                               |              | 42,514  |  |         | 30,597 |      |   | 24,749  |  |   | 195,000 |  |   | 263,752
|Members equity subject to put request, restated (3) |                               |              |        |  |         |       |      |   |        |  |   | 22,354  |  |   | 26,377 
|Members equity (3)                                  |                               |              | 34,056  |  |         | 36,547 |      |   | 53,959  |  |   | 109,409 |  |   | 52,676 



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|                                            |                                |                         |                                                     |      |                                                 |   |                                   |   |  |   |         |  |   |         |  |   |        |  |   |         |  
|------------------------------------------- | ------------------------------ | ----------------------- | --------------------------------------------------- | ---- | ----------------------------------------------- | - | --------------------------------- | - |  | - | ------- |  | - | ------- |  | - | ------ |  | - | ------- | -
|                                            |                                | Norcraft Companies L.P. |                                                    
|                                            | Predecessor                    |                         | Successor                                           |     
|                                            | Fiscal Year Ended December 31, |                         | For the PeriodJanuary 1, 2003throughOctober 20,2003 |      | For the PeriodOctober 21throughDecember 31,2003 |   | Fiscal YearEnded December 31,2004 |  
|                                            | 2000                           |                         |                                                     | 2001 |                                                 |   | 2002                              |   |  |  
|Statement of Operations Data:               |                                |                         |                                                     |      |                                                 |   |                                   |   |  |   |         |  |   |         |  |   |        |  |   |         |  
|Net sales                                   |                                | $                       | 113,696                                             |      |                                                 | $ | 136,855                           |   |  | $ | 203,860 |  | $ | 203,899 |  | $ | 52,777 |  | $ | 330,275 |  
|Cost of sales                               |                                |                         | 91,854                                              |      |                                                 |   | 96,607                            |   |  |   | 141,705 |  |   | 135,918 |  |   | 36,341 |  |   | 227,433 |  
|                                            |                                |                         |                                                     |      |                                                 |   |                                   |   |  |   |         |  |   |         |  |   |        |  |   |         |  
|Gross profit                                |                                |                         | 21,842                                              |      |                                                 |   | 40,248                            |   |  |   | 62,155  |  |   | 67,981  |  |   | 16,436 |  |   | 102,842 |  
|Selling, general and administrative expense |                                |                         | 24,069                                              |      |                                                 |   | 30,026                            |   |  |   | 36,031  |  |   | 37,721  |  |   | 10,168 |  |   | 58,244  |  
|Other                                       |                                |                         |                                                    |      |                                                 |   |                                  |   |  |   |        |  |   | 4,127   |  |   |       |  |   |        |  
|                                            |                                |                         |                                                     |      |                                                 |   |                                   |   |  |   |         |  |   |         |  |   |        |  |   |         |  
|Income/(loss) from operations               |                                |                         | (2,227                                              | )    |                                                 |   | 10,222                            |   |  |   | 26,124  |  |   | 26,133  |  |   | 6,268  |  |   | 44,598  |  
|Interest expense                            |                                |                         | 4,252                                               |      |                                                 |   | 3,585                             |   |  |   | 2,574   |  |   | 1,422   |  |   | 3,217  |  |   | 15,897  |  
|Amortization of deferred financing costs    |                                |                         | 119                                                 |      |                                                 |   | 198                               |   |  |   | 301     |  |   | 267     |  |   | 391    |  |   | 2,589   |  
|Other, net                                  |                                |                         | 189                                                 |      |                                                 |   | 12                                |   |  |   | 641     |  |   | 638     |  |   | 610    |  |   | (58     | )
|                                            |                                |                         |                                                     |      |                                                 |   |                                   |   |  |   |         |  |   |         |  |   |        |  |   |         |  
|Total other expense                         |                                |                         | 4,560                                               |      |                                                 |   | 3,795                             |   |  |   | 3,516   |  |   | 2,327   |  |   | 4,218  |  |   | 18,428  |  
|Income/(loss) from continuing operations    |                                |                         | (6,787                                              | )    |                                                 |   | 6,427                             |   |  |   | 22,608  |  |   | 23,806  |  |   | 2,050  |  |   | 26,170  |  
|Income/(loss) from discontinued operations  |                                |                         | (510                                                | )    |                                                 |   | (439                              | ) |  |   |        |  |   |        |  |   |       |  |   |        |  
|Loss on disposal of discontinued operations |                                |                         |                                                    |      |                                                 |   | (4,049                            | ) |  |   |        |  |   |        |  |   |       |  |   |        |  
|                                            |                                |                         |                                                     |      |                                                 |   |                                   |   |  |   |         |  |   |         |  |   |        |  |   |         |  
|Net income/(loss)                           |                                | $                       | (7,297                                              | )    |                                                 | $ | 1,939                             |   |  | $ | 22,608  |  | $ | 23,806  |  | $ | 2,050  |  | $ | 26,170  |  
|                                            |                                |                         |                                                     |      |                                                 |   |                                   |   |  |   |         |  |   |         |  |   |        |  |   |         |  
|Other Financial Data:                       |                                |                         |                                                     |      |                                                 |   |                                   |   |  |   |         |  |   |         |  |   |        |  |   |         |  
|Ratio of earnings to fixed charges (2)      |                                |                         |                                                    |      |                                                 |   | 2.6x                              |   |  |   | 8.2x    |  |   | 12.8x   |  |   | 1.6x   |  |   | 2.4x    |  



|                    |  |                               |        |         |   |         |  |      |         |      |   |         |  |   |        
|------------------- |  | ----------------------------- | ------ | ------- | - | ------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|                    |  | December 31,                 
|                    |  | 2000(1)                       |        | 2001(1) |   | 2002(1) |  | 2003 |         | 2004
|                    |  | (dollar amounts in thousands)
|Balance Sheet Data: |  |                               |        |         |   |         |  |      |         |      |   |         |  |   |        
|Total assets        |  | $                             | 82,023 |         | $ | 80,773  |  | $    | 103,940 |      | $ | 356,842 |  | $ | 366,585
|Total debt          |  |                               | 42,514 |         |   | 30,597  |  |      | 24,749  |      |   | 195,000 |  |   | 180,500

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|(1) | Predecessor company.
|--- | --------------------

|(2) | For purposes of determining the ratio earnings to fixed charges, earnings consist of net income before fixed charges. Fixed charges consist of interest expense, the amortization
of deferred debt issuance costs, capitalized interest, and the interest portion of our rent expense (assumed to be one-third of total rent expense). For the year ended December 31, 2000 earnings were insufficient to cover fixed charges by $2.2
million.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Holdings has restated its previously audited consolidated balance sheets as of December 31, 2004 and 2003. A portion of its outstanding limited partnership units held by certain
members of management was reclassified to members equity subject to put request from members equity. Specifically, the limited partnership agreement of Holdings provides that certain employee equity holders may request that Holdings
repurchase limited partnership units upon their death or disability at the then fair market value. Following such a request, Holdings must use its commercially reasonable efforts to repurchase such units, subject to limitations on the repurchase of
equity contained in the senior credit facility and the indentures governing the Senior Discount Notes and Senior Subordinated Notes, respectively. Any changes in the fair market value of these units are reported as accretion on members
interest subject to put request in the statement of members equity and comprehensive income.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Item 9A. Controls and Procedures



Evaluation of Disclosure Controls and Procedures



Holdings management, under the supervision of and with the participation of Holdings Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of Holdings disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of the
end of the period covered by this Annual Report on Form 10-K/A. Management had previously concluded Holdings disclosure controls and procedures were effective as of December 31, 2004. However, in connection with the restatement described below
and in Note 19 of this report, management determined that a material weakness existed in Holdings internal control over financial reporting. Because of this material weakness, management determined that Holdings disclosure controls and
procedures were not effective as of December 31, 2004 to ensure that all material information required to be included in Holdings reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in
the reports that it files or submits under the Act is accumulated and communicated to the issuers management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure. To address this material weakness, Holdings management performed additional analysis and other post-closing procedures to ensure that Holdings consolidated financial statements were
prepared in accordance with accounting principles generally accepted in the United States of America. Accordingly, management believes that (i) the consolidated financial statements, as restated, fairly present in all material respects
Holdings financial condition, results of operations and cash flows for the periods presented, and (ii) this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.



Consideration of the Restatement



The restatement corrects an error in Holdings consolidated balance sheets as of December 31, 2003, June 30, 2004, September 30, 2004, December 31, 2004, and March
31, 2005, related to certain limited partnership units held by management and previously classified as permanent equity. The limited partnership agreement of Holdings provides that certain employee equity holders may request Holdings to repurchase
their limited partnership units upon either their death or disability. Following such a request, Holdings must use commercially reasonable efforts to repurchase such units, subject to limitations on the repurchase of equity contained in the senior
credit facility and the indentures governing the Senior Discount Notes and Senior Subordinated Notes, respectively. Holdings has determined the partnership units subject to this put request are contingently redeemable shares and should therefore be
classified as temporary, or members equity subject to put request. Further, to the extent that there is a change in the fair value of these partnership units, Holdings will record a corresponding change in the carrying value of the
members equity subject to put request and a change in members equity.



Management evaluated the materiality of the correction on its consolidated financial statements using the guidelines of Staff Accounting Bulletin No. 99, Materiality and concluded that the effects of the corrections were
material to its 2004 annual consolidated financial statements as well as its interim consolidated financial statements for the quarters ended September 30, 2004 and March 31, 2005. Accordingly, management concluded that it would restate its
previously issued 2004 annual consolidated financial statements as well as its interim consolidated financial statements for the quarters ended September 30, 2004 and March 31, 2005.



Internal Control over Financial Reporting



A material weakness is a control deficiency or combination of control deficiencies that results in more than a remote likelihood that a material misstatement of the
annual or interim consolidated financial statements will not be prevented or detected. As of December 31, 2004, Holdings did not maintain effective control over financial reporting to ensure members equity was accurately presented for
redeemable units or that the accounting treatment related to redeemable units was appropriately reviewed to ensure compliance with accounting principles generally accepted in the United States of America. The transaction related to these redeemable
units was non-routine in nature. Specifically, the Company did not have adequate controls over the classification of certain partnership units subject to put request nor the proper evaluation of the relevant accounting literature related to such
units. This control deficiency resulted in a restatement of Holdings 2004



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annual consolidated financial statements, as well as, Holdings interim consolidated financial statements for the
quarters ended September 30, 2004 and March 31, 2005. Additionally, this control deficiency could result in a misstatement of members equity that would result in a material misstatement to the annual or interim consolidated financial
statements that would not be prevented or detected. Accordingly, management determined that this control deficiency constitutes a material weakness.



Managements Remediation Plan



We have developed a plan to remediate the identified material weaknesses. Several elements of our remediation plan, which were initiated in September 2005, can only be
accomplished over time. In connection with our remedial efforts to date, both the Chief Financial Officer and the Controller of Holdings have evaluated EITF D-98: Classification and Measurement of Redeemable Securities and other
relevant accounting literature. The purpose of this evaluation was to strengthen managements understanding of the appropriate presentation and disclosure of members equity in accordance with accounting principles generally accepted in
the United States of America, specifically related to non-routine transactions.



Changes in Internal Control over Financial Reporting



There
have not been any changes in Holdings internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act during Holdings fiscal quarter ended December 31, 2004 that have materially
affected, or are reasonably likely to materially affect, Holdings internal control over financial reporting.



Limitations on the Effectiveness of Controls



Holdings internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Holdings 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 Holdings 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 Holdings 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.



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Item 13. Certain Relationships and Related Transactions



ARRANGEMENTS WITH OUR INVESTORS



The holders of limited partnership units of Holdings entered into a limited partnership
agreement simultaneous with the closing of the Acquisition. The limited partnership agreement contains agreements among the holders of Holdings limited partnership units with respect to the transfer of such units, including rights of first
offer, tag-along rights, drag-along rights, preemptive rights and registration rights. Certain employee equity holders may request that Holdings repurchase limited partnership units upon their death or disability. Following such a request, Holdings
must use its commercially reasonable efforts to repurchase such units, subject to limitations on the repurchase of equity contained in the senior credit facility and the indentures governing the Senior Discount Notes and Senior Subordinated Notes
Units held by our managers and the investors associated with Mark Buller are subject to a right of repurchase by Holdings.



The SKM and Trimaran holders, and the Buller holders entered into a limited liability company agreement of Norcraft GP. Pursuant to this limited liability company
agreement, each of the representatives of the SKM holders who sit on Norcraft GPs board of managers, currently Mr. Reilly and Mr. Kim, is entitled to cast 2.5 votes with respect to each matter which is submitted to a vote before Norcraft
GPs board of managers. The Trimaran holders designated two managers, and the Buller holders designated two managers, each of which have one vote. As a result, the managers appointed by the SKM holders together hold a majority of the votes to
be cast on each matter submitted to a vote before Norcraft GPs board of managers. In addition, pursuant to the limited liability company agreement, the SKM and Trimaran holders and the Buller holders have the right to approve various
transactions.



Upon completion of the Acquisition, we entered into a management
and monitoring agreement with an affiliate of SKM Equity Fund III, L.P. and an affiliate of Trimaran Fund II, L.L.C. pursuant to which such entities provide management and monitoring services to us. These entities receive an aggregate annual
management fee of $1.0 million and annual reimbursement for out-of-pocket expenses incurred in connection with the provision of such services. In 2003, management fees charged to expense was approximately $0.2 million.



ARRANGEMENTS WITH THE BULLER INVESTORS



In connection with their investment, the Buller holders are entitled to a right of first
offer to purchase our company upon a decision by Norcraft GPs board of managers to engage in a sale transaction. Any offer made by the Buller investors pursuant to any exercise of this right is required to be an offer which allows us the time
to solicit additional competing offers that we may accept in the event they are at a higher valuation or on such other material terms and conditions more favorable to us than those set forth in the offer made by the Buller holders.



In consideration of their contribution of the Winnipeg facility, the Buller holders are
entitled to receive additional cash payments of up to $4.0 million and the right to acquire up to approximately 2,957,068 Class A limited partnership units of Holdings upon a change of control involving a sale by the SKM and Trimaran holders
exceeding specified financial hurdles, if our owners following such a change of control elect not to continue Mr. Bullers employment with us.



7



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##### Table of Contents

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                
|President and Chief Executive Officer |  | Chief Financial Officer     
|                                      | 
|Date: September 20, 2005              |  | Date: September 20, 2005    
|Signing on behalf of the              |  | Signing on behalf of the    
|Registrants and as principal          |  | Registrants and as principal
|officer                               |  | accounting officer          



Pursuant to the requirements of the
Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrants and in the capacities as of this xx day of August, 2005.



|                       |  |                                                                                                              
|---------------------- |  | -------------------------------------------------------------------------------------------------------------
|/s/ Herbert Buller     |  | Chairman of the Board of Managers of Norcraft GP, L.L.C.,the General Partner of the Registrants              
|Herbert Buller         |  |                                                                                                              
|                       | 
|/s/ Jay Bloom          |  | Manager of Norcraft GP, L.L.C., the General Partner of the Registrants                                       
|Jay Bloom              |  |                                                                                                              
|                       | 
|/s/ David Kim          |  | Manager of Norcraft GP, L.L.C., the General Partner of the Registrants                                       
|David Kim              |  |                                                                                                              
|                       | 
|/s/ Michael Maselli    |  | Manager of Norcraft GP, L.L.C., the General Partner of the Registrants                                       
|Michael Maselli        |  |                                                                                                              
|                       | 
|/s/ Christopher Reilly |  | Manager of Norcraft GP, L.L.C., the General Partner of the Registrants                                       
|Christopher Reilly     |  |                                                                                                              
|                       | 
|/s/ Mark Buller        |  | President, Chief Executive Officer and Manager of Norcraft GP, L.L.C., the General Partner of the Registrants
|Mark Buller            |  |                                                                                                              



8



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##### Table of Contents

Norcraft Holdings, L.P. (Successor)



Index to Consolidated Financial Statements



|                                                                                                                                                                       |  |     
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                                                                       |  | Page
|Report of Independent Registered Public Accounting Firm                                                                                                                |  | F-2 
|Consolidated Balance Sheets at December 31, 2004 and 2003                                                                                                              |  | F-5 
|Consolidated Statements of Income for the year ended December 31, 2004 and for the period October 21, 2003 through December 31, 2003                                   |  | F-6 
|Consolidated Statements of Members Equity and Comprehensive Income for the year ended December 31, 2004 and for the period October 21, 2003 through December 31, 2003 |  | F-8 
|Consolidated Statements of Cash Flows for the year ended December 31, 2004 and for the period October 21, 2003 through December 31, 2003                               |  | F-10
|Notes to Consolidated Financial Statements                                                                                                                             |  | F-12



Norcraft Companies,
L.P. (Successor)



Index to Consolidated Financial
Statements



|                                                                                                                                                                       |  |     
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                                                                       |  | Page
|Report of Independent Registered Public Accounting Firm                                                                                                                |  | F-3 
|Consolidated Balance Sheets at December 31, 2004 and 2003                                                                                                              |  | F-5 
|Consolidated Statements of Income for the year ended December 31, 2004 and for the period October 21, 2003 through December 31, 2003                                   |  | F-7 
|Consolidated Statements of Members Equity and Comprehensive Income for the year ended December 31, 2004 and for the period October 21, 2003 through December 31, 2003 |  | F-9 
|Consolidated Statements of Cash Flows for the year ended December 31, 2004 and for the period October 21, 2003 through December 31, 2003                               |  | F-11
|Notes to Consolidated Financial Statements                                                                                                                             |  | F-12



Norcraft Companies,
LLC (Predecessor)



Index to Consolidated Financial
Statements



|                                                                                                                                                              |  |     
|------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                                                              |  | Page
|Reports of Independent Registered Public Accounting Firm                                                                                                      |  | F-4 
|Statement of Income for the periods from January 1, 2003 through October 20, 2003 and for the year ended December 31, 2002                                    |  | F-7 
|Statements of Members Equity and Comprehensive Income for the periods from January 1, 2003 through October 20, 2003 and for the year ended December 31, 2002 |  | F-8 
|Statements of Cash Flows from January 1, 2003 through October 20, 2003 and for the year ended December 31, 2002                                               |  | F-11
|Notes to Consolidated Financial Statements                                                                                                                    |  | F-12



F-1



---

##### Table of Contents

Report of Independent Registered Public Accounting Firm



To the Board of Managers of

Norcraft GP, L.L.C.



