UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

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FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

|(Mark One)                                               |                                                                                                           
|-------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------
|ý                                                        | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                      
|For the fiscal year ended December 31, 2004             
|o                                                        | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
|For the transition period
from                        to

Commission file number: 333-115490

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WII COMPONENTS, INC.(Exact name of registrant as specified in its charter)

|Delaware(State of Incorporation)                                                                      |  | No. 73-1662631(I.R.S. Employer Identification No.)
|----------------------------------------------------------------------------------------------------- |  | --------------------------------------------------
|525 Lincoln Avenue, SE, St. Cloud, Minnesota 56304(Address of principal executive offices) (Zip Code)

(320) 252-1503(Registrant's telephone number, Including area code)

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the
past 90 days. Yes ý    No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act.) Yes o    No ý

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

The aggregate market value of the voting stock held by nonaffiliates of the registrant as of June 30, 2004: not applicable.

As
of March 14, 2005, 20,734,843 shares of voting common stock, $.01 par value per share, were outstanding and 854,261 shares of non-voting common stock, $.01 par
value per share, were outstanding (all of which are privately owned and not traded on a public market).

DOCUMENTS INCORPORATED BY REFERENCE: None.



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WII COMPONENTS, INC.

FORM 10-K
Year Ended December 31, 2004

INDEX

|PART I   |  |                                                                                                             
|-------- |  | ------------------------------------------------------------------------------------------------------------
|Item 1.  |  | Business                                                                                                    
|Item 2.  |  | Properties                                                                                                  
|Item 3.  |  | Legal Proceedings                                                                                           
|Item 4.  |  | Submission of Matters to Vote of Security Holders                                                           
|PART II  |  |                                                                                                             
|Item 5.  |  | Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|Item 6.  |  | Selected Financial Data                                                                                     
|Item 7.  |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                       
|Item 7A. |  | Qualitative and Quantitative Disclosures about Market Risk                                                  
|Item 8.  |  | Financial Statements and Supplementary Data                                                                 
|Item 9.  |  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                        
|Item 9A. |  | Controls and Procedures                                                                                     
|Item 9B. |  | Other Information                                                                                           
|PART III |  |                                                                                                             
|Item 10. |  | Directors and Executive Officers of the Registrant                                                          
|Item 11  |  | Executive Compensation                                                                                      
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters              
|Item 13. |  | Certain Relationships and Related Party Transactions                                                        
|Item 14. |  | Principal Accountant Fees and Services                                                                      
|PART IV  |  |                                                                                                             
|Item 15. |  | Exhibits, Financial Statement Schedules                                                                     
|Item 16. |  | Signatures                                                                                                  

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In this report, the terms "WII Components," "we," "our" or "us" refer to WII Components, Inc. and its subsidiaries on a consolidated basis, unless
otherwise indicated or the context otherwise requires. In April 2003, WII Components, Inc. was formed by a group of investors led by Behrman Capital III L.P. to acquire Woodcraft
Industries, Inc., or Woodcraft, and its subsidiaries, PrimeWood, Inc., or PrimeWood, and Brentwood Acquisition Corp., or Brentwood. WII Components conducts all of its operations through
its direct subsidiary, Woodcraft, and its indirect subsidiaries, PrimeWood, Brentwood, and Grand Valley Acquisition, Inc., or Grand Valley. For periods prior to April 2003, the terms
"we," "our" or "us" refer to Woodcraft, as our predecessor, and its subsidiaries on a consolidated basis, unless otherwise indicated or the context otherwise requires.

PART 1

Item 1. Business

Our Company

We are one of the leading manufacturers of hardwood cabinet doors, hardwood components and engineered wood products in the United States. We generate
approximately 93% of our sales from the kitchen and bath cabinet manufacturing industry. Our reputation for high quality and reliable performance has enabled us to establish strong,
long-standing relationships with our customers, which include most of the top cabinet manufacturers in the United States. Our customers, in turn, distribute their products through various
sales channels, including specialty kitchen and bath cabinet dealers, home center retailers and homebuilders. We generated net sales of approximately $51.9 million for the three months ended
December 31, 2004 and approximately $203.1 million for the year ended December 31, 2004.

We
believe that we have one of the broadest product offerings of doors and related components for the kitchen and bath cabinet manufacturing industry. Our products include:
(1) hardwood cabinet door components, face frames and drawer fronts, (2) fully assembled hardwood cabinet doors, (3) rigid thermofoil, or RTF, cabinet doors and components,
(4) veneer raised panels, or VRPs, and (5) a variety of laminated and profile-wrapped components. We produce over 100,000 SKUs for our customers, representing a wide array of styles,
sizes, designs and wood species. In addition, we offer a variety of value-added services for our customers, such as new product design and development and
kitchen-at-a-time, or KAT, manufacturing a small batch production process that enables us to deliver semi-custom doors and components on a
quick-turnaround basis.

We
operate seven manufacturing facilities located in Minnesota, North Dakota, Ohio, Oregon and Kentucky that allow us to distribute our products nationwide. We have made substantial
capital investments to broaden the scope of our manufacturing operations from rough milling through final production, which maximizes our yield from raw materials and allows us to meet the short lead
time requirements of our customers. Our technical knowledge and expertise with respect to the entire production process enable us to meet the specifications and delivery time demands of our customers
for almost any style of cabinet doors or components with high quality standards at a competitive cost. We believe we offer customers among the shortest lead times in the industry, an important
criterion in our customers' procurement decisions.

Our
senior management team has an average of 17 years of industry experience and 13 years with our Company. Our President and Chief Executive Officer, John Fitzpatrick, has
over 25 years of experience in managing manufacturing-based companies and has led our senior management team since July 2000.

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Our History

Our subsidiary, Woodcraft Industries, Inc., was founded in 1945 in St. Cloud, Minnesota, and began as a manufacturer of millwork products, including store
fixtures and shipping pallets. In 1968, through an acquisition and by utilizing our millwork expertise, we began manufacturing kitchen cabinet components. In 1989, we entered the door assembly
business. Over the past 35 years, through strategic acquisitions and expansion of our manufacturing capabilities, we have become a leading U.S. hardwood cabinet door and hardwood component
manufacturer focused primarily on the kitchen and bath cabinet industry. We acquired our PrimeWood subsidiary in 1998, our Brentwood subsidiary in 2002 and our Grand Valley subsidiary in 2004. In
April 2003, we were acquired by our current shareholders, a group of investors led by Behrman Capital III L.P. in connection with the acquisition by Behrman, WII Components, Inc. was
incorporated in Delaware.

Customers

We have been servicing our top ten customers for an average of approximately 14 years, with a minimum of five years. In 2004, sales to Elkay, Masco
Corporation, and MasterBrand Cabinet, Inc. accounted for 20%, 17%, and 10%, respectively, of our net sales. We have experienced significant volume growth in the past three years with most of
our top ten customers due to both market share gains and growth experienced by our customers.

Sales and Marketing

Substantially all of our sales are made directly to cabinet manufacturers without the use of third party sales representatives or distributors. Our sales and
marketing group is organized primarily by product and geography and is directed by our Vice President of Sales and Marketing. The group includes a marketing manager for our hardwood products as well
as two national account managers and three regional account managers. Over the past few years, our sales and marketing efforts have been focused on strengthening relationships with our most important
customers and introducing new products to targeted markets. Due to our long-standing relationships with our key customers, sales and marketing involves relationships at multiple levels
with our customers. Accordingly, our internal sales force works closely with our manufacturing and marketing personnel to develop new opportunities in our core kitchen and bath market, which accounted
for approximately 93% of our sales in 2004, as well as our other markets, including store fixtures.

In
addition to selling products manufactured in our plants, we are exploring opportunities to leverage our customer relationships and established logistics capabilities to market
imported components. While customers' short lead times and demands for high-quality domestic lumber and flexible production limit the components that are feasible to import, certain high
volume, non-visible, lower margin structural components, such as drawer sides, can be imported cost-effectively. We are capable of managing the product sourcing, logistics and
service required to import components for our customers while also providing the auxiliary domestic manufacturing support necessary to ensure reliable and timely supply. In 2004, our sales of imported
products accounted for less than 3% of our total sales.

Supply of Raw Materials

The primary raw materials we purchase are green and kiln-dried hardwood lumber, MDF, hardwood veneer and PVC foil. Hardwood lumber accounts for the
largest portion of our material costs. We purchase our lumber directly from hardwood mills, which allows us to both leverage our scale and avoid the costs associated with intermediaries. We purchase
from a network of over 50 regional mills throughout the Northern and Appalachian hardwood forest areas in close proximity to our manufacturing facilities. No single supplier accounted for more than 6%
of our material purchases in

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2004,
and we are not dependent on any single supplier for any raw material product. Our top ten suppliers accounted for approximately 31% of the key raw materials we purchased in 2004.

We
purchase a variety of species of hardwood lumber, with hard maple, red oak and cherry accounting for our largest volumes. The prices of the various species have fluctuated
historically on independent supply and demand curves and are not highly correlated to one another. Generally, with a lag time, we have passed lumber price changes through to our customers by working
in a partnership with them.

Competition

We operate in the highly competitive kitchen and bath cabinet door and component industry. Our competitors include other independent kitchen and bath cabinet door
and component manufacturers and vertically integrated cabinet manufacturers who produce their own doors and components. We estimate that the cabinet door and component market segment in which we
compete represented approximately $2 billion of the overall U.S. cabinet market in 2004. We believe that independent cabinet door and component manufacturers, like us, accounted for
approximately $900 million of this segment in 2004, while vertically integrated cabinet manufacturers accounted for the remainder.

We
are one of the two largest manufacturers in the independent cabinet component industry. We believe that in 2004 we accounted for approximately 22% of total outsourced cabinet door and
component market sales, and together with Conestoga Wood Products, our principal competitor, we accounted for approximately 41% of this market in 2004.

Environmental Matters

Our operations and properties are subject to extensive federal, state, local and foreign environmental laws relating to protection of the environment and human
health and safety. Environmental laws and regulations are subject to frequent amendment and have become more stringent over time. We could incur in the future significant costs associated with
compliance with, or liabilities under, environmental laws and regulations, including equipment costs, disposal costs, cleanup costs, civil and criminal penalties, injunctive relief and denial or loss
of, or imposition of significant restrictions on, environmental permits. In addition, we could in the future be subject to suit by private parties in connection with alleged violations of or
liabilities under environmental laws and regulations.

Employees

As of December 31, 2004, we had approximately 1,363 full-time employees, 31 part-time employees, and 107 independent contractors.
Approximately 497 employees and independent contractors are located at our St. Cloud, Minnesota headquarters and production facilities, approximately 177 are based in our Foreston, Minnesota facility,
approximately 125 are located in our Bowling Green, Kentucky facility, approximately 336 are located in our PrimeWood subsidiary's Wahpeton, North Dakota facility, approximately 286 are located in our
Brentwood subsidiary's Molalla, Oregon facility, and approximately 80 are located in our Grand Valley subsidiary's Orwell, Ohio facility. Currently, none of our employees are covered by a collective
bargaining agreement.

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Risk Factors and Factors Affecting Forward-Looking Statements

Our ability to predict results or the effect of certain events on our operating results is inherently uncertain. Therefore, we wish to caution each reader of this
annual report to carefully consider the following factors and certain other factors discussed herein and in other past filings with the Securities and Exchange Commission.

The
risks described below are not the only ones that could impact our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may
also materially and adversely affect our business, financial condition or results of operations.

Downturns in the new home construction industry, repair and remodeling activity or the economy could negatively affect our business.

Sales to the kitchen and bath cabinet market accounted for approximately 93% of our total sales for the year ended December 31, 2004. Sales in this market
are driven by new home construction and home repair and remodeling activity. New home construction and repair and remodeling activity may be significantly affected by changes in economic and other
conditions, such as gross domestic product levels, employment levels, demographic trends, availability of financing, interest rates and consumer confidence. These factors can negatively affect the
demand for our products. Any deterioration in these factors could have a material adverse effect on our business, financial condition and results of operations.

We are dependent on major customers for a significant portion of our net sales.

For the year ended December 31, 2004, our top ten customers accounted for approximately 80% of our net sales. During this period, our two largest customers
accounted for approximately 37% of our net sales. The permanent loss of, or a significant decrease in the level of purchases by, one or more of our major customers could have a material adverse effect
on our results of operations. The ongoing trend toward consolidation in the cabinet manufacturing market in which our customers operate could increase the concentration of our sales and therefore
increase these risks.

In
addition, some of our key cabinet manufacturer customers have the resources to manufacture internally the cabinet doors and components that we sell to them. Despite these
manufacturing capabilities, these customers have chosen to outsource door and component production to us in part due to the quality of our products and in order to reduce costs, eliminate production
risks and maintain company focus. However, we cannot assure you that these customers will continue to outsource door and component production in the future. Increased levels of production insourcing
could result from a number of factors, such as shifts in our customers' business strategies, which could result from the acquisition of another door and component manufacturer, the inability of third
party suppliers to meet product specifications and the emergence of low-cost production opportunities in foreign countries. Any significant reduction in the level of cabinet door and
component production outsourcing from our cabinet manufacturing customers could significantly impact our sales and, accordingly, have a material adverse effect on our business, results of operations
and financial condition.

Increased prices for raw materials used in our products could adversely affect our business.

Our profitability is affected by the prices of our raw materials, which may fluctuate based on a number of factors beyond our control, including, among others,
changes in supply and demand, general economic conditions, labor costs, competition and, in some cases, government regulation. The prices for the hardwood species we use in production of our hardwood
doors and components are subject to some volatility. In the past calendar year such prices have all increased, with the size of the increase for the primary hardwood species we use ranging from
approximately 22% for hard maple (approximately

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52%
of our lumber purchases) to approximately 18% for cherry (approximately 19% of our lumber purchases). We have no long-term supply contracts for the raw materials used in the
manufacture of our products. This means that we are subject to changes in the prices charged by our suppliers. Significant increases in the prices of raw materials could materially adversely affect
our business, financial condition and results of operations, especially if we are not able to recover these costs by increasing the prices we charge our customers for our products. The primary raw
material used in our hardwood components business is maple. In 2004, the U.S. kitchen and bath cabinet industry relied heavily on domestic maple, which we believe is of a higher quality than imported
maple. A shortage in the supply of domestic maple or certain other species of lumber would restrict our ability to make sales to our customers, which could also have a material adverse effect on our
business, financial condition and results of operations.

Interruptions in deliveries of raw materials could adversely affect our business.

Our dependency upon regular deliveries from suppliers means that interruptions or stoppages in such deliveries could adversely affect our operations until
arrangements with alternate suppliers could be made. If a substantial number of our suppliers was unable to deliver materials to us for an extended period of time, as the result of financial
difficulties, catastrophic events affecting their facilities or other factors beyond our control, or if we were unable to negotiate acceptable terms for the supply of materials with these or
alternative suppliers, our business, financial condition and results of operations could suffer. We may not be able to find acceptable alternatives, and any such alternatives could result in increased
costs to us. Even if acceptable alternatives are found, the process of locating and securing such alternatives might be disruptive to our business. Extended unavailability of a necessary raw material
could cause us to cease manufacturing of one or more products for a period of time, which could have a material adverse effect on our business, financial condition and results of operations.

Environmental requirements may impose significant compliance costs and liabilities on us.

Our facilities are subject to numerous federal, state and local laws relating to the protection of the environment. We believe we are in substantial compliance
with all applicable requirements. Our efforts to comply with environmental requirements do not remove the risk that we may be held liable, or incur fines or penalties, and that the amount of
liability, fines or penalties may be material, for, among other things, releases of hazardous substances from current properties or any associated offsite disposal location, or for contamination at
our properties from activities conducted by previous occupants. Changes in environmental laws and regulations or the discovery of previously unknown contamination or other liabilities relating to our
properties and operations could result in significant environmental liabilities. In addition, we might incur significant capital and other costs to comply with increasingly stringent environmental
laws and enforcement policies, which would decrease our cash flow available to service our indebtedness.

We face intense competition in our markets.

We operate in the highly fragmented and very competitive cabinet door and component industry. Our competitors include international, national and local cabinet
and cabinet component manufacturers. These can be large consolidated operations with manufacturing facilities in large and efficient plants, as well as relatively small, local cabinetmakers. Some of
our competitors may achieve greater market penetration in certain of the markets in which we operate, have greater financial and other resources available and be less highly leveraged, which may
provide them with greater financial flexibility. Moreover, companies in other building products industries may choose to compete with us. To remain competitive, we will need to invest continuously in
manufacturing, customer service and support and marketing. We may have to adjust the prices of some of our products to stay competitive.

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We
cannot assure you that we will have sufficient resources to continue to make such investments or that we will maintain our competitive position within each of the markets we serve.

Cabinet manufacturers may increasingly rely on imported components, which could negatively affect our business.

The number of foreign-made kitchen cabinets sold in the United States has increased in the last ten years. We believe that the number of
foreign-made cabinet components sold in the United States has also increased, though we do not believe any detailed study of such a trend is currently available. This increase in sales of
imported components is the result of foreign wood component manufacturers improving the quality of their products and services and, in some cases, offering lower prices. While we currently believe
that the impact of imported products in our target markets is limited by, among other factors, the need for greater variety in terms of styles and sizes, demand for higher quality products and short
lead times, there can be no assurance that demand for foreign-made products will not increase in such markets. If domestic cabinet manufacturers continue to increasingly rely on foreign
imports for their components, our business, financial condition and results of operations could be materially and negatively affected.

If we are unable to meet future capital requirements, our business may be adversely affected.

We periodically make capital investments to, among other things, maintain and upgrade our facilities and enhance our production processes. As we grow our
businesses, we may have to incur significant capital expenditures. We cannot assure you that we will have, or be able to obtain, adequate funds to make all necessary capital expenditures when
required, or that the amount of future capital expenditures will not be materially in excess of our anticipated or current expenditures. If we are
unable to make necessary capital expenditures, our product offering may become dated, our productivity may be decreased and the quality of our products may be adversely affected, which, in turn, could
negatively impact our business, financial condition and results of operations.

Increases in the cost of labor, union organizing activity and work stoppages at our facilities could materially affect our business.

Our business is labor intensive. As a result, our financial performance is affected by the availability of qualified personnel and the cost of labor. Currently,
none of our employees are represented by labor unions. However, we cannot assure you that strikes or other types of conflicts with personnel will not arise or that we will not become a target for
union organizing activity. Strikes, work stoppages or slowdowns could result in slowdowns or closures of our or our suppliers' facilities. In addition, organizations responsible for shipping our
products may be impacted by strikes. Any interruption in the production or delivery of our products could reduce sales of our products and increase our costs.

We are dependent on certain key personnel, the loss of whom could materially affect our financial performance and prospects.

Our continued success depends to a large extent upon the continued services of our senior management and certain key employees. The loss of the services of any of
these individuals could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to successfully integrate, and may inherit significant liabilities in connection with, future acquisitions.

We explore opportunities to acquire related businesses from time to time, some of which could be material to us. If we make acquisitions, our ability to continue
to grow will depend upon effectively

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integrating
these acquired companies, achieving cost efficiencies and managing these businesses as part of our company.

We
may not be able to effectively integrate the acquired companies or successfully implement appropriate operational, financial and management systems and controls to achieve the
benefits
expected to result from these acquisitions. Our efforts to integrate these businesses could be affected by a number of factors beyond our control, including general economic conditions and increased
competition. In addition, the process of integrating these businesses could cause the interruption of, or loss of momentum in, the activities of our existing business. The diversion of management's
attention and any delays or difficulties encountered in connection with the integration of these businesses could negatively impact our business and results of operations. Further, the benefits that
we anticipate from these acquisitions may not materialize.

Additionally,
we may be subject to unexpected claims and liabilities arising from these acquisitions. Such claims and liabilities could be costly to defend, could be material in amount
and may exceed either the limitations of any applicable indemnification provisions or the financial resources of the indemnifying parties, in which event such unexpected claims and liabilities could
materially and negatively affect our business and financial performance.

Our principal stockholder is in a position to affect our ongoing operations, corporate transactions and other matters.

As of December 31, 2004, Behrman Capital III L.P., or Behrman, owned 95.4% of our outstanding voting capital stock. Behrman and its affiliates have the
ability to control the election of our Board of Directors and the outcome of other issues submitted to the stockholders for approval. See "Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters." We cannot assure you that the interests of Behrman and its affiliates will not conflict with the interest of the holders of our senior notes and related
stockholder matters. In particular, Behrman and its affiliates may cause a change of control at a time when we do not have sufficient funds to repurchase the notes, or to repay our credit facility.

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Item 2. Properties

Our headquarters are located in St. Cloud, Minnesota. We own seven sophisticated manufacturing facilities. We believe that our facilities are currently operating
at approximately 95% of overall plant capacity. We intend to maintain current levels of capacity utilization while handling an increased volume of sales through increases in operating efficiencies and
moderate growth investments at our hardwood component, door and engineered woods facilities. We expanded our Molalla, Oregon plant in 2004 to create additional capacity for customers located on the
West Coast.

Our
Woodcraft subsidiary operates three facilities in Minnesota, two of which are located in St. Cloud and one of which is in Foreston. Our Minnesota facilities manufacture hardwood
components, and one of our St. Cloud facilities also produces approximately 75% of our hardwood doors. The hardwood door plant in St. Cloud houses high-volume hardwood door production
together with flexible production cells required to respond to customer KAT orders. Our Woodcraft division also has a fourth facility located in Bowling Green, Kentucky where we manufacture hardwood
components for shipment to our Minnesota facilities and to selected customers in the eastern United States.

In
Wahpeton, North Dakota, our PrimeWood subsidiary manufactures RTF doors and components, VRPs and wrapped profiles. We believe our Wahpeton facility, which supplies cabinet
manufacturers throughout North America, is one of the largest independent producers of engineered woods in North America. We acquired this facility in 1998 in connection with our acquisition of
PrimeWood, Inc.

Our
Brentwood subsidiary operates a manufacturing facility in Molalla, Oregon where we produce hardwood and RTF doors, primarily for distribution to our customers located on the West
Coast. Our Molalla facility focuses primarily on KAT production of custom and semi-custom products. We acquired this facility in 2002 in connection with our acquisition of
Brentwood, Inc.

Our
Grand Valley subsidiary operates a manufacturing facility in Orwell, Ohio where we produce hardwood doors through KAT production, primarily for semi-custom products. We
acquired this facility in 2004 in connection with our acquisition of Grand Valley.

The
following chart sets forth information regarding our headquarters and our seven manufacturing facilities:

|Location                |  | Primary Product Line          |  | Square Footage |  | Description of
Property Interest
|----------------------- |  | ----------------------------- |  | -------------- |  | --------------------------------
|St. Cloud, Minnesota    |  | Headquarters                  |  | 10,000         |  | Owned                           
|St. Cloud, Minnesota    |  | Hardwood Doors                |  | 90,000         |  | Owned                           
|St. Cloud, Minnesota    |  | Hardwood Components           |  | 157,450        |  | Owned                           
|Foreston, Minnesota     |  | Hardwood Components           |  | 137,770        |  | Owned                           
|Bowling Green, Kentucky |  | Hardwood Components           |  | 116,880        |  | Owned                           
|Wahpeton, North Dakota  |  | RTF Doors and Components, VRP |  | 200,000        |  | Owned                           
|Molalla, Oregon         |  | Hardwood and RTF Doors        |  | 100,000        |  | Owned                           
|Orwell, Ohio            |  | Hardwood Doors                |  | 40,000         |  | Owned                           

Item 3. Legal Proceedings

We are involved in various proceedings incidental to the ordinary conduct of our business. We do not presently believe that any of the proceedings currently
pending will have a material adverse effect on our business, financial condition, cash flows or results of operations.

Item 4. Submission of Matters to Vote of Security Holders

None.

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PART II

Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

There is no established public trading market for any class of common equity of WII Components, Inc. As of March 14, 2005, there are 12 holders of
record of WII Component's voting stock and 1 holder of record of non-voting common stock.

On
February 24, 2004, we used $39.0 million of the net proceeds from the offering of the senior notes to make payments to our stockholders through a combination of
dividends and redemptions of common
stock. Any payment of future dividends and the amounts thereof will be dependent upon the Company's earnings, fiscal requirements and other factors deemed relevant by the Company's Board of Directors.
Certain restrictive covenants contained in the Company's senior secured credit facility and the indenture governing the senior notes currently limit its ability to make dividend or other payments.

In
April 2004, we issued 2,142,857 shares of common stock at $3.85 per share in connection with our acquisition of Grand Valley. During 2004, we granted 539,000 options to
purchase our common stock at a weighted average exercise price of $3.85 per share.

Item 6. Selected Financial Data

The following table sets forth certain of our historical consolidated financial data. We refer to the Company prior to its acquisition by Behrman Capital III L.P.
on April 9, 2003 as the "Predecessor." For accounting purposes, this acquisition was recorded with an effective date of April 1, 2003 and accounted for using the purchase method of
accounting. Therefore, the financial information for periods after April 1, 2003 may not be comparable to financial information for periods prior to April 1, 2003. We refer to the
Company after its acquisition by Behrman Capital III L.P. on April 9, 2003 as the "Successor". The selected historical consolidated financial data as of and for the years ended
December 31, 2004, 2002, 2001, and 2000; as of and for the three months ended March 31, 2003; and as of and for the nine months ended December 31, 2003 have been derived from our
audited consolidated financial statements. Historical results are not necessarily indicative of the results to be expected in the future. You should read the following data in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of Operations" and our historical consolidated financial statements and accompanying notes included elsewhere in this annual
report.

|                               |  | Successor |         | Predecessor |  
|------------------------------ |  | --------- | ------- | ----------- | -
|
|
|
|
|Statement of Operations Data:  |  |           |         |             |  
|Net sales                      |  | $         | 203,066 |             | $
|Cost of sales                  |  |           | 167,042 |             |  
|Gross profit                   |  |           | 36,024  |             |  
|Total operating expenses(3)(4) |  |           | 12,880  |             |  
|Operating income               |  |           | 23,144  |             |  
|Interest expense               |  |           | 12,767  |             |  
|Other loss (income), net(5)    |  |           | 3,414   |             |  
|Income tax expense (benefit)   |  |           | 2,684   |             |  
|Net income (loss)              |  | $         | 4,279   |             | $
|                               |  |           |         |             |  

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|Other Financial Data:                     |  |   |         |   |   |         |   |   |        |   |   |        |   |   |        |   |   |        |  
|----------------------------------------- |  | - | ------- | - | - | ------- | - | - | ------ | - | - | ------ | - | - | ------ | - | - | ------ | -
|EBITDA(6)                                 |  | $ | 25,801  |   | $ | 20,799  |   | $ | 6,032  |   | $ | 20,724 |   | $ | 12,625 |   | $ | 8,288  |  
|EBITDA margin(7)                          |  |   | 12.7    | % |   | 15.7    | % |   | 14.7   | % |   | 14.4   | % |   | 10.4   | % |   | 6.5    | %
|Depreciation and amortization(8)          |  | $ | 6,071   |   | $ | 4,052   |   | $ | 1,283  |   | $ | 4,765  |   | $ | 5,314  |   | $ | 6,598  |  
|Capital expenditures                      |  |   | 5,733   |   |   | 5,005   |   |   | 533    |   |   | 2,270  |   |   | 1,692  |   |   | 1,745  |  
|Net cash provided by operating activities |  |   | 15,969  |   |   | 17,203  |   |   | 989    |   |   | 11,308 |   |   | 12,655 |   |   | 5,116  |  
|Balance Sheet (at end of period):         |  |   |         |   |   |         |   |   |        |   |   |        |   |   |        |   |   |        |  
|Total assets                              |  | $ | 194,987 |   | $ | 173,925 |   | $ | 81,091 |   | $ | 76,879 |   | $ | 65,896 |   | $ | 73,902 |  
|Long-term debt, plus current maturities   |  |   | 120,000 |   |   | 94,948  |   |   | 32,273 |   |   | 32,634 |   |   | 32,381 |   |   | 44,588 |  
|Capital lease obligations                 |  |   | 3,122   |   |   | 4,488   |   |   | 4,166  |   |   | 4,342  |   |   | 4,242  |   |   | 4,233  |  
|Accumulated preferred stock               |  | $ |        |   | $ |        |   | $ | 28,245 |   | $ | 27,062 |   | $ | 20,529 |   | $ | 17,253 |  

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10

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|                              |  | Successor |        | Predecessor |  
|----------------------------- |  | --------- | ------ | ----------- | -
|
|
|
|
|Net income (loss)             |  | $         | 4,279  |             | $
|Interest expense              |  |           | 12,767 |             |  
|Income tax expense (benefit)  |  |           | 2,684  |             |  
|Depreciation and amortization |  |           | 6,071  |             |  
|                              |  |           |        |             |  
|EBITDA                        |  | $         | 25,801 |             | $

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in conjunction with our consolidated financial statements and related notes appearing elsewhere
in this annual report. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to
differ materially from management's expectations.

Overview

We are one of the leading manufacturers of hardwood cabinet doors and components and engineered wood products in the United States. Our products include
(1) hardwood cabinet door components, face frames and drawer fronts, (2) fully assembled hardwood cabinet doors, (3) rigid thermofoil, or RTF, cabinet doors and components,
(4) veneer raised panels, or VRPs, and (5) a variety of laminated and profile-wrapped components. We generate approximately 93% of our sales from the kitchen and bath cabinet
manufacturing industry. Our customers, in turn, distribute their products through various sales channels, including specialty kitchen and bath cabinet dealers, home center retailers and homebuilders.
We conduct all of our operations through our Woodcraft, PrimeWood, Grand Valley and Brentwood subsidiaries and we operate seven manufacturing facilities located in Minnesota, North Dakota, Oregon,
Ohio and Kentucky that allow us to distribute our products nationwide.

We
consummated three strategic acquisitions that have substantially enhanced our market position, product breadth and geographic reach. In June 1998, we acquired PrimeWood, a
manufacturer of RTF, VRP and profile-wrapped engineered wood products based in North Dakota. In July 2002, we acquired Brentwood, a manufacturer of solid wood and RTF cabinet doors located in
Oregon. In April 2004, we acquired Grand Valley, a manufacturer of solid wood cabinet doors located in Ohio.

WII
Components, Inc. (formerly known as WII Holdings, Inc.), a Delaware corporation, which we refer to as the Company, was formed to acquire Woodcraft
Industries, Inc. and its subsidiaries, or the Predecessor, through a stock purchase on April 9, 2003, which we refer to as the Acquisition. For accounting purposes, the Acquisition was
recorded with an effective date of April 1, 2003. The Acquisition was accounted for using the purchase method of accounting. Accordingly, the assets acquired and the liabilities assumed by WII
Components, Inc. were recorded at fair value as of April 1,

11

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2003
and included $104.0 million for goodwill. The financial information for periods after April 1, 2003 may not be comparable to financial information for periods prior to
April 1, 2003.

In
February 2004, we entered into a new senior secured revolving credit facility and used the proceeds from the sale of our 10% Senior Notes due 2012 to pay off the term loans and
revolving line of credit under our old senior credit facility, pay a dividend of approximately $21.5 million, to repurchase an aggregate of 3,317,580 shares of our voting and
non-voting common stock from all of our existing stockholders on a proportionate basis for an aggregate purchase price of approximately $17.5 million or $5.29 per share and to pay
financing costs of $7.4 million.

Results of Operations

Year Ended December 31, 2004 Compared to the Year Ended December 31, 2003

For purposes of the discussion of the results of operations for the twelve months ended December 31, 2004 and 2003 below, the results of operations for the
company for the nine-month period ended December 31, 2003 and the results of operations for the predecessor for the three-month period ended March 31, 2003 have been combined
in the table below. The results of operations for the company for the nine-month period ended December 31, 2003 includes purchase accounting adjustments due to the Acquisition,
which will be discussed throughout the "Management's Discussion and Analysis of Financial Condition and Results of Operations" below. The following table sets forth selected operating data derived
from our consolidated statements of operations and presents this information as a percentage of net sales.

|                         |                | WII Components, Inc. |         | Combined |   | Predecessor |       | WII Components, Inc. |       
|------------------------ | -------------- | -------------------- | ------- | -------- | - | ----------- | ----- | -------------------- | ------
|
|
|Net sales                |                | $                    | 203,066 |          | $ | 173,627     |       | $                    | 40,980
|                         | % of net sales |                      |         | 100.0    | % |             | 100.0 | %                    |       
|Cost of sales            |                |                      | 167,042 |          |   | 139,549     |       |                      | 32,071
|                         | % of net sales |                      |         | 82.3     | % |             | 80.4  | %                    |       
|                         |                |                      |         |          |   |             |       |                      |       
|Gross profit             |                |                      | 36,024  |          |   | 34,078      |       |                      | 8,909 
|                         | % of net sales |                      |         | 17.7     | % |             | 19.6  | %                    |       
|Operating expenses       |                |                      | 12,880  |          |   | 12,678      |       |                      | 4,188 
|                         | % of net sales |                      |         | 6.3      | % |             | 7.3   | %                    |       
|                         |                |                      |         |          |   |             |       |                      |       
|Operating income         |                |                      | 23,144  |          |   | 21,400      |       |                      | 4,721 
|                         | % of net sales |                      |         | 11.4     | % |             | 12.3  | %                    |       
|Other expenses:          |                |                      |         |          |   |             |       |                      |       
|Interest expense         |                |                      | 12,767  |          |   | 7,178       |       |                      | 835   
|                         | % of net sales |                      |         | 6.3      | % |             | 4.1   | %                    |       
|Other loss (income), net |                |                      | 3,414   |          |   | (96         | )     |                      | (28   
|                         | % of net sales |                      |         | 1.7      | % |             | -0.1  | %                    |       
|Income taxes             |                |                      | 2,684   |          |   | 5,256       |       |                      | 1,404 
|                         | % of net sales |                      |         | 1.3      | % |             | 3.0   | %                    |       
|                         |                |                      |         |          |   |             |       |                      |       
|Net income               |                |                      | 4,279   |          |   | 9,062       |       |                      | 2,510 
|                         | % of net sales |                      |         | 2.1      | % |             | 5.2   | %                    |       
|                         |                |                      |         |          |   |             |       |                      |       

Net Sales.Net sales increased $29.5 million, or 17.0%, from $173.6 million for the year ended
December 31, 2003 to $203.1 million for the year ended December 31, 2004. Our hardwood product line increased $30.8 million and is attributable to a combination of
(i) increases in volume due in part

12

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to
overall industry growth and in part to market share gain, and (ii) price adjustments due to increases in raw material costs. This increase is partially offset by a $1.3 million
decrease in sales in our engineered wood products line due to a partial loss of market share by some of our customers and a softening in this market sector.