In our opinion, the accompanying restated consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial
position of Norcraft Holdings, L.P. (Successor Company) as of December 31, 2004 and 2003, and the results of its operations and its cash flows for the year ended December 31, 2004 and for the period from October 21, 2003 through December
31, 2003, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the index appearing under item 15(a)(2) present fairly, in all material
respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedules are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.



As discussed in Note 19, the
Company has restated its consolidated balance sheets for the years ended December 31, 2004 and 2003 and its consolidated statements of members equity and comprehensive income for the year ended December 31, 2004 and for the period from October
21, 2003 through December 31, 2003.



/s/ PricewaterhouseCoopers LLP



Minneapolis, Minnesota

March 18, 2005, except for

the restatement described in

Note 19 as to which the

date is September 20, 2005



F-2



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##### Table of Contents

Report of Independent Registered Public Accounting Firm



To the Board of Managers of

Norcraft GP, L.L.C.



In our opinion, the accompanying consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of
Norcraft Companies, L.P. (Successor Company) as of December 31, 2004 and 2003, and the results of its operations and its cash flows for the year ended December 31, 2004 and for the period from October 21, 2003 through December 31, 2003,
in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the index appearing under item 15(a)(2) present fairly, in all material respects,
the information set forth therein when read in conjunction with the related financial statements. These financial statements and financial statement schedules are the responsibility of the Companys management. Our responsibility is to express
an opinion on these financial statements and financial statement schedules based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.



/s/ PricewaterhouseCoopers LLP



Minneapolis, Minnesota

March 18, 2005



F-3



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##### Table of Contents

Report of Independent Registered Public Accounting Firm



To the Board of Managers of

Norcraft GP, L.L.C.



In our opinion, the accompanying consolidated financial statements listed in the accompanying index present fairly, in all material respects, Norcraft Companies LLC
(Predecessor Company) results of their operations and its cash flows for the period from January 1, 2003 through October 20, 2003 and for the year ended December 31, 2002 in conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the financial statement schedules listed in the index appearing under item 15(a)(2) present fairly, in all material respects, the information set forth therein when read in conjunction with the
related financial statements. These financial statements and financial statement schedules are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and financial statement
schedules based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



/s/ PricewaterhouseCoopers LLP



Minneapolis, Minnesota

March 24, 2004



F-4



---

##### Table of Contents

Consolidated Balance Sheets

(dollar amounts in thousands)



|                                       |  |                                    |         |                                     |   |                   |  |                   |         |  |   |        
|-------------------------------------- |  | ---------------------------------- | ------- | ----------------------------------- | - | ----------------- |  | ----------------- | ------- |  | - | -------
|                                       |  | Norcraft Holdings, L.P.(Successor) |         | Norcraft Companies, L.P.(Successor)
|                                       |  | December 31,2004                   |         | December 31,2003                    |   | December 31, 2004 |  | December 31, 2003
|                                       |  | (Restated. SeeNote 19)             |         | (Restated. SeeNote 19)              |   |                   |  |                  
|ASSETS                                 |  |                                    |         |                                     |   |                   |  |                   |         |  |   |        
|Current assets:                        |  |                                    |         |                                     |   |                   |  |                   |         |  |   |        
|Cash and cash equivalents              |  | $                                  | 823     |                                     | $ | 2,583             |  | $                 | 823     |  | $ | 2,583  
|Trade accounts receivable, net         |  |                                    | 33,056  |                                     |   | 24,063            |  |                   | 33,056  |  |   | 24,063 
|Inventories                            |  |                                    | 21,886  |                                     |   | 16,948            |  |                   | 21,886  |  |   | 16,948 
|Prepaid expenses                       |  |                                    | 1,497   |                                     |   | 2,000             |  |                   | 1,497   |  |   | 2,000  
|                                       |  |                                    |         |                                     |   |                   |  |                   |         |  |   |        
|Total current assets                   |  |                                    | 57,262  |                                     |   | 45,594            |  |                   | 57,262  |  |   | 45,594 
|Property, plant and equipment, net     |  |                                    | 34,959  |                                     |   | 32,168            |  |                   | 34,959  |  |   | 32,168 
|Other assets:                          |  |                                    |         |                                     |   |                   |  |                   |         |  |   |        
|Goodwill                               |  |                                    | 148,459 |                                     |   | 148,459           |  |                   | 148,459 |  |   | 148,459
|Customer relationships, net            |  |                                    | 61,664  |                                     |   | 66,131            |  |                   | 61,664  |  |   | 66,131 
|Brand names                            |  |                                    | 49,000  |                                     |   | 49,000            |  |                   | 49,000  |  |   | 49,000 
|Deferred financing costs, net          |  |                                    | 12,523  |                                     |   | 11,509            |  |                   | 9,116   |  |   | 11,509 
|Display cabinets, net                  |  |                                    | 6,034   |                                     |   | 3,861             |  |                   | 6,034   |  |   | 3,861  
|Deposits                               |  |                                    | 91      |                                     |   | 120               |  |                   | 91      |  |   | 120    
|                                       |  |                                    |         |                                     |   |                   |  |                   |         |  |   |        
|Total other assets                     |  |                                    | 277,771 |                                     |   | 279,080           |  |                   | 274,364 |  |   | 279,080
|                                       |  |                                    |         |                                     |   |                   |  |                   |         |  |   |        
|Total assets                           |  | $                                  | 369,992 |                                     | $ | 356,842           |  | $                 | 366,585 |  | $ | 356,842
|                                       |  |                                    |         |                                     |   |                   |  |                   |         |  |   |        
|LIABILITIES AND MEMBERS EQUITY        |  |                                    |         |                                     |   |                   |  |                   |         |  |   |        
|Current liabilities:                   |  |                                    |         |                                     |   |                   |  |                   |         |  |   |        
|Current portion of long-term debt      |  | $                                  |        |                                     | $ | 5,000             |  | $                 |        |  | $ | 5,000  
|Accounts payable                       |  |                                    | 7,299   |                                     |   | 6,704             |  |                   | 7,299   |  |   | 6,704  
|Accrued expenses                       |  |                                    | 19,888  |                                     |   | 23,375            |  |                   | 19,888  |  |   | 23,375 
|                                       |  |                                    |         |                                     |   |                   |  |                   |         |  |   |        
|Total current liabilities              |  |                                    | 27,187  |                                     |   | 35,079            |  |                   | 27,187  |  |   | 35,079 
|Long-term debt                         |  |                                    | 263,752 |                                     |   | 190,000           |  |                   | 180,500 |  |   | 190,000
|Commitments and contingencies          |  |                                    |         |                                     |   |                   |  |                   |         |  |   |        
|Members equity subject to put request |  |                                    | 26,377  |                                     |   | 22,354            |  |                   |        |  |   |       
|Members equity                        |  |                                    | 52,676  |                                     |   | 109,409           |  |                   | 158,898 |  |   | 131,763
|                                       |  |                                    |         |                                     |   |                   |  |                   |         |  |   |        
|Total liabilities and members equity  |  | $                                  | 369,992 |                                     | $ | 356,842           |  | $                 | 366,585 |  | $ | 356,842
|                                       |  |                                    |         |                                     |   |                   |  |                   |         |  |   |        



See notes to
consolidated financial statements.



F-5



---

##### Table of Contents

Consolidated Statements of Income

(dollar amounts in thousands)



|                                             |  |                             |         |   |                                                       |   |       
|-------------------------------------------- |  | --------------------------- | ------- | - | ----------------------------------------------------- | - | ------
|                                             |  | Norcraft Holdings, L.P.    
|                                             |  | Successor                  
|                                             |  | Year EndedDecember 31, 2004 |         |   | For the PeriodOctober 21,2003 throughDecember 31,2003
|Net sales                                    |  | $                           | 330,275 |   |                                                       | $ | 52,777
|Cost of sales                                |  |                             | 227,433 |   |                                                       |   | 36,341
|                                             |  |                             |         |   |                                                       |   |       
|Gross profit                                 |  |                             | 102,842 |   |                                                       |   | 16,436
|Selling, general and administrative expenses |  |                             | 58,244  |   |                                                       |   | 10,168
|                                             |  |                             |         |   |                                                       |   |       
|Income from operations                       |  |                             | 44,598  |   |                                                       |   | 6,268 
|Other expense (income):                      |  |                             |         |   |                                                       |   |       
|Interest expense                             |  |                             | 18,815  |   |                                                       |   | 3,217 
|Amortization of deferred financing costs     |  |                             | 2,714   |   |                                                       |   | 391   
|Other, net                                   |  |                             | (58     | ) |                                                       |   | 610   
|                                             |  |                             |         |   |                                                       |   |       
|                                             |  |                             | 21,471  |   |                                                       |   | 4,218 
|                                             |  |                             |         |   |                                                       |   |       
|Net income                                   |  | $                           | 23,127  |   |                                                       | $ | 2,050 
|                                             |  |                             |         |   |                                                       |   |       



See notes to
consolidated financial statements.



F-6



---

##### Table of Contents

Consolidated Statements of Income

(dollar amounts in thousands)



|                                             |  |                             |         |             |                                                        |   |                                                      |  |                             |         |  |   |        
|-------------------------------------------- |  | --------------------------- | ------- | ----------- | ------------------------------------------------------ | - | ---------------------------------------------------- |  | --------------------------- | ------- |  | - | -------
|                                             |  | Norcraft Companies, L.P.   
|                                             |  | Successor                   |         | Predecessor
|                                             |  | Year EndedDecember 31, 2004 |         |             | For the PeriodOctober 21,2003 throughDecember 31, 2003 |   | For the PeriodJanuary 1,2003 throughOctober 20, 2003 |  | Year EndedDecember 31, 2002
|Net sales                                    |  | $                           | 330,275 |             |                                                        | $ | 52,777                                               |  | $                           | 203,899 |  | $ | 203,860
|Cost of sales                                |  |                             | 227,433 |             |                                                        |   | 36,341                                               |  |                             | 135,918 |  |   | 141,705
|                                             |  |                             |         |             |                                                        |   |                                                      |  |                             |         |  |   |        
|Gross profit                                 |  |                             | 102,842 |             |                                                        |   | 16,436                                               |  |                             | 67,981  |  |   | 62,155 
|Selling, general and administrative expenses |  |                             | 58,244  |             |                                                        |   | 10,168                                               |  |                             | 37,721  |  |   | 36,031 
|Other                                        |  |                             |        |             |                                                        |   |                                                     |  |                             | 4,127   |  |   |       
|                                             |  |                             |         |             |                                                        |   |                                                      |  |                             |         |  |   |        
|Income from operations                       |  |                             | 44,598  |             |                                                        |   | 6,268                                                |  |                             | 26,133  |  |   | 26,124 
|Other expense (income):                      |  |                             |         |             |                                                        |   |                                                      |  |                             |         |  |   |        
|Interest expense                             |  |                             | 15,897  |             |                                                        |   | 3,217                                                |  |                             | 1,422   |  |   | 2,574  
|Amortization of deferred financing costs     |  |                             | 2,589   |             |                                                        |   | 391                                                  |  |                             | 267     |  |   | 301    
|Other, net                                   |  |                             | (58     | )           |                                                        |   | 610                                                  |  |                             | 638     |  |   | 641    
|                                             |  |                             |         |             |                                                        |   |                                                      |  |                             |         |  |   |        
|                                             |  |                             | 18,428  |             |                                                        |   | 4,218                                                |  |                             | 2,327   |  |   | 3,516  
|                                             |  |                             |         |             |                                                        |   |                                                      |  |                             |         |  |   |        
|Net income                                   |  | $                           | 26,170  |             |                                                        | $ | 2,050                                                |  | $                           | 23,806  |  | $ | 22,608 
|                                             |  |                             |         |             |                                                        |   |                                                      |  |                             |         |  |   |        



See notes to
consolidated financial statements.



F-7



---

##### Table of Contents

Consolidated Statements of Changes in Members Equity and Comprehensive Income

(dollar amounts in
thousands)



Predecessor Basis



|                                     |  |                          |        |   |                |   |       |       |  |   |        |  
|------------------------------------ |  | ------------------------ | ------ | - | -------------- | - | ----- | ----- |  | - | ------ | -
|                                     |  | Norcraft Companies, L.P. |       
|                                     |  | Class AMembers           |        |   | Class BMembers |   |       | Total | 
|Members equity at January 1, 2002   |  | $                        | 35,106 |   |                | $ | 1,441 |       |  | $ | 36,547 |  
|Management equity pool contributions |  |                          |       |   |                |   | 693   |       |  |   | 693    |  
|Member tax distributions declared    |  |                          | (5,657 | ) |                |   | (232  | )     |  |   | (5,889 | )
|Net income                           |  |                          | 21,771 |   |                |   | 837   |       |  |   | 22,608 |  
|                                     |  |                          |        |   |                |   |       |       |  |   |        |  
|Members equity at December 31, 2002 |  |                          | 51,220 |   |                |   | 2,739 |       |  |   | 53,959 |  
|Member tax distributions declared    |  |                          | (8,574 | ) |                |   | (398  | )     |  |   | (8,972 | )
|Net income                           |  |                          | 22,893 |   |                |   | 913   |       |  |   | 23,806 |  
|                                     |  |                          |        |   |                |   |       |       |  |   |        |  
|Members equity at October 20, 2003  |  | $                        | 65,539 |   |                | $ | 3,254 |       |  | $ | 68,793 |  
|                                     |  |                          |        |   |                |   |       |       |  |   |        |  



Successor Basis



|                                                      |  |                         |         |   |                                              |   |     |                                 |  |   |        |  
|----------------------------------------------------- |  | ----------------------- | ------- | - | -------------------------------------------- | - | --- | ------------------------------- |  | - | ------ | -
|                                                      |  | Norcraft Holdings, L.P. |        
|                                                      |  | Members equity         |         |   | Accumulated othercomprehensive income (loss) |   |     | Totalcomprehensiveincome (loss) | 
|                                                      |  | (Restated. See Note 19) |         |   |                                              |   |     |                                 | 
|Issuance of members interest, restated               |  | $                       | 108,448 |   |                                              | $ |    |                                 |  | $ |       |  
|Management equity pool contributions                  |  |                         | 97      |   |                                              |   |    |                                 |  |   |       |  
|Accretion on members interest subject to put request |  |                         | (1,241  | ) |                                              |   |    |                                 |  |   |       |  
|Cumulative translation adjustment                     |  |                         | 55      |   |                                              |   | 55  |                                 |  |   | 55     |  
|Net income                                            |  |                         | 2,050   |   |                                              |   |    |                                 |  |   | 2,050  |  
|                                                      |  |                         |         |   |                                              |   |     |                                 |  |   |        |  
|Balance, December 31, 2003, restated                  |  |                         | 109,409 |   |                                              |   | 55  |                                 |  |   | 2,105  |  
|Issuance of members interest                         |  |                         | 3,608   |   |                                              |   |    |                                 |  |   |       |  
|Distribution to members                               |  |                         | (77,181 | ) |                                              |   |    |                                 |  |   |       |  
|Repurchase of members interest                       |  |                         | (535    | ) |                                              |   |    |                                 |  |   |       |  
|Accretion on members interest subject to put request |  |                         | (4,023  | ) |                                              |   |    |                                 |  |   |       |  
|Member tax distributions declared                     |  |                         | (1,651  | ) |                                              |   |    |                                 |  |   |       |  
|Cumulative translation adjustment                     |  |                         | (78     | ) |                                              |   | (78 | )                               |  |   | (78    | )
|Net income                                            |  |                         | 23,127  |   |                                              |   |    |                                 |  |   | 23,127 |  
|                                                      |  |                         |         |   |                                              |   |     |                                 |  |   |        |  
|Balance, December 31, 2004, restated                  |  | $                       | 52,676  |   |                                              | $ | (23 | )                               |  | $ | 25,154 |  
|                                                      |  |                         |         |   |                                              |   |     |                                 |  |   |        |  



See notes to
consolidated financial statements.



F-8



---

##### Table of Contents

Consolidated Statements of Changes in Members Equity and Comprehensive Income

(dollar amounts in
thousands)



Successor Basis



|                                     |  |                          |         |   |                                              |   |     |                          |  |   |        |  
|------------------------------------ |  | ------------------------ | ------- | - | -------------------------------------------- | - | --- | ------------------------ |  | - | ------ | -
|                                     |  | Norcraft Companies, L.P. |        
|                                     |  | Members Equity          |         |   | Accumulated othercomprehensive income (loss) |   |     | Totalcomprehensiveincome | 
|Issuance of members interest        |  | $                        | 129,561 |   |                                              | $ |    |                          |  | $ |       |  
|Management equity pool contributions |  |                          | 97      |   |                                              |   |    |                          |  |   |       |  
|Cumulative translation adjustment    |  |                          | 55      |   |                                              |   | 55  |                          |  |   | 55     |  
|Net income                           |  |                          | 2,050   |   |                                              |   |    |                          |  |   | 2,050  |  
|                                     |  |                          |         |   |                                              |   |     |                          |  |   |        |  
|Members equity at December 31, 2003 |  |                          | 131,763 |   |                                              |   | 55  |                          |  |   | 2,105  |  
|Issuance of members interest        |  |                          | 3,608   |   |                                              |   |    |                          |  |   |       |  
|Distribution to member               |  |                          | (379    | ) |                                              |   |    |                          |  |   |       |  
|Repurchase of member interest        |  |                          | (535    | ) |                                              |   |    |                          |  |   |       |  
|Member tax distributions declared    |  |                          | (1,651  | ) |                                              |   |    |                          |  |   |       |  
|Cumulative translation adjustment    |  |                          | (78     | ) |                                              |   | (78 | )                        |  |   | (78    | )
|Net income                           |  |                          | 26,170  |   |                                              |   |    |                          |  |   | 26,170 |  
|                                     |  |                          |         |   |                                              |   |     |                          |  |   |        |  
|Members equity at December 31, 2004 |  | $                        | 158,898 |   |                                              | $ | (23 | )                        |  | $ | 28,197 |  
|                                     |  |                          |         |   |                                              |   |     |                          |  |   |        |  



See notes to
consolidated financial statements.



F-9



---

##### Table of Contents

Consolidated Statements of Cash Flows

(dollar amounts in thousands)



|                                                                                    |  |                             |         |   |                                                        |   |          |  
|----------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ------------------------------------------------------ | - | -------- | -
|                                                                                    |  | Norcraft Holdings, L.P.     |        
|                                                                                    |  | Successor                   |        
|                                                                                    |  | Year EndedDecember 31, 2004 |         |   | For the PeriodOctober 21,2003 throughDecember 31, 2003 |  
|Cash flows from operating activities:                                               |  |                             |         |   |                                                        |   |          |  
|Net income                                                                          |  | $                           | 23,127  |   |                                                        | $ | 2,050    |  
|Adjustments to reconcile net income to net cash provided by operating activities:   |  |                             |         |   |                                                        |   |          |  
|Depreciation and amortization of property, plant and equipment                      |  |                             | 4,278   |   |                                                        |   | 637      |  
|Amortization:                                                                       |  |                             |         |   |                                                        |   |          |  
|Customer relationships                                                              |  |                             | 4,467   |   |                                                        |   | 869      |  
|Deferred financing costs                                                            |  |                             | 2,714   |   |                                                        |   | 391      |  
|Display cabinets                                                                    |  |                             | 3,179   |   |                                                        |   | 563      |  
|Provision for uncollectible accounts receivable                                     |  |                             | 2,206   |   |                                                        |   | 202      |  
|Provision for obsolete and excess inventory                                         |  |                             | (40     | ) |                                                        |   | (46      | )
|Provision for warranty claims                                                       |  |                             | 2,329   |   |                                                        |   | 384      |  
|Accreted interest borrowings on senior notes                                        |  |                             | 2,918   |   |                                                        |   |         |  
|Stock compensation expense                                                          |  |                             | 386     |   |                                                        |   |         |  
|(Gain) loss on disposal of assets                                                   |  |                             | (7      | ) |                                                        |   | 1        |  
|Change in operating assets and liabilities:                                         |  |                             |         |   |                                                        |   |          |  
|Accounts receivable                                                                 |  |                             | (11,193 | ) |                                                        |   | 3,616    |  
|Inventories                                                                         |  |                             | (4,938  | ) |                                                        |   | 1,352    |  
|Prepaid expenses                                                                    |  |                             | 504     |   |                                                        |   | (37      | )
|Other assets                                                                        |  |                             | 29      |   |                                                        |   | (28      | )
|Accounts payable and accrued liabilities                                            |  |                             | (2,788  | ) |                                                        |   | 154      |  
|                                                                                    |  |                             |         |   |                                                        |   |          |  
|Net cash provided by operating activities                                           |  |                             | 27,171  |   |                                                        |   | 10,108   |  
|Cash flows from investing activities:                                               |  |                             |         |   |                                                        |   |          |  
|Acquisition of Norcraft Companies LLC, net of cash acquired of $1,327               |  |                             |        |   |                                                        |   | (316,334 | )
|Proceeds from sale of property and equipment                                        |  |                             | 77      |   |                                                        |   | 2        |  
|Purchase of property, plant and equipment                                           |  |                             | (7,036  | ) |                                                        |   | (1,690   | )
|Purchase of display cabinets                                                        |  |                             | (5,352  | ) |                                                        |   | (432     | )
|                                                                                    |  |                             |         |   |                                                        |   |          |  
|Net cash used in investing activities                                               |  |                             | (12,311 | ) |                                                        |   | (318,454 | )
|Cash flows from financing activities:                                               |  |                             |         |   |                                                        |   |          |  
|Borrowings on senior subordinated notes payable resulting from Norcraft acquisition |  |                             |        |   |                                                        |   | 150,000  |  
|Borrowings on bank term loan resulting from Norcraft acquisition                    |  |                             |        |   |                                                        |   | 45,000   |  
|Borrowings on bank revolving loan resulting from Norcraft acquisition               |  |                             |        |   |                                                        |   | 5,000    |  
|Issuance of successor company members equity                                       |  |                             |        |   |                                                        |   | 129,561  |  
|Borrowings on senior discount notes payable                                         |  |                             | 80,334  |   |                                                        |   |         |  
|Distribution to members                                                             |  |                             | (77,181 | ) |                                                        |   |         |  
|Payment of financing costs                                                          |  |                             | (3,728  | ) |                                                        |   | (11,900  | )
|Book overdrafts payable                                                             |  |                             |        |   |                                                        |   | (1,884   | )
|Payments on Bank Revolving Loan                                                     |  |                             | (8,500  | ) |                                                        |   | (5,000   | )
|Borrowings on Bank Revolving Loan                                                   |  |                             | 8,500   |   |                                                        |   |         |  
|Payments on term loan                                                               |  |                             | (14,500 | ) |                                                        |   |         |  
|Proceeds from issuance of member interests                                          |  |                             | 553     |   |                                                        |   | 97       |  
|Repurchase of members interests                                                     |  |                             | (535    | ) |                                                        |   |         |  
|Tax distributions to members                                                        |  |                             | (1,651  | ) |                                                        |   |         |  
|                                                                                    |  |                             |         |   |                                                        |   |          |  
|Net cash (used in) provided by financing activities                                 |  |                             | (16,708 | ) |                                                        |   | 310,874  |  
|Effect of exchange rates on cash                                                    |  |                             | 88      |   |                                                        |   | 55       |  
|Net (decrease) increase in cash                                                     |  |                             | (1,760  | ) |                                                        |   | 2,583    |  
|Cash, beginning of the period                                                       |  |                             | 2,583   |   |                                                        |   |         |  
|Cash, end of period                                                                 |  | $                           | 823     |   |                                                        | $ | 2,583    |  
|                                                                                    |  |                             |         |   |                                                        |   |          |  
|Supplemental disclosure of cash flow information:                                   |  |                             |         |   |                                                        |   |          |  
|Cash paid during the period for interest                                            |  | $                           | 19,235  |   |                                                        | $ | 1,052    |  
|                                                                                    |  |                             |         |   |                                                        |   |          |  
|Supplemental disclosure of non-cash transactions:                                   |  |                             |         |   |                                                        |   |          |  
|Members interest recorded for consideration other than cash                        |  | $                           | 3,055   |   |                                                        | $ |         |  
|                                                                                    |  |                             |         |   |                                                        |   |          |  





F-10



---

##### Table of Contents

Consolidated Statements of Cash Flows

(dollar amounts in thousands)



|                                                                                    |  |                             |         |   |                                                       |   |          |                                                      |  |   |                             |   |  |   |         |  
|----------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ----------------------------------------------------- | - | -------- | ---------------------------------------------------- |  | - | --------------------------- | - |  | - | ------- | -
|                                                                                    |  | Norcraft Companies, L.P.    |        
|                                                                                    |  | Successor                   |         |   | Predecessor                                           |  
|                                                                                    |  | Year EndedDecember 31, 2004 |         |   | For the PeriodOctober 21,2003 throughDecember 31,2003 |   |          | For the PeriodJanuary 1,2003 throughOctober 20, 2003 |  |   | Year EndedDecember 31, 2002 |  
|Cash flows from operating activities:                                               |  |                             |         |   |                                                       |   |          |                                                      |  |   |                             |   |  |   |         |  
|Net income                                                                          |  | $                           | 26,170  |   |                                                       | $ | 2,050    |                                                      |  | $ | 23,806                      |   |  | $ | 22,608  |  
|Adjustments to reconcile net income to net cash provided by operating activities:   |  |                             |         |   |                                                       |   |          |                                                      |  |   |                             |   |  |   |         |  
|Depreciation and amortization of property, plant and equipment                      |  |                             | 4,278   |   |                                                       |   | 637      |                                                      |  |   | 2,696                       |   |  |   | 2,897   |  
|Amortization:                                                                       |  |                             |         |   |                                                       |   |          |                                                      |  |   |                             |   |  |   |         |  
|Customer relationships                                                              |  |                             | 4,467   |   |                                                       |   | 869      |                                                      |  |   |                            |   |  |   |        |  
|Deferred financing costs                                                            |  |                             | 2,589   |   |                                                       |   | 391      |                                                      |  |   | 267                         |   |  |   | 301     |  
|Display cabinets                                                                    |  |                             | 3,179   |   |                                                       |   | 563      |                                                      |  |   | 2,101                       |   |  |   | 2,197   |  
|Provision for uncollectible accounts receivable                                     |  |                             | 2,206   |   |                                                       |   | 202      |                                                      |  |   | 2,040                       |   |  |   | 1,876   |  
|Provision for obsolete and excess inventory                                         |  |                             | (40     | ) |                                                       |   | (46      | )                                                    |  |   | 517                         |   |  |   | 1,937   |  
|Provision for warranty claims                                                       |  |                             | 2,329   |   |                                                       |   | 384      |                                                      |  |   | 1,687                       |   |  |   | 2,813   |  
|Stock compensation expense                                                          |  |                             | 386     |   |                                                       |   |         |                                                      |  |   |                            |   |  |   |        |  
|Loss on impairment of Yucca facility                                                |  |                             |        |   |                                                       |   |         |                                                      |  |   | 4,127                       |   |  |   |        |  
|(Gain) loss on disposal of assets                                                   |  |                             | (7      | ) |                                                       |   | 1        |                                                      |  |   | 108                         |   |  |   |        |  
|Change in operating assets and liabilities:                                         |  |                             |         |   |                                                       |   |          |                                                      |  |   |                             |   |  |   |         |  
|Accounts receivable                                                                 |  |                             | (11,193 | ) |                                                       |   | 3,616    |                                                      |  |   | (11,430                     | ) |  |   | (4,255  | )
|Inventories                                                                         |  |                             | (4,938  | ) |                                                       |   | 1,352    |                                                      |  |   | (3,467                      | ) |  |   | (1,163  | )
|Prepaid expenses                                                                    |  |                             | 504     |   |                                                       |   | (37      | )                                                    |  |   | 480                         |   |  |   | (605    | )
|Other assets                                                                        |  |                             | 29      |   |                                                       |   | (28      | )                                                    |  |   | 4                           |   |  |   | (59     | )
|Accounts payable and accrued liabilities                                            |  |                             | (2,788  | ) |                                                       |   | 154      |                                                      |  |   | 2,798                       |   |  |   | (786    | )
|                                                                                    |  |                             |         |   |                                                       |   |          |                                                      |  |   |                             |   |  |   |         |  
|Net cash provided by operating activities                                           |  |                             | 27,171  |   |                                                       |   | 10,108   |                                                      |  |   | 25,734                      |   |  |   | 27,761  |  
|                                                                                    |  |                             |         |  
|Cash flows from investing activities:                                               |  |                             |         |   |                                                       |   |          |                                                      |  |   |                             |   |  |   |         |  
|Acquisition of Norcraft Companies LLC, net of cash acquired of $1,327               |  |                             |        |   |                                                       |   | (316,334 | )                                                    |  |   |                            |   |  |   |        |  
|Acquisition of Starmark, Inc., net of cash acquired of $106                         |  |                             |        |   |                                                       |   |         |                                                      |  |   |                            |   |  |   | (15,655 | )
|Proceeds from sale of property and equipment                                        |  |                             | 77      |   |                                                       |   | 2        |                                                      |  |   | 212                         |   |  |   |        |  
|Purchase of property, plant and equipment                                           |  |                             | (7,036  | ) |                                                       |   | (1,690   | )                                                    |  |   | (1,428                      | ) |  |   | (1,772  | )
|Purchase of Yucca capital lease                                                     |  |                             |        |   |                                                       |   |         |                                                      |  |   | (5,000                      | ) |  |   |        |  
|Purchase of display cabinets                                                        |  |                             | (5,352  | ) |                                                       |   | (432     | )                                                    |  |   | (2,300                      | ) |  |   | (2,349  | )
|                                                                                    |  |                             |         |   |                                                       |   |          |                                                      |  |   |                             |   |  |   |         |  
|Net cash used in investing activities                                               |  |                             | (12,311 | ) |                                                       |   | (318,454 | )                                                    |  |   | (8,516                      | ) |  |   | (19,776 | )
|                                                                                    |  |                             |         |  
|Cash flows from financing activities:                                               |  |                             |         |   |                                                       |   |          |                                                      |  |   |                             |   |  |   |         |  
|Borrowings on senior subordinated notes payable resulting from Norcraft acquisition |  |                             |        |   |                                                       |   | 150,000  |                                                      |  |   |                            |   |  |   |        |  
|Borrowings on bank term loan resulting from Norcraft acquisition                    |  |                             |        |   |                                                       |   | 45,000   |                                                      |  |   |                            |   |  |   |        |  
|Borrowings on bank revolving loan resulting from Norcraft acquisition               |  |                             |        |   |                                                       |   | 5,000    |                                                      |  |   |                            |   |  |   |        |  
|Issuance of successor company members equity                                       |  |                             |        |   |                                                       |   | 129,561  |                                                      |  |   |                             |   |  |   |        |  
|Borrowings on senior discount notes payable                                         |  |                             |        |   |                                                       |   |         |                                                      |  |   |                            |   |  |   |        |  
|Distribution to Holdings                                                            |  |                             | (379    | ) |                                                       |   |         |                                                      |  |   |                            |   |  |   |        |  
|Payment of financing costs                                                          |  |                             | (196    | ) |                                                       |   | (11,900  | )                                                    |  |   |                            |   |  |   |        |  
|Book overdrafts payable                                                             |  |                             |        |   |                                                       |   | (1,884   | )                                                    |  |   | 489                         |   |  |   | (71     | )
|Payments on Bank Revolving Loan                                                     |  |                             | (8,500  | ) |                                                       |   | (5,000   | )                                                    |  |   | (48,990                     | ) |  |   | (58,179 | )
|Borrowings on Bank Revolving Loan                                                   |  |                             | 8,500   |   |                                                       |   |         |                                                      |  |   | 49,712                      |   |  |   | 60,288  |  
|Payments on term loan                                                               |  |                             | (14,500 | ) |                                                       |   |         |                                                      |  |   | (9,421                      | ) |  |   | (7,948  | )
|Payments on capital lease                                                           |  |                             |        |   |                                                       |   |         |                                                      |  |   | (7                          | ) |  |   | (9      | )
|Proceeds from issuance of member interests                                          |  |                             | 553     |   |                                                       |   | 97       |                                                      |  |   |                            |   |  |   | 693     |  
|Repurchase of members interests                                                     |  |                             | (535    | ) |                                                       |   |         |                                                      |  |   |                            |   |  |   |        |  
|Tax distributions to members                                                        |  |                             | (1,651  | ) |                                                       |   |         |                                                      |  |   | (8,973                      | ) |  |   | (2,713  | )
|                                                                                    |  |                             |         |   |                                                       |   |          |                                                      |  |   |                             |   |  |   |         |  
|Net cash (used in) provided by financing activities                                 |  |                             | (16,708 | ) |                                                       |   | 310,874  |                                                      |  |   | (17,190                     | ) |  |   | (7,939  | )
|                                                                                    |  |                             |         |  
|Effect of exchange rates on cash                                                    |  |                             | 88      |   |                                                       |   | 55       |                                                      |  |   |                            |   |  |   |        |  
|                                                                                    |  |                             |         |   |                                                       |   |          |                                                      |  |   |                             |   |  |   |         |  
|Net (decrease) increase in cash                                                     |  |                             | (1,760  | ) |                                                       |   | 2,583    |                                                      |  |   | 28                          |   |  |   | 46      |  
|                                                                                    |  |                             |         |  
|Cash, beginning of the period                                                       |  |                             | 2,583   |   |                                                       |   |         |                                                      |  |   | 59                          |   |  |   | 13      |  
|                                                                                    |  |                             |         |   |                                                       |   |          |                                                      |  |   |                             |   |  |   |         |  
|Cash, end of period                                                                 |  | $                           | 823     |   |                                                       | $ | 2,583    |                                                      |  | $ | 87                          |   |  |   | 59      |  
|                                                                                    |  |                             |         |   |                                                       |   |          |                                                      |  |   |                             |   |  |   |         |  
|Supplemental disclosure of cash flow information:                                   |  |                             |         |   |                                                       |   |          |                                                      |  |   |                             |   |  |   |         |  
|Cash paid during the period for interest                                            |  | $                           | 19,235  |   |                                                       | $ | 1,052    |                                                      |  | $ | 1,349                       |   |  | $ | 2,667   |  
|                                                                                    |  |                             |         |   |                                                       |   |          |                                                      |  |   |                             |   |  |   |         |  
|Supplemental disclosure of non-cash transactions:                                   |  |                             |         |   |                                                       |   |          |                                                      |  |   |                             |   |  |   |         |  
|Tax distributions declared but not paid                                             |  | $                           |        |   |                                                       | $ |         |                                                      |  | $ |                            |   |  | $ | 3,176   |  
|                                                                                    |  |                             |         |   |                                                       |   |          |                                                      |  |   |                             |   |  |   |         |  
|Members interest recorded for consideration other than cash                        |  | $                           | 3,055   |   |                                                       | $ |         |                                                      |  | $ |                            |   |  | $ |        |  
|                                                                                    |  |                             |         |   |                                                       |   |          |                                                      |  |   |                             |   |  |   |         |  