Cost of Sales.Cost of sales increased $27.5 million, or 19.7%, from $139.5 million for the year ended
December 31, 2003 to $167.0 million for the year ended December 31, 2004. This increase in cost of sales is attributable to (i) increased material, labor and overhead costs
related to volume growth, (ii) inflation, primarily in respect of raw material costs, in each case related to both our hardwood and engineered wood product lines, and (iii) operating
inefficiencies experienced due to the expansion of our Brentwood facility. These costs were partially offset by gains in operational efficiency in our other facilities and by spreading our fixed costs
over a larger sales base.

Gross Profit.Gross profit increased $2.0 million, or 5.9%, from $34.1 million for the year ended
December 31, 2003 to $36.1 million for the same period in 2004 as a result of the factors described above. As a percentage of net sales, our gross profit decreased 190 basis points from
19.6% for the year ended December 31, 2003 to 17.7% for the same period in 2004. This decrease reflects (i) increases in our raw material costs compared to the same period in 2003 and
(ii) inefficiencies in material and labor utilization in our Brentwood facility, offset in part by (iii) the spreading of our fixed costs over a larger sales base.

Operating Expenses.Operating expenses increased $0.2 million, or 1.6%, from $12.7 million for the year ended
December 31, 2003 to $12.9 million for the same period in 2004. The increase consists of (i) $0.8 million of additional incentive compensation paid to certain key employees
in February 2004 in recognition of our improved financial performance and the successful completion of the offering of the senior notes, (ii) $1.2 million due to the inclusion of
eight full months of operations of Grand Valley in 2004, (iii) $0.5 million for bad debt expense due to a reversal of an allowance for doubtful account reserve in 2003, and
(iv) $0.5 million for stock compensation expense. This increase was offset partially by (i) $1.5 million in cash payments to holders of the predecessor's capital stock for
certain tax liabilities incurred upon the sale of capital stock in April 2003, (ii) $0.3 million for lower bonus expense based on 2004 performance versus budget,
(iii) $0.2 million write-down of an impaired asset in 2003, (iv) $0.1 million of periodic fees paid in 2003 to the private equity firm which managed the equity
fund that owned the predecessor, (v) $0.2 million of lower depreciation expense, and (vi) $0.4 million of consulting and noncompete expense in 2003 for the previous owner
of a subsidiary of Woodcraft Industries, Inc.

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Operating Income.Operating income increased by $1.8 million, or 8.4%, from $21.4 million for the year ended
December 31, 2003 to $23.2 million for the year ended December 31, 2004 as a result of the net effect of the factors described above.

Interest Expense.Interest expense increased $5.6 million, or 77.8%, from $7.2 million for the year ended
December 31, 2003 to $12.8 million for the year ended December 31, 2004. Amortization of deferred financing fees accounted for $0.2 million of the increase. The remaining
increase related to the increase in debt and the higher interest rate on the senior credit facility established in connection with the Acquisition in April 2003, and the issuance of
$120.0 million senior notes in February 2004.

Other loss (income).Other loss (income) changed from $0.1 million of other income for the year ended
December 31, 2003 to $3.4 million of other loss for the year ended December 31, 2004 resulting from the write-off of financing fees related to the senior credit
facility from April 2003 which was subsequently paid-off in February 2004.

Income tax expense.Income tax expense decreased $2.6 million, or 49.1% from $5.3 million for the year ended
December 31, 2003 to $2.7 million for the year ended December 31, 2004 as a result of lower earnings. The effective tax rate increased 180 basis points from 36.7% in 2003 to 38.5%
in 2004. This increase is a result of increases in permanent differences.

Net Income.Net income decreased $4.7 million, or 52.2%, from $9.0 million for the year ended
December 31, 2003 to $4.3 million for the year ended December 31, 2004 as a result of the factors described above.

Year Ended December 31, 2003 Compared to the Year Ended December 31, 2002

For purposes of the discussion of the results of operations for the twelve months ended December 31, 2003 and 2002 below, the results of operations for the
company for the nine-month period ended December 31, 2003 and the results of operations for the predecessor for the three-month period ended March 31, 2003 have been combined
in the table below. The results of operations for the company for the nine-month period ended December 31, 2003 includes purchase accounting adjustments due to the Acquisition,
which will be discussed throughout the "Management's Discussion and Analysis of Financial Condition and Results of Operations" below. The following table sets forth

14

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selected
operating data derived from our consolidated statements of operations and presents this information as a percentage of net sales.

|                         |                | Predecessor |        | WII Components, Inc. |   | Combined |       | Predecessor |        
|------------------------ | -------------- | ----------- | ------ | -------------------- | - | -------- | ----- | ----------- | -------
|
|
|Net sales                |                | $           | 40,980 |                      | $ | 132,647  |       | $           | 173,627
|                         | % of net sales |             |        | 100.0                | % |          | 100.0 | %           |        
|Cost of sales            |                |             | 32,071 |                      |   | 107,478  |       |             | 139,549
|                         | % of net sales |             |        | 78.3                 | % |          | 81.0  | %           |        
|                         |                |             |        |                      |   |          |       |             |        
|Gross profit             |                |             | 8,909  |                      |   | 25,169   |       |             | 34,078 
|                         | % of net sales |             |        | 21.7                 | % |          | 19.0  | %           |        
|Operating expenses       |                |             | 4,188  |                      |   | 8,490    |       |             | 12,678 
|                         | % of net sales |             |        | 10.2                 | % |          | 6.4   | %           |        
|                         |                |             |        |                      |   |          |       |             |        
|Operating income         |                |             | 4,721  |                      |   | 16,679   |       |             | 21,400 
|                         | % of net sales |             |        | 11.5                 | % |          | 12.6  | %           |        
|Other expenses:          |                |             |        |                      |   |          |       |             |        
|Interest expense         |                |             | 835    |                      |   | 6,343    |       |             | 7,178  
|                         | % of net sales |             |        | 2.0                  | % |          | 4.8   | %           |        
|Other loss (income), net |                |             | (28    | )                    |   | (68      | )     |             | (96    
|                         | % of net sales |             |        | -0.1                 | % |          | -0.1  | %           |        
|Income taxes             |                |             | 1,404  |                      |   | 3,852    |       |             | 5,256  
|                         | % of net sales |             |        | 3.4                  | % |          | 2.9   | %           |        
|                         |                |             |        |                      |   |          |       |             |        
|Net income               |                |             | 2,510  |                      |   | 6,552    |       |             | 9,062  
|                         | % of net sales |             |        | 6.1                  | % |          | 4.9   | %           |        
|                         |                |             |        |                      |   |          |       |             |        

Net Sales.Net sales increased $29.8 million, or 20.7%, from $143.8 million for the year ended
December 31, 2002 to $173.6 million for the year ended December 31, 2003. Approximately $10.7 million of this increase resulted from the inclusion of twelve months of
Brentwood sales for the year ended December 31, 2003 compared to five months of sales for the year ended December 31, 2002. Sales for Brentwood for the twelve-month period were
$16.9 million in 2003 compared to $6.2 million in 2002. Of the remaining $19.1 million increase in net sales, $14.8 million relates to our hardwood product lines and is
attributable to a combination of (i) increases in volume due in part to overall industry growth and in part to market share gain, and (ii) price adjustments due to increases in raw
material costs. The balance of $4.3 million relates to our engineered wood products line and is attributable to increases in volume due to overall industry growth and market share gain.

Cost of Sales.Cost of sales increased $23.7 million, or 20.5%, from $115.8 million for the year ended
December 31, 2002 to $139.5 million for the year ended December 31, 2003. Of this increase, approximately $8.8 million resulted from the inclusion of Brentwood's cost of
sales for the full twelve months in 2003 compared to the inclusion of such costs for five months in 2002. The remaining $14.9 million increase in cost of sales is attributable to
(i) increased material, labor and overhead costs related to volume growth, and (ii) inflation, primarily in respect of raw material costs, in each case related to both our hardwood and
engineered wood product lines. These costs were partially offset by gains in operational efficiency, primarily increased labor productivity.

Gross Profit.Gross profit increased $6.1 million, or 21.7%, from $28.0 million for the year ended
December 31, 2002 to $34.1 million for the same period in 2003 as a result of the factors described above. As a percentage of net sales, our gross profit increased 10 basis points from
19.5% for the year

15

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ended
December 31, 2002 to 19.6% for the same period in 2003. This increase reflects (i) productivity gains and (ii) the spreading of our fixed costs over a larger sales base,
offset in part by (iii) increases in our raw material costs compared to the same period in 2002.

Operating Expenses.Operating expenses increased $1.4 million, or 12.4%, from $11.3 million for the year ended
December 31, 2002 to $12.7 million for the same period in 2003. The increase consists of (i) $0.8 million in increases in stock compensation expenses,
(ii) $1.8 million resulting from the inclusion of Brentwood operating expenses for twelve months in 2003 compared to five months in 2002 and (iii) a $0.2 million
write-down of an impaired asset, offset by (iv) $0.7 million for fees paid to the private equity firm which managed the equity fund that owned the Predecessor and
(v) $0.6 million decrease in bad debt expense.

Operating Income.Operating income increased by $4.7 million, or 28.1%, from $16.7 million for the year ended
December 31, 2002 to $21.4 million for the year ended December 31, 2003 as a result of the net effect of the factors described above.

Interest Expense.Interest expense increased $3.8 million, or 113.8%, from $3.4 million for the year ended
December 31, 2002 to $7.2 million for the year ended December 31, 2003. Amortization of deferred financing fees accounted for $0.4 million of the increase. The remaining
increase related to the increase in debt and the higher interest rate on the senior credit facility established in connection with the Acquisition in April 2003.

Other loss (income).Other loss (income) changed from $0.7 million of other loss for the year ended
December 31, 2002 to $0.1 million of other income for the year ended December 31, 2003, a $0.8 million positive difference, resulting from the write-off of
financing fees of $0.8 million in 2002 related to the modification of debt under our senior credit facility in connection with the acquisition of our Brentwood subsidiary.

Income tax expense.Income tax expense increased $0.3 million, or 5.5% from $5.0 million for the year ended
December 31, 2002 to $5.3 million for the year ended December 31, 2003 as a result of higher earnings. The effective tax rate decreased 280 basis points from 39.5% in 2002 to
36.7% in 2003. This decrease is a result of decreases in permanent differences, primarily non-deductible expenses and non-deductible interest, during the year ended
December 31, 2003.

Net Income.Net income increased $1.4 million, or 19.0%, from $7.6 million for the year ended
December 31, 2002 to $9.1 million for the year ended December 31, 2003 as a result of the factors described above.

Liquidity and Capital Resources

Our primary cash needs are working capital, capital expenditures and debt service. We have historically financed these cash requirements through internally
generated cash flow and funds borrowed under our prior and existing senior secured credit facilities.

Refinancing.On February 18, 2004, we issued $120 million of 10% senior notes due in 2012, and paid the entire
outstanding balance of our old senior secured credit facility and terminated the related credit agreement. Under that credit facility, we had three outstanding term loans and a $15.0 million
revolving credit facility. Our existing credit facility provides for revolving credit of up to $25.0 million subject to a borrowing base and outstanding principal bears interest at a
fluctuating rate equal to, at our option, either the base rate plus 21/4% per annum or LIBOR plus 31/2% per annum for the first twelve months the facility is in place and
thereafter either the base rate plus 2% per annum or LIBOR plus 31/4% per annum when the ratio of total debt to trailing twelve month EBITDA is less than 4.0 to 1.0. As of
December 31, 2004, we had nothing outstanding under our credit facility. We must comply with certain financial covenants under our credit facility including maintenance of a minimum fixed

16

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charge
coverage ratio, a maximum total leverage ratio and an EBITDA minimum. As of December 31, 2004 we were in compliance with these covenants. As of December 31, 2004 we had
$3.1 million of capital lease obligations, of which $0.9 million was current.

Our
existing senior secured revolving credit facility and the indenture for the senior notes imposes certain restrictions on us, including restrictions on our ability to incur
indebtedness, pay dividends, make investments, grant liens, sell our assets and engage in certain other activities. Indebtedness under our existing senior secured revolving credit facility is secured
by substantially all of our assets, including our real and personal property, inventory, accounts receivable, intellectual property and other intangibles.

Cash Flow from Operating Activities.As of December 31, 2003, we had $39,000 of cash and cash equivalents available
for working capital purposes. As of December 31, 2004, we had approximately $2,000 of cash and cash equivalents available for working capital purposes. Cash provided by operating activities for
the year ended December 31, 2004 was $16.0 million compared to $18.2 million for the same period in 2003.

Cash Flow from Investing Activities.Capital expenditures were $5.7 million in fiscal year 2004 compared to
$5.5 million for fiscal year 2003. Net cash used in investing activities was $21.6 million as of December 31, 2004 compared to $5.6 million used in the same period in 2003.
Cash flow from investing activities includes $15.9 million for our Grand Valley acquisition in 2004.

Cash Flow from Financing Activities.Net cash provided by financing activities for the year ended December 31, 2004
totaled $5.6 million and includes cash inflows for the $120.0 million offering of senior notes, an increase in the new credit facility of $1.2 million in conjunction with the
offering of our 10% senior notes, $0.1 million for the discontinuation of our interest rate hedge in connection with the repayment of the old credit facility, and $8.3 million for the
issuance of common stock in conjunction with the Grand Valley acquisition. Net cash used by financing activities for the year ended December 31, 2004 includes the payment to extinguish the old
credit facility of $75.0 million, a dividend distribution of $21.5 million, a repurchase of common stock of $17.5 million, $7.4 million of debt issuance cost in connection
with the offering of $120.0 million of our 10% senior notes due 2012, $1.4 million of payments on capital lease obligations, and a decrease in the revolver of approximately
$1.2 million.

Dividends.In the three months ended March 31, 2003, the predecessor paid a dividend in the amount of
$11.4 million to its preferred shareholders. We are limited by our current debt covenants regarding the payment of dividends. On February 24, 2004, we used $39.0 million of the
net proceeds from the offering of the senior notes to make payments to our stockholders through a combination of dividends and redemptions of common stock.

We
anticipate that the funds generated by operations and funds available under the senior secured revolving credit facility will be sufficient to meet working capital requirements and to
finance capital expenditures over the next twelve months. We cannot provide assurances that our business will generate sufficient cash flow from operations, that anticipated net sales growth and
operating improvements will be realized or that future borrowings will be available under our senior secured revolving credit facility in an amount sufficient to enable us to service our indebtedness,
including the senior notes, or to fund our other liquidity needs. In addition, we cannot provide assurances that we will be able to refinance any of our indebtedness, including our senior secured
revolving credit facility and the senior notes, on commercially reasonable terms, if at all.

17

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Schedule of Certain Contractual Obligations

The following table details our projected payments for our significant contractual obligations as of December 31, 2004. The table is based upon available
information and certain assumptions that we believe are reasonable.

|                                   |  | Payments Due by Period
|---------------------------------- |  | ----------------------
|
|
|Long-term debt obligations         |  | $                     
|Interest expense                   |  |                       
|Capital lease obligations          |  |                       
|Operating lease obligations        |  |                       
|                                   |  |                       
|Total contractual cash obligations |  | $                     

Inflation

Our cost of sales is subject to inflationary pressures on labor costs, prices of the raw materials we use and various overhead costs. We generally have been able
over time to offset the effects of inflation and price fluctuations through a combination of sales price increases and operational efficiencies.

Seasonality

Our sales historically have been moderately seasonal, reflecting the temporary slow down in consumer purchasing activity during the winter holiday season and the
summer months.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to
make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Because of the uncertainty inherent in these matters, actual results could differ from those estimates. We believe that the
estimates, assumptions and judgments involved in the accounting policies below have the greatest potential impact on our financial statements.

Revenue Recognition.We recognize revenues and related cost of sales when title passes, which is usually upon shipment of
product under FOB shipping point terms. Returns are estimated and provided for at the time of sale based on historical experience and current trends.

Allowance for Doubtful Accounts.We make estimates of potentially uncollectible accounts receivable. Our reserves are based
on an analysis of customers' accounts and historical write-off experience. Our analysis includes the age of the receivable, customer creditworthiness and general economic conditions. We
believe the results could be materially different if historical trends do not reflect actual results or if economic conditions worsened.