F-11



---

##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



|1. | Basis of presentation and Change in Reporting Entity
|-- | ----------------------------------------------------



As more fully discussed in Note 19, Norcraft Holdings, L.P. restated its December 31, 2004 and 2003 consolidated balance sheets and statements of
members equity and comprehensive income for the year ended December 31, 2004 and for the period from October 21, 2003 through December 31, 2003 included in the accompanying consolidated audited financial statements to correct a classification
error related to outstanding limited partnership units held by certain members of management.



Norcraft Holdings L.L.C. was formed on August 21, 2003 as a Delaware corporation to acquire all the outstanding membership units of Norcraft Companies LLC (Predecessor). On October 10, 2003, Norcraft
Holdings L.L.C. converted to a Delaware Limited Partnership and is now Norcraft Holdings L.P. (Holdings). Holdings had no activity prior to its acquisition of Norcraft Companies LLC on October 21, 2003. Concurrent with the acquisition,
Norcraft Companies LLC converted to a Delaware Limited Partnership and is now Norcraft Companies, L.P. Norcraft Companies, L.P. (Norcraft,), a separate public reporting company, is a 100% owned subsidiary of Holdings. Holdings and
Norcraft are also collectively referred to as the Company.



The consolidated financial statements of Holdings include the accounts of its 100% owned subsidiary, Norcraft. In August 2004, Holdings and Norcraft Capital Corp., Holdings wholly owned subsidiary, issued $118.0 million of 93⁄4%
senior discount notes generating gross proceeds of $80.3 million. Holdings and Norcraft Capital Corp. are the sole obligors of these notes. The net proceeds of this offering were used to make a distribution to Holdings limited partners. Other
than this debt obligation, related deferred issuance costs, and related interest and amortization expense, all other assets, liabilities, income, expenses and cash flows of Holdings presented for all periods represent those of its wholly owned
subsidiary Norcraft.



The predecessor financial statements
have been presented at their historical cost basis. The successor financial statements have been prepared giving effect to the purchase transaction, including capitalization of the Company in accordance with EITF 88-16, Basis in Leverage Buyout
Transactions, as a partial purchase.



Norcraft GP,
L.L.C.(Norcraft GP), a Delaware limited liability company, is the general partner of Holdings and Norcraft. Norcraft GP does not hold any equity interest in Holdings or Norcraft, but as a general partner of each entity, it controls both
entities. The members of Norcraft GP are SKM Norcraft Corp., Trimaran Cabinet Corp. and Buller Norcraft Holdings, L.L.C. Norcraft GP has not been capitalized and has no assets or liabilities as of December 31, 2004 or 2003. Furthermore, Norcraft GP
has no commitment to fund cash flow deficits or furnish direct or indirect financial assistance to the Company.



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



|2. | Nature of Company
|-- | -----------------



The Company is a manufacturer and national distributor of kitchen and bathroom cabinetry to dealers, wholetailers, who sell to end users in the repair and
remodeling and new home construction markets, contractors, builders and home centers. Manufacturing is conducted from owned premises located in Kansas, Minnesota, North Carolina, South Dakota, Virginia and Winnipeg, Canada.



|3. | Significant Accounting Policies
|-- | -------------------------------



Cash and Cash Equivalents



For purposes of reporting cash and cash equivalents, the Company considers all highly liquid investments having original maturities of three months or
less to be cash equivalents.



Accounts Receivable and
Concentrations of Credit Risk



The Companys
customers operate in the repair and remodeling and new home construction markets and, accordingly, their credit worthiness is affected by cyclical trends and general conditions in those markets. Concentrations of credit risk with respect to trade
receivables are limited to some extent by its large number of customers and their geographic dispersion. In 2002, 2003, and 2004, no one customer accounted for more than 7% of net sales. The Company generally does not require collateral from its
customers, but does maintain allowances



F-12



---

##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



for the estimated uncollectibility of accounts receivable based on historical experience and
specifically identified at-risk accounts. The adequacy of the allowance is evaluated on an ongoing, periodic basis and adjustments are made in the period in which a change in condition occurs.



Inventories



The Company states inventory at the lower of cost or market using the
first-in, first-out (FIFO) method. The Company maintains allowances for estimated obsolete or excess inventories. These reserves are based on historical experience, market conditions and other assumptions and judgment by management. Estimated costs
to be incurred for such obsolete or excess inventory are recorded in the periods in which those conditions arise.



Property, Plant and Equipment



Property, plant and equipment are recorded at cost. Depreciation and amortization is computed using the straight-line method over the estimated useful
lives: buildings and leasehold improvements  20 years or the life of the underlying lease, factory equipment  7 years, vehicles  5 years, office and data processing equipment  3 to 5 years.



Display Cabinets



The cost of cabinetry displays are capitalized when provided to the
Companys dealers and are amortized over 36 months, which represents the period they are expected to be on display for customer viewing.



Goodwill



Prior to 2002, goodwill, representing the excess of purchase price over the fair value of net assets acquired, was being amortized on a straight-line
basis over fifteen years. On January 1, 2002, the Predecessor adopted Statement of Financial Accounting Standard No. 142, Goodwill and Other Intangible Assets (SFAS No. 142). Goodwill and intangible assets with indefinite lives are no
longer amortized. SFAS No. 142 requires these assets carrying values be assessed annually, or when events or changes in circumstances indicate a potential impairment in relation to estimated fair market values. There have been no impairment
charges in 2004. The Predecessor had no such impairment in 2003 or 2002.



Intangible Assets



Identifiable intangible assets consist of customer relationships and brand names. The customer relationship intangible asset is considered a definite lived intangible asset in accordance with SFAS 142 and is being amortized using the
straight-line method over its estimated useful life of 15 years. Brand names, consisting of Mid Continent®, UltraCraft®, StarMark®and Fieldstone®are considered indefinite lived intangible assets under SFAS 142. Indefinite lived intangible assets are not amortized. Instead, the Company makes annual assessments, or as events or circumstances
indicate that the asset might be impaired, separately from goodwill to evaluate realizability of carrying values. The fair value of the indefinite-lived assets is determined for the annual impairment testing using the Royalty Savings Method, which
is a variation of the income approach.



Amortization expense
related to customer relationships for the year ended December 31, 2004 and for the period from October 21, 2003 to December 31, 2003 of $4.5 million and $0.9 million, respectively, is included in selling, general, and administrative expenses in the
consolidated statement of income for the period. Annual amortization expense for each of the next five years is expected to be $4.5 million per year.



It is the Companys policy to value intangible assets at the lower of unamortized cost or fair value. Management reviews the valuation and
amortization of intangible assets on a periodic basis, taking into consideration any events or circumstances that might result in diminished fair value. The Company periodically reviews the estimated useful lives of its identifiable intangible
assets, taking into consideration any events or circumstances which might result in a diminished fair value or revised useful life.



F-13



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##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



Impairment of Long-lived Assets



The Company assesses the recoverability of long-lived assets periodically to
determine if facts or changes in circumstances indicate that expected future undiscounted cash flows might not be sufficient to support the carrying value of an asset. Recoverability of assets to be held and used is measured by a comparison of the
carrying value of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds fair
value of the assets.



Deferred Financing Costs



Issuance costs are deferred and amortized to deferred
financing expense using the interest method over the terms of the related debt. Holdings amortization of such costs for fiscal year 2004, the period from October 21, 2003 through December 31, 2003, the period from January 1, 2003 through
October 20, 2003, and for fiscal year 2002 totaled approximately $2.7 million, $0.4 million, $0.3 million, and $0.3 million, respectively.



Norcrafts amortization of such costs for fiscal year 2004, the period from October 21, 2003 through December 31, 2003, the period from January 1,
2003 through October 20, 2003, and for fiscal year 2002 totaled approximately $2.6 million, $0.4 million, $0.3 million, and $0.3 million, respectively.



Future estimated aggregate amortization expense at December 31, 2004 is as follows:



|                         |  |                        |       |                         |   |      
|------------------------ |  | ---------------------- | ----- | ----------------------- | - | -----
|Year Ending December 31, |  | NorcraftHoldings, L.P. |       | NorcraftCompanies, L.P.
|2005                     |  | $                      | 2,633 |                         | $ | 2,278
|2006                     |  |                        | 2,396 |                         |   | 2,006
|2007                     |  |                        | 2,103 |                         |   | 1,674
|2008                     |  |                        | 1,678 |                         |   | 1,209
|2009                     |  |                        | 1,172 |                         |   | 694  



Foreign Currency
Translation/Transactions



The financial statements of
the Companys Canadian subsidiary are translated into U.S. dollars for consolidation. All assets and liabilities are translated using period-end exchange rates and statement of operations items are translated using average exchange rates for
the period. The resulting translation adjustments are recorded as a separate component of members equity. Also recorded as translation adjustments in members equity are transaction gains and losses on intercompany balances for which
settlement is not planned or anticipated in the foreseeable future. Other foreign currency transaction gains and losses are included in determining net income, but have not been material in any of the periods presented.



Segment Information



The Company has one operating segment, consisting of the following
divisions: Mid Continent, Ultra Craft and StarMark as well as its subsidiary, Norcraft Canada Corporation. As all three divisions have similar products, production processes, types of customers, distribution methods and economic characteristics and
operate in identical positions with regards to regulatory requirements, the Company has deemed it appropriate to aggregate these operating divisions into one reportable segment.



The single reportable segment operates in the manufacturing, assembling and finishing of kitchen and bathroom cabinetry in
the United States and Canada. The Company sells its products primarily to kitchen and bath cabinetry dealers as well as to wholesale retailers, or wholetailers, who in turn sell to end users in the repair and remodeling and new home construction
markets. The Company also sells directly to home builders. The Company has national distribution capabilities for all of its brands through six manufacturing facilities, four service and distribution centers, one warehouse, and five retail
locations.



F-14



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##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



The Companys product offering includes stock, semi-custom and custom cabinets. No single
customer accounted for 10 percent or more of net sales.



The
following table summarizes the net sales for each of the Companys divisions and subsidiaries:



|                                                  |  |                            |         |   |                                                           |   |        |                                                         |  |   |                            |   |  |   |         |  
|------------------------------------------------- |  | -------------------------- | ------- | - | --------------------------------------------------------- | - | ------ | ------------------------------------------------------- |  | - | -------------------------- | - |  | - | ------- | -
|                                                  |  | Successor                  |         |   | Predecessor                                               |  
|                                                  |  | Year EndedDecember 31,2004 |         |   | For the Period October 21, 2003 through December 31, 2003 |   |        | For the Period January 1, 2003 through October 20, 2003 |  |   | Year EndedDecember 31,2002 |  
|Mid Continent cabinetry                           |  | $                          | 210,474 |   |                                                           | $ | 34,173 |                                                         |  | $ | 128,864                    |   |  | $ | 129,267 |  
|UltraCraft cabinetry                              |  |                            | 54,718  |   |                                                           |   | 8,121  |                                                         |  |   | 33,172                     |   |  |   | 31,004  |  
|StarMark cabinetry                                |  |                            | 68,528  |   |                                                           |   | 11,071 |                                                         |  |   | 45,797                     |   |  |   | 47,181  |  
|Norcraft Canada                                   |  |                            | 6,114   |   |                                                           |   | 59     |                                                         |  |   |                           |   |  |   |        |  
|Elimination of inter-divisional and inter-company |  |                            | (9,559  | ) |                                                           |   | (647   | )                                                       |  |   | (3,934                     | ) |  |   | (3,592  | )
|                                                  |  |                            |         |   |                                                           |   |        |                                                         |  |   |                            |   |  |   |         |  
|                                                  |  | $                          | 330,275 |   |                                                           | $ | 52,777 |                                                         |  | $ | 203,899                    |   |  | $ | 203,860 |  
|                                                  |  |                            |         |   |                                                           |   |        |                                                         |  |   |                            |   |  |   |         |  



Revenue
Recognition



Revenue is recognized upon delivery of
product, which represents the point at which ownership transfers to the customer.



Shipping and Handling Costs



The Company classifies freight chargeback billings to customers as a component of net sales in the statement of income and the related cost is included as a component of cost of sales.



Advertising



The Company expenses all advertising costs as incurred. Advertising expense
was $0.6 million for the year ended December 31, 2004, $0 for the period October 21, 2003 through December 31, 2003, $0.3 million for the period January 1, 2003 through October 21, 2003 and $0.3 million for the year ended December 31, 2002.



Volume-Based Incentives



These incentives typically involve rebates or refunds of a specified amount
of cash consideration that are redeemable only if the customer completes a specified cumulative level of sales transactions. Under incentive programs of this nature, the Company estimates the anticipated rebate to be paid and allocates a portion of
the estimated cost of the rebate to each underlying sales transaction with the customer. The estimated rebates are recorded as a reduction of revenue in the period of sale based on historical redemption rates.



Marketing Programs



Under these arrangements the Company agrees to reimburse certain of its
customers for a portion of the costs incurred by the customer to advertise and promote certain of the Companys products. The Company recognizes the cost of cooperative advertising programs in the period in which the advertising and promotional
activity takes place. The actual costs of these programs are included in selling, general and administrative expenses in the statement of income.



F-15



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##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



Product Warranties



The Company provides warranties for its products ranging from three years up to the life of the product. Estimated costs to
be incurred for such warranties are provided for in the period of sale based on historical claim rates.



Income Taxes



The Company is a limited partnership, whereby the Companys income is allocated to its limited partners for inclusion in their respective tax
returns. Accordingly, no liability or provision for Federal income taxes and deferred income taxes attributable to the Companys operations are included in the accompanying financial statements. However, the Company is subject to various state
and local taxes.



Stock-Based Compensation



The Company accounts for stock-based compensation using the
fair value method prescribed in Statement of Financial Accounting Standards No. 123, Accounting for Stock based Compensation. Compensation for stock awards, if any, is measured at the fair value of the award less any consideration
received in exchange for the award.



Use of
Estimates



The preparation of financial statements in
conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the
financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.



|4. | Acquisition
|-- | -----------



On October 21, 2003, Holdings acquired all issued and outstanding membership units of Norcraft Companies LLC The total purchase price was $335.0 million
including related acquisition costs of $15.5 million. The acquisition was funded through $150.0 million in senior subordinated notes, $50.0 million from a senior credit facility and $135.0 million in equity investor cash, in-kind contributions and
rollover of management equity.



The total purchase
consideration has been allocated to the assets acquired and liabilities assumed, including identifiable intangible assets based on their respective fair values at the date of acquisition as determined by an independent valuation obtained by the
Company. The purchase allocation resulted in goodwill of $148.5 million. Goodwill was assigned at the reporting level and is deductible for income tax purposes.



The consolidated financial statements have been prepared giving effect to the purchase transaction in accordance with
Statement of Financial Accounting Standards No. 141, Business Combinations, in accordance with EITF 88-16, Basis in Leveraged Buyout Transactions, as a partial purchase. Under EITF 88-16, 2.3% of the transaction is accounted for at the
continuing members carryover basis resulting in a decrease in net assets acquired of $5.4 million.



The following table summarizes the purchase allocation based upon the estimated fair values of the assets acquired and liabilities assumed:



|                                                            |  |   |        |  |   |        
|----------------------------------------------------------- |  | - | ------ |  | - | -------
|Cash                                                        |  |   |        |  | $ | 1,327  
|Accounts receivable                                         |  |   |        |  |   | 27,881 
|Inventories                                                 |  |   |        |  |   | 18,254 
|Prepaid expenses and other current assets                   |  |   |        |  |   | 1,962  
|Property, plant and equipment                               |  |   |        |  |   | 31,119 
|Other assets                                                |  |   |        |  |   | 15,985 
|Identifiable intangible assets subject to amortization:     |  |   |        |  |   |        
|Customer relationships, 15 year life                        |  | $ | 67,000 |  |   |        
|Identifiable intangible assets not subject to amortization: |  |   |        |  |   |        
|Brand names                                                 |  |   | 49,000 |  |   |        
|                                                            |  |   |        |  |   |        
|Total identifiable intangible assets                        |  |   |        |  |   | 116,000
|Goodwill                                                    |  |   |        |  |   | 148,459
|                                                            |  |   |        |  |   |        
|Total assets acquired                                       |  |   |        |  |   | 360,987
|                                                            |  |   |        |  |   |        
|Accounts payable                                            |  |   |        |  |   | 7,700  
|Accrued other expenses                                      |  |   |        |  |   | 23,726 
|                                                            |  |   |        |  |   |        
|Total liabilities assumed                                   |  |   |        |  |   | 31,426 
|                                                            |  |   |        |  |   |        
|Net assets acquired                                         |  |   |        |  | $ | 329,561
|                                                            |  |   |        |  |   |        



F-16



---

##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



On March 25, 2002, the Predecessor Company acquired substantially all of the assets and assumed
certain liabilities of StarMark, Inc., SMI Retail Corp., and SMI Transportation Inc. (collectively referred to as StarMark) for cash consideration of approximately $14.8 million, exclusive of acquisition costs of approximately $0.9
million. The acquisition was funded through the Heller Financial revolving loan (Note 8). StarMark is a semi-custom manufacturer and national distributor of framed cabinetry. The acquisition was accounted for as a purchase and the accompanying
financial statements include the results of StarMarks operations since the acquisition date. The following table summarizes the purchase allocation based upon estimated fair values of the assets acquired and liabilities assumed:



|                              |  |      |        |  
|----------------------------- |  | ---- | ------ | -
|                              |  | 2002 |       
|Current assets                |  | $    | 11,198 |  
|Property, plant and equipment |  |      | 8,644  |  
|Capitalized displays          |  |      | 1,989  |  
|Deferred financing costs      |  |      | 401    |  
|                              |  |      |        |  
|Total assets acquired         |  |      | 22,232 |  
|Current liabilities           |  |      | (6,471 | )
|                              |  |      |        |  
|Net assets acquired           |  | $    | 15,761 |  
|                              |  |      |        |  



Concurrent with the
acquisition of StarMark, the Predecessor Company implemented plans to exit certain StarMark operations, including StarMarks Kitchen and Bath Ideas Virginia retail store. Exit costs included approximately $1.1 million for closing and severance
costs related to these planned activities. Net income for the period January 1, 2003 through October 20, 2003 and the year ended December 31, 2002 includes $0.1 million and $0.2 million of net losses generated from the Virginia retail store,
respectively. These losses include $0.02 million and $0.04 million of depreciation expense, respectively.



The following unaudited pro forma information presents the results of operations for the two years ended December 31, 2003 and assumes that the Norcraft
and StarMark acquisitions referred to above occurred on January 1, 2002 and January 1, 2001, respectively. The unaudited pro forma results below are based on historical results of operations, include adjustments for depreciation, amortization and
interest expense associated with the acquisitions and do not necessarily reflect actual results that would have occurred:



|                     |  |      |         |      |   |        
|-------------------- |  | ---- | ------- | ---- | - | -------
|                     |  | 2003 |         | 2002
|Pro forma net sales  |  | $    | 256,676 |      | $ | 214,518
|Pro forma net income |  |      | 8,892   |      |   | 1,945  



The pro forma amounts
reflected above include one-time charges for incentive compensation associated with the sale of Norcraft Companies LLC of $2.1 million, the Yucca distribution center lease termination impairment charge of $4.1 million that was terminated in
contemplation of the Acquisition and $0.4 million of acquisition cost paid by the Predecessor.



F-17



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##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



|5. | Trade Accounts Receivable
|-- | -------------------------



Trade accounts receivable consists of the following:



|                                           |  |      |        |   |      |   |        |  
|------------------------------------------ |  | ---- | ------ | - | ---- | - | ------ | -
|                                           |  | 2004 |        |   | 2003 |  
|Trade accounts receivable, gross           |  | $    | 34,306 |   |      | $ | 25,924 |  
|Less: Allowance for uncollectible accounts |  |      | (1,250 | ) |      |   | (1,861 | )
|                                           |  |      |        |   |      |   |        |  
|Trade accounts receivable, net             |  | $    | 33,056 |   |      | $ | 24,063 |  
|                                           |  |      |        |   |      |   |        |  



|6. | Inventories
|-- | -----------



Inventories consist of the following:



|                           |  |      |        |   |      |   |        |  
|-------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                           |  | 2004 |        |   | 2003 |  
|Raw materials and supplies |  | $    | 12,289 |   |      | $ | 11,689 |  
|Work in process            |  |      | 6,060  |   |      |   | 3,784  |  
|Finished goods             |  |      | 5,134  |   |      |   | 3,510  |  
|                           |  |      |        |   |      |   |        |  
|                           |  |      | 23,483 |   |      |   | 18,983 |  
|Allowance for obsolescence |  |      | (1,597 | ) |      |   | (2,035 | )
|                           |  |      |        |   |      |   |        |  
|                           |  | $    | 21,886 |   |      | $ | 16,948 |  
|                           |  |      |        |   |      |   |        |  



Supplier
Concentration



The Company purchased approximately
17.8% of its raw materials during 2004 from its largest supplier, to take advantage of a favorable pricing relationship with that entity.



|7. | Property, Plant and Equipment
|-- | -----------------------------



Property, plant and equipment consists of the following:



|                                     |  |      |        |   |      |   |        |  
|------------------------------------ |  | ---- | ------ | - | ---- | - | ------ | -
|                                     |  | 2004 |        |   | 2003 |  
|Land                                 |  | $    | 2,357  |   |      | $ | 2,362  |  
|Buildings and improvements           |  |      | 19,302 |   |      |   | 17,327 |  
|Factory equipment                    |  |      | 13,942 |   |      |   | 9,756  |  
|Vehicles                             |  |      | 93     |   |      |   | 90     |  
|Office and data processing equipment |  |      | 3,069  |   |      |   | 2,318  |  
|Construction in progress             |  |      | 1,095  |   |      |   | 952    |  
|                                     |  |      |        |   |      |   |        |  
|                                     |  |      | 39,858 |   |      |   | 32,805 |  
|Less: accumulated depreciation       |  |      | (4,899 | ) |      |   | (637   | )
|                                     |  |      |        |   |      |   |        |  
|                                     |  | $    | 34,959 |   |      | $ | 32,168 |  
|                                     |  |      |        |   |      |   |        |  



|8. | Accrued expenses
|-- | ----------------



Accrued expenses consist of the following:



|                                            |  |      |        |      |   |       
|------------------------------------------- |  | ---- | ------ | ---- | - | ------
|                                            |  | 2004 |        | 2003
|Salaries, wages and employee benefits       |  | $    | 9,957  |      | $ | 14,394
|Commissions, rebates and marketing programs |  |      | 4,111  |      |   | 3,188 
|Interest                                    |  |      | 2,343  |      |   | 2,763 
|Other                                       |  |      | 3,477  |      |   | 3,030 
|                                            |  |      |        |      |   |       
|                                            |  | $    | 19,888 |      | $ | 23,375
|                                            |  |      |        |      |   |       



F-18



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##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



|9. | Product Warranties
|-- | ------------------



Liabilities for product warranties as of December 31, 2004, 2003, and October 20, 2003:



|                                   |  |               |        |   |                                                                     |   |      |                                                                     |  |   |        |  
|---------------------------------- |  | ------------- | ------ | - | ------------------------------------------------------------------- | - | ---- | ------------------------------------------------------------------- |  | - | ------ | -
|                                   |  | Successor2004 |        |   | Successor For the Period October 21, 2003 through December 31, 2003 |   |      | Predecessor For the Period January 1, 2003 through October 20, 2003 | 
|Beginning balance                  |  | $             | 372    |   |                                                                     | $ | 408  |                                                                     |  | $ | 386    |  
|Accruals for warrantiescurrent    |  |               | 2,329  |   |                                                                     |   | 384  |                                                                     |  |   | 1,687  |  
|Settlements made during the period |  |               | (2,181 | ) |                                                                     |   | (420 | )                                                                   |  |   | (1,665 | )
|                                   |  |               |        |   |                                                                     |   |      |                                                                     |  |   |        |  
|Ending balance                     |  | $             | 520    |   |                                                                     | $ | 372  |                                                                     |  | $ | 408    |  
|                                   |  |               |        |   |                                                                     |   |      |                                                                     |  |   |        |  



|10. | Long-term debt
|--- | --------------



Long-term debt consists of the following:



|                                                                                                                                                                                                                                                 |  |                         |         |      |                          |         |      |  |      |         |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------- | ------- | ---- | ------------------------ | ------- | ---- |  | ---- | ------- |  | - | ------- | -
|                                                                                                                                                                                                                                                 |  | Norcraft Holdings, L.P. |         |      | Norcraft Companies, L.P. |        
|                                                                                                                                                                                                                                                 |  | 2004                    |         | 2003 |                          |         | 2004 |  | 2003 |        
|Senior subordinated notes payable (due in 2011 with semi-annual interest payments at 9%)                                                                                                                                                         |  | $                       | 150,000 |      | $                        | 150,000 |      |  | $    | 150,000 |  | $ | 150,000 |  
|Senior discount notes payable (due in 2012 with interest payments accreting at 9.75%)                                                                                                                                                            |  |                         | 83,252  |      |                          |        |      |  |      |        |  |   |        |  
|Term note payable to the agent bank, UBS (interest at the LIBOR plus 3.00% and 3.25% at December 31, 2004 and 2003, respectively, due in
ascending quarterly installments with final payment of the outstanding balance due on October 20, 2010) |  |                         | 30,500  |      |                          | 45,000  |      |  |      | 30,500  |  |   | 45,000  |  
|Total debt                                                                                                                                                                                                                                       |  |                         | 263,752 |      |                          | 195,000 |      |  |      | 180,500 |  |   | 195,000 |  
|Less - current portion                                                                                                                                                                                                                           |  |                         |        |      |                          | (5,000  | )    |  |      |        |  |   | (5,000  | )
|                                                                                                                                                                                                                                                 |  |                         |         |      |                          |         |      |  |      |         |  |   |         |  
|Long-term debt                                                                                                                                                                                                                                   |  | $                       | 263,752 |      | $                        | 190,000 |      |  | $    | 180,500 |  | $ | 190,000 |  
|                                                                                                                                                                                                                                                 |  |                         |         |      |                          |         |      |  |      |         |  |   |         |  



Future maturities of
long-term debt at December 31, 2004 are as follows:



|                         |  |                        |         |                         |   |        
|------------------------ |  | ---------------------- | ------- | ----------------------- | - | -------
|Year Ending December 31, |  | NorcraftHoldings, L.P. |         | NorcraftCompanies, L.P.
|2005                     |  | $                      |        |                         | $ |       
|2006                     |  |                        | 6,536   |                         |   | 6,536  
|2007                     |  |                        | 6,536   |                         |   | 6,536  
|2008                     |  |                        | 8,714   |                         |   | 8,714  
|2009                     |  |                        | 8,714   |                         |   | 8,714  
|Thereafter               |  |                        | 233,252 |                         |   | 150,000
|                         |  |                        |         |                         |   |        
|                         |  | $                      | 263,752 |                         | $ | 180,500
|                         |  |                        |         |                         |   |        



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)



F-19



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##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



of 93/4% Senior Discount Notes due 2012 (the Senior 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 accrues on the Senior Notes in the form of an increase in the accreted value of the note prior to September 1, 2008. Thereafter, cash interest on the Senior Notes will accrue and be payable
semiannually in arrears on March 1 and September 1 of each year, commencing March 1, 2009 at a rate of 93/4% per
annum. Holdings has no independent operating assets or liabilities other than its investment in Norcraft.



At any time on or after September 1, 2008, Holdings may redeem the Senior 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. At any time on or prior to September 1, 2007, Holdings may redeem up to 35% of the aggregate accreted value of the Senior Notes with the proceeds of qualified
equity offerings at a redemption price equal to 109.75% of the accreted value.



If Holdings experiences a change in control prior to September 1, 2008, it may redeem all, but not less than all, of the Senior Notes at a purchase price equal to 100% of the accreted value plus a make-whole premium
as defined.



If Holdings experiences a change in control prior
to September 1, 2008, it may be required to offer to purchase the Senior 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 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 December 31, 2004, Holdings was in compliance with all
such provisions.



Senior Subordinated Notes



On October 21, 2003, concurrent with the Acquisition, an offering of $150
million, 9% senior subordinated notes (the Senior Subordinated Notes) due in 2011 was completed by Norcraft Companies, L.P. and Norcraft Finance Corporation, co-issuers. Interest payments are required semiannually on May 1 and November
1, and began on May 1, 2004. The Senior Subordinated Notes are subordinated to all existing and future senior debt, including indebtedness under the senior credit facility.