Goodwill.We adopted Statement of Financial Accounting Standards, or SFAS No. 142, Goodwill and Other Intangible
Assets, and accordingly have discontinued the amortization of goodwill. We evaluate goodwill for impairment annually or whenever an indicator of impairment occurs. If events or circumstances change,
including reductions in anticipated cash flows generated by operations, goodwill could become impaired and result in a charge to earnings.

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Impairment of Long-Lived Assets.We evaluate the carrying value of long-lived assets, such as
property, plant and equipment, for impairment when events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be recoverable. Assets are grouped and
evaluated for impairment at the lowest level for which there are identifiable cash flows. If impairment indicators are present and the estimated future undiscounted cash flows are less than the
carrying value of the asset or group of assets, the carrying value is reduced to its estimated fair value. Fair value is estimated based on the best information available, including prices for similar
assets or results of valuation techniques such as discounting estimated future cash flows.

Insurance Benefit Accruals.Each accounting period, we estimate an amount to accrue for medical costs incurred but not yet
reported under our self-funded employee medical and workers compensation insurance plans. We base our determination on an evaluation of past rates of claim payouts and trends in the amount
of payouts. This determination requires significant judgment and assumes past patterns are representative of future payment patterns. A significant shift in usage and payment patterns within these
plans could necessitate significant adjustments to these accruals in future accounting periods.

Purchase Accounting.We accounted for our acquisitions under the purchase method of accounting and, accordingly, the acquired
assets and liabilities assumed are recorded at their respective fair values. The recorded values of assets and liabilities are based on third-party estimates and valuations when available. The
remaining values are based on management's judgments and estimates. Our financial position and results from operations may be affected by changes in estimates and judgments.

Income Taxes.The Company accounts for income taxes in accordance with the liability method of accounting, which requires
recognition of deferred tax assets and liabilities for the expected future tax consequences of events that were included in the consolidated financial statements and tax returns. Under this method,
deferred tax assets and liabilities are determined based on the difference between
the financial statement and tax bases of assets and liabilities using enacted tax rates expected to be in effect for the year in which the differences are expected to reverse. The Company records a
valuation allowance when it is more likely than not that the net deferred tax assets will not be realized.

The
Company is subject to audits in the tax jurisdictions in which it operates. Upon audit, these taxing jurisdictions could retroactively disagree with our tax treatment of certain
items. Consequently, the actual liabilities with respect to any year may be determined long after financial statements have been issued. The Company establishes tax reserves for estimated tax
exposures. These potential exposures result from varying applications of statutes, rules, regulations, case law and interpretations. The settlement of these exposures primarily occurs upon
finalization of tax audits. However, the amount of the exposures can also be impacted by changes in tax laws and other factors. The Company believes that it has established the appropriate reserves
for these estimated exposures. However, actual results may differ from these estimates. The resolution of these tax matters will not have a material effect on the consolidated financial condition of
the Company, although a resolution could have a material impact on the Company's consolidated statement of operations for a particular future period and on the Company's effective tax rate.

New Accounting Standards

See Item 8, Note 2 of the Consolidated Financial Statements for information pertaining to recently adopted accounting standards or accounting standards to
be adopted in the future.

Item 7A. Qualitative and Quantitative Information about Market Risk

We are subject to various market risks such as fluctuating lumber prices and interest rates.

19

---



Commodity Price Risk.Hardwood lumber accounts for the largest portion of our material costs. Our profitability is therefore
affected by the prices of lumber which may fluctuate based on a number of factors beyond our control, including, among others, changes in supply and demand, general economic conditions, labor costs,
competition and, in some cases, government regulation. Though we are not dependent on any single supplier for our raw materials, we have no long-term supply contracts and thus, are subject
to changes in the prices charged by our suppliers. The prices for the primary hardwood species we use in the production of our hardwood doors and components are subject to some volatility.

Interest Rate Risk.We are exposed to market risk relating to changes in interest rates in respect of a portion of our
long-term debt and a portion of our capital leases. As of December 31, 2004, we had nothing outstanding under our senior secured revolving credit facility. In addition, as of that
date, we had approximately $1.8 million of capital leases that bear interest at variable rates. We believe that a one percent (1%) increase in the interest rates currently in effect would not
have a material adverse effect on our financial condition or results of operations.

20

---





Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and Stockholders of
WII Components, Inc.

We
have audited the accompanying consolidated balance sheets of WII Components, Inc. and Subsidiaries (the "Successor") as of December 31, 2004 and 2003, and the related consolidated
statements of operations, stockholders' equity, and cash flows for the year ended December 31, 2004 and for the period from inception (April 1, 2003) to December 31, 2003. We have
also audited the accompanying consolidated statements of operations, stockholders' equity, and cash flows of Woodcraft Industries, Inc. and Subsidiaries (the "Predecessor" along with the
Successor, herein referred to as the "Company") for the three-month period ended March 31, 2003 and for the year ended December 31, 2002. Our audits also included the financial statement
schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on
the financial statements and financial statement schedule based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances but not for
the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the Successor consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2004 and
2003, and the results of their operations and their cash flows for the year ended December 31, 2004 and for the period from inception (April 1, 2003) to December 31, 2003, in
conformity with accounting principles generally accepted in the United States of America. Further, in our opinion, the Predecessor's consolidated financial statements referred to above present fairly,
in all material respects, the results of their operations and their cash flows for the three-month period ended March 31, 2003 and for the year ended December 31, 2002, in conformity
with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/
DELOITTE & TOUCHE LLP

Minneapolis,
Minnesota
March 25, 2005

21

---





WII COMPONENTS, INC. AND SUBSIDIARIES  CONSOLIDATED BALANCE SHEETS  DECEMBER 31, 2004 AND 2003  (In thousands, except share and per share amounts)

|                                                    |                                                                                                                       | 2004                               |         | 2003    |        
|--------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------- | ---------------------------------- | ------- | ------- | -------
|ASSETS                                              |                                                                                                                       |                                    |         |         |        
|CURRENT ASSETS:                                     |                                                                                                                       |                                    |         |         |        
|                                                    | Cash                                                                                                                  |                                    | $       | 2       |        
|                                                    | Accounts receivablenet of allowance for doubtful accounts of $209 and $237, respectively                             |                                    |         | 9,564   |        
|                                                    | Inventories                                                                                                           |                                    |         | 16,742  |        
|                                                    | Deferred income taxes                                                                                                 |                                    |         | 1,437   |        
|                                                    | Income tax receivable                                                                                                 |                                    |         | 768     |        
|                                                    | Other current assets                                                                                                  |                                    |         | 1,176   |        
|                                                    |                                                                                                                       |                                    |         |         |        
|                                                    |                                                                                                                       | Total current assets               |         |         | 29,689 
|PROPERTY, PLANT, AND EQUIPMENT:                     |                                                                                                                       |                                    |         |         |        
|                                                    | Land                                                                                                                  |                                    |         | 3,175   |        
|                                                    | Buildings and yards                                                                                                   |                                    |         | 20,197  |        
|                                                    | Equipment                                                                                                             |                                    |         | 27,480  |        
|                                                    | Less accumulated depreciation                                                                                         |                                    |         | (8,600  | )      
|                                                    |                                                                                                                       |                                    |         |         |        
|                                                    |                                                                                                                       | Property, plant, and equipmentnet |         |         | 42,252 
|GOODWILL AND OTHER ASSETS:                          |                                                                                                                       |                                    |         |         |        
|                                                    | Goodwill                                                                                                              |                                    |         | 107,601 |        
|                                                    | Customer relationship                                                                                                 |                                    |         | 7,347   |        
|                                                    | Noncompete agreements                                                                                                 |                                    |         | 1,201   |        
|                                                    | Other assets                                                                                                          |                                    |         | 6,897   |        
|                                                    |                                                                                                                       |                                    |         |         |        
|                                                    |                                                                                                                       | Total goodwill and other assets    |         |         | 123,046
|                                                    |                                                                                                                       |                                    |         |         |        
|TOTAL                                               |                                                                                                                       | $                                  | 194,987 |         | $      
|                                                    |                                                                                                                       |                                    |         |         |        
|LIABILITIES AND STOCKHOLDERS' EQUITY                |                                                                                                                       |                                    |         |         |        
|CURRENT LIABILITIES:                                |                                                                                                                       |                                    |         |         |        
|                                                    | Current maturities of long-term debt                                                                                  |                                    | $       |        |        
|                                                    | Current maturities of capital lease obligations                                                                       |                                    |         | 928     |        
|                                                    | Accounts payable                                                                                                      |                                    |         | 5,808   |        
|                                                    | Accrued payroll                                                                                                       |                                    |         | 3,207   |        
|                                                    | Other current liabilities                                                                                             |                                    |         | 9,107   |        
|                                                    |                                                                                                                       |                                    |         |         |        
|                                                    |                                                                                                                       | Total current liabilities          |         |         | 19,050 
|LONG-TERM DEBTNet of current maturities            |                                                                                                                       |                                    | 120,000 |         |        
|CAPITAL LEASE OBLIGATIONSNet of current maturities |                                                                                                                       |                                    | 2,194   |         |        
|DEFERRED INCOME TAXES                               |                                                                                                                       |                                    | 4,526   |         |        
|STOCKHOLDERS' EQUITY:                               |                                                                                                                       |                                    |         |         |        
|                                                    | Common stock:                                                                                                         |                                    |         |         |        
|                                                    | Voting, $0.01 par28,000,000 shares authorized; 20,734,843 and 14,813,827 shares issued and outstanding, respectively |                                    |         | 207     |        
|                                                    | Nonvoting, $0.01 par1,000,000 shares authorized; 854,261 and 1,000,000 issued and outstanding, respectively          |                                    |         | 9       |        
|                                                    | Undesignated preferred shares, $0.01 par1,000,000 shares authorized; none outstanding                                |                                    |         |        |        
|                                                    | Additional paid-in capital                                                                                            |                                    |         | 45,410  |        
|                                                    | Retained earnings                                                                                                     |                                    |         | 3,591   |        
|                                                    | Accumulated other comprehensive income                                                                                |                                    |         |        |        
|                                                    |                                                                                                                       |                                    |         |         |        
|                                                    |                                                                                                                       | Total stockholders' equity         |         |         | 49,217 
|                                                    |                                                                                                                       |                                    |         |         |        
|TOTAL                                               |                                                                                                                       | $                                  | 194,987 |         | $      
|                                                    |                                                                                                                       |                                    |         |         |        

See notes to consolidated financial statements.

22

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WII COMPONENTS, INC. AND SUBSIDIARIES (SUCCESSOR), AND  WOODCRAFT INDUSTRIES, INC. AND SUBSIDIARIES (PREDECESSOR)  CONSOLIDATED STATEMENTS OF OPERATIONS  (In thousands)

|                                         |                               | Successor                |         | Predecessor |        
|---------------------------------------- | ----------------------------- | ------------------------ | ------- | ----------- | -------
|
|NET SALES                                |                               | $                        | 203,066 |             | $      
|COST OF SALES                            |                               |                          | 167,042 |             |        
|                                         |                               |                          |         |             |        
|                                         |                               | Gross profit             |         |             | 36,024 
|OPERATING EXPENSES:                      |                               |                          |         |             |        
|                                         | General and administrative    |                          |         | 9,124       |        
|                                         | Selling and marketing         |                          |         | 2,949       |        
|                                         | Stock compensation expense    |                          |         | 844         |        
|                                         | Loss (gain) on sale of assets |                          |         | (37         | )      
|                                         |                               |                          |         |             |        
|                                         |                               | Total operating expenses |         |             | 12,880 
|                                         |                               |                          |         |             |        
|OPERATING INCOME                         |                               |                          | 23,144  |             |        
|OTHER INCOME (EXPENSE):                  |                               |                          |         |             |        
|                                         | Interest income               |                          |         | 28          |        
|                                         | Interest expense              |                          |         | (12,767     | )      
|                                         | Loss on modification of debt  |                          |         | (3,454      | )      
|                                         | Other income                  |                          |         | 12          |        
|                                         |                               |                          |         |             |        
|                                         |                               | Total other expense      |         |             | (16,181
|                                         |                               |                          |         |             |        
|INCOME BEFORE PROVISION FOR INCOME TAXES |                               |                          | 6,963   |             |        
|PROVISION FOR INCOME TAXES               |                               |                          | 2,684   |             |        
|                                         |                               |                          |         |             |        
|NET INCOME                               |                               | $                        | 4,279   |             | $      
|                                         |                               |                          |         |             |        

See
notes to consolidated financial statements.

23

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WII COMPONENTS, INC. AND SUBSIDIARIES (SUCCESSOR), AND  WOODCRAFT INDUSTRIES, INC. AND SUBSIDIARIES (PREDECESSOR)  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)  (In thousands, except share amounts)

|                                     |                                                                                  | Common Stock               |            |   |     |     |           |          |   |    |   
|------------------------------------ | -------------------------------------------------------------------------------- | -------------------------- | ---------- | - | --- | --- | --------- | -------- | - | -- | --
|
|
|
|PREDECESSOR                          |                                                                                  |                            |            |   |     |     |           |          |   |    |   
|BALANCEDecember 31, 2001            |                                                                                  | 1,088,750                  |            | $ | 11  |     | 85,348    |          | $ | 1  |   
|                                     | Issuance of common stock                                                         |                            | 50,000     |   |     | 1   |           |          |   |    |   
|                                     | Series A, Series B, and Series C redeemable preferred stock cumulative dividends |                            |            |   |     |     |           |          |   |    |   
|                                     | Exercise of stock options                                                        |                            | 133,750    |   |     | 1   |           |          |   |    |   
|                                     | Repurchase of common stock                                                       |                            | (293,000   | ) |     | (3  | )         |          |   |    |   
|                                     | Stock option modification                                                        |                            |            |   |     |     |           |          |   |    |   
|                                     | Net income                                                                       |                            |            |   |     |     |           |          |   |    |   
|                                     |                                                                                  |                            |            |   |     |     |           |          |   |    |   
|BALANCEDecember 31, 2002            |                                                                                  | 979,500                    |            | $ | 10  |     | 85,348    |          | $ | 1  |   
|                                     | Series A, Series B, and Series C redeemable preferred stock cumulative dividends |                            |            |   |     |     |           |          |   |    |   
|                                     | Stock option modification                                                        |                            |            |   |     |     |           |          |   |    |   
|                                     | Net income                                                                       |                            |            |   |     |     |           |          |   |    |   
|                                     |                                                                                  |                            |            |   |     |     |           |          |   |    |   
|BALANCEMarch 31, 2003               |                                                                                  | 979,500                    |            | $ | 10  |     | 85,348    |          | $ | 1  |   
|                                     |                                                                                  |                            |            |   |     |     |           |          |   |    |   
|SUCCESSOR                            |                                                                                  |                            |            |   |     |     |           |          |   |    |   
|INITIAL CAPITALIZATIONApril 1, 2003 |                                                                                  | 14,813,827                 |            | $ | 148 |     | 1,000,000 |          | $ | 10 |   
|                                     | Derivative instrument                                                            |                            |            |   |     |     |           |          |   |    |   
|                                     | Net income                                                                       |                            |            |   |     |     |           |          |   |    |   
|                                     |                                                                                  |                            |            |   |     |     |           |          |   |    |   
|                                     |                                                                                  | Total comprehensive income |            |   |     |     |           |          |   |    |   
|                                     |                                                                                  |                            |            |   |     |     |           |          |   |    |   
|BALANCEDecember 31, 2003            |                                                                                  | 14,813,827                 |            | $ | 148 |     | 1,000,000 |          | $ | 10 |   
|                                     | Conversion of convertible note                                                   |                            | 6,950,000  |   |     | 70  |           |          |   |    |   
|                                     | Repurchase of common stock                                                       |                            | (3,171,841 | ) |     | (32 | )         | (145,739 | ) |    | (1
|                                     | Dividend distribution                                                            |                            |            |   |     |     |           |          |   |    |   
|Stock compensation expense           |                                                                                  |                            |            |   |     |     |           |          |   |    |   
|Stock issued to fund acquisition     |                                                                                  | 2,142,857                  |            |   | 21  |     |           |          |   |    |   
|                                     | Net income                                                                       |                            |            |   |     |     |           |          |   |    |   
|                                     | Derivative instrument                                                            |                            |            |   |     |     |           |          |   |    |   
|                                     |                                                                                  |                            |            |   |     |     |           |          |   |    |   
|                                     | Total comprehensive income                                                       |                            |            |   |     |     |           |          |   |    |   
|                                     |                                                                                  |                            |            |   |     |     |           |          |   |    |   
|BALANCEDecember 31, 2004            |                                                                                  | 20,734,843                 |            | $ | 207 |     | 854,261   |          | $ | 9  |   
|                                     |                                                                                  |                            |            |   |     |     |           |          |   |    |   

See notes to consolidated financial statements.