Subsequent to November 1, 2007, the Company has the option to redeem the notes, in whole or part, at a redemption price
equal to 100% of the principal amount plus a premium declining ratably to par, plus accrued and unpaid interest. At any time prior to November 1, 2006, the Company may redeem up to 35% of the aggregate principal amount of the notes with the proceeds
of qualified equity offerings at a redemption price equal to 109% of the principal amount, plus accrued and unpaid interest.



If the Company experiences a change of control prior to November 1, 2007, they may redeem all, but not less than all, of the Senior Subordinated Notes at
a redemption price equal to 100% of the principal amount plus a make-whole premium as defined.



If the Company experiences a change of control subsequent to November 1, 2007, it may be required to offer to purchase the Senior Subordinated Notes at a
purchase price equal to 101% of the principal amount, plus accrued and unpaid interest.



Additionally, the terms of the indenture governing the Senior Subordinated Notes limit the Companys 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.



The following represents certain stand-alone information as of December 31, 2004 and 2003 and for the year ended December 31, 2004 and for the period
from October 21, 2003 through December 31, 2003 for the issuers and for Norcraft Canada Corporation, a wholly-owned subsidiary of Norcraft Companies, L.P., which fully and unconditionally guarantees the senior subordinated notes.



F-20



---

##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



CONDENSED CONSOLIDATING BALANCE SHEETS

As of December 31, 2004



|                                      |  |                          |         |                            |   |                |  |              |       |  |       |        |   |  |   |        
|------------------------------------- |  | ------------------------ | ------- | -------------------------- | - | -------------- |  | ------------ | ----- |  | ----- | ------ | - |  | - | -------
|                                      |  | (1) NorcraftCompanies LP |         | (1) Norcraft Finance Corp. |   | NorcraftCanada |  | Eliminations |       |  | Total
|Current assets                        |  | $                        | 56,156  |                            | $ |               |  | $            | 1,106 |  | $     |       |   |  | $ | 57,262 
|Property, plant and equipment         |  |                          | 30,829  |                            |   |               |  |              | 4,130 |  |       |        |   |  |   | 34,959 
|Investments in Norcraft Canada        |  |                          | 2,016   |                            |   |               |  |              |      |  |       | (2,016 | ) |  |   |       
|Other assets                          |  |                          | 277,259 |                            |   |               |  |              | 213   |  |       | (3,108 | ) |  |   | 274,364
|                                      |  |                          |         |                            |   |                |  |              |       |  |       |        |   |  |   |        
|Total assets                          |  | $                        | 366,260 |                            | $ |               |  | $            | 5,449 |  | $     | (5,124 | ) |  | $ | 366,585
|                                      |  |                          |         |                            |   |                |  |              |       |  |       |        |   |  |   |        
|Current liabilities                   |  | $                        | 26,862  |                            | $ |               |  | $            | 325   |  |       |        |   |  | $ | 27,187 
|Current portion of long-term debt     |  |                          |        |                            |   |               |  |              |      |  | $     |       |   |  |   |       
|Long-term debt                        |  |                          | 180,500 |                            |   |               |  |              | 3,108 |  |       | (3,108 | ) |  |   | 180,500
|Members equity                       |  |                          | 158,898 |                            |   |               |  |              | 2,016 |  |       | (2,016 | ) |  |   | 158,898
|                                      |  |                          |         |                            |   |                |  |              |       |  |       |        |   |  |   |        
|Total liabilities and members equity |  | $                        | 366,260 |                            | $ |               |  | $            | 5,449 |  | $     | (5,124 | ) |  | $ | 366,585
|                                      |  |                          |         |                            |   |                |  |              |       |  |       |        |   |  |   |        
|                                     
|As of December 31, 2003              
|                                      |  |                          |         |                            |  
|                                      |  | (1) NorcraftCompanies LP |         | (1) NorcraftFinance Corp.  |   | NorcraftCanada |  | Eliminations |       |  | Total
|Current assets                        |  | $                        | 45,203  |                            | $ |               |  | $            | 391   |  | $     |       |   |  | $ | 45,594 
|Property, plant and equipment         |  |                          | 28,485  |                            |   |               |  |              | 3,683 |  |       |       |   |  |   | 32,168 
|Investments in Norcraft Canada        |  |                          | 2,875   |                            |   |               |  |              |      |  |       | (2,875 | ) |  |   |       
|Other assets                          |  |                          | 280,140 |                            |   |               |  |              | 213   |  |       | (1,273 | ) |  |   | 279,080
|                                      |  |                          |         |                            |   |                |  |              |       |  |       |        |   |  |   |        
|Total assets                          |  | $                        | 356,703 |                            | $ |               |  | $            | 4,287 |  | $     | (4,148 | ) |  | $ | 356,842
|                                      |  |                          |         |                            |   |                |  |              |       |  |       |        |   |  |   |        
|Current liabilities                   |  | $                        | 29,940  |                            | $ |               |  | $            | 139   |  | $     |       |   |  | $ | 30,079 
|Current portion of long-term debt     |  |                          | 5,000   |                            |   |               |  |              |      |  |       |       |   |  |   | 5,000  
|Long-term debt                        |  |                          | 190,000 |                            |   |               |  |              | 1,273 |  |       | (1,273 | ) |  |   | 190,000
|Members equity                       |  |                          | 131,763 |                            |   |               |  |              | 2,875 |  |       | (2,875 | ) |  |   | 131,763
|                                      |  |                          |         |                            |   |                |  |              |       |  |       |        |   |  |   |        
|Total liabilities and members equity |  | $                        | 356,703 |                            | $ |               |  | $            | 4,287 |  | $     | (4,148 | ) |  | $ | 356,842
|                                      |  |                          |         |                            |   |                |  |              |       |  |       |        |   |  |   |        

---

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



F-21



---

##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



CONDENSED CONSOLIDATING INCOME STATEMENTS

For the Year Ended December 31, 2004



|                                                             |  |                          |         |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |         |  
|------------------------------------------------------------ |  | ------------------------ | ------- | - | ------------------------- | - | -------------- |  | - | ------------ | - |  | ----- | ------ | - |  | - | ------- | -
|                                                             |  | (1) NorcraftCompanies LP |         |   | (1) NorcraftFinance Corp. |   | NorcraftCanada |  |   | Eliminations |   |  | Total |       
|Net sales                                                    |  | $                        | 330,275 |   |                           | $ |               |  | $ | 6,114        |   |  | $     | (6,114 | ) |  | $ | 330,275 |  
|Cost of sales                                                |  |                          | 226,880 |   |                           |   |               |  |   | 6,667        |   |  |       | (6,114 | ) |  |   | 227,433 |  
|                                                             |  |                          |         |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |         |  
|Gross profit                                                 |  |                          | 103,395 |   |                           |   |               |  |   | (553         | ) |  |       |       |   |  |   | 102,842 |  
|Loss from investment in Canadian Subsidiary                  |  |                          | (783    | ) |                           |   |               |  |   |             |   |  |       | 783    |   |  |   |        |  
|Selling, general and administrative expenses                 |  |                          | 58,019  |   |                           |   |               |  |   | 225          |   |  |       |       |   |  |   | 58,244  |  
|                                                             |  |                          |         |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |         |  
|Income (loss) from operations                                |  |                          | 44,593  |   |                           |   |               |  |   | (778         | ) |  |       | 783    |   |  |   | 44,598  |  
|Other expense:                                               |  |                          |         |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |         |  
|Interest expense                                             |  |                          | 15,897  |   |                           |   |               |  |   |             |   |  |       |       |   |  |   | 15,897  |  
|Amortization of deferred financing Costs                     |  |                          | 2,589   |   |                           |   |               |  |   |             |   |  |       |       |   |  |   | 2,589   |  
|Other, net                                                   |  |                          | (63     | ) |                           |   |               |  |   | 5            |   |  |       |       |   |  |   | (58     | )
|                                                             |  |                          |         |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |         |  
|                                                             |  |                          | 18,423  |   |                           |   |               |  |   | 5            |   |  |       |       |   |  |   | 18,428  |  
|                                                             |  |                          |         |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |         |  
|Net income                                                   |  | $                        | 26,170  |   |                           | $ |               |  |   | (783         | ) |  |       | 783    |   |  | $ | 26,170  |  
|                                                             |  |                          |         |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |         |  
|                                                            
|For the Period from October 21,2003 through December 31,2003 | 
|                                                             |  |                          |         |   |                          
|                                                             |  | (1) NorcraftCompanies LP |         |   | (1) NorcraftFinance Corp. |   | NorcraftCanada |  |   | Eliminations |   |  | Total |       
|Net sales                                                    |  | $                        | 52,777  |   |                           | $ |               |  | $ | 59           |   |  | $     | (59    | ) |  | $ | 52,777  |  
|Cost of sales                                                |  |                          | 36,199  |   |                           |   |               |  |   | 201          |   |  |       | (59    | ) |  |   | 36,341  |  
|                                                             |  |                          |         |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |         |  
|Gross profit                                                 |  |                          | 16,578  |   |                           |   |               |  |   | (142         | ) |  |       |       |   |  |   | 16,436  |  
|Loss from investment in Canadian Subsidiary                  |  |                          | (147    | ) |                           |   |               |  |   |             |   |  |       | 147    |   |  |   |        |  
|Selling, general and administrative expenses                 |  |                          | 10,139  |   |                           |   |               |  |   | 29           |   |  |       |       |   |  |   | 10,168  |  
|                                                             |  |                          |         |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |         |  
|Income (loss) from operations                                |  |                          | 6,292   |   |                           |   |               |  |   | (171         | ) |  |       | 147    |   |  |   | 6,268   |  
|Other expense (income):                                      |  |                          |         |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |         |  
|Interest expense                                             |  |                          | 3,241   |   |                           |   |               |  |   | (24          | ) |  |       |       |   |  |   | 3,217   |  
|Amortization of deferred financing costs                     |  |                          | 391     |   |                           |   |               |  |   |             |   |  |       |       |   |  |   | 391     |  
|Other, net                                                   |  |                          | 610     |   |                           |   |               |  |   |             |   |  |       |       |   |  |   | 610     |  
|                                                             |  |                          |         |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |         |  
|                                                             |  |                          | 4,242   |   |                           |   |               |  |   | (24          | ) |  |       |       |   |  |   | 4,218   |  
|                                                             |  |                          |         |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |         |  
|Net income                                                   |  | $                        | 2,050   |   |                           | $ |               |  | $ | (147         | ) |  | $     | 147    |   |  | $ | 2,050   |  
|                                                             |  |                          |         |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |         |  

---

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



F-22



---

##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2004



|                                                             |  |                          |          |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |          |  
|------------------------------------------------------------ |  | ------------------------ | -------- | - | ------------------------- | - | -------------- |  | - | ------------ | - |  | ----- | ------ | - |  | - | -------- | -
|                                                             |  | (1) NorcraftCompanies LP |          |   | (1) NorcraftFinance Corp. |   | NorcraftCanada |  |   | Eliminations |   |  | Total |       
|Cash flows from operating activities                         |  | $                        | 26,270   |   |                           | $ |               |  | $ | (901         | ) |  | $     |       |   |  | $ | 27,171   |  
|Cash flows from investing activities                         |  |                          | (13,233  | ) |                           |   |               |  |   | (913         | ) |  |       | 1,835  |   |  |   | (12,311  | )
|Cash flows from financing activities                         |  |                          | (16,708  | ) |                           |   |               |  |   | 1,835        |   |  |       | (1,835 | ) |  |   | (16,708  | )
|Cumulative translation adjustment                            |  |                          |         |   |                           |   |               |  |   | 88           |   |  |       |       |   |  |   | 88       |  
|                                                             |  |                          |          |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |          |  
|Net increase in cash                                         |  |                          | (3,671   | ) |                           |   |               |  |   | 109          |   |  |       |       |   |  |   | (1,760   | )
|Cash, beginning of period                                    |  |                          | 2,533    |   |                           |   |               |  |   | 50           |   |  |       |       |   |  |   | 2,583    |  
|                                                             |  |                          |          |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |          |  
|Cash, end of period                                          |  | $                        | 664      |   |                           | $ |               |  | $ | 159          |   |  | $     |       |   |  | $ | 823      |  
|                                                             |  |                          |          |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |          |  
|                                                            
|For the Period from October 21,2003 through December 31,2003 | 
|                                                             |  |                          |          |   |                          
|                                                             |  | (1) NorcraftCompanies LP |          |   | (1) NorcraftFinance Corp. |   | NorcraftCanada |  |   | Eliminations |   |  | Total |       
|Cash flows from operating activities                         |  | $                        | 10,263   |   |                           | $ |               |  | $ | (155         | ) |  | $     |       |   |  | $ | 10,108   |  
|Cash flows from investing activities                         |  |                          | (318,604 | ) |                           |   |               |  |   | (1,123       | ) |  |       | 1,273  |   |  |   | (318,454 | )
|Cash flows from financing activities                         |  |                          | 310,874  |   |                           |   |               |  |   | 1,273        |   |  |       | (1,273 | ) |  |   | 310,874  |  
|Cumulative translation adjustment                            |  |                          |         |   |                           |   |               |  |   | 55           |   |  |       |       |   |  |   | 55       |  
|                                                             |  |                          |          |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |          |  
|Net increase in cash                                         |  |                          | 2,533    |   |                           |   |               |  |   | 50           |   |  |       |       |   |  |   | 2,583    |  
|Cash, beginning of period                                    |  |                          |         |   |                           |   |               |  |   |             |   |  |       |       |   |  |   |         |  
|                                                             |  |                          |          |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |          |  
|Cash, end of period                                          |  | $                        | 2,533    |   |                           | $ |               |  | $ | 50           |   |  | $     |       |   |  | $ | 2,583    |  
|                                                             |  |                          |          |   |                           |   |                |  |   |              |   |  |       |        |   |  |   |          |  

---

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



Senior Credit Facility



On October 21, 2003, concurrent with the acquisition of Norcraft Companies LLC by Holdings, Norcraft Companies, L.P. entered into a $70.0 million senior credit facility with a third party for up to $25.0 million in available revolver funds
and a $45.0 million term loan maturing on October 21, 2008. The senior credit facility allows for up to $10.0 million in authorized letters of credit. The interest rates on these facilities are based on LIBOR or prime, plus a premium. The premium is
based on the leverage ratio of the Company. At December 31, 2004, the revolver had an interest rate of LIBOR plus 2.25% and the term loan had a rate of LIBOR plus 3.00%. Borrowings under the senior credit facility are collateralized by substantially
all of the Companys assets. Approximately $3.5 million of letters of credit were outstanding at December 31, 2004 and December 31, 2003. The total available credit under the revolver at December 31, 2004 and December 31, 2003 was $21.6
million.



The senior credit facility contains covenants which,
among other things, limit: (i) additional indebtedness; (ii) dividends; (iii) capital expenditures and (iv) acquisitions, mergers and consolidations. The facility also contains certain financial covenants, including maximum leverage ratio, minimum
interest coverage ratio and minimum fixed charge coverage ratio. The Company was in compliance with these covenants at December 31, 2004.



Norcrafts senior credit facility and the indenture governing their senior subordinated notes each contain restrictions on their ability to pay
dividends and make certain other payments to Holdings. Pursuant to each arrangement, Norcraft may subject to certain limitations, pay dividends or make such payments in connection with (i) repurchases of certain interests of Holdings, (ii) the
payment by Holdings of taxes, costs and other expenses required to maintain its legal existence and legal, accounting and other overhead costs in the ordinary course of business and (iii) permitted income tax distributions by Holdings to its limited
partners.



During 2004, Norcraft made advance debt payments on
the term loan facility and may continue to do so in the future.



F-23



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##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



Predecessor Bank Debt



The Predecessor Company amended their credit agreement with Heller (as lender and agent) dated June 16, 1998
(Agreement) on March 25, 2002. Borrowings under the revolving loan were limited to the lesser of $27.0 million or the sum of 85% of eligible accounts receivable and 65% of eligible inventories, as defined. Interest on the revolving loan
was 6.25% at December 31, 2002. The revolving loan would have matured on May 31, 2005. Borrowings under the Agreement, which include the term notes payable, were collateralized by substantially all of the Predecessor Companys assets. The
Agreement contained covenants which required maintenance of certain financial ratios and limited various business transactions. At December 31, 2002, the Predecessor Company was not in compliance with certain covenants for which a waiver dated March
12, 2003 was received.



The Heller term notes required the
Predecessor Company to make mandatory prepayments of 50% of the excess cash flow, as defined, for each fiscal year. A cash flow prepayment was required for the year ended December 31, 2002 and is included in the current portion of debt in the amount
of $4.5 million.



Concurrent with the acquisition of Norcraft
Companies LLC, all outstanding debt was repaid on October 21, 2003.



|11. | Disclosures About Fair Value of Financial Instruments
|--- | -----------------------------------------------------



The following tables present the carrying amounts and estimated fair market values of financial instruments at December 31, 2004 and 2003. The fair value
of a financial instrument is deemed to be the amount at which the instrument could be exchanged in a current transaction between willing parties.



|                                |  |                          |  |            |  |                |  |           
|------------------------------- |  | ------------------------ |  | ---------- |  | -------------- |  | ----------
|                                |  | Norcraft Holdings, L.P. 
|                                |  | 2004                     |  | 2003      
|                                |  | CarryingAmount           |  | Fair Value |  | CarryingAmount |  | Fair Value
|9.00% Senior Subordinated Notes |  | 150,000                  |  | 161,250    |  | 150,000        |  | 150,000   
|9.75% Senior Discount Notes     |  | 83,252                   |  | 87,910     |  |               |  |          
|Senior Secured Credit Facility  |  | 30,500                   |  | 30,653     |  | 45,000         |  | 45,000    
|                                | 
|                                |  | Norcraft Companies, L.P.
|                                |  | 2004                     |  | 2003      
|                                |  | CarryingAmount           |  | Fair Value |  | CarryingAmount |  | Fair Value
|9.00% Senior Subordinated Notes |  | 150,000                  |  | 161,250    |  | 150,000        |  | 150,000   
|Senior Secured Credit Facility  |  | 30,500                   |  | 30,653     |  | 45,000         |  | 45,000    



The fair market values
of financial instruments were estimated based on market conditions and perceived risks at December 31, 2004 and 2003, and require varying degrees of management judgment. The factors used to estimate these values may not be valid on any subsequent
date. Accordingly, the fair market value of the financial instruments presented may not be indicative of their future values.



|12. | Members Equity
|--- | ---------------



At December 31, 2004 and 2003, there were 135,484,362 and 135,137,133 Class A limited partnership units issued and outstanding, respectively. Class A
limited partners are entitled to one vote per unit held. As provided in the Limited Partnership Agreement, income, gain, loss, deduction or credit are allocated to the members pro rata, in accordance with their respective percentage interests,
except as required by the Internal Revenue Code and related regulations. The Limited Partnership Agreement also provides for the Company to make estimated distributions to Holdings for payment of estimated federal and state income taxes arising from
the Companys operations.



F-24



---

##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



Predecessor Members Equity



At December 31, 2002, there were 1,435,357 Class A and 65,961 Class B member
share interests issued and outstanding. Class A members were entitled to one vote per share interest held. As provided in the operating agreement, income, gain, loss, deduction or credit were allocated to the members pro rata, in accordance with
their respective percentage interests, except as required by the Internal Revenue Code and related regulations. Concurrent with the acquisition the predecessors members shares were either acquired or converted into limited partnership
units.



The Operating Agreement provided for the Predecessor
Company to make distributions to its members for payment of federal and state income taxes arising from the Predecessor Companys operations equal to 42% of the Predecessor Companys taxable income. Other distributions could have been made
to members pro rata in accordance with their respective interests at the sole discretion of the Operating Board. As of December 31, 2002, the Company had recorded a members distribution payable in the amount of $3.2 million.



Management Incentive Plan



The Company accounts for stock options and measures the compensation cost at
the grant date based on the fair value of the award and recognizes the cost over the vesting period.



The Company adopted a Management Incentive Plan, (the Plan) which provides for the grants of incentive Class D membership units in Holdings,
to selected employees. Under the terms of the Plan the units begin to vest on the December 31, following the date of grant with 50% of the units vesting over a 5 year period and 50% vesting over a 5 year period subject to the Company meeting certain
performance based criteria in each of those years. Upon vesting, each unit entitles the unit holder the option to purchase one unit of the parents Class A units. All units will be issued with an exercise price equal to the then fair value of
the parents Class A units. In connection with the acquisition, 5,149,147 units were granted with an exercise price of $1.00 per unit. With the issuance of the $118.0 million in 93/4% Senior Discount Notes and related limited partner distribution, the exercise price was amended to $0.45 per unit. The fair value of the options issued is
valued based on the Black-Scholes option-pricing model. The fair value is reflected as compensation expense as the units vest. Compensation expense related to stock options was $0.4 million year ended December 31, 2004, with no such expense in 2003.



The following table sets forth information about the
fair value of the option grant on the date of grant using the Black-Scholes option-pricing model and the weighted average assumptions used for such grant:



|                                               |  |      |      |   |      |   |      |  
|---------------------------------------------- |  | ---- | ---- | - | ---- | - | ---- | -
|                                               |  | 2004 |      |   | 2003 |  
|Weighted-average fair value of options granted |  | $    | 0.68 |   |      | $ | 0.17 |  
|Dividend yield                                 |  |      | 0.0  | % |      |   | 0.0  | %
|Risk-free interest rate                        |  |      | 3.39 | % |      |   | 3.26 | %
|Volatility                                     |  |      | 0.0  | % |      |   | 0.0  | %
|Expected lives                                 |  |      | 4.86 |   |      |   | 5.86 |  



F-25



---

##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



A summary of stock option activity under the plan is as follows:



|                    |  |           |   |                                            |                                 |      |       |           |                                 |   |     
|------------------- |  | --------- | - | ------------------------------------------ | ------------------------------- | ---- | ----- | --------- | ------------------------------- | - | ----
|                    |  | 2004      |   | October 21, 2003 through December 31, 2003
|                    |  | Units     |   |                                            | Weighted-Average Exercise Price |      | Units |           | Weighted-Average Exercise Price
|Beginning balance   |  | 5,149,147 |   |                                            | $                               | 1.00 |       |          |                                 |   |    
|Granted             |  | 285,714   |   |                                            | $                               | 1.00 |       | 5,149,147 |                                 | $ | 1.00
|Pricing amendment   |  |          |   |                                            | $                               | 0.45 |       |          |                                 |   |    
|Exercised           |  |          |   |                                            |                                 |     |       |          |                                 |   |    
|Forfeited/Expired   |  | (469,870  | ) |                                            | $                               | 0.45 |       |          |                                 |   |    
|                    |  |           |   |                                            |                                 |      |       |           |                                 |   |     
|Ending balance      |  | 4,964,991 |   |                                            | $                               | 0.45 |       | 5,149,147 |                                 | $ | 1.00
|                    |  |           |   |                                            |                                 |      |       |           |                                 |   |     
|Exercisable balance |  | 992,998   |   |                                            | $                               | 0.45 |       |          |                                 |   |    
|                    |  |           |   |                                            |                                 |      |       |           |                                 |   |     



Members
Equity Subject to Put Request



The limited partnership
agreement of Holdings provides that certain employee equity holders may request that Holdings repurchase limited partnership units upon their death or disability at the then fair market value. Following such a request, Holdings must use commercially
reasonable efforts to repurchase such units, subject to limitations on the repurchase of equity contained in the senior credit facility and the indentures governing the Senior Discount Notes and Senior Subordinated Notes, respectively. The fair
market value of these units is recorded outside of permanent equity. Any changes in the fair market value of these units are reported as changes in members equity subject to put request in the statement of members equity and
comprehensive income. As of December 31, 2004 and 2003, there were 23.9 million and 21.2 million units subject to the put request, respectively.



|13. | Employee Benefit Plan
|--- | ---------------------



The Predecessor Company was a participant in the Pfingsten Partners, L.L.C. (an affiliate of a Class A member) 401(k) plan (a multiple employer plan) (the
Predecessor Plan). Certain professionals of Pfingsten Partners, L.L.C. served as trustees of the Plan. Substantially all employees of the Predecessor Company were eligible to participate in the Predecessor Plan. The Predecessor Plan,
established under the provisions of Section 401(k) of the Internal Revenue Code, provides, among other things, for the Predecessor Company to make discretionary contributions. Company contributions to the Predecessor Plan for the period from January
1, 2003 to October 20, 2003 and for the years ended December 31, 2002 were $0.5 million, and $0.4 million, respectively. On September 15, 2003, the Predecessor Company transferred its participation in this plan to its own Norcraft 401(k) Retirement
Plan (the Norcraft Plan).



The Norcraft Plan,
established under the provisions of Section 401(k) of the Internal Revenue Code, provides, among other things, for the Company to make discretionary contributions. Company contributions to this plan for 2004 and for the period from October 21, 2003
to December 31, 2003 were $0.6 million and $0.1 million, respectively.



|14. | Related Party Transactions
|--- | --------------------------



The Company has an agreement with two of its majority limited partners, Saunders Karp & Megrue, LLC and Trimaran Fund Management, LLC to provide
management services to the Company. Under the terms of the agreement, the Company will pay a $1.0 million annual management fee plus reimbursement of any out-of-pocket expenses incurred. The agreement expires upon sale to an unaffiliated third party
of substantially all of the Companys assets or interests. Management fees charged to expense was $1.0 million and $0.2 million for 2004 and for the period October 21, 2003 through December 31, 2003, respectively. Additionally, the Company paid
$3.3 million in transaction fees to its majority limited partners which have been recorded as deferred financing cost.



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##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



The Predecessor Company had an agreement with Pfingsten Partners, L.L.C., an affiliate of a Class A
member, to provide management services to the Predecessor Company. The agreement expired upon the sale of the Company on October 21, 2003. Management fees charged to expense was $0.3 million for the period January 1, 2003 through October 20, 2003
and $0.3 million for the year ended December 31, 2002.



In
August 2003, the Predecessor Company distributed $6.0 million to existing equity holders who subsequently purchased the property underlying the capital lease for the Yucca distribution center for $5.7 million. On August 29, 2003, the Predecessor
Company terminated the capital lease and entered into a new short-term lease for this distribution center. Because the $5.7 million purchase price for the Yucca distribution center exceeded the estimated fair value of the property, for financial
statement presentation purposes, the Predecessor Company recognized a net loss of approximately $4.1 million in August 2003, representing a lease termination expense and the effect of removing from its financial statements the asset and obligation
under the capital lease.



|15. | Leases
|--- | ------



The Company leases its corporate office and distribution facilities under operating leases expiring on various dates. In addition to the base rent,
certain leases require the Company to pay as additional rent a portion of the real estate taxes and common area expenses of the leased premises. Total rent expense was $1.6 million for the year ended December 31, 2004, $0.3 million for the period
October 21, 2003 through December 31, 2003, $1.0 million for the period January 1, 2003 through October 20, 2003 and $0.7 million for the years ended December 31, 2002. The Company has historically entered and will continue to enter into leases of a
temporary or short-term nature that do not extend beyond December 31, 2004 and that do not have future non-cancelable commitments.



Future minimum lease payments under non-cancelable operating leases at December 31, 2004, are as follows:



|                         |  |        |      
|------------------------ |  | ------ | -----
|Year Ending December 31, |  | Amount
|2005                     |  | $      | 1,395
|2006                     |  |        | 1,225
|2007                     |  |        | 946  
|2008                     |  |        | 973  
|2009                     |  |        | 585  
|                         |  |        |      
|                         |  | $      | 5,124
|                         |  |        |      



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##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



|16. | Unaudited Supplemental Quarterly Data
|--- | -------------------------------------



The following unaudited quarterly consolidated financial data is presented for the fourth quarter of 2004 (successor basis), the period from October 21,
2003 to December 31, 2003 (successor basis), and the period from October 1, 2003 to October 20, 2003 (predecessor basis).



|                                             |  |                                      |        |   |               |   |        |              |  |               |        |  |   |       
|-------------------------------------------- |  | ------------------------------------ | ------ | - | ------------- | - | ------ | ------------ |  | ------------- | ------ |  | - | ------
|                                             |  | Norcraft Holdings, L.P. (Successor) 
|                                             |  | FirstQuarter                         |        |   | SecondQuarter |   |        | ThirdQuarter |  | FourthQuarter
|2004                                         |  |                                      |        |   |               |   |        |              |  |               |        |  |   |       
|Net sales                                    |  | $                                    | 68,593 |   |               | $ | 88,090 |              |  | $             | 89,186 |  | $ | 84,406
|Cost of sales                                |  |                                      | 45,794 |   |               |   | 58,832 |              |  |               | 62,069 |  |   | 60,738
|                                             |  |                                      |        |   |               |   |        |              |  |               |        |  |   |       
|Gross profit                                 |  |                                      | 22,799 |   |               |   | 29,258 |              |  |               | 27,117 |  |   | 23,668
|Selling, general and administrative expenses |  |                                      | 13,322 |   |               |   | 15,189 |              |  |               | 14,751 |  |   | 14,982
|                                             |  |                                      |        |   |               |   |        |              |  |               |        |  |   |       
|Income from operations                       |  |                                      | 9,477  |   |               |   | 14,069 |              |  |               | 12,366 |  |   | 8,686 
|Other expense:                               |  |                                      |        |   |               |   |        |              |  |               |        |  |   |       
|Interest expense                             |  |                                      | 3,938  |   |               |   | 4,039  |              |  |               | 5,046  |  |   | 5,792 
|Amortization of deferred financing costs     |  |                                      | 628    |   |               |   | 616    |              |  |               | 654    |  |   | 814   
|Other, net                                   |  |                                      | (4     | ) |               |   | (85    | )            |  |               | 1      |  |   | 32    
|                                             |  |                                      |        |   |               |   |        |              |  |               |        |  |   |       
|                                             |  |                                      | 4,562  |   |               |   | 4,570  |              |  |               | 5,701  |  |   | 6,638 
|                                             |  |                                      |        |   |               |   |        |              |  |               |        |  |   |       
|Net income                                   |  | $                                    | 4,915  |   |               | $ | 9,499  |              |  | $             | 6,665  |  | $ | 2,048 
|                                             |  |                                      |        |   |               |   |        |              |  |               |        |  |   |       
|                                             | 
|                                             |  | Norcraft Companies, L.P. (Successor)
|                                             |  | FirstQuarter                         |        |   | SecondQuarter |   |        | ThirdQuarter |  | FourthQuarter
|2004                                         |  |                                      |        |   |               |   |        |              |  |               |        |  |   |       
|Net sales                                    |  | $                                    | 68,593 |   |               | $ | 88,090 |              |  | $             | 89,186 |  | $ | 84,406
|Cost of sales                                |  |                                      | 45,794 |   |               |   | 58,832 |              |  |               | 62,069 |  |   | 60,738
|                                             |  |                                      |        |   |               |   |        |              |  |               |        |  |   |       
|Gross profit                                 |  |                                      | 22,799 |   |               |   | 29,258 |              |  |               | 27,117 |  |   | 23,668
|Selling, general and administrative expenses |  |                                      | 13,322 |   |               |   | 15,189 |              |  |               | 14,751 |  |   | 14,982
|                                             |  |                                      |        |   |               |   |        |              |  |               |        |  |   |       
|Income from operations                       |  |                                      | 9,477  |   |               |   | 14,069 |              |  |               | 12,366 |  |   | 8,686 
|Other expense:                               |  |                                      |        |   |               |   |        |              |  |               |        |  |   |       
|Interest expense                             |  |                                      | 3,938  |   |               |   | 4,039  |              |  |               | 4,093  |  |   | 3,827 
|Amortization of deferred financing costs     |  |                                      | 628    |   |               |   | 616    |              |  |               | 627    |  |   | 715   
|Other, net                                   |  |                                      | (4     | ) |               |   | (85    | )            |  |               | 1      |  |   | 32    
|                                             |  |                                      |        |   |               |   |        |              |  |               |        |  |   |       
|                                             |  |                                      | 4,562  |   |               |   | 4,570  |              |  |               | 4,721  |  |   | 4,574 
|                                             |  |                                      |        |   |               |   |        |              |  |               |        |  |   |       
|Net income                                   |  | $                                    | 4,915  |   |               | $ | 9,499  |              |  | $             | 7,645  |  | $ | 4,112 
|                                             |  |                                      |        |   |               |   |        |              |  |               |        |  |   |       