24

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WII COMPONENTS, INC. AND SUBSIDIARIES (SUCCESSOR), AND  WOODCRAFT INDUSTRIES, INC. AND SUBSIDIARIES (PREDECESSOR)  CONSOLIDATED STATEMENTS OF CASH FLOWS  (In thousands)

|                                    |                                                                                   | Successor                                   |                                               | Predecessor                                            |      
|----------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------- | --------------------------------------------- | ------------------------------------------------------ | -----
|
|OPERATING ACTIVITIES:               |                                                                                   |                                             |                                               |                                                        |      
|                                    | Net income                                                                        |                                             | $                                             | 4,279                                                  |      
|                                    | Adjustments to reconcile net income to net cash provided by operating activities: |                                             |                                               |                                                        |      
|                                    |                                                                                   | Loss on modification of debt                |                                               |                                                        | 3,454
|                                    |                                                                                   | Depreciation and amortization               |                                               |                                                        | 7,082
|                                    |                                                                                   | Deferred income taxes                       |                                               |                                                        | 145  
|                                    |                                                                                   | Loss (gain) on sale of assets               |                                               |                                                        | (37  
|                                    |                                                                                   | Stock compensation expense                  |                                               |                                                        | 844  
|                                    |                                                                                   | Change in operating assets and liabilities: |                                               |                                                        |      
|                                    |                                                                                   |                                             | Accounts receivable                           |                                                        |      
|                                    |                                                                                   |                                             | Inventories                                   |                                                        |      
|                                    |                                                                                   |                                             | Other current assets                          |                                                        |      
|                                    |                                                                                   |                                             | Accounts payable                              |                                                        |      
|                                    |                                                                                   |                                             | Accrued payroll and other current liabilities |                                                        |      
|                                    |                                                                                   |                                             |                                               |                                                        |      
|                                    |                                                                                   |                                             |                                               | Total adjustments                                      |      
|                                    |                                                                                   |                                             |                                               |                                                        |      
|                                    |                                                                                   |                                             |                                               | Net cash provided by operating activities              |      
|                                    |                                                                                   |                                             |                                               |                                                        |      
|INVESTING ACTIVITIES:               |                                                                                   |                                             |                                               |                                                        |      
|                                    | Purchases of property, plant, and equipment                                       |                                             |                                               | (5,733                                                 | )    
|                                    | Brentwood acquisition                                                             |                                             |                                               |                                                       |      
|                                    | Grand Valley acquisition                                                          |                                             |                                               | (15,937                                                | )    
|                                    | Proceeds from sale of assets                                                      |                                             |                                               | 2                                                      |      
|                                    | Change in other assets                                                            |                                             |                                               | 59                                                     |      
|                                    |                                                                                   |                                             |                                               |                                                        |      
|                                    |                                                                                   |                                             |                                               | Net cash used in investing activities                  |      
|                                    |                                                                                   |                                             |                                               |                                                        |      
|FINANCING ACTIVITIES:               |                                                                                   |                                             |                                               |                                                        |      
|                                    | Principal payments under long-term financing agreements                           |                                             |                                               | (92,097                                                | )    
|                                    | Borrowings of long-term debt                                                      |                                             |                                               | 135,782                                                |      
|                                    | Series C redeemable preferred stock issuance                                      |                                             |                                               |                                                       |      
|                                    | Dividend distribution                                                             |                                             |                                               | (21,449                                                | )    
|                                    | Issuance of common stock                                                          |                                             |                                               | 8,250                                                  |      
|                                    | Exercise of stock options                                                         |                                             |                                               |                                                       |      
|                                    | Repurchase of common stock                                                        |                                             |                                               | (17,550                                                | )    
|                                    | Debt issuance costs                                                               |                                             |                                               | (7,385                                                 | )    
|                                    | Termination of interest rate collar                                               |                                             |                                               | 52                                                     |      
|                                    |                                                                                   |                                             |                                               |                                                        |      
|                                    |                                                                                   |                                             |                                               | Net cash provided by (used in) by financing activities |      
|                                    |                                                                                   |                                             |                                               |                                                        |      
|NET (DECREASE) INCREASE IN CASH     |                                                                                   |                                             | (37                                           | )                                                      |      
|CASHBeginning of period            |                                                                                   |                                             | 39                                            |                                                        |      
|                                    |                                                                                   |                                             |                                               |                                                        |      
|CASHEnd of period                  |                                                                                   | $                                           | 2                                             |                                                        | $    
|                                    |                                                                                   |                                             |                                               |                                                        |      
|SUPPLEMENTAL CASH FLOW INFORMATION: |                                                                                   |                                             |                                               |                                                        |      
|                                    | Cash paid for interest                                                            |                                             | $                                             | 9,050                                                  |      
|                                    | Cash paid for income taxesnet                                                    |                                             | $                                             | 664                                                    |      
|NONCASH ACTIVITY:                   |                                                                                   |                                             |                                               |                                                        |      
|                                    | Accrued redeemable preferred stock cumulative dividends for Series A, B, and C    |                                             | $                                             |                                                       |      
|                                    | Conversion of subordinated convertible note and accrued interest to common stock  |                                             | $                                             | 20,850                                                 |      
|                                    | Issuance of note payable                                                          |                                             | $                                             |                                                       |      

See notes to consolidated financial statements.

25

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WII COMPONENTS, INC. AND SUBSIDIARIES (SUCCESSOR),  AND WOODCRAFT INDUSTRIES, INC. AND SUBSIDIARIES (PREDECESSOR)  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  DECEMBER 31, 2004 AND 2003

1. NATURE OF BUSINESS

Company BackgroundWII Components, Inc. (formerly WII Holdings, Inc. and referred to
herein as the "Successor" or the "Company"), a Delaware corporation, was formed to acquire 100% of the common stock of Woodcraft Industries, Inc. and Subsidiaries (the "Predecessor" or
"Company") in a buyout (the "Acquisition") from the former owners. On April 9, 2003, pursuant to a sale agreement between WII Components, Inc. and the former owners, WII
Components, Inc. acquired the common stock of Woodcraft Industries, Inc. for a total of approximately $145 million. For accounting purposes, the acquisition date is considered to
be April 1, 2003. WII Components, Inc. has no independent assets or operations separate from its consolidated subsidiaries.

The
Acquisition was accounted for using the purchase method of accounting. Accordingly, the assets acquired and the liabilities assumed by WII Components, Inc. were recorded at
fair value as of the date of the Acquisition. The excess of the purchase price over the fair value of the assets acquired and liabilities assumed totaling approximately $104.0 million was
recorded as goodwill.

In
February 2004, the Successor completed an equity restructuring using the proceeds from its $120 million 10% senior notes offering (Note 6) to pay off the
outstanding term loans and revolving line of credit, to pay a dividend of approximately $21.5 million, to repurchase approximately $17.5 million of the Successor's outstanding common
stock, and to pay financing costs of approximately $7.4 million.

The
Company acquired a cabinet door manufacturer operating under the name Grand Valley Door Co. ("Grand Valley") on April 30, 2004 (Note 5).

Description of BusinessThe Company is a leading manufacturer of wood cabinet doors, hardwood
components, and engineered wood products in the United States. Its products are sold principally to leading national and regional kitchen and bathroom cabinet manufacturers. Its reputation for high
quality and reliable performance has enabled the Company to establish strong, long-standing relationships with its customers. Its customers, in turn, distribute products through various
sales channels, including specialty kitchen and bathroom cabinetry dealers, home center retailers, and homebuilders.

Principles of ConsolidationThe consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. As described more fully in Note 5, the Company completed the acquisition of Woodcraft Industries, Inc. and its wholly owned subsidiaries,
PrimeWood, Inc. ("PrimeWood") and Brentwood Acquisition, Corp. ("Brentwood") on April 9, 2003, and completed the acquisition of Grand Valley on April 30, 2004. All intercompany
accounts and transactions have been eliminated in the preparation of the consolidated financial statements.

2. SIGNIFICANT ACCOUNTING POLICIES

Revenue RecognitionThe Company recognizes revenues and the related cost of sales when title passes,
which is usually upon shipment of product under FOB shipping point terms. Freight billed to customers is included in sales. Shipping costs are included in cost of sales. Returns are estimated and
provided for at the time of sale based on historical experience and current trends.

26

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Concentration of Credit RiskAccounts receivable comprises primarily trade receivables related to the
sale of the Company's products to its customers, primarily in the United States. The Company's customers representing 10% or more of consolidated sales, are as follows:

|  |  | Successor |   | Predecessor |  
|- |  | --------- | - | ----------- | -
|
|A |  | 20.1      | % | 17.3        | %
|B |  | 16.9      |   | 11.1        |  
|C |  | 9.8       |   | 10.0        |  
|D |  | 9.6       |   | 12.8        |  

The
Company's customers that represent 10% or more of consolidated accounts receivable as of December 31 are as follows:

2004

2003A

12.0
%
8.1
%B

29.1

19.7C

3.3

0.0D

9.8

17.3


InventoriesInventories as of December 31 consisted of the following (in thousands):

2004

2003Raw materials

$
9,995

$
8,315Work in process


4,796


3,116Finished goods


2,901


2,039LIFO adjustment


(950
)

(143
)$
16,742

$
13,327


The
majority of inventory is valued at the lower of last-in, first-out ("LIFO") cost or market. The remainder of the inventory is valued under the
first-in, first-out method ("FIFO"). As of December 31, 2004, and 2003, inventory on the LIFO method represented 60% and 61% of the inventory balance, respectively.

Property, Plant, and EquipmentImprovements are capitalized and expenditures for maintenance and
repairs are charged to operations as incurred. Depreciation is computed using the straight-line method (for financial reporting purposes) and the accelerated method (for income tax
reporting purposes). Estimated useful lives for financial reporting purposes are as follows:

Buildings and yards

20 - 40 yearsEquipment (machinery)

7 - 10 yearsEquipment (computer related)

3 - 5 years


27

---



GoodwillAs discussed in Note 4, in 2002, the Company adopted and accounts for goodwill in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 142,Goodwill and Other Intangible Assets. In part, SFAS No. 142
states that companies are no longer required to amortize goodwill but instead must evaluate goodwill for impairment at least annually. Previously, goodwill was amortized over its estimated useful
life.

The
Company has elected to perform its annual tests for goodwill impairment as of December 31 of each year. Fair value is measured using the present value of expected future cash
flows.

Customer RelationshipCustomer relationship relates to an intangible asset recorded through the
purchase price allocation of the Grand Valley acquisition (Note 5) for a relationship with a significant customer.
The $7,872,000 intangible asset is being amortized over the estimated life of 10 years. Amortization for the year ended December 31, 2004 was $525,000. Expected amortization is as
follows for the years ended December 31 (in thousands):

2005

$
7872006


7872007


7872008


7872009


7872010-2014


3,412


Noncompete AgreementNoncompete agreements primarily relate to agreements with the former owners of
PrimeWood, Brentwood, and Grand Valley. Noncompete rights are being amortized over the applicable terms of the agreements (6 years, 5 years, and 7 years, respectively), and are
expected to be fully amortized by June 2004, July 2007, and April 2011, respectively. Amortization for the year ended December 31, 2004, the nine-month period
ended December 31, 2003, the three-month period ended March 31, 2003, and year ended December 31, 2002 was $516,000, $448,000, $149,000, and $346,000, respectively. As of
December 31, 2004 the net noncompete agreement intangible asset was $1.2 million. Expected amortization is as follows for the years ended December 31 (in thousands):

2005

$
4442006


4442007


2652008


142009


1410-2011


19


Other AssetsOther assets primarily represent financing fees and are amortized over the term of the
related financing agreement. During 2002, the Company amended and restated its credit agreement. For accounting purposes, the debt modification was considered an extinguishment of the previous credit
agreement resulting in a loss on modification of debt of $779,000. During 2004 the Company terminated its credit agreement and recorded a loss of $3.5 million.

28

---



Impairment of Long-Lived AssetsThe Company evaluates the carrying value of
long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If impairment indicators are present and the
estimated future undiscounted cash flows are less than the carrying value of the assets, the carrying value is reduced to the estimated fair value as measured by the associated discounted cash flows.
There were no material impairment write-downs during any of the periods presented.

Other Current LiabilitiesOther current liabilities consisted of the following (in thousands):

December 31,2004

2003Self-insurance reserve

$
1,801

$
2,207Accrued interest expense


4,693


2,044Other


2,613


3,043$
9,107

$
7,294


The
Company is partially self-insured for medical and workers' compensation costs, subject to maximum individual stop-loss amounts. The Company has established
reserves related to insurance that are included in other current liabilities as noted above.

Income TaxesThe Company accounts for income taxes in accordance with the liability method of
accounting, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that were included in the consolidated financial statements and tax
returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates
expected to be in effect for the year in which the differences are expected to reverse. The Company records a valuation allowance when it is more likely than not that the net deferred tax assets will
not be realized.

Stock OptionsThe Predecessor had a stock option plan that provided for the granting of up to 150,881
nonqualified stock options on the Predecessor's common stock. Certain officers, directors, and key employees were granted options to purchase common stock of the Predecessor under these plans. Options
become exercisable over a three-year period. At the end of each year, one-third of the total options to an individual become vested. The Predecessor purchased the remaining
14,250 options prior to its acquisition. (Note 5)

In
2002, 133,750 options were modified to accelerate the exercise date. This resulted in a compensation expense charge of $510,000 in 2002. All of these options were subsequently
exercised. The fair value of each option is determined on the date of grant, using a stock option pricing model.

There
were 29,501 options that were canceled and reissued during 2001, resulting in the need to adopt variable accounting over the remaining vesting period of the repriced options. As of
December 31, 2002, of the remaining options 6,250 shares were vested. The Predecessor recorded compensation expense related to options of $334,000 for the three-month period ended
March 31, 2003.

29

---



Information
regarding stock options under all plans is summarized as follows:

|                                               |           | Successor |         | Predecessor
|---------------------------------------------- | --------- | --------- | ------- | -----------
|
|
|Outstanding, beginning of period               |           | 1,617,000 |         | $          
|                                               | Granted   |           | 539,000 |            
|                                               | Exercised |           |         |            
|                                               | Canceled  |           | 100,000 |            
|Outstanding, end of period                     |           | 2,056,000 |         | $          
|Exercisable, end of period                     |           | 379,250   |         | $          
|Weighted average fair value of options granted |           |           |         | $          
|                                               |           |           |         |            

In April 2003, the 2003 Stock Option and Grant Plan ("2003 Plan") was approved by the stockholders of the Successor. The 2003 Plan allows
the granting of both incentive stock options and nonqualified stock options. The 2003 Plan serves as the successor to the plans implemented by the Predecessor. Under the terms of the 2003 Plan, a
maximum of 2,500,000 shares of stock, subject to adjustment, were made available for awards to officers, employees, directors, consultants, and other key persons of the Company. Awards may include,
but are not limited to, stock options, restricted stock, unrestricted stock awards, and substitute performance awards.

In
May 2003, 1,617,000 options were granted with terms of 10 years from the date of grant, and at an exercise price of $3.00 per share under the 2003 Plan. Issued options
vest in equal annual installments over four years. The fair value of options granted during the nine months ended December 31, 2003 was estimated on the date of the grant using the
Black-Scholes option-pricing model with the following assumptions: a risk-free interest rate of 3.0%, an expected life of six years, and no volatility. During 2004, 100,000 options were
cancelled. As a part of the February 2004 equity restructuring (Note 6), the Successor repriced the outstanding stock options. The Successor has adopted variable plan accounting for
these options from the date of the repricing. Based on the fair value of the options as of December 31, 2004, the Successor expects to record approximately $2.3 million of compensation
expense over the remaining vesting period of approximately two and
one-half years. The Company recorded $844,000 of noncash compensation expense during the year ended December 31, 2004. As of December 31, 2004 the 1,517,000 options have an
exercise price of $1.78 per share and a weighted average remaining contractual life of eight and one-half years.

In
2004, the Company granted in April and November 489,000 and 50,000 options, respectively under the 2003 Plan. The fair value of these options was estimated on the date of the
grant using the Black-Scholes option-pricing model with the following assumptions: a risk-free interest rate in April and November of 3.9% and 4.2%, respectively, an expected life of six
years, and no volatility.

The
Company accounts for the options under Accounting Principles Board Opinion No. 25,Accounting for Stock Issued to Employees,
under which no compensation cost has been recognized as of

30

---



the
original grant date. Had compensation cost for the options been determined consistent with SFAS No. 123,Accounting for Stock-Based
Compensation, the Company's net income would have been the following pro forma amounts for the year ended December 31, 2004, the nine-month period ended
December 31, 2003, the three-month period ended March 31, 2003, and for the year ended December 31, 2002 (in thousands):

|                                                                                                                     |  | Successor |       | Predecessor |  
|-------------------------------------------------------------------------------------------------------------------- |  | --------- | ----- | ----------- | -
|
|As reported net income                                                                                               |  | $         | 4,283 |             | $
|Total stock-based employee compensation expense determined under fair value based method, net of related tax effects |  |           | (74   | )           |  
|                                                                                                                     |  |           |       |             |  
|Pro forma net income                                                                                                 |  | $         | 4,209 |             | $

Derivative Instruments and Hedging ActivitiesAll derivatives, whether designated in hedging
relationships or not, are recorded on the balance sheet at fair value. If the derivative is designated in a cash flow hedge, changes in the fair value of the derivative are recorded in other
comprehensive income and recognized in the statement of operations when the hedged item affects earnings. SFAS No. 133,Accounting for Derivative Instruments and Hedging
Activities, as amended, defines the requirements for designation and documentation of hedging relationships as well as ongoing effectiveness assessments in order to use hedge
accounting. For a derivative that is not designated as or does not qualify as a hedge, changes in fair value are recognized in earnings. Management has determined that the Company has no freestanding
or embedded derivatives as of December 31, 2004. (Note 6) The Company's policy is to not use freestanding derivatives for speculative purposes.