F-28



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##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



|                                             |  |              |        |               |           |              |  |                                                      |        |  |                                                        |        |   |  |   |       
|-------------------------------------------- |  | ------------ | ------ | ------------- | --------- | ------------ |  | ---------------------------------------------------- | ------ |  | ------------------------------------------------------ | ------ | - |  | - | ------
|                                             |  | Predecessor  |        |               | Successor
|                                             |  | FirstQuarter |        | SecondQuarter |           | ThirdQuarter |  | For the periodOctober 1,2003 throughOctober 20, 2003 |        |  | For the periodOctober 21,2003 throughDecember 31, 2003
|2003                                         |  |              |        |               |           |              |  |                                                      |        |  |                                                        |        |   |  |   |       
|Net sales                                    |  | $            | 55,784 |               | $         | 64,611       |  | $                                                    | 69,654 |  | $                                                      | 13,850 |   |  | $ | 52,777
|Cost of sales                                |  |              | 37,498 |               |           | 42,892       |  |                                                      | 46,780 |  |                                                        | 8,748  |   |  |   | 36,341
|                                             |  |              |        |               |           |              |  |                                                      |        |  |                                                        |        |   |  |   |       
|Gross profit                                 |  |              | 18,286 |               |           | 21,719       |  |                                                      | 22,874 |  |                                                        | 5,102  |   |  |   | 16,436
|Selling, general and administrative expenses |  |              | 9,769  |               |           | 11,244       |  |                                                      | 11,536 |  |                                                        | 5,172  |   |  |   | 10,168
|Other                                        |  |              |       |               |           |             |  |                                                      | 4,127  |  |                                                        |       |   |  |   |      
|                                             |  |              |        |               |           |              |  |                                                      |        |  |                                                        |        |   |  |   |       
|Income from operations                       |  |              | 8,517  |               |           | 10,475       |  |                                                      | 7,211  |  |                                                        | (70    | ) |  |   | 6,268 
|Other expense:                               |  |              |        |               |           |              |  |                                                      |        |  |                                                        |        |   |  |   |       
|Interest expense                             |  |              | 494    |               |           | 470          |  |                                                      | 355    |  |                                                        | 103    |   |  |   | 3,217 
|Amortization of deferred financing costs     |  |              | 83     |               |           | 83           |  |                                                      | 83     |  |                                                        | 18     |   |  |   | 391   
|                                             |  |              |        |               |           |              |  |                                                      |        |  |                                                        |        |   |  |   |       
|Other, net                                   |  |              |       |               |           | 381          |  |                                                      | 185    |  |                                                        | 72     |   |  |   | 610   
|                                             |  |              | 577    |               |           | 934          |  |                                                      | 623    |  |                                                        | 193    |   |  |   | 4,218 
|                                             |  |              |        |               |           |              |  |                                                      |        |  |                                                        |        |   |  |   |       
|Net income                                   |  | $            | 7,940  |               | $         | 9,541        |  | $                                                    | 6,588  |  | $                                                      | (263   | ) |  | $ | 2,050 
|                                             |  |              |        |               |           |              |  |                                                      |        |  |                                                        |        |   |  |   |       



|17. | New Accounting Pronouncements
|--- | -----------------------------



In March 2004, the FASB issued Emerging Issues Task Force (EITF) No. 03-01, The Meaning of Other-Than-Temporary Impairment and its Application to
Certain Investments, which provides new guidance for assessing impairment losses on debt and equity investments. The new impairment model applies to investments accounted for under the cost or equity method and investments accounted for
under SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. EITF No. 03-01 also includes new disclosure requirements for cost method investments and for all investments that are in an unrealized loss position. In
September 2004, the FASB delayed the accounting provisions of EITF No. 03-01; however the disclosure requirements remain effective and the applicable ones have been adopted for our year-end 2004. We do not expect this guidance to have a significant
impact on our consolidated financial statements.



In December
2004, the FASB issued SFAS No. 123 (Revised 2004) Share-Based Payments (SFAS No. 123R). SFAS No. 123R addresses all forms of share-based payment awards, including shares issued under employee stock purchase plans, stock options,
restricted stock and stock appreciation rights. SFAS No. 123R will require us to expense share-based payment awards with compensation cost measured at the fair value of the award. SFAS No. 123R requires us to adopt the new accounting provisions
beginning in the first quarter of 2006. We do not expect this standard to have a significant impact on our consolidated financial statements.



In November 2004, the FASB issued SFAS No. 151, Inventory Costs  an amendment of ARB No. 43 (SFAS No. 151), which is the result
of its efforts to converge U.S. accounting standards for inventories with International Accounting Standards. SFAS No. 151 requires idle facility expenses, freight, handling costs, and wasted material (spoilage) costs to be recognized as
current-periodic charges. It also requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS No. 151 will be effective for inventory costs incurred during
fiscal years beginning after June 15, 2005. We do not expect this standard to have a significant impact on our consolidated financial statements.



In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets  an Amendment of APB Opinion No. 29, (SFAS No.
153). SFAS No. 153 amends APB Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance.
A nonmonetary exchange has commercial substance if



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##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



the future cash flows of the entity are expected to change significantly as a result of the exchange.
SFAS No. 153 will be effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. We do not expect this standard to have a significant impact on our consolidated financial statements.



|18. | Subsequent Event
|--- | ----------------



Effective January 1, 2005, Norcraft changed its vacation policy. Under the old policy, employees were advanced the full annual allowable number of
vacation hours that they would earn that year on January 1. These hours had to be used by the end of the year as any unused hours could not be carried forward to the following year. Under the new policy, one-half of the annual allowable number of
vacation hours will be advanced as of January 1, 2005. The remaining half will be earned on a pro-rata basis over the remainder of the year. Any unused hours at December 31, 2005 can be carried forward into the following year, up to 150% of each
employees annual allowable vacation hours. Beginning in 2006, 40 hours will be advanced to each employee at the beginning of the year. As a result of this policy change, Norcraft expects to reduce its employee vacation accrual by approximately
$1.6 million as of January 1, 2005 and have a further reduction of vacation expense over the course of 2005 of approximately $0.4 million.



|19. | Restatement of Holdings Financial Statements
|--- | --------------------------------------------



Holdings has restated its previously audited consolidated balance sheets as of December 31, 2004 and 2003 and the related consolidated statements of
changes in members equity and comprehensive income for the year ended December 31, 2004 and for the period October 1, 2003 through December 31, 2003 because it had incorrectly accounted for a portion of its outstanding limited partnership
units held by certain members of management that should have been classified as members equity subject to put request. Specifically, the limited partnership agreement of Holdings provides that certain employee equity holders may request that
Holdings repurchase limited partnership units upon their death or disability at the then fair market value. Following such a request, Holdings must use commercially reasonable efforts to repurchase such units, subject to limitations on the
repurchase of equity contained in the senior credit facility and the indentures governing the Senior Discount Notes and Senior Subordinated Notes, respectively. Any changes in the fair market value of these units are reported as changes in
members interest subject to put request in the statement of members equity and comprehensive income.



These restatements do not impact amounts already reported as net sales, net income, nor will they result in a default under any provisions in our credit
agreement or indentures. In addition, these restatements do not impact the financial statements of the operating company, Norcraft Companies, L.P.



Summarized below are the significant effects of the restatement:



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##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



Consolidated Balance Sheets

(dollar amounts in thousands)



|                                       |  |                                     |         |                        |   |         |          |  |   |        
|-------------------------------------- |  | ----------------------------------- | ------- | ---------------------- | - | ------- | -------- |  | - | -------
|                                       |  | Norcraft Holdings, L.P. (Successor)
|                                       |  | December 31, 2004                  
|                                       |  | As PreviouslyReported               |         | RestatementAdjustments |   |         | Restated
|ASSETS                                 |  |                                     |         |                        |   |         |          |  |   |        
|Current assets:                        |  |                                     |         |                        |   |         |          |  |   |        
|Cash and cash equivalents              |  | $                                   | 823     |                        | $ |        |          |  | $ | 823    
|Trade accounts receivable, net         |  |                                     | 33,056  |                        |   |        |          |  |   | 33,056 
|Inventories                            |  |                                     | 21,886  |                        |   |        |          |  |   | 21,886 
|Prepaid expenses                       |  |                                     | 1,497   |                        |   |        |          |  |   | 1,497  
|                                       |  |                                     |         |                        |   |         |          |  |   |        
|Total current assets                   |  |                                     | 57,262  |                        |   |        |          |  |   | 57,262 
|Property, plant and equipment, net     |  |                                     | 34,959  |                        |   |        |          |  |   | 34,959 
|Other assets:                          |  |                                     |         |                        |   |         |          |  |   |        
|Goodwill                               |  |                                     | 148,459 |                        |   |        |          |  |   | 148,459
|Customer relationships, net            |  |                                     | 61,664  |                        |   |        |          |  |   | 61,664 
|Brand names                            |  |                                     | 49,000  |                        |   |        |          |  |   | 49,000 
|Deferred financing costs, net          |  |                                     | 12,523  |                        |   |        |          |  |   | 12,523 
|Display cabinets, net                  |  |                                     | 6,034   |                        |   |        |          |  |   | 6,034  
|Deposits                               |  |                                     | 91      |                        |   |        |          |  |   | 91     
|                                       |  |                                     |         |                        |   |         |          |  |   |        
|Total other assets                     |  |                                     | 277,771 |                        |   |        |          |  |   | 277,771
|                                       |  |                                     |         |                        |   |         |          |  |   |        
|Total assets                           |  | $                                   | 369,992 |                        | $ |        |          |  | $ | 369,992
|                                       |  |                                     |         |                        |   |         |          |  |   |        
|LIABILITIES AND MEMBERS EQUITY        |  |                                     |         |                        |   |         |          |  |   |        
|Current liabilities:                   |  |                                     |         |                        |   |         |          |  |   |        
|Current portion of long-term debt      |  | $                                   |        |                        | $ |        |          |  | $ |       
|Accounts payable                       |  |                                     | 7,299   |                        |   |        |          |  |   | 7,299  
|Accrued expenses                       |  |                                     | 19,888  |                        |   |        |          |  |   | 19,888 
|                                       |  |                                     |         |                        |   |         |          |  |   |        
|Total current liabilities              |  |                                     | 27,187  |                        |   |        |          |  |   | 27,187 
|Long-term debt                         |  |                                     | 263,752 |                        |   |        |          |  |   | 263,752
|Commitments and contingencies          |  |                                     |         |                        |   |         |          |  |   |        
|Members equity subject to put request |  |                                     |        |                        |   | 26,377  |          |  |   | 26,377 
|Members equity                        |  |                                     | 79,053  |                        |   | (26,377 | )        |  |   | 52,676 
|                                       |  |                                     |         |                        |   |         |          |  |   |        
|Total liabilities and members equity  |  | $                                   | 369,992 |                        | $ |        |          |  | $ | 369,992
|                                       |  |                                     |         |                        |   |         |          |  |   |        



F-31



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##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



Consolidated Balance Sheets

(dollar amounts in thousands)



|                                       |  |                                     |         |                        |   |         |          |  |   |        
|-------------------------------------- |  | ----------------------------------- | ------- | ---------------------- | - | ------- | -------- |  | - | -------
|                                       |  | Norcraft Holdings, L.P. (Successor)
|                                       |  | December 31, 2003                  
|                                       |  | As PreviouslyReported               |         | RestatementAdjustments |   |         | Restated
|ASSETS                                 |  |                                     |         |                        |   |         |          |  |   |        
|Current assets:                        |  |                                     |         |                        |   |         |          |  |   |        
|Cash and cash equivalents              |  | $                                   | 2,583   |                        | $ |        |          |  | $ | 2,583  
|Trade accounts receivable, net         |  |                                     | 24,063  |                        |   |        |          |  |   | 24,063 
|Inventories                            |  |                                     | 16,948  |                        |   |        |          |  |   | 16,948 
|Prepaid expenses                       |  |                                     | 2,000   |                        |   |        |          |  |   | 2,000  
|                                       |  |                                     |         |                        |   |         |          |  |   |        
|Total current assets                   |  |                                     | 45,594  |                        |   |        |          |  |   | 45,594 
|Property, plant and equipment, net     |  |                                     | 32,168  |                        |   |        |          |  |   | 32,168 
|Other assets:                          |  |                                     |         |                        |   |         |          |  |   |        
|Goodwill                               |  |                                     | 148,459 |                        |   |        |          |  |   | 148,459
|Customer relationships, net            |  |                                     | 66,131  |                        |   |        |          |  |   | 66,131 
|Brand names                            |  |                                     | 49,000  |                        |   |        |          |  |   | 49,000 
|Deferred financing costs, net          |  |                                     | 11,509  |                        |   |        |          |  |   | 11,509 
|Display cabinets, net                  |  |                                     | 3,861   |                        |   |        |          |  |   | 3,861  
|Deposits                               |  |                                     | 120     |                        |   |        |          |  |   | 120    
|                                       |  |                                     |         |                        |   |         |          |  |   |        
|Total other assets                     |  |                                     | 279,080 |                        |   |        |          |  |   | 279,080
|                                       |  |                                     |         |                        |   |         |          |  |   |        
|Total assets                           |  | $                                   | 356,842 |                        | $ |        |          |  | $ | 356,842
|                                       |  |                                     |         |                        |   |         |          |  |   |        
|LIABILITIES AND MEMBERS EQUITY        |  |                                     |         |                        |   |         |          |  |   |        
|Current liabilities:                   |  |                                     |         |                        |   |         |          |  |   |        
|Current portion of long-term debt      |  | $                                   | 5,000   |                        | $ |        |          |  | $ | 5,000  
|Accounts payable                       |  |                                     | 6,704   |                        |   |        |          |  |   | 6,704  
|Accrued expenses                       |  |                                     | 23,375  |                        |   |        |          |  |   | 23,375 
|                                       |  |                                     |         |                        |   |         |          |  |   |        
|Total current liabilities              |  |                                     | 35,079  |                        |   |        |          |  |   | 35,079 
|Long-term debt                         |  |                                     | 190,000 |                        |   |        |          |  |   | 190,000
|Commitments and contingencies          |  |                                     |         |                        |   |         |          |  |   |        
|Members equity subject to put request |  |                                     |        |                        |   | 22,354  |          |  |   | 22,354 
|Members equity                        |  |                                     | 131,763 |                        |   | (22,354 | )        |  |   | 109,409
|                                       |  |                                     |         |                        |   |         |          |  |   |        
|Total liabilities and members equity  |  | $                                   | 356,842 |                        | $ |        |          |  | $ | 356,842
|                                       |  |                                     |         |                        |   |         |          |  |   |        



F-32



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##### Table of Contents

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

Notes to Consolidated Financial Statements

(dollar amounts in thousands)



Consolidated Statements of Changes in Members Equity and Comprehensive Income

(dollar amounts in thousands)



Successor Basis



|                                                      |  |                         |         |   |                        |   |         |          |  |   |         |  
|----------------------------------------------------- |  | ----------------------- | ------- | - | ---------------------- | - | ------- | -------- |  | - | ------- | -
|                                                      |  | Norcraft Holdings, L.P. |        
|                                                      |  | Members Equity         |        
|                                                      |  | As Previously Reported  |         |   | RestatementAdjustments |   |         | Restated | 
|Issuance of members interest                         |  | $                       | 129,561 |   |                        | $ | (21,113 | )        |  | $ | 108,448 |  
|Management equity pool contributions                  |  |                         | 97      |   |                        |   |        |          |  |   | 97      |  
|Accretion on members interest subject to put request |  |                         |        |   |                        |   | (1,241  | )        |  |   | (1,241  | )
|Cumulative translation adjustment                     |  |                         | 55      |   |                        |   |        |          |  |   | 55      |  
|Net income                                            |  |                         | 2,050   |   |                        |   |        |          |  |   | 2,050   |  
|                                                      |  |                         |         |   |                        |   |         |          |  |   |         |  
|Balance, December 31, 2003                            |  |                         | 131,763 |   |                        |   | (22,354 | )        |  |   | 109,409 |  
|Issuance of members interest                         |  |                         | 3,608   |   |                        |   |        |          |  |   | 3,608   |  
|Distribution to members                               |  |                         | (77,181 | ) |                        |   |        |          |  |   | (77,181 | )
|Repurchase of members interest                       |  |                         | (535    | ) |                        |   |        |          |  |   | (535    | )
|Accretion on members interest subject to put request |  |                         |        |   |                        |   | (4,023  | )        |  |   | (4,023  | )
|Member tax distributions declared                     |  |                         | (1,651  | ) |                        |   |        |          |  |   | (1,651  | )
|Cumulative translation adjustment                     |  |                         | (78     | ) |                        |   |        |          |  |   | (78     | )
|Net income                                            |  |                         | 23,127  |   |                        |   |        |          |  |   | 23,127  |  
|                                                      |  |                         |         |   |                        |   |         |          |  |   |         |  
|Balance, December 31, 2004                            |  | $                       | 79,053  |   |                        | $ | (26,377 | )        |  | $ | 52,676  |  
|                                                      |  |                         |         |   |                        |   |         |          |  |   |         |  



F-33