Use of EstimatesThe preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

New Accounting PronouncementsIn December 2004, the Financial Accounting Standards Board
(FASB) revised SFAS No. 123 and issued SFAS No. 123(R). This Statement supersedes APB No. 25, which resulted in no stock-based employee compensation cost related to stock options
if the options granted had an exercise price equal to the market value of the underlying common stock on the date of grant. SFAS No. 123R requires recognition of employee services provided in
exchange for a share-based payment based on the grant date fair market value. The Company is required to adopt SFAS No. 123R as of July 1, 2005. As of the effective date, this Statement
applies to all new awards issued as well as awards modified, repurchased, or cancelled. Additionally, for stock-based awards issued prior to the effective date, compensation cost attributable to
future services will be recognized as the remaining service is rendered. The Company may also elect to restate prior periods by applying a modified retrospective method to periods prior to the
effective date. The Company is in the process of

31

---



determining
which method of adoption it will elect (see "Stock Options" above for SFAS No. 123 required disclosures).

In
November 2004, the FASB issued SFAS No. 151,Inventory Costs. This Statement requires that abnormal amounts of idle
facility expense, freight, handling costs, and spoilage be recognized as current period charges. The Statement also requires that fixed production overhead be allocated to conversion costs based on
the normal capacity of the production facilities. SFAS No. 151 is effective for inventory costs incurred by the Company beginning in fiscal year 2006. The Company does not believe the adoption
of this Statement will have a material impact on its consolidated financial position or results of operations.

3. BUSINESS SEGMENTS

The Company conducts its business within one reportable segment: the wood kitchen and bath products segment. The Company has two primary product categories:
hardwood products and engineered wood products. Hardwood products produces a comprehensive line of hardwood doors and components. Engineered wood products includes rigid thermofoil doors and
components, veneer raised panels, and wrapped profiles.

The
Company's sales by product category are as follows:

|                         |  | Successor |         | Predecessor
|------------------------ |  | --------- | ------- | -----------
|
|Hardwood products        |  | $         | 150,713 |            
|Engineered wood products |  |           | 52,353  |            
|                         |  |           |         |            
|Total                    |  | $         | 203,066 |            

Substantially
all sales are made within North America.

32

---





4. GOODWILL

Effective January 1, 2002, the Company adopted and began accounting for goodwill in accordance with SFAS No. 142 which states that companies are no
longer required to amortize goodwill but instead must evaluate goodwill for impairment annually, if not more frequently. The Company has elected to perform its annual tests for goodwill impairment as
of December 31 of each year. Previously, goodwill was amortized over its estimated useful life. Based on the impairment test performed on December 31, 2004, the Company's fair value
exceeds the carrying value, resulting in no goodwill impairment.

The
changes in the carrying amount of goodwill were as follows (in thousands):

|                               |  | Successor |         | Predecessor |  
|------------------------------ |  | --------- | ------- | ----------- | -
|
|BalanceBeginning of period    |  | $         | 104,041 |             | $
|Goodwill acquired              |  |           | 3,770   |             |  
|Purchase accounting adjustment |  |           | (210    | )           |  
|                               |  |           |         |             |  
|BalanceEnd of period          |  | $         | 107,601 |             | $

5. ACQUISITIONS

As stated in Note 1, the Successor was formed to acquire 100% of the common stock of the Predecessor in a buyout from the former owners. On April 9,
2003, pursuant to a sale agreement between the Successor and the former owners, the Successor acquired the common stock of the Predecessor for a total of approximately $145 million. For
accounting purposes, the acquisition date is considered to be April 1, 2003. The Successor has no independent assets or operations separate from its consolidated subsidiaries.

The
Acquisition was accounted for using the purchase method of accounting. Accordingly, the assets acquired and the liabilities assumed by the Successor were recorded at fair value as of
the date of the Acquisition. The excess of the purchase price over the fair value of the assets acquired and liabilities assumed totaling approximately $104.0 million was recorded as goodwill.

The
components of the purchase price allocation are as follows (in thousands):

Current assets

$
34,531Property, plant, and equipment


35,622Other assets


4,280Noncompete agreements


2,065Goodwill


104,041Assets acquired


180,539Liabilities assumed


133,098Net assets acquired

$
47,441


33

---



The
Company obtained various forms of debt totaling approximately $97.6 million at the date of acquisition to fund the acquisitions and future operations.

Pro
forma operating results of the Predecessor, assuming the acquisition of Woodcraft occurred on January 1, 2002, are as follows (in thousands):

Three Months
Ended
March 31,
2003

Year Ended
December 31,
2002Sales from continuing operations net sales

$
40,980

$
143,832Net income


1,660


4,536


Pro
forma financial information is provided for informational purposes only and is not necessarily indicative of the Company's operating results that would have occurred had the
acquisitions been consummated on the dates for which the consummation of the acquisitions are being given effect, nor is it necessarily indicative of the Company's future operating results. The pro
forma amounts do not reflect any operating efficiencies and cost savings that the Company believes are achievable.

In
July 2002, the Company acquired specific assets and assumed certain liabilities of Brentwood, Inc. The purchase price of $13,740,000 was paid $11,590,000 in cash and
$2,150,000 in note payable. The purchase has been accounted for using the purchase method of accounting. The results of operations of Brentwood have been included in the financial statements as of the
acquisition date (July 31, 2002). The following table summarizes the assets acquired and liabilities assumed (in thousands):

Current assets

$
2,014Property and equipment


6,698Other assets


695Noncompete agreement


2,150Goodwill


2,973Assets acquired


14,530Liabilities assumed


790Net assets acquired


13,740Note payable issued


2,150Cash consideration paid

$
11,590


The
noncompete agreement is being amortized over the life of the agreement (5 years).

Pro
forma operating results for the Predecessor, assuming the acquisition of Brentwood occurred on January 1, 2002, are as follows for the year ended December 31, 2002 (in
thousands):

Net sales

$
152,026Net income


7,870


34

---



On
April 30, 2004, the Company acquired a cabinet door manufacturer operating under the name of Grand Valley Door Co. The acquisition was accomplished through the acquisition of
substantially all of the assets of Ohio Door Company and certain land and improvements from Grand Valley Investment LLC. The Company paid a cash purchase price at closing of $16 million, and if
the business acquired achieves certain sales and profit margin targets, an additional $1 million will be payable prior to June 30, 2006. Approximately half of the purchase price was
funded with borrowings under the senior secured revolving credit facility and the remainder was funded from the proceeds of an equity contribution from existing stockholders. The acquired company is a
100% owned subsidiary of the Successor and, on June 25, 2004, agreed to fully and unconditionally guarantee the senior notes on a joint and several basis with the Successor's existing
subsidiary guarantors.

The
Acquisition of Grand Valley was accounted for using the purchase method of accounting. Accordingly, the assets acquired and the liabilities assumed by the Successor were recorded at
fair value as of the date of the Acquisition. The excess of the purchase price over the fair value of the assets acquired and liabilities assumed totaling $3,770,000 was recorded as goodwill. Based
upon the Company's final purchase price allocation, $7,872,000 of the purchase price was recorded as an other intangible asset, Customer Relationship (Note 2). The pro forma effects of this
transaction are not material to the Company's results of operations. The components of the final purchase price allocation are as follows (in thousands):

Current assets

$
386Property, plant, and equipment


4,491Other assets


125Goodwill


3,770Customer Relationship


7,872Noncompete agreement


100Assets acquired


16,744Liabilities assumed


807Net assets acquired

$
15,937


35

---



6. FINANCING ARRANGEMENTS

Long-term debt consisted of the following (in thousands):

December 31,
2004

December 31,
2003Senior notes (10%) due 2012

$
120,000

$
Revolver (5.37% and 6.63% at December 31, 2004 and December 31, 2003, respectively)





1,800Subordinated convertible notes, due April 2004, 5% interest payable





20,000Senior term loan A, interest at LIBOR plus 3.88% (5.01% at December 31, 2003) due in varying installments through March 31, 2008





33,150Senior term loan B, interest at LIBOR plus 4.25% (5.36% at December 31, 2003) interest-only payments until June 2008 with balance due September 2009





20,500Senior term loan C, interest at 15%, interest-only payments until December 2009, balance due March 2010





19,421Other due 2004





77Total debt


120,000


94,948Less current maturities





24,627$
120,000

$
70,321


Senior NotesOn February 18, 2004, the Company completed the offering of $120 million
of 10% senior notes due 2012. The net proceeds of the offering of the senior notes were used to pay off the outstanding term loans and revolving line of credit, to pay a dividend of approximately
$21.5 million, to repurchase approximately $17.5 million of the Company's outstanding common stock, and to pay financing costs of $7.4 million. Additionally in
February 2004, the Company entered into a new $25 million revolving line of credit.

The
Company's existing senior secured revolving credit facility and the indenture for the notes imposes certain restrictions on it, including restrictions on its ability to incur
indebtedness, pay dividends, make investments, grant liens, sell our assets and engage in certain other activities. The Company must comply with certain financial covenants under the credit facility
including maintenance of a minimum fixed charge coverage ratio, a maximum total leverage ratio and an EBITDA minimum. As of December 31, 2004 it was in compliance with these covenants.
Indebtedness under its existing senior secured revolving credit facility is secured by substantially all of its assets, including real and personal property, inventory, accounts receivable,
intellectual property and other intangibles.

Each
of the Company's subsidiaries, which are all 100% owned subsidiaries of the Company, have fully and unconditionally guaranteed the senior notes on a joint and several basis. The
Company has no independent assets or operations. As a result, the Company has not presented separate financial statements of the subsidiary guarantors.

36

---



Subordinated Convertible DebtThe Company issued approximately $20 million of 5% Convertible
Subordinated Notes due April 9, 2004 in April 2003. These notes were convertible at any time prior to maturity, unless previously redeemed, at the option of the holders into shares of
the Company's common stock at a conversion price of $3.00 per share, subject to certain adjustments. The notes were subordinated to the Company's senior indebtedness. The notes were not subordinated
to the Company's trade payables or other general creditors of the Company. On February 9, 2004, these notes, along with approximately $0.9 million of related accrued interest, were
converted into approximately 7.0 million shares of the Company's $0.01 par value common stock.

Credit Agreement and Term LoansIn April 2003 the Company entered into a $90,500,000 credit
facility that provides for $75,500,000 in term loans and a revolving line of credit of $15,000,000. The Agreement includes various restrictive covenants, including, among others, capital expenditure
limitations, a maximum leverage ratio, a minimum fixed charge coverage ratio, a minimum interest average ratio, and a minimum EBITDA amount. The Company was in compliance with these debt covenants at
December 31, 2003.

Each
of the Company's subsidiaries, which are all 100% owned subsidiaries of the Successor, have fully and unconditionally guaranteed the credit agreement on a joint and several basis.
The Company has no independent assets or operations. As a result, the Company has not presented separate financial statements of the subsidiary guarantors.

In
July 2003, the Company entered into a three-year interest rate collar transaction with a notional amount of $55,550,000 to limit the interest rate (LIBOR rate) on a
portion of this variable rate debt between a floor of 1.2% and a cap of 6.0%. To the extent that the index rate is below the collar floor, payment is due from the Successor. To the extent the index
rate is above the collar cap, the Company is entitled to receive the difference. The index rate at December 31, 2003 was 1.16%. The fair value of the interest rate collar is approximately
$148,342 at December 31, 2003 and is classified in other assets. The Company discontinued this interest rate hedge in connection with the repayment of its old credit facility as described
above, resulting in the receipt of approximately $52,000 upon settlement.

Maturities of Long-Term DebtThe company has no long-term debt maturing until
after December 31, 2011. The Company's $120 million of 10% senior notes are set to mature in February of 2012.

Capital LeasesThe Company leases certain equipment under capital lease agreements with interest
rates of 3.65% to 7.92%. The agreements expire at various dates through 2008. Future

37

---



minimum
lease payments required under these capital leases at December 31, 2004 are as follows (in thousands):

Year Ending
December 312005

$
1,0862006


1,0802007


7212008


5492009


Total capital lease obligations


3,436Less amount representing interest


314Present value of capital lease obligations


3,122Less current maturities


928Capital lease obligationsnet of current maturities

$
2,194


7. COMMITMENTS AND CONTINGENCIES

Operating LeasesThe Company is obligated under various operating leases for warehouse space and
plant equipment. Rental expense under these agreements was approximately $290,000 for the year ended December 31, 2004, $199,000 for the nine-month period ended December 31,
2003, $66,000 for the three-month period ended March 31, 2003, and $254,000 for the year ended December 31, 2002, respectively. Future minimum lease payments are as follows (in
thousands) as of December 31, 2004:

Year Ending
December 312005

$
702006


632007


512008


452009


33$
262


Woodcraft Industries, Inc. Retirement Assurance PlanThe Company sponsors a 401(k) and profit
sharing plan which covers certain full-time employees who meet eligibility requirements as to age and length of service. Employees are allowed to make pretax contributions up to the
maximum amount permitted by law. Employer contributions to the plan are made at the discretion of the Board of Directors. The Company's contribution was approximately $488,000, $381,000, $201,000, and
$550,000 during the year ended December 31, 2004, nine-month period ended December 31, 2003, the three-month period ended March 31, 2003, and the year ended
December 31, 2002, respectively.

LitigationIn the normal course of business, the Company is subject to various instances of
litigation. In the opinion of the Company's management and legal counsel, the ultimate settlement of

38

---



such
matters will not have a material adverse effect on the Company's financial position, results of operations, or cash flows.

8. INCOME TAXES

The provision for income taxes consisted of the following (in thousands):

|                               |         | Successor |       | Predecessor |  
|------------------------------ | ------- | --------- | ----- | ----------- | -
|
|Current provision:             |         |           |       |             |  
|                               | Federal |           | $     | 2,210       |  
|                               | State   |           |       | 329         |  
|                               |         |           |       |             |  
|                               |         |           | 2,539 |             |  
|Deferred tax expense (benefit) |         |           | 145   |             |  
|                               |         |           |       |             |  
|Provision for income taxes     |         | $         | 2,684 |             | $

The
provision for income taxes differs from the amount of income tax determined by applying the U.S. federal tax rate to pretax income due to the following:

|                                                    |                                           | Successor |       | Predecessor |  
|--------------------------------------------------- | ----------------------------------------- | --------- | ----- | ----------- | -
|
|Tax provision at federal rate                       |                                           | $         | 2,367 |             | $
|Increase (decrease) in income taxes resulting from: |                                           |           |       |             |  
|                                                    | Nondeductible interest                    |           |       |            |  
|                                                    | Nondeductible expenses                    |           |       | 121         |  
|                                                    | Federal tax credits                       |           |       | (125        | )
|                                                    | State income taxesnet of federal benefit |           |       | 321         |  
|                                                    |                                           |           |       |             |  
|Provision for income taxes                          |                                           | $         | 2,684 |             | $

39

---



Net
deferred tax assets (liabilities) consist of the following components as of December 31:

2004

2003Depreciation

$
(5,878
)
$
(5,930
)Noncompete agreements


1,259


1,272Goodwill


(252
)

(102
)Accruals


568


142Inventory


(769
)

(882
)Capital leases


916


1,376Bad debt expense


80


90Accrued payroll and health insurance


987


1,090Net deferred tax liabilities

$
(3,089
)
$
(2,944
)Whereof:Current

$
1,437

$
1,420Noncurrent


(4,526
)

(4,364
)$
(3,089
)
$
(2,944
)


The
Company is subject to audits in the tax jurisdictions in which it operates. Upon audit, these taxing jurisdictions could retroactively disagree with our tax treatment of certain
items. Consequently, the actual liabilities with respect to any year may be determined long after financial statements have been issued. The Company establishes tax reserves for estimated tax
exposures. These potential exposures result from varying applications of statutes, rules, regulations, case law and interpretations. The settlement of these exposures primarily occurs upon
finalization of tax audits. However, the amount of the exposures can also be impacted by changes in tax laws and other factors. The Company believes that it has established the appropriate reserves
for these estimated exposures. However, actual results may differ from these estimates. The resolution of these tax matters will not have a material effect on the consolidated financial condition of
the Company, although a resolution could have a material impact on the Company's consolidated statement of operations for a particular future period and on the Company's effective tax rate.

9. REDEEMABLE PREFERRED STOCK (PREDECESSOR)

Series A Redeemable Preferred StockThe Predecessor issued 750,000 shares of Series A
in 1998 for consideration of $6,000,000. Series A had certain preferential liquidation, redemption, and dividend rights as follows:



40

---





All
Series A Redeemable Preferred Stock was purchased in connection with the Acquisition.

Series B and Series C Redeemable Preferred StockThe Predecessor issued 803,125 shares
of Series B in 1998 for consideration of $6,425,000 and 112,500 shares of Series C in 2001 for consideration of $900,000. In 2002, the Predecessor issued 437,500 shares of
Series C for consideration of $3,500,000. Series B and Series C have certain preferential liquidation, redemption, and dividend rights as follows:



All
Series B and Series C Redeemable Preferred Stock was purchased in connection with the Acquisition.

Accumulated DividendsUnpaid Series A accumulated dividends of $5,352,249, Series B
accumulated dividends of $4,488,786, and Series C accumulated dividends of $395,591 as of December 31, 2002 are included in dividends payable on the consolidated balance sheets. In
April 2003, all dividends ($11,420,000) were paid in connection with the Acquisition.

WarrantsIn connection with the issuance of Series A and Series B preferred stock, the
Predecessor has issued warrants for the purchase of up to 1,178,125 shares of nonvoting common stock and 13,125 shares of voting common stock to stockholders at an exercise price of $8.00 per share.
In 2001, 13,125 shares of the voting common stock were subsequently exercised and redeemed by the Predecessor. The warrants are exercisable through February 28, 2005. No value has been assigned
to these warrants as their values were deemed to be insignificant at the time of issuance.

In
connection with the issuance of the $6.0 million senior subordinated notes payable in 1998, the Predecessor issued a total of 182,890 warrants to purchase nonvoting common
stock of the Predecessor. In 1998, 85,348 shares of nonvoting common stock were exercised at a nominal price per share. Each

41

---



warrant
entitles the holder to purchase one share of nonvoting common stock at a nominal exercise price, and such warrants expire on June 16, 2008 or the date on which the notes are fully paid
at the time of issuance.

All
warrants were bought out in connection with the Acquisition.

10. STOCKHOLDERS' EQUITY (PREDECESSOR)

Authorized SharesThe Predecessor's Restated Articles of Incorporation authorize the aggregate
issuance of 14,986,875 shares of stock divided into five classes consisting of: 750,000 shares of Series A redeemable preferred stock ("Series A"), $.01 par value; 803,125 shares of
Series B redeemable preferred stock ("Series B"), $.01 par value; 1,000,000 shares of Series C redeemable preferred stock ("Series C"), $.01 par value; 5,000,000 shares of voting common
stock, $.01 par value; 600,000 shares of nonvoting common stock, $.01 par value; and 6,833,750 undesignated shares, $.01 par value. The undesignated shares shall be divisible into such classes or
series and have such voting rights, other rights, and preferences, as determined by the Predecessor's Board of Directors.

Common StockDuring fiscal 2002, the Predecessor issued 50,000 shares resulting in a compensation
charge of $383,000, and repurchased 293,000 shares for $536,000.

11. STOCKHOLDERS' EQUITY (SUCCESSOR)

The Successor's Amended and Restated Certificate of Incorporation authorized the aggregate issuance of 30,000,000 shares of stock divided into three classes:
28,000,000 shares of voting common stock, $0.01 par value; 1,000,000 shares of nonvoting common stock, $0.01 par value; and 1,000,000 undesignated preferred stock, par value $0.01.

In
February 2004, the Company completed an equity restructuring using a portion of the proceeds from its $120 million 10% senior notes offering (Note 6) to pay a
dividend of approximately $21.5 million and to repurchase 3,317,580 shares of common stock for approximately $17.5 million. In conjunction with this equity restructuring, the Company's
convertible notes were converted into 6,950,000 shares of common stock.

In
April 2004, the Company issued 2,142,857 shares of common stock for approximately $8.3 million in connection with the Grand Valley acquisition (Note 5).

12. RELATED-PARTY TRANSACTIONS

The Company has a management services agreement with an affiliate of the primary investor whereby the Company pays a transaction fee to the affiliate for services
provided for each financing, refinancing, acquisition, or similar nonrecurring transaction. The Company paid approximately $1,740,000 to this affiliate for services related to the Acquisition which is
recorded as goodwill and approximately $1,160,000 for financing services which was recorded in other assets as deferred financing costs and was written off as discussed in Note 2. In addition,
the Company paid approximately $2,400,000 to this affiliate related to the February financing transaction (Note 6), which is recorded in other assets as deferred financing costs. The Company
paid approximately $320,000 to this affiliate for

42

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services
related to the acquisition of Grand Valley, approximately $224,000 of which is recorded as goodwill and approximately $96,000 of which is recorded in other assets as financing costs.

The
Predecessor had a management services agreement with an affiliate of its former primary investor, whereby the Predecessor paid an annual base fee of $300,000 plus a percentage fee
based on annual net operating cash flow. The total fee was approximately $81,000 for the three-month period ended March 31, 2003, and was approximately $825,000 for the year ended
December 31, 2002.

The
Predecessor entered into a noncompete agreement on July 31, 2002 with the former majority stockholder of Brentwood (Note 2).

The
Predecessor entered into a consulting and noncompete agreement on June 16, 1998 with the former majority stockholder of PrimeWood. The agreement required aggregate payments of
approximately $4,600,000 in equal annual installments over a six-year period. The fee under these agreements was approximately $76,000, $575,000, $192,000, and $767,000 for the year ended
December 31, 2004, nine-months ended December 31, 2003, three-months ended March 31, 2003, and year ended December 31, 2002, respectively (Note 2).

The
Company entered into a noncompete agreement on April 30, 2004 with the former owners of Grand Valley (Notes 2 and 5).

13. QUARTERLY FINANCIAL DATA (UNAUDITED):

The following is a condensed summary of actual quarterly results of operations for 2004 and 2003 (in thousands). The results of operations for the three-month
period ended March 31, 2003 are for the predecessor, and have been combined with the nine-month financial results of the company in the table below:

|      |                   | First |   | Second |   | Third |        | Fourth |   | Year  
|----- | ----------------- | ----- | - | ------ | - | ----- | ------ | ------ | - | ------
|2004: |                   |       |   |        |   |       |        |        |   |       
|      | Net sales         |       | $ | 47,718 |   | $     | 51,217 |        | $ | 52,274
|      | Gross profit      |       |   | 8,366  |   |       | 8,840  |        |   | 9,293 
|      | Operating income  |       |   | 4,622  |   |       | 5,880  |        |   | 5,829 
|      | Net income (loss) |       |   | (816   | ) |       | 1,558  |        |   | 1,504 
|2003: |                   |       |   |        |   |       |        |        |   |       
|      | Net sales         |       | $ | 40,980 |   | $     | 45,180 |        | $ | 43,958
|      | Gross profit      |       |   | 8,909  |   |       | 9,617  |        |   | 8,524 
|      | Operating income  |       |   | 4,721  |   |       | 6,829  |        |   | 5,698 
|      | Net income        |       |   | 2,510  |   |       | 2,950  |        |   | 2,324 

43

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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

There were no changes in or disagreements with the accountants on accounting and financial disclosure.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures. As required by Rule 13a-15 under the Securities Exchange Act of 1934, we carried out an evaluation under
the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the period covered by this annual report. In designing and evaluating our disclosure controls and procedures, we and our management recognize that any controls
and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its
judgment in evaluating and implementing possible controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that they believe that, as
of the date of completion of the evaluation, our disclosure controls and procedures were reasonably effective to ensure that information required to be disclosed by us in the reports we file or submit
under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. We will continue to review and
document our disclosure controls and procedures on an ongoing basis, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our
business.

Changes
in Internal Controls Over Financial Reporting. There were no changes in our internal controls over financial reporting during our fourth fiscal quarter that have materially
affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Item 9B. Other Information

Not applicable.

44

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PART III

Item 10. Directors and Executive Officers of the Registrant

The following table sets forth the names and ages of our executive officers and directors as of December 31, 2004 and the positions that they hold at WII
Components, Inc. and, where applicable, at our subsidiary levels. Directors of WII Components hold their positions until the annual meeting of the stockholders at which their term expires or
until their respective successors are elected and qualified. Executive officers of WII Components hold their positions until the annual meeting of the Board of Directors or until their respective
successors are elected and qualified.

|Name             |  | Age |  | Position                                                                                         
|---------------- |  | --- |  | -------------------------------------------------------------------------------------------------
|John Fitzpatrick |  | 61  |  | Chief Executive OfficerWII Components; Director, President and Chief Executive OfficerWoodcraft
|Dale Herbst      |  | 36  |  | Vice President, Treasurer and SecretaryWII Components; Chief Financial OfficerWoodcraft        
|Gary Noon        |  | 63  |  | Vice President of Sales and MarketingWoodcraft                                                  
|Tom Perlmutter   |  | 41  |  | DirectorWII Components                                                                          
|Dennis Sisco     |  | 58  |  | Director and PresidentWII Components                                                            

Mr. Fitzpatrickhas served as Woodcraft's President and Chief Executive Officer since 2000. Prior to joining us he was Chief
Operating Officer at Nexcycle, Inc., a privately held consolidator of specialty recycling businesses with over $120 million of sales in the United States, Canada and the United Kingdom.
He also was a corporate officer of ITEQ and general manager for Graco, Inc. after spending 20 years with General Electric Company, where he held various management positions in several
divisions. Mr. Fitzpatrick received a BS in Mechanical Engineering from the University of Notre Dame and an MBA from the University of Pittsburgh.

Mr. Herbsthas served as Woodcraft's Chief Financial Officer since 2002. Since joining us in 1992, he has served as a Controller,
Accounting Manager and General Accountant. Mr. Herbst received a BS in Financial Management and Accounting from the University of North Dakota.

Mr. Noonhas served as Woodcraft's Vice President of Sales and Marketing since our acquisition of PrimeWood in 1998. He joined
PrimeWood in 1994 and served as Vice President of Sales and Marketing. Prior to joining PrimeWood, Mr. Noon served as Vice President of Sales and Marketing for
Nadech, Inc. and as Chief Executive Officer and Vice President of Marketing for Hettich America. Mr. Noon received a BS in Marketing from Northern Illinois University.

Mr. Perlmutterjoined our board of directors in 2003. Mr. Perlmutter joined Behrman Capital in May 2002 with
13 years of private equity investing experience. Most recently, he spent seven years as a vice president at Desai Capital Management, a private equity investment firm with over
$1 billion of capital under management. During that time, he led several successful investments in the business services, information technology and communications sectors, including TeleCorp
PCS and Triton PCS. He currently serves on the board of WIL Research Holding Company, Inc. Mr. Perlmutter received an AB in Economics from Princeton University and an MBA from Harvard Business
School.

Mr. Siscojoined our board of directors in 2003. Mr. Sisco has served as a partner at Behrman Capital since
January 1998. Most recently, he was an executive vice president of The Dun & Bradstreet Corporation and Cognizant Corporation. Previously, he was President of D&B Enterprises, a venture
capital and buyout company with $240 million of capital under management. He currently serves on the boards of Strategic Management Group, Inc., Brooks Equipment Company, Inc.,
ACS Communications, Inc., Viziqor Holdings, Inc. and Adventis Corporation. Mr. Sisco received a BA in Economics from McDaniel College.

45

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Board of Directors

We currently have a two-member board of directors consisting of Messrs. Perlmutter and Sisco. Our bylaws permit the directors to increase the
size of the board of directors by resolution. All of our stockholders are party to a stockholders agreement whereby they agree to take all appropriate action to fix the size of the board of directors
at two and to vote the shares over which they exercise voting power in favor of the election of Messrs. Perlmutter and Sisco.

Board Committees

Our board of directors intends to establish a compensation committee and an audit committee. We anticipate that the compensation committee will establish
salaries, incentives and other forms of compensation for our officers and will administer incentive compensation and benefit plans provided for our employees. We anticipate that the audit committee
will review our audit policies and oversee the engagement of our independent auditors. The composition of the compensation committee and the audit committee has not yet been determined.

Item 11. Executive Compensation

Summary Compensation.The following summary compensation table sets forth information concerning
compensation for services rendered in all capacities awarded to, earned by or paid to our Chief Executive Officer and our two other most highly compensated executive officers who were serving as
executive officers on December 31, 2004 and whose total compensation exceeded $100,000 for the fiscal year ended December 31, 2004.

|                                                                                                                   |  |      |  |   |         |  |   | Long-Term Compensation |  |         | 
|------------------------------------------------------------------------------------------------------------------ |  | ---- |  | - | ------- |  | - | ---------------------- |  | ------- | 
|
|
|
|
|John Fitzpatrick
Chief Executive OfficerWII Components; Director, President and Chief Executive OfficerWoodcraft |  | 2004 |  | $ | 288,400 |  | $ | 238,072                |  | 620,000 | 
|Dale Herbst
Vice President, Treasurer, SecretaryWII Components; Chief Financial OfficerWoodcraft                 |  | 2004 |  | $ | 110,000 |  | $ | 57,403                 |  | 210,000 | 
|Gary Noon
Vice President of Sales and MarketingWoodcraft                                                          |  | 2004 |  | $ | 130,490 |  | $ | 101,037                |  |        | 

---

46

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Option Grants.The following table sets forth information concerning the individual grants of stock
options to each of the executive officers listed below who received grants in 2004. The exercise price per share of each option was equal to the fair market value of the voting common stock on the
date of grant, as determined by the board of directors based on its good faith estimate of the fair market value. We have never granted any stock appreciation rights. The potential realizable value is
calculated based on assumed rates of stock appreciation of 5% and 10% compounded annually from the date the options were granted until their expiration dates, assuming a fair market value equal to the
fair market value at fiscal 2004 year end. These numbers are calculated based on the requirements of the SEC and do not reflect our estimate of future stock price growth. Actual gains, if any,
on stock option exercises will depend on future performance of common stock and the date on which the options are exercised.

|                 |  |         |  | Percentage of
Options
Total
Granted to
Employees in
Fiscal Year |   |   |      |  |         | Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation for
Option Term
|---------------- |  | ------- |  | --------------------------------------------------------------- | - | - | ---- |  | ------- | ----------------------------------------------------------------------------------------------
|
|
|
|John Fitzpatrick |  | 120,000 |  | 22.26                                                           | % | $ | 3.85 |  | 4/22/14 |                                                                                               
|Dale Herbst      |  | 38,000  |  | 7.05                                                            | % | $ | 3.85 |  | 4/22/14 |                                                                                               
|Gary Noon        |  |        |  |                                                                |   |   |     |  |        |                                                                                               

Option Exercises and Year-end Values.The following table sets forth information
concerning exercises of stock options during 2004 by each of the executive officers listed below and the year-end value of unexercised options, provided on an aggregated basis:

|Name             |  | Shares Acquired
on Exercise (#) |  | Value Realized
($)(1) |  | Number of Securities Underlying
Unexercised Options at FY-End(#)
Exercisable/unexercisable |  | Value of Unexercised In-the-
Money Options at FY-End($)
Exercisable/unexercisable(2)
|---------------- |  | ------------------------------- |  | --------------------- |  | ------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------
|John Fitzpatrick |  |                                |  |                      |  | 125,000/495,000                                                                            |  | 255,000/761,400                                                                     
|Dale Herbst      |  |                                |  |                      |  | 43,000/167,000                                                                             |  | 87,720/262,020                                                                      
|Gary Noon        |  |                                |  |                      |  | /                                                                                        |  | /                                                                                 

---

Special Bonus.In recognition of the contributions to our improved financial performance and the
successful completion of the offering of senior notes, on February 27, 2004, we paid a one-time special bonus to certain key employees, including the executive officers listed in
the option grants table above. The special bonus consisted of cash payments of an aggregate of $808,500.

2003 Stock Option and Grant Plan

Under our 2003 Stock Option and Grant Plan, our board of directors may award up to an aggregate of 2,500,000 shares of our voting common stock to directors,
officers, consultants and other key persons of WII Components, Inc. and our subsidiaries in the form of incentive stock options (which may be awarded to employees only), nonqualified stock
options, restricted stock awards, unrestricted stock awards and any combination of the foregoing. The exercise price per share for an incentive stock

47

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option
may not be less than 100% of the fair market value of the underlying shares on the grant date. The exercise price per share for an incentive stock option granted to a person owning stock
possessing more than 10% of the total combined voting power of all classes of our stock may not be less than 110% of the fair market value of the underlying shares on the grant date, and may not be
exercisable after the expiration of five years from the date of grant. Otherwise, options may not be exercisable after the expiration of ten years from the date of grant. Our board of directors has
full discretion to administer and interpret the 2003 Stock Option and Grant Plan, to adopt such rules, regulations and procedures as it deems necessary or advisable, and to determine the persons
eligible to receive awards, the time or times at which the awards may be exercised and whether and under what circumstances an award may be exercised.

Employment Agreements

On April 9, 2003, we entered into employment agreements with Messrs. Fitzpatrick, and Herbst. Mr. Fitzpatrick's agreement has a term of two
years, and Mr. Herbst's agreement has a term of one year. Both agreements are automatically renewed upon the completion of the initial term for successive one-year periods until
either we or the executive give 60 days prior written notice of intent not to extend. Each agreement provides for the payment of base salary, incentive compensation and the provision of certain
fringe benefits to the executive. The agreements require the officers to refrain from competing with us and from hiring our employees for a period of time following the termination of their employment
agreements. Mr. Fitzpatrick is prohibited from competing with us for a period of twelve months from the termination of his employment and prohibited from hiring our employees for a period of
24 months from the termination of his employment. Mr. Herbst's agreement prohibits him from competing with us for a period ranging from six months to one year following the
termination of his employment and is prohibited from hiring our employees for a period of 24 months from the termination of his employment. Each agreement also provides for certain payments and
benefits for each officer in the event his employment with us is terminated as a result of his death or disability. In general, in the case of a termination by an officer for good reason, or by us
without cause, he will receive the greater of either the base salary due to him for the remainder of the term or six months salary (except in the case of Mr. Fitzpatrick who shall receive two
years base salary) and if the officer has remained employed with us for at least six months of the fiscal year in which his employment terminated, he will receive a prorated portion of the annual
incentive bonus that would have been payable to him had he remained employed with us at the end of the fiscal year.

On
January 1, 2003, Mr. Noon entered into an employment agreement, which was amended and restated most recently in January 2005. The agreement has a three-month term
of employment through April 1, 2005. Thereafter, the agreement includes consulting services by Mr. Noon with the company through December 31, 2005. The consulting agreement may be
renewed or extended as agreed upon by Mr. Noon and the Company. Mr. Noon is prohibited from competing with us for a period of one year following the termination of his employment or
consulting services, and prohibited from hiring our employees for a period of 24 months from the termination.

Directors Compensation

Our directors do not receive compensation for attending board meetings.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information regarding the beneficial ownership of our voting common stock and non-voting common stock as of
March 14, 2005 by (i) each person known to us to beneficially own more than 5% of the outstanding shares of either voting common stock or non-voting common stock;
(ii) each of our directors; (iii) each named executive officer and (iv) all of our officers

48

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and
directors as a group. Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of shares to persons who possess sole or
shared voting and/or investment power with respect to the shares shown as beneficially owned and include shares of common stock issuable upon the exercise of stock options that are immediately
exercisable or exercisable within 60 days. Unless otherwise indicated in the footnotes to this table, the address of all listed stockholders is c/o WII Components, Inc., 525 Lincoln
Avenue, SE, St. Cloud, Minnesota 56304.

|                                                   |  | Voting Common Stock |  | Non-Voting
Common Stock |  
|-------------------------------------------------- |  | ------------------- |  | ----------------------- | -
|
|Behrman Capital III L.P.(1)                        |  | 19,772,383          |  | 92.9                    | %
|Tom Perlmutter(2)                                  |  | 19,772,383          |  | 92.9                    | %
|Dennis Sisco(2)                                    |  | 19,772,383          |  | 92.9                    | %
|John Fitzpatrick(3)                                |  | 578,522             |  | 2.7                     | %
|Dale Herbst(4)                                     |  | 142,317             |  | *                       |  
|Indosuez Capital Partners 2003, LLC(5)             |  |                    |  |                        |  
|Gary Noon                                          |  |                    |  |                        |  
|All directors and officers as a group (7 persons)  |  | 20,493,222          |  | 97.1                    | %
|Total shares outstanding, including vested options |  | 21,110,343          |  | 100                     | %

---

Item 13. Certain Relationships and Related Party Transactions

Stockholders Agreement

Pursuant to our Stockholders Agreement, dated as of April 9, 2003, entered into with Behrman Capital III L.P., one of Behrman Capital III's affiliates,
certain members of our management (including the named executive officers) and certain other stockholders, each of the current stockholders, other than Behrman Capital III L.P. and its affiliate are
subject to certain transfer restrictions, including rights of first refusal and co-sale, and is entitled to co-sale rights on certain transfers by Behrman Capital III L.P. and
its affiliate. Behrman Capital III L.P. has the right to force all of the other stockholders to participate in a sale event in which it elects to participate. Subject to certain standard exceptions,
all stockholders have pre-emptive rights on future sales of securities. Under the provisions

49

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of
the Stockholders Agreement, all of the parties agree to elect as members of our board of directors two Behrman Capital III L.P. nominees, currently Messrs. Perlmutter and Sisco. Finally,
each member of our management who is a party to the Stockholders Agreement has the right under certain circumstances to require us to repurchase his or her shares of our stock at the then fair market
value in the event of the termination of his or her employment.

Equity Registration Rights Agreement

We entered into a Registration Rights Agreement, dated as of April 9, 2003, with Behrman Capital III L.P. and one of its affiliates, certain members of our
management (including the named executive officers) and certain other stockholders. Pursuant to this agreement, we granted certain customary registration rights, including demand, piggy back and
resale shelf registration rights. Demand registration rights were granted only to Behrman Capital III L.P. and one of its affiliates.

Financial Advisor Agreement

We entered into a Financial Advisor Agreement dated as of April 9, 2003, with Behrman Brothers Management Corp., or Behrman Brothers, an affiliate of our
largest stockholder, Behrman Capital III L.P. Under this agreement, Behrman Brothers provides us with advice regarding our financial management, potential acquisitions, dispositions, financial
transactions and other issues. In the event that we consummate a transaction (such as a merger with, or acquisition of, another company, a sale of our company or significant events relating to changes
in our equity structure), we are required to pay Behrman Brothers a fee for its role as our advisor and reimburse any expenses incurred by Behrman Brothers in providing such advice. This agreement
remains in effect until there is a change in the control of our company or we sell all or substantially all of our assets.

Indemnification Agreements

We have entered into indemnification agreements with our directors, Dennis Sisco and Tom Perlmutter. The form of indemnification agreement provides that the
directors will be indemnified for expenses incurred because of their status as a director to the fullest extent permitted by Delaware law and our certificate of incorporation and bylaws.

Our
certificate of incorporation, as amended, contains a provision permitted by Delaware law that generally eliminates the personal liability of directors for monetary damages for
breaches of their fiduciary duty, including breaches involving negligence or gross negligence in business combinations, unless the director has breached his or her duty of loyalty, failed to act in
good faith, engaged in intentional misconduct or a knowing violation of law, paid a dividend or approved a stock repurchase or redemption in violation of the Delaware General Corporation Law or
obtained an improper personal benefit. This provision does not alter a director's liability under the federal securities laws and does not affect the availability of equitable remedies, such as an
injunction or rescission, for breach of fiduciary duty. Our bylaws provide that directors shall be, and in the discretion of the board of directors, our officers and non-officer employees
may be, indemnified to the fullest extent authorized by Delaware law, as it now exists or may in the future be amended, against all expenses and liabilities reasonably incurred in connection with
service for or on behalf of the company. Our bylaws also provide that the right of our directors and officers to indemnification shall be a contract right and shall not be exclusive of any other right
now possessed or hereafter acquired under any statute, bylaw, agreement, vote of stockholders, directors or otherwise.

Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and persons controlling us as described above, we have been
advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. At present, there is no pending material
litigation or proceeding involving

50

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any
of our directors, officers, employees or agents in which indemnification will be required or permitted.

Item 14. Principal Accountant Fees and Services

Aggregate fees billed to the company for the fiscal years ended December 31, 2004, and 2003 by the Company's principal accounting firm, Deloitte &
Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates:

Fiscal year ended2004

2003Audit Fees(a)

$
315,015

$
263,632Audit-Related Fees(b)


10,693


Total audit and audit-related fees


325,708


263,632Tax Fees(c)


85,400


14,100All Other Fees





Total Fees

$
411,108

$
277,732




Fees
for the audit services billed in 2004 consist of:



Fees
for tax services billed in 2004 consist of:



51

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PART IV

Item 15. Exhibits, Financial Statement Schedules

(1)Financial Statements.Consolidated Financial Statements of WII Components, Inc. and Subsidiaries as
of December 31, 2004 and 2003 and for the year ended December 31, 2004 and the period from inception (April 1, 2003) to December 31, 2003, and Consolidated Financial
Statements of Woodcraft Industries, Inc. and Subsidiaries (Predecessor to WII Components, Inc.) for the three months ended March 31, 2003 and the year ended December 31,
2002



(2)Financial Statement Schedules.All schedules for which provision is made in the applicable accounting
regulations of the SEC have been omitted as not required or not applicable, or the information required has been included elsewhere by reference in the financial statements and related notes, except
for Schedule II.

(3)Exhibits:

|Exhibit No. |  | Exhibit Description                                                                                                                                                                                                         
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1         |  | Second Amended and Restated Certificate of Incorporation of WII Components, Inc. (incorporated herein by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-4, as amended, File
No. 333-115490)     
|3.2         |  | Amended and Restated By-laws of WII Components, Inc. (incorporated herein by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-4, as amended, File No. 333-115490)                                 
|3.3         |  | Restated Articles of Incorporation of Woodcraft Industries, Inc. (incorporated herein by reference to Exhibit 3.3 to the Company's Registration Statement on Form S-4, as amended, File No. 333-115490)                     
|3.4         |  | Restated Bylaws of Woodcraft Industries, Inc. (incorporated herein by reference to Exhibit 3.4 to the Company's Registration Statement on Form S-4, as amended, File No. 333-115490)                                        
|3.5         |  | Articles of Incorporation of Primewood, Inc. (incorporated herein by reference to Exhibit 3.5 to the Company's Registration Statement on Form S-4, as amended, File No. 333-115490)                                         
|3.6         |  | Bylaws of Primewood, Inc. (incorporated herein by reference to Exhibit 3.6 to the Company's Registration Statement on Form S-4, as amended, File No. 333-115490)                                                            
|3.7         |  | Certificate of Incorporation of Brentwood Acquisition Corp. (incorporated herein by reference to Exhibit 3.7 to the Company's Registration Statement on Form S-4, as amended, File No. 333-115490)                          
|3.8         |  | Bylaws of Brentwood Acquisition Corp. (incorporated herein by reference to Exhibit 3.8 to the Company's Registration Statement on Form S-4, as amended, File No. 333-115490)                                                
|3.9         |  | Certificate of Incorporation of Grand Valley Acquisition, Inc. (incorporated herein by reference to Exhibit 3.9 to the Company's Amendment No. 1 to the Registration Statement on Form S-4, as amended, File
No. 333-115490)
|            |  |                                                                                                                                                                                                                             

52

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|3.10  |  | Bylaws of Grand Valley Acquisition, Inc. (incorporated herein by reference to Exhibit 3.10 to the Company's Amendment No. 1 to the Registration Statement on Form S-4, as amended, File No. 333-115490)                                                                                                                                                      
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.1   |  | Indenture dated as of February 18, 2004 by and among WII Components, Inc., and U.S. Bank National Association (incorporated herein by reference to Exhibit 4.3 to the Company's Registration Statement on
Form S-4, as amended, File No. 333-115490)                                                                                                         
|4.2   |  | Registration Rights Agreement dated as of February 18, 2004, by and among WII Components, Inc. and the Initial Purchasers as defined therein (incorporated herein by reference to Exhibit 4.5 to the Company's
Registration Statement on Form S-4, as amended, File No. 333-115490)                                                                          
|4.3   |  | Form of WII Components, Inc. 10% Senior Note due 2012 (incorporated herein by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-4, as amended, File No. 333-115490)                                                                                                                                                                 
|4.4   |  | Supplemental Indenture, dated as of June 25, 2004 by and among WII Components, Inc. and the Initial Purchasers as defined therein (incorporated herein by reference to Exhibit 4.7 to the Company's Amendment
No. 1 to the Registration Statement on Form S-4, as amended, File No. 333-115490)                                                              
|10.1  |  | WII Holdings, Inc. 2003 Stock Option and Grant Plan (incorporated herein by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-4, as amended, File No. 333-115490)                                                                                                                                                                  
|10.2  |  | Form of Director Indemnification Agreement (incorporated herein by reference to Exhibit 10.2 to the Company's Registration Statement on Form S-4, as amended, File No. 333-115490)                                                                                                                                                                           
|10.3  |  | Employment Agreement dated April 9, 2003 between Woodcraft Industries, Inc. and John Fitzpatrick (incorporated herein by reference to Exhibit 10.3 to the Company's Registration Statement on Form S-4, as
amended, File No. 333-115490)                                                                                                                     
|10.4  |  | Employment Agreement dated April 9, 2003 between Woodcraft Industries, Inc. and Dale Herbst (incorporated herein by reference to Exhibit 10.4 to the Company's Registration Statement on Form S-4, as amended,
File No. 333-115490)                                                                                                                          
|*10.5 |  | Amended and Restated Employment Agreement dated January 1, 2003 between Woodcraft Industries, Inc. and Gary Noon                                                                                                                                                                                                                                             
|10.6  |  | Credit Agreement, dated as of February 18, 2004, by and among WII Components, Inc. as Borrower and Antares Capital Corporation, for itself and as Agent for all Lenders, and the Financial Institutions Party thereto
(incorporated herein by reference to Exhibit 10.8 to the Company's Registration Statement on Form S-4, as amended, File No. 333-115490)
|10.7  |  | Form of Revolving Note (incorporated herein by reference to Exhibit 10.9 to the Company's Registration Statement on Form S-4, as amended, File No. 333-115490)                                                                                                                                                                                               
|10.8  |  | Stockholders Agreement dated April 9, 2003 by and among WII Holdings, Inc. and the Stockholders as defined therein (incorporated herein by reference to Exhibit 4.1 to the Company's Registration Statement on
Form S-4, as amended, File No. 333-115490)                                                                                                    
|10.9  |  | Registration Rights Agreement dated April 9, 2003 by and among WII Holdings, Inc. and the Stockholders as defined therein (incorporated herein by reference to Exhibit 4.2 to the Company's Registration Statement
on Form S-4, as amended, File No. 333-115490)                                                                                             
|10.10 |  | Purchase Agreement dated as of February 18, 2004, by and among WII Components Inc. and the Purchasers as defined therein (incorporated herein by reference to Exhibit 4.4 to the Company's Registration Statement
on Form S-4, as amended, File No. 333-115490)                                                                                              
|10.11 |  | Purchase and Exchange Agreement dated April 9, 2003 by and among WII Holdings, Inc. and The Investors and Management Stockholders as defined therein (incorporated herein by reference to Exhibit 2.1 to the
Company's Registration Statement on Form S-4, as amended, File No. 333-115490)                                                                  
|      |  |                                                                                                                                                                                                                                                                                                                                                              

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|10.12 |  | Agreement and Plan of Merger dated as of April 9, 2003 by and among WII Holdings, Inc., Woodcraft Acquisition Subsidiary, Inc., and Woodcraft Industries, Inc. (incorporated herein by reference to Exhibit 2.3 to
the Company's Registration Statement on Form S-4, as amended, File No. 333-115490)
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*12.1 |  | Statement Regarding Computation of Ratio of Earnings to Fixed Charges                                                                                                                                                                                                                                
|21.1  |  | Subsidiaries of the Registrant (incorporated herein by reference to Exhibit 21.1 to the Company's Amendment No. 1 to the Registration Statement on Form S-4, as amended, File No. 333-115490)                                                                                                        
|*23.1 |  | Consent of Deloitte & Touche LLP                                                                                                                                                                                                                                                                     
|*31.1 |  | Certification of Vice President, Treasurer, and Secretary of WII Components, Inc., pursuant to Rules 13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                   
|*31.2 |  | Certification of Chief Executive Officer of WII Components, Inc., pursuant to Rules 13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                    
|*32.1 |  | Certification of Vice President, Treasurer, and Secretary of WII Components, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                          
|*32.2 |  | Certification of Chief Executive Officer of WII Components, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                           

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SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS

Allowance for Doubtful Accounts

The transactions in the allowance for doubtful accounts for the year ended December 31, 2004, the nine-month period ended December 31,
2003, the three-month period ended March 31, 2003, and the year ended December 31, 2002 were as follows (in thousands):

|                            |  | Successor |   | Predecessor |  
|--------------------------- |  | --------- | - | ----------- | -
|
|Balance, beginning of year  |  | 237       |   | 358         |  
|Acquisition opening balance |  |          |   |            |  
|Provision                   |  | 27        |   | (72         | )
|Write-offs                  |  | (55       | ) | (49         | )
|                            |  |           |   |             |  
|Balance, end of year        |  | 209       |   | 237         |  
|                            |  |           |   |             |  

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Item 16. Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report to be signed
on its behalf by the undersigned thereunto duly authorized, this 31st day of March 2005:

| |  | WII COMPONENTS, INC.
| |  | --------------------
| |  | By:                 

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

|Signature                           |  | Title                                                                                                  |  | Date          
|----------------------------------- |  | ------------------------------------------------------------------------------------------------------ |  | --------------
|                                    |  |                                                                                                        |  |               
|/s/JOHN FITZPATRICKJohn Fitzpatrick |  | Chief Executive Officer (Principal Executive Officer)                                                  |  | March 31, 2005
|/s/DALE B. HERBSTDale B. Herbst     |  | Vice President, Treasurer and Secretary (Principal Financial Officer and Principal Accounting Officer) |  | March 31, 2005
|/s/DENNIS G. SISCODennis G. Sisco   |  | Director                                                                                               |  | March 31, 2005
|/s/TOM PERLMUTTERTom Perlmutter     |  | Director                                                                                               |  | March 31, 2005

